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Improvement Contract_Heiar Brothers Fencing for Murphy ParkMasterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Marie L. Ware, Leisure Services Manager SUBJECT: Contracts for Murphy Park Fencing Project, CIP #350 -2298 DATE: July 17, 20122 Dubuque * * * ** All Amenca City 2007 Attached are three copies of the improvement contract and performance bond for the Murphy Park Fencing Project. Heiar Brothers Fencing, Inc. is the contractor for the project. Ken, please review and send to Barry. Barry, please review and send to the City Manager. Mike, after you sign the copies, please forward them to the City Clerk for `�-uA processing. S uI c MLW:et attachments Approved by Ken Approved by Barry HEIAR -7 OP ID: MIJO 144 i7 ' CERTIFICATE LIABILITY INSURANCE DATE (MWDONYYY) 07/17/12 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER 563- 872 -42556 Ludovissy & Assoc - Bellevue 103 N Riverview 563 -872 -3256 Bellevue, IA 52031 - Ludovlssy, Jon D CONTACT PHONE FAX (NC, No, Sell: INC. No): E•MAIL ADDRESS: 1NSURER(S) AFFORDING COVERAGE NAIL # INSURER : Acuity 14184 INSURED Heiar Brothers Fencing, Inc. Doug Heiar 13975 Ryan Rd Peosta, IA 52068 INSURER B: X INSURER C: X13656 INSURER D : 04/01/13 INSURER E : $ 1,000,000 INSURER F : $ 100,000 COVERAGES CERTIFICATE NUMBER: • THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. [HER LTR TYPE OF INSURANCE ADDL INSR SUBR WVD POLICY NUMBER POLICY EFF IMM /DDIYYYY) POLICY EXP (MM /DD /YYYY) LIMITS A GENERAL X LIABILITY COMMERCIAL GENERAL ICLAIMS -MADE Business Owners LIABILITY X OCCUR X X13656 04/01/12 04/01/13 EACH OCCURRENCE ' $ 1,000,000 DAMAGE TD RENTED PREMt5E5 (Ea occurcance) $ 100,000 MED EXP (Any one person) $ 5,000 PERSONAL & ADV INJURY $ 1,000,000 GENERAL AGGREGATE $ 2,000,000 GENL AGGREGATE LIMIT APPLIES PER: POLICY I bbl PRO- LOC IF(:T PRODUCTS - COMP /OPAGG $ 2,000,000 $ A AUTOMOBILE X LIABILITY ANY AUTO ALL OWNED AUTOS HIRED AUTOS X X SCHEDULED AUTOS 21-OWNED S X13656 04/01/12 04101 /13 COMBINED SINGLE LIMIT (Ea accident) $ 1,000,000 BODILY INJURY (Per person) $ BODILY (Per ( accident) $ PROPERTY DAMAGE (Per accident) $ A X UMBRELLA LIAB EXCESS MB X OCCUR CLAIMS -MADE X13656 04/01/12 04/01/13 EACH OCCURRENCE $ 1,000,000 AGGREGATE $ BED RETENTIONS $ A WORKERS COMPENSATION AND EMPLOYERS' LIABILITY ANY PROPRIETOR/PARTNER/EXECUTIVE OFFICER/MEMBER EXCLUDED? (Mandatory in NH) If yes, describe under DESCRIPTION OF OPERATIONS below Y/N N N I A X X13656 04/01/12 04/01/13 X TORY L MITS ER E.L. EACH ACCIDENT • $ 500,000 E.L. DISEASE - EA EMPLOYEE $ 500,000 E.L. DISEASE - POLICY LIMIT $ 500,000 DESCRIPTION OF OPERATIONS/ LOCATIONS 1 VEHICLES (Attach ACORD 101, Additional Remarks Schedule if more space Is required) Project: Murphy Park See next page... CERTIFICATE HOLDER I CITYD -1 City of Dubuque Engineering Dept 50 W 13th St Dubuque, IA 52001 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE ,9, 1 ACORD 25 (2010105) ©1988.2010 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD NOTE PAD: HOLDER CODE ClTYIJ 1 INSURED's NAME Heiar Brothers Fencing, Inc. HEAR -7 PAGE 2 OP ID: MIJO DATE 07/17/12 The City of Dubuque is an additional insured including ngoing and colnpleeed operations equivalent to CG2070 and CG2u37. -General Liability policy is primary & non contributing. Form CG2503 - Designated projects general agg limit is included. Governmental Immunities endorsement is included. Waiver of subrogation in favor of City of Dubuque on Work comp. Endoreements-will- lie- ferwardec9- wrt1a1 tin -days: ACUITY A ?Aulual Insurance Company First Named Insured and Address: Agency Name and Number: HEIAR BROTHERS FENCING INC - LUDOVISSY & ASSOCIATES 13975 RYAN RD 2888 -AM PEOSTA IA 52068 Policy Number: X13656 BIS -PAK CHANGES Change Effective Date: 05 -29 -12 PREMIUM SUMMARY Additional Premium Applied to Your Balance $ 84.00 Direct Billed CHANGES: ADDED CITY OF DUBUQUE AS ADDITIONAL INSURED IL -7007 (6 -01) Policyholder - Original SO 02 07/16/12 ADDITIONAL INSURED CITY OF DUBUQUE, IOWA This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM COMMERCIAL GENERAL LIABILITY COVERAGE PART BIS -PAK BUSINESS LIABILITY AND MEDICAL EXPENSES COVERAGE FORM t, The City of Dubuque, Iowa, including all its elected and appointed officials, all its employ- ees and volunteers, all its boards, commissions and /or authorities and their board members, employees and volunteers, are included as ad- ditional insureds with respect to all work and services performed for them. This coverage shall be primary to the additional insureds and not contributing with any other insurance or similar protection available to the additional in- sureds, whether other available coverage be primary, contributing or excess. 