28.101
Bid guarantees
Bid guarantees are essential to protect the government from financial loss if a bidder fails to honor their bid, and strict compliance with requirements is necessary to avoid bid rejection.
Overview
FAR 28.101 covers the requirements and procedures for bid guarantees in federal contracting. Bid guarantees are