This is permissible until necessary reinsurance agreements are executed, even though the total bond requirement may exceed the insurer's underwriting limitation. Verification of federal insurance is available through the Federal Deposit Insurance Corporation (FDIC) institution directory at the website http://www2.fdic.gov/idasp/index.asp. (f) Self-insurance programs to protect a contractor against the costs of correcting its own defects in materials or workmanship shall not be approved. (4) The Government elects to assume risks for which the contractor ordinarily obtains commercial insurance. 28.106-7 Withholding contract payments. c. Municipalities must require a Labor & Material Payment Bond for contracts exceeding $100,000. 28.105-1 Advance payment bonds. Notice: This form is intended for use by government contractors and contracting personnel for compliance with and management of financial security requirements in Federal Government contracts. Any person required to furnish a bond has an option to furnish a certified or cashier’s check, bank draft, Post Office money order, or currency, in an amount equal to the penal sum of the bond, instead of furnishing surety or sureties on the bonds. (b) When a contract price is increased, the Government may require additional bond protection in an amount adequate to protect suppliers of labor and material. (b) The contracting officer shall determine the penal sum. 28.202 Acceptability of corporate sureties. 28.106-7 Withholding contract payments. (d) Section 806(a)(2) of Pub.L.102-190, as amended by Sections2091 and 8105 of Pub.L.103-355 ( 10 U.S.C. (f) Determinations of non-responsibility based on the unacceptability of a power of attorney are not subject to the Certificate of Competency process of subpart 19.6 if the surety has disavowed the validity of the power of attorney. (2) No additional bond is required and- (See 28.308 for self-insurance.) Greg Rynerson, CEO of a California-based surety company, Surety Bond Authority Inc, answers in detail on what you need to know about Construction Surety Bonds.. Today, many small, emerging, and even large-scale contractors looking to secure surety bonds and expand their businesses have many questions about construction bonds as required by state laws. Per 31 U.S.C. Verification of federal insurance is available through the Federal Deposit Insurance Corporation (FDIC) institution directory at the website http://www2.fdic.gov/idasp/index.asp. See section 1.110 and section 28.102-1, paragraph (a). Found inside – Page 28-3PART 28 — BONDS AND INSURANCE 28.103-3 performance and payment bonds for any construction contract exceeding ... When performance or payment bonds are required , the solicitation shall specify( a ) The requirement for the bond ( s ) ... To control as well as take measure of this risk the Surety requires specific items and / or forms which help in the process. (f) SF 34, Annual Bid Bond (see 28.001). (o) OF 91, Release of Personal Property from Escrow (see 28.203-3). The net adjusted value of unencumbered assets pledged by the individual surety must equal or exceed the penal amount (i.e., face value) of each bond. As used in this part- (ii) The amount of the payment bond must be no less than the amount of the performance bond. (b) The Government may require additional performance bond protection when a contract price is increased. See section 28.102-1, paragraph (b)(1). As used in this subsection- (ii) An irrevocable letter of credit (ILC). Agencies shall establish safeguards to protect against loss of the security and shall return the security or its equivalent to the contractor when the bond obligation has ceased. This subpart prescribes requirements and procedures for the use of bonds, alternative payment protections, and all types of bid guarantees. (d) The contracting officer shall- (1) Performance bonds. (2) If, upon investigation, the surety declares the power of attorney to have been valid at the time of bid opening, the contracting officer may require correction of any technical error. (2) The financial responsibility of the contractor is unknown or doubtful. NRSROs can be located at the website http://www.sec.gov/answers/nrsro.htm maintained by the SEC. (2) A contractor sells assets to or merges with another concern, and the Government, after recognizing the latter concern as the successor in interest, desires assurance that it is financially capable. (e) SF 28, Affidavit of Individual Surety (see 28.203). (a) Any person signing a bid bond as an attorney-in-fact shall include with the bid bond evidence of authority to bind the surety. (a) A new surety bond covering all or part of the obligations on a bond previously approved may be substituted for the original bond if approved by the head of the contracting activity, or as otherwise specified in agency regulation. (1) A complete description of the program, including any resolution of the board of directors authorizing and adopting coverage, including types of risks, limits of coverage, assignments of safety and loss control, and legal service responsibilities; Although the Government is not ordinarily concerned with the contractor’s insurance coverage if the contract is a fixed-price contract, in special circumstances agencies may specify insurance requirements under fixed-price contracts. Each individual surety is jointly and severally liable to the extent of the penal amount of the bond. 9310, individual sureties must pledge eligible obligations, which Treasury refers to as acceptable collateral or eligible collateral. (2)Failure to disclose all bond obligations. to these employees, the benefits of the Longshoremen’s and Harbor Workers’ Compensation Act are extended through operation of the War Hazards Compensation Act (42 U.S.C.1701, etseq.) (c) The contractor may satisfy a requirement for bond security by furnishing a combination of the types of security listed in 28.204-1 through 28.204-3 or a combination of bonds supported by these types of security and additional surety bonds under 28.202 or 28.203. The submission shall be by segment or segments of the contractor’s business to which the program applies and shall include-. (3) The work is to be performed on a Government installation. AIA Bonds 28.106-2 Substitution of surety bonds. 