Sign In
  • Question

    The RFI reads as follows: FAR Subpart 2.101 defines Construction as - construction, alteration, or repair of buildings. Structures, or other real property. The Construction portion of the RFP may apply to well installation and abandonment if CERCLA wells are considered real property. If CERCLA wells are not considered real property the contract could be considered other than construction and would be subject to FAR 28.103 which may not require bonds. Are CERCLA wells considered real property? Additionally, I have been asked in RFI's to remove the requirement for Bonds completely. If it's a Services Contract and only a couple of Work Elements are construction, do we still require Bonds for those Work Elements? And, is the work considered construction if you're just using heavy equipment?


    Answer

    The following response is based solely on the question and background information provided. As we do not have all of the facts particular to your contract, program, and situation, we highly recommend you consult your Contracting Officer and Legal Office for guidance.
     
    Bottom Line Up Front (BLUF): Performance and payment bonds are typically required for construction contracts, but can also be used for other types of contracts.  Just because you may have construction elements in your contract doesn’t mean you’re required to have bonds. 
     
    In accordance with 40 U.S.C., chapter 31, performance and payment bonds are required for any construction “contract” exceeding $150,000.  In your scenario, use of particular equipment does not, in and of itself, define the work as "construction".  As you point out, FAR 2.101 defines construction as:
     
    “Construction” means construction, alteration, or repair (including dredging, excavating, and painting) of buildings, structures, or other real property. For purposes of this definition, the terms “buildings, structures, or other real property” include, but are not limited to, improvements of all types, such as bridges, dams, plants, highways, parkways, streets, subways, tunnels, sewers, mains, power lines, cemeteries, pumping stations, railways, airport facilities, terminals, docks, piers, wharves, ways, lighthouses, buoys, jetties, breakwaters, levees, canals, and channels.
     
    Also, while the wells you mention may be considered real property, the nature of the work performed may still not constitute a construction “contract”.  See FAR 36.101(c) for what to do when construction is combined with other services or supplies within a given contract.  You’ll note that the “predominant” part of the work drives which clauses are included, which, in turn, drives what contractors are required to submit by way of bonds.  If the work is deemed a construction contract, then FAR 52.228-15 will most likely be included, requiring performance and payment bonds.
     
    If the contract is not construction, then FAR 28.103 still allows the Contracting Officer to require bonds to protect the Government’s interests.  If the contract exceeds the simplified acquisition threshold, a couple examples that may warrant such a requirement may be: 1) where Government property is provided to the contractor for use in performance the contract, or; 2) contracts for dismantling, demolition, or removal of improvements.  It all boils down to risk – which is a discussion to engage with all members of the acquisition team.
     
     

    Open full Question Details