2. The following applies when the City of Du- buque, Iowa is named as an additional insured: a. We expressly agree and state that the pur- chase of this policy and the naming of the City of Dubuque, Iowa as an additional in- sured does not waive any of the defenses of governmental immunity available to the City of Dubuque, Iowa under the Code of Iowa Section 670.4 as it now exists and as it may be amended from time to time. b. We further agree that this policy of insur- ance shall cover only those claims not sub- ject to the defense of governmental immu- nity under the Code of Iowa Section 670.4 as it now exists and as it may be amended IL- 7063(7 -02) from time to time. Those claims not subject to the Code of Iowa Section 670.4 shall be covered by the terms and conditions of this policy. c. The City of Dubuque, Iowa shall be respon- sible for asserting any defense of govern- mental immunity, and may do so at any . time and shalt do so upon timely written request by us. d. We shall not deny coverage under this poli- cy and we shall not deny any of the rights and benefits accruing to the City of Du- buque, Iowa under this policy for reasons of governmental immunity unless and until a court of competent jurisdiction has ruled in favor of the defense(s) of governmental im- munity asserted by the City of Dubuque, Iowa. e. We and the City of Dubuque, Iowa agree that the above preservation of governmental immunities shall not otherwise change or alter the coverage available under the poli- cy. 3. We will give thirty (30) days advance written notice of cancellation, nonrenewal, reduction in coverage or limits and /or material change by endorsement and ten (10) days written notice for nonpayment of premium to: City of Dubuque and Dubuque County, City Hall, 13th and Cen- tral, Dubuque, IA 52001. This endorsement su- persedes the standard cancellation statement on the Certificate of Insurance to which this endorsement is attached. ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTORS - COMPLETED OPERATIONS This endorsement modifies insurance provided under the following: BIS -PAK BUSINESS LIABILITY AND MEDICAL EX- PENSES COVERAGE FORM Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule, but only with respect to Name of Additional Insured Person(s) or Organization(s) (Name and Address) CITY OF DUBUQUE 50 W 13TH ST DUBUQUE IA 52001 CB- 7333(4 -10) liability for bodily injury or property damage caused, in whole or in part, by your work at the location designated and described in the schedule of this endorsement performed for that additional insured and included in the products - completed operations hazard. SCHEDULE Location and Description of Completed Operations JOBSITE ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTORS - CB- 7331(4 -10) SCHEDULED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: BIS -PAK BUSINESS LIABILITY AND MEDICAL EX- PENSES COVERAGE FORM 1. The following is added to Who Is An Insured: Any person(s) or organization(s) shown in the Schedule, but only with respect to liability for bodily injury, property damage or personal and advertising injury caused, in whole or in part, by: a. Your acts or omissions; or b. The acts or omissions of those acting on your behalf; in the performance of your ongoing operations for the additional insured(s) at the location(s) designated below. 