48-2842. Form and execution of contract; supervision of performance; surety

A. The district shall make all written contracts and receive all bonds authorized by this article. The contracts shall specify a reasonable time for completing the flood protection facility.

B. The board may prescribe a form for the contract that is not inconsistent with this article or with title 34, chapter 6, article 1, if that procurement method is chosen, and fix a reasonable time for completing the work, which may be extended by the board.

C. The work shall be done under the direction of the board or its engineer. The board may prescribe administrative rules relating to supervising the work. The board may appoint its engineer or a suitable person to take charge of and direct the construction of a flood protection facility on behalf of the district. The person appointed is responsible for supervising fulfillment of the contract. The board shall fix the compensation for that person.

D. If the work is not performed with diligence, the board, after a hearing and service of notice on the contractor and the contractor's surety, may prescribe those terms and conditions as it deems proper before permitting the contractor to continue with the work.

E. If the board finds that the contractor is unable to continue with the work or to perform the work according to the contract, the board shall hold the contractor in default and make demand on the surety to act according to the contract and the terms and conditions of the performance bond. If the surety fails to act within sixty days after the date of the written notice, the board may order that proposals be received from other contractors to complete the work. After receiving proposals, the board may award the contract to the lowest responsible bidder. If, after receiving the new proposals, the cost of completion exceeds the monies or bonds available for payment, the board shall make a demand on the defaulting contractor's surety for payment of the difference within twenty days after the mailing of the notice. If the surety is represented by an attorney-in-fact, the demand may be served on the attorney-in-fact or at the surety's principal office in this state. If the surety has no attorney-in-fact and no principal office in this state, the demand shall be served on the director of insurance. The demand may not exceed the penal sum of the performance bond. Monies collected from the surety shall be used to pay any added costs of completing the work. Any difference between the actual costs of the work and the amount assessed shall be advanced by the district, which shall use its contingency fund or any other available monies to pay the new contractor. The district shall reimburse itself from the amounts paid by the former contractor or its surety or from assessments and bonds when monies become available. All additional costs of the work not received from the original contractor's surety shall ultimately be assessed against the benefiting parcels of property.