28.105-2 Patent infringement bonds. When reinsurance is contemplated, the contracting office generally shall require reinsurance agreements to be executed and submitted with the bonds before making a final determination on the bonds. (2) All work on the Government installation will be performed outside the United States and its outlying areas. 28.203 Individual Sureties. The contract shall provide either that the costs of this liability or the reasonable costs of insurance against this liability shall be allowed as a cost under the contract. (ii) An irrevocable letter of credit (ILC). (ii) The amount of coinsurance or reinsurance does not exceed the underwriting limit of each coinsurer or reinsurer. As used in this subsection- 28.204-4 Contract clause. 28.204-3 Irrevocable letter of credit. With open communication and responsible business practices, the surety bond company can be the best asset in a claim situation. Agencies shall establish safeguards to protect against loss of the security and shall return the security or its equivalent to the contractor when the bond obligation has ceased. (2) Contracts subject to alternative payment protection. (d) SF 25B, Continuation Sheet (for SF’s 24, 25, and 25A). The security interest shall be maintained for the later of— Agencies may prescribe their own solicitation provisions and contract clauses to implement the basic policies contained in this subpart 28.3. If the provision at 52.228-1 is not included in the solicitation, the contracting officer must set a period of time for return of executed bonds. (h) SF 273, Reinsurance Agreement for a Bonds Statute Performance Bond (see 28.202(a)(4)). If the contracting officer learns that a financial institution's rating has dropped below investment grade level, the contracting officer shall give the contractor 30 days to substitute an acceptable ILC or shall draw on the ILC using the sight draft in paragraph (g) of the clause at 52.228-14. However, performance and payment bonds may be used as permitted in 28.103-2 and 28.103-3. (i) The amount which exceeds the specified limit is coinsured or reinsured; and While a warranty bond guarantees the repair of a project should there be a defect in materials or workmanship, performance bonds are in place to guarantee that the project will be done according to the contract's specifications and on schedule. The amount shall be adequate to protect the interest of the Government. Insurance is mandatory also when commingling of property, type of operation, circumstances of ownership, or condition of the contract make it necessary for the protection of the Government. The contracting officer may require additional coverage and higher limits. (c) The contracting officer must determine the contractor’s responsibility (see subpart 9.1) even though a bond has been or can be obtained. (2) The Government reserves the right to disapprove the purchase of any insurance coverage not in the Government’s interest. (b) Insert the clause at 52.228-13, Alternative Payment Protections, in solicitations and contracts for construction, when the estimated or actual value exceeds $35,000 but does not exceed $150,000. When more than one agency is involved, the agency responsible for review and approval of a contractor’s insurance program shall coordinate with other interested agencies before acting on significant insurance matters. If you qualify for the bad credit surety bond market, you might have to provide a letter of credit, a personal promissory or a cash collateral before you can get your bond. (b) All types of bid guarantees are acceptable for supply or service contracts (see annual bid bonds and annual performance bonds coverage in 28.001). Gen. 456 (1982).) 49-41). In making the determination, the contracting officer shall consider the following factors: (1) The soundness of the contractor’s financial condition, including available lines of credit. For those employees, the contractor shall provide workers’ compensation coverage against the risk of work injury or death and assume liability toward the employees and their beneficiaries for war-hazard injury, death, capture, or detention. Any award to the offeror shall not exceed the quantity covered by the bid guarantee; In determining the extent of the Government’s share in any premium refunds or credits, any special reserves and other refunds to which the contractor may be entitled in the future shall be taken into account. (B) For performance bonds only, until completion of any warranty period. (c) To draw on the ILC, the contracting officer shall use the sight draft set forth in the clause at 52.228-14, and present it with the ILC (including letter of confirmation, if any) to the issuing financial institution or the confirming financial institution (if any). Those furnishing checks, drafts, or money orders shall draw them to the order of the appropriate Federal agency. 