2. With respect to the insurance afforded to these Name of Additional Insured Person(s) or Organization(s) (Name and Address) CITY OF DUBUQUE 50W19THST DUBUQUE IA 52001 SCHEDULE additional' insureds, the following additional ex- clusions apply: This insurance does not apply to bodily injury or property damage occurring after: a. All work, including materials, parts or equip- ment furnished in connection with such work, on the project (other than service, maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the location of the covered operations has been completed; or b. That portion of your work out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontrac- tor engaged in performing operations for a principal as a part of the same project. Location(s) of Covered Operations JOBSITE ACUITY A Mulual Insurance Company Named Insured and Address: HEIAR BROTHERS FENCING INC 13975 RYAN RD PEOSTA IA 52068 Named Insured is: CORPORATION WORKERS' COMPENSATION Information Page Changes Agency Name and Number: LUDOVISSY & ASSOCIATES 2888 -AM Insured Policy Number: X13656 Policy Number: CWC- X13656 -00 Change Effective Date: 05 -29 -12 Identification Number: FEIN: 275469880 Policy Period: Inception 04 -01 -12 Expiration 04 -01 -13 12:01 A.M. standard time at the address of the insured stated herein. PREMIUM SUMMARY Additional Premium Applied to Your Balance $ 50.00 Direct Billed CHANGES: IOWA WC 00 03 13 IS ADDED THE FOLLOWING CLASS CODE IS ADDED: CLASS CODE 9724 ADDITIONAL PREMIUM WAIVER OF SUBROGATION RATE $50.00 PREMIUM BASIS 1 WC- 7026(6 -01) Policyholder - Original SO 02 07/16/12 WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT WC 00 03 13(4 -84) We have the right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against the person or or- ganization named in the Schedule. This agreement applies only to the extent that you perform work under a written contract that requires you to obtain this agreement from us. This agreement shall not operate directly or indirectly to benefit any one not named in the Schedule. SCHEDULE CITY OF DUBUQUE CITY OF DUBUQUE, IOWA IMPROVEMENT CONTRACT MUPHY PARK FENCING PROJECT THIS IMPROVEMENT CONTRACT (the Contract), made in triplicate, dated for reference purposes the /3 day of 14,01 lily , 2012, between the City of Dubuque, Iowa, by its City Manager, through authority conferred upon the City Manager by its City Council (City) and Heiar Brothers Fencing, Inc. of the City of Peosta, 13975 Ryan Road, Peosta, IA 52068. For and in consideration of the mutual covenants herein contained, the parties hereto agree as follows: CONTRACTOR AGREES: 1. To furnish all material and equipment and to perform all labor necessary for the MURPHY PARK FENCING PROJECT (the Project). 2. Contract Documents shall mean and include the following: the Notice to Bidders; the Contractor's Proposal; Plans, Specifications, and General Requirements as adopted by the City for the Project. 3. All materials used by the Contractor in the Project shall be the best of their several kinds and shall be put in place to the satisfaction of the Leisure Services Manager. 4. The Contractor shall remove any materials rejected by the Leisure Services Manager as defective or improper, or any of said work condemned as unsuitable or defective, and the same shall be replaced or done anew to the satisfaction of the Leisure Services Manager at the cost and expense of the Contractor. 5. Five percent (5 %) of the Contract price shall be retained by the City for a period of thirty (30) days after final completion and acceptance of the Project by the City to pay any claim that may be filed within said time for labor and materials done and furnished in connection with the performance of this Contract and for a longer period if such claims are not adjusted within that time, as provided in Iowa Code Chapter 573. The City shall also retain additional sums to protect itself against any claim that has been filed against it for damages to persons or property arising through the prosecution of the work and such sums shall be held by the City until such claims have been settled, adjudicated or otherwise disposed of. 6. The Contractor has read and understands the specifications including General Requirements and has examined and understands the plans herein referred to and agrees not to plead misunderstanding or deception because of estimates of quantity, character, location or other conditions surrounding the same. 7. In addition to the guarantee provided for in the specifications, the Contractor shall also make good any other defect in any part of the Project due to improper construction notwithstanding the fact that said Project may have been accepted and fully paid for by the City, and the Contractor's bond shall be security therefore. 