Sign In
  • Question

    Is there any other reason to obtain bid bonds other than the requirements referenced in FAR 28.101? 28.101 indicates that bid bonds shall not be required unless perf and payment bonds are required. If an offeror will not be required to provide perf and payment bonds, is there any other reason why the Gov still need to require a bid bond? FAR 15 talks about price reasonableness, is there any link between bid bonds and pricing reasonableness?


    No, a contracting officer shall not require a bid guarantee unless a performance bond or a performance and payment bond is also required.
    However, I have a hard time believing that this MATOC is less than $30,000.  You still need to follow FAR 28.102.  Construction contracts require some sort of performance and payment bond/guarantee.
    If you require bid bonds, the cost is allowable.  Bonds will increase the price of the contract.

    28.102-1 -- General.
    (a) The Miller Act (40 U.S.C. 3131 et seq.) requires performance and payment bonds for any construction contract exceeding $150,000, except that this requirement may be waived--
    (1) By the contracting officer for as much of the work as is to be performed in a foreign country upon finding that it is impracticable for the contractor to furnish such bond; or
    (2) As otherwise authorized by the Miller Act or other law.
    (1) Pursuant to 40 U.S.C. 3132, for construction contracts greater than $30,000, but not greater than $150,000, the contracting officer shall select two or more of the following payment protections, giving particular consideration to inclusion of an irrevocable letter of credit as one of the selected alternatives:
    (i) A payment bond.
    (ii) An irrevocable letter of credit (ILC).
    (iii) A tripartite escrow agreement. The prime contractor establishes an escrow account in a federally insured financial institution and enters into a tripartite escrow agreement with the financial institution, as escrow agent, and all of the suppliers of labor and material. The escrow agreement shall establish the terms of payment under the contract and of resolution of disputes among the parties. The Government makes payments to the contractor’s escrow account, and the escrow agent distributes the payments in accordance with the agreement, or triggers the disputes resolution procedures if required.
    (iv) Certificates of deposit. The contractor deposits certificates of deposit from a federally insured financial institution with the contracting officer, in an acceptable form, executable by the contracting officer.
    (v) A deposit of the types of security listed in 28.204-1 and 28.204-2.
    (2) The contractor shall submit to the Government one of the payment protections selected by the contracting officer.
    (c) The contractor shall furnish all bonds or alternative payment protection, including any necessary reinsurance agreements, before receiving a notice to proceed with the work or being allowed to start work.

    Open full Question Details