This is the Bonding Company’s worst nightmare. In this 160th article of our surety series, we are able to cowl the situations wherein no Performance or Payment Bond is needed! Some of the initiatives are massive and federal, some are non-public, ALL are unbonded. Here we cross!
As a point of reference, you could count on that federal, state and municipal contracts call for a Performance and Payment (P&P) Bond equal to the contract quantity. Normally they do. General Contractors running for a non-public owner, including the development of an workplace constructing or apartment project, might also face the equal requirement. This can follow to subcontractors, too.
This area includes all branches of the federal authorities. Examples: Army Corps of Engineers, General Services Administration, Dept. Of Energy, etc. Their contracts are administered following the guidelines of the Federal Acquisition Regulations (FAR).
The FAR says that no P&P bond is required on contracts underneath $a hundred and fifty,000.
For contracts $150,000 and higher that require protection, there are instances when the bond requirement may be reduced below one hundred% or waived totally. These encompass:
If the bond requirement is obligatory, the FAR lists ideal alternatives:
US Government (funding) Bonds
Irrevocable Letter of Credit
Here’s every other choice: For contracts carried out overseas, the government can accept a bond from a non-T-Listed surety. (Circular 570)
State and Municipal Contracts
The bonding requirements may vary by using state, however generally their flavor is just like federal.