8. The Contractor shall fully complete the Project under this Contract on or before July 1, 2012 to complete the concrete bridge support abutments or the earlier completion date established by the contractor. 9. To the fullest extent permitted by law, the Contractor shall indemnify and hold harmless the City from and against all claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of or resulting from performance of the Contract, provided that such claim, damages, loss or expense is attributable to bodily injury, sickness, disease or death, or injury to or destruction of property (other than the Project itself) including loss of use resulting there from, but only to the extent caused in whole or in part by negligent acts or omissions of the Contractor, the Contractor's subcontractor, or anyone directly or indirectly employed by the Contractor or the Contractor's subcontractor or anyone for whose acts the Contractor or the Contractor's subcontractor may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder. THE CITY AGREES: Upon the completion of the Contract, and the acceptance of the Project by the City, the City agrees to pay the Contractor as full compensation for the complete performance of this Contract, the amount determined for the total number of units completed at the unit prices stated in the Contractor's Proposal and less any liquidated damages provided for in the Contract Documents. The number of units stated in the plans and specifications is approximate only and the final payment shall be made by the work covered by the Contract. CONTRACT AMOUNT $ 21,780 CITY OF DUBUQUE, IOWA PERFORMANCE, PAYMENT AND MAINTENANCE BOND KNOWN ALL MEN BY THES PRESEN , S: Tha Heiar Bro ers Fencing, Inc. as Principal (Contractor) and , J> 4. /L. ,i....ek.../, as Surety are held firmly bound unto the City o Dubuque, I•wa (•9y), in he p' nal sum of $ 21,780 the same being 100% of the total price of the Contract for the Project herein referred to, lawful money of the United States of America, well and truly to be paid to said City of Dubuque, and to all other parties who, under the provisions of the laws of Iowa, are intended to be protected and secured hereby for which payment we bind ourselves, our heirs, executors, successors and assigns, jointly and severally by these presents. Dated at Dubuque, Iowa, this day of , 2012, and duly attested and sealed. WHEREAS, the said Contractor by a Contract dated 31r3 , 2012, incorporated herein by reference, has agreed with said City of Dubuque to perform all labor and furnish all materials required to be performed and furnished for the MURPHY PARK FENCING PROJECT (the Project) according to the Contract and Construction Documents prepared therefore. It is expressly understood and agreed by the Contractor and Surety bond that the following provisions are a part of this Bond and are binding upon said Contractor and Surety, to -wit: 1. PERFORMANCE BOND: The Contractor shall well and faithfully observe, perform, fulfill and abide by each and every covenant, condition and part of said Contract and Contract Documents, by reference made a part hereof, for the Project, and shall indemnify and save harmless the City from all outlay and expense incurred by the City by reason of the Contractor's default of failure to perform as required. The Contractor shall also be responsible for the default or failure to perform as required under the Contract and Contract Documents by all its subcontractors, suppliers, agents, or employees furnishing materials or providing labor in the performance of the Contract. 2. PAYMENT BOND: The Contractor and the Surety shall pay all just claims submitted by persons, firms, subcontractors, and corporations furnishing materials for or performing labor in the performance of the Contract on account of which this Bond is given, including but not limited to claims for all amounts due for labor, materials, lubricants, oil, gasoline, repairs on machinery, equipment and tools, consumed or used by the Contractor or any subcontractor, wherein the same are not satisfied out of the portion of the contract price which the City is required to retain until completion of the improvement, but the Contractor and Surety shall not be liable to said persons, firms, or corporations unless the claims of said claimants against said portion of the contract price shall have been established as provided by law. The Contractor and Surety hereby bind themselves to the obligations and conditions set forth in Chapter 573, Code of Iowa, which by this reference is made a part hereof as though fully set out herein. 