28.203-4 Solicitation provision and contract clause. 600, is available from: (c) Once the administrative contracting officer has approved a program, the contractor must submit to that official for approval any major proposed changes to the program. (b) The contracting officer shall insert a clause substantially the same as that at 52.228-10, Vehicular and General Public Liability Insurance, in solicitations and contracts for transportation or for transportation-related services when the contracting officer determines that vehicular liability or general public liability insurance required by law is not sufficient. Agencies may specify that only separate bid bonds are acceptable in connection with construction contracts. 7. (2) If, upon investigation, the surety declares the power of attorney to have been valid at the time of bid opening, the contracting officer may require correction of any technical error. A surety's assets pledged in support of a payment bond may be released to a subcontractor or supplier upon Government receipt of a Federal district court judgment, or a sworn statement by the subcontractor or supplier that the claim is correct along with a notarized authorization of the release by the surety stating that it approves of such release. (1) If the contracting officer contacts the surety to validate the power of attorney, the contracting officer shall document the file providing, at a minimum, the following information: (b) The contracting officer shall determine the penal sum. The period of required coverage shall be: A private contractor for a government project may request GSIS to issue a performance bond in favor of a government office to guarantee the completion of the project. (b) The contracting officer shall determine the amount of the bid guarantee for insertion in the provision at 52.228-1 (see 28.102-2(a)). (3)The individual surety shall execute the SF 28, Affidavit of Individual Surety, and provide a security interest. (a) When it is anticipated that 50 percent or more of the self-insurance costs to be incurred at a segment of a contractor’s business will be allocable to negotiated Government contracts, and the self-insurance costs at the segment for the contractor’s fiscal year are expected to be $200,000 or more, the contractor shall submit, in writing, information on its proposed self-insurance program to the administrative contracting officer and obtain that official’s approval of the program. (c)Using the information from the SF 28 submitted by the offeror or contractor, the contracting officer shall notify the Treasury's collateral operations support team by email at [email protected] or by phone at 888-568-7343, of the individual surety, the assets to be pledged, and the amount necessary to cover the individual surety bond, i.e., the required amount to be collateralized. (a) Definition. (a) When it is anticipated that 50 percent or more of the self-insurance costs to be incurred at a segment of a contractor’s business will be allocable to negotiated Government contracts, and the self-insurance costs at the segment for the contractor’s fiscal year are expected to be $200,000 or more, the contractor shall submit, in writing, information on its proposed self-insurance program to the administrative contracting officer and obtain that official’s approval of the program. ) or https:// means you’ve safely connected to the .gov website. Upon the written or oral request of a subcontractor/supplier, or prospective subcontractor/supplier, under a contract with respect to which a payment bond has been furnished pursuant to the Bonds statute, the contracting officer shall promptly provide to the requester, either orally or in writing, as appropriate, any of the following: (1) Name and address of the surety or sureties on the payment bond. (b) The contracting officer shall insert the clause at 52.228-4, Worker’s Compensation and War-Hazard Insurance Overseas, in solicitations and contracts when the contract will be a public-work contract performed outside the United States and the Secretary of Labor waives the applicability of the Defense Base Act (see 28.305(d)). (ii) The modification does not change the contract scope but changes the contract price (upward or downward) by more than 25 percent or $50,000; or (2) Contracts approved or financed under the Foreign Assistance Act of1961 (Pub.L.87-195) other than- (i) Contracts approved or financed by the Development Loan Fund (unless the Secretary of Labor, acting upon the recommendation of a department or agency, determines that such contracts should be covered); or (ii) Contracts exclusively for materials or supplies. This part prescribes requirements for obtaining financial protection against losses under contracts that result from the use of the sealed bid or negotiated methods. 28.311 Solicitation provision and contract clause on liability insurance under cost-reimbursement contracts. The bid guarantee amount shall be at least 20 percent of the bid price but shall not exceed $3 million. 