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  • Question

    How do you reach out to the bonding company if work has not been completed by the contractor? What are the steps to take to reach out the bonding company.


    Answer

    This response is based on the information provided.  We suggest you discuss with your contracting team, program manager and/or legal department as appropriate.

     

    There is no formal process for contacting a bonding company in the FAR/DFARS/NMCFARS.  Unless the Navy has other implementing procedures, we are not aware of any.  We suggest you make sure your contracting officer has notified the contractor in writing the issue exists/there is work required.  You will want to ensure you have proof of contractor receipt of your notification, such as certified or registered mail delivery or some other record of receipt.  You should have been including the surety in communications concerning work to be done.  Do provide the surety your notification.  Have the contracting officer and legal review the language of the bond itself.

     

    A surety will  often argue its responsibility ends when the contract is complete.  The success or failure of this argument often turns on the language of the bond itself.  Are there any limits on duration in the language of the bond related to your contract?  There is a Warranty Bond that guarantees the contractor will come back and fix the defective work; however, it is very rare for the Government require anything other than the Performance and Payment Bond; required for virtually every construction contract.

    Providing the notification to the surety will accomplish two things:

    1) The company will either agree it is liable or deny liability; the surety, when it gets this type of communication, may decline to provide further bonding to that company.  If a construction contractor cannot maintain a relationship with a bonding company to secure bonds, it is pretty much dead in the water.  No bond, no award.

    2) It will also provide documentation should the surety assert it has no responsibility and the Navy subsequently hires an outside contractor to fix the problem/complete the work.

    If you don't give the contractor formal notification before going out and hiring another contractor to fix the problem, the contractor will not be held liable.     

     

    With all that said, we believe it is unlikely the bonding company is going to quickly jump in and resolve your issues.  You haven't stated in your situation as to whether the construction company challenges the Government assertion of warranty or acknowledges but fails to do the work.  If the issues are not warranty issues and the Government accepted without properly identifying remaining issues (often referred to as punchlist items) then your unit has a very high hurdle to overcome.

     

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