3. MAINTENANCE BOND: The Contractor and the Surety hereby agree, at their own expense: A. To remedy any and all defects that may develop in or result from work to be performed under the Contract within the period of two (2) year(s) from the date of acceptance of the work under the Contract by the City Council of the City of Dubuque, Iowa, by reason of defects in workmanship or materials used in construction of said work; B. To keep all work in continuous good repair; and C. To pay the City the reasonable costs of monitoring and inspection to assure that any defects are remedied, and to repay the City all outlay and expense incurred as a result of Contractor's and Surety's failure to remedy any defect as required by this section. Contractor's and Surety's agreement herein made extends to defects in workmanship or materials not discovered or known to the City at the time such work was accepted. NOW, THEREFORE, the condition of this obligation is such that if the said Contractor shall perform all of the work contemplated by the Contract in a workmanlike manner and in strict compliance with the plans and specifications, and will pay all claims for labor and materials used in connection with said Project, to indemnify the said City for all damages, costs and expense incurred by reason of damages to persons or property arising through the performance of said Contract, and will reimburse the City for any outlay of money which it may be required to make in order to complete said Contract according to the Construction Documents and will maintain in good repair said Project for the period specified in the Contract where this bond is obligated for maintenance, and will faithfully comply with all of the provisions of Section 573 of the Code of Iowa, then this obligation shall be null and void, otherwise it shall remain in full force and effect. All the conditions of this bond must be fully complied with before the Contractor or the Surety will be released. The Contract, Contractor's Proposal, and Construction Documents shall be considered as a part of this Bond just as if their terms were repeated herein. Dated at Dubuque, Iowa this ) day of-Skit ` , 2012. CITY OF DUBUQUE, IOWA PRINCIPAL: By: FURTHER CONDITIONS The Contractor hereby represents and guarantees that it has not, nor has any other person for or in its behalf, directly or indirectly, entered into any arrangement or agreement with any other bidder, or with any public officer, whereby it has paid or is to pay any other bidder or public officer any sum of money or anything of value whatever in order to obtain this Contract; and it has not, nor has another person for or in its behalf directly or indirectly, entered into any agreement or arrangement with any other person, firm, corporation or association which tends to or does lessen or destroy free competition in the letting of this Contract and agrees that in case it hereafter be established that such representations or guarantees, or any of them are false, it will forfeit and pay not less than ten percent (10 %) of the Contract price but in no event be less than $500.00 (Five Hundred and 00 /Dollars) as liquidated damages to the City. The surety on the bond furnished for this Contract, shall in addition to all other provisions, be obligated to the extent provided for by Iowa Code § 573.6, relating to this Contract, which provisions apply to said bond. The Contractor agrees, and its bond shall be surety therefore, that it will keep and maintain the Project in good repair for a period of two (2) years after acceptance of the same by the Leisure Services Manager and its bond shall be security therefore. CITY OF DUBUQUE, IOWA By City Manager PRINCIPAL: By: CERTIFICATE OF CITY CLERK This is to certify that a c- 'fied copy of the above Contract has been filed in my , 