28.307-1 Group insurance plans. (a) The surety on the bond, upon its written request, may be furnished information on the progress of the work, payments, and the estimated percentage of completion, concerning the contract for which the bond was furnished. The ILC shall provide that, unless the issuer provides the beneficiary written notice of non-renewal at least 60 days in advance of the current expiration date, the ILC is automatically extended without amendment for oneyear from the expiration date, or any future expiration date, until the period of required coverage is completed and the contracting officer provides the financial institution with a written statement waiving the right to payment. The obligations of the Design-Builder and Surety(ies) under these payment and performance bonds shall continue in full force and effect until all materials, equipment and labor have been provided AND all requirements contained in the Contract Documents, plans and specifications have been completed in a timely, thorough and workmanlike manner. Unless the financial institution issuing the ILC had letter of credit business of at least $25 million in the past year, ILCs over $5 million must be confirmed by another acceptable financial institution that had letter of credit business of at least $25 million in the past year. The contracting officer may- Below is information about Performance and Continuing Idemnity Bonds followed by a list of downloadable NCDOT's encroachment agreements (along with descriptions of when and where they are applicable), Bond forms, and Requirements for Encroachment Agreement forms and associated engineering plans. (k) SF 1414, Consent of Surety (see 28.106-5). A separate ILC is required for each bond. (a) Turn securities over to the finance or other authorized agency official; or 28.103-2 Performance bonds. 28.104 Annual performance bonds. 28.102 Performance and payment bonds and alternative payment protections for construction contracts. (See 19.602-1(a) and 61 Comp. (iii) A tripartite escrow agreement. ICC Books USA, 1212 Avenue of the Americas, 21 st Floor, New York, NY 10036; (e)An exclusion of an individual surety under this section will also preclude such party from acting as a contractor in accordance with subpart 9.4. Found inside – Page 12This section establishes the bonding requirements for coal exploration permits , notwithstanding cross - references in other parts of ... ( 3 ) The exploration bond shall be a single performance bond covering the entire permit area . The bond forms shall be used as indicated in the instruction portion of each form: (a) Turn securities over to the finance or other authorized agency official; or Phone: 212-703-5078; Fax: 212-391-6568; E-mail: [email protected]; Via the Internet at:http://www.uscib.org/ucp-600-ud-4465/. (10) A disclosure of all captive insurance company and reinsurance agreements, including methods of computing cost. (See 19.602-1(a) and 61 Comp. 28.101-2 Solicitation provision or contract clause. The contracting officer shall determine the amount of each bond for insertion in the clause. Under cost-reimbursement contracts, before buying insurance under a group insurance plan, the contractor must submit the plan for approval, in accordance with agency regulations. (ii) For contracts not subject to the Bonds statute, the later of- They shall provide a gross penal sum applicable to the total amount of all covered contracts. (b) Contracts exceeding $150,000- (2) All work on the Government installation will be performed outside the United States and its outlying areas. The contractor shall, as a condition of the partial release, furnish an affidavit agreeing that the release of such security does not relieve the contractor of its obligations under the bond(s). (1) 100 percent of the original contract price; and (a)An individual surety is acceptable for all types of bonds except position schedule bonds. The period of required coverage shall be: The EPA and the U.S. Army Corps of Engineers (Corps) have experienced difficulties in contracting Hazardous and Toxic Waste (HTW) cleanup projects. (d) To qualify for a self-insurance program, a contractor must demonstrate ability to sustain the potential losses involved. A surety's assets pledged in support of a payment bond may be released to a subcontractor or supplier upon Government receipt of a Federal district court judgment, or a sworn statement by the subcontractor or supplier that the claim is correct along with a notarized authorization of the release by the surety stating that it approves of such release. 600, is available from: §1269. (c)Using the information from the SF 28 submitted by the offeror or contractor, the contracting officer shall notify the Treasury's collateral operations support team by email at [email protected] or by phone at 888-568-7343, of the individual surety, the assets to be pledged, and the amount necessary to cover the individual surety bond, i.e., the required amount to be collateralized. The contracting officer shall determine whether the individual surety bond is acceptable as to the amount necessary to cover the individual surety bond based on the asset eligibility and valuation assessment from Treasury. extends the Longshoremen’s and Harbor Workers’ Compensation Act (33 U.S.C.901) to various classes of employees working outside the United States, including those engaged in performing-, (1) Public-work contracts; or, (2) Contracts approved or financed under the Foreign Assistance Act of1961 (Pub.L.87-195) other than-, (i) Contracts approved or financed by the Development Loan Fund (unless the Secretary of Labor, acting upon the recommendation of a department or agency, determines that such contracts should be covered); or.
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