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  • Question

    Can a construction contractor provide multiple (four) bonds on four CLINS as opposed to providing one bond for all four CLINS in total? This is a 4 phase project with nearly two years for a POP. For example, if the project total is $8 million instead of providing an $8 million bond the contractor provides four, $2 million bonds. The contractor does not want to tie up their bonding on a phased project when Phase 1 and Phase 2 will be done within a year, but if it was on one bond it would tie up $4 million in bonding for completed work. Thanks for any help!


    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. 

     

    You have the ability to structure you contract in a manner that makes the most business sense within the rules of the AR/DFARS/AFFARS.  The best way to accomplish the contractor's request and ensure the government's interests are protected would be to have option CLINs for each phase and a matching bond CLIN of the appropriate value for each phase.  When exercising the first phase you would also exercise the bond option for that phase.  If the work is not progressing as planned, neither the task nor the bond CLIN need be exercised until the previous wok is satisfactory.

     

    The risk you run is that the bond may not be available at the time of exercise.

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