2012. office on the /5 day of 0-1204 rZlri.4 Kevi S. Firnstahl, CM ity Clerk City Manager Contractor SURETY: By: Surety Company Signature Title City, State, Zip Code Telephone Attorney In-Fact CITY OF DUBUQUE, IOWA SALES AND USE TAX EXEMPTION CERTIFICATE The City of Dubuque, as a designated exempt entity awarding construction contracts on or after January 1, 2003, may issue special exemption certificates to contractors and subcontractors, allowing them to purchase, or withdraw from inventory, materials for the contract free from sales tax pursuant to Iowa Code Sections: 422.42 (15) & (16), and 422.47 (5). This special exemption certificate may also allow a manufacturer of building materials to consume materials in the performance of a construction contract without owing tax on the fabricated cost of those materials. If the Jurisdiction, at its option, decides to utilize this exemption option, it will so state by special provision and publication in the Notice of Hearing and Letting. 1. Upon award of contract, the Jurisdiction will register the contract, Contractor, and each subcontractor with the Iowa Department of Revenue and Finance; and distribute tax exemption certificates and authorization letters to the Contractor and each subcontractor duly approved by the Jurisdiction in accordance with Section 1030, 1.10, B. These documents allow the Contractor and subcontractors to purchase materials for the contract free from sales tax. The Contractor and subcontractors may make copies of the tax exemption certificate and provide a copy to each supplier providing construction material. These tax exemption certificates and authorization letters are applicable only for the work under the contract. 2. At the time the Contractor requests permission to sublet in accordance with said Section 1030, 1.10, B, the Contractor shall provide a listing to the Jurisdiction identifying all subcontractors, including the Federal Employer Identification Number (FEIN) for the Contractor and all subcontractors, as well as the name, address, telephone number, and a representative of the organization which will perform the work, a description of the work to be sublet, and the associated cost. 3. The Contractor and each subcontractor shall comply with said Iowa Code Sales Tax requirements, shall keep records identifying the materials and supplies purchased and verify that the were used on the contract, and shall pay tax on any materials purchased tax -free and not used on the contract. SPECIAL PROVISIONS An out -of -State contractor, before commencing a contract in excess of $5,000.00, shall, pursuant to Iowa Code 91C.7(2), file a bond with the Division of Labor Services of the. Department of Employment Services. The Surety Bond shall be executed by a Surety Company authorized to do business in the State of Iowa, and the bond shall be continuous in nature until canceled by the Surety with not less than 30 days written notice to the contractor and to the Division of Labor Services of the Department of Employment Services indicating the Surety's desire to cancel the bond. The bond shall be in the sum of the greater of the following amounts: a. $1,000.00 b. 5% of the contract price Release of the bond shall be conditioned upon the payment of all taxes, including contributions due under the unemployment compensation insurance system, penalties, interest, and related fees, which may accrue to the State of Iowa or its subdivision on account of the execution and performance of the contract. If any time during the term of the bond the Department of Revenue and Finance determines that the amount of the bond is not sufficient to cover the tax liabilities accruing to the State of Iowa or its subdivision, the Department will require the bond to be increased by an amount the Department deems sufficient to cover the tax liabilities accrued and to accrue under the contract, as provided under Iowa Code 91C.7(2). If it is determined that this subsection may cause denial of Federal Funds which would otherwise be available, or would otherwise be inconsistent with requirements of Federal law, this section shall be suspended, but only the extent necessary to prevent denial of the funds or to eliminate the inconsistency with Federal requirements.