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  • Question

    When a procures performance a payments bond according to the FAR and when the government decides to terminate the contract for convenience, is the government required to have those bonds closed prior to terminating. Or is it the contractors responsibility to close out the bonds and the government only focuses on paying the contractor for the work they performed.


    Answer

    Typically it is the contractor's responsibility to close the bonds.  The only responsibility the KO has is to provide a copy of the termination notice to the surety see FAR 49.102(b).  The contractor can claim (if they verify) any costs associated with closing the bonds with their settlement proposal.  Often these are very small dollar amounts associated with the administrative paperwork to close the bond(s).  If the contractor has a lot of business with their surety there may be no costs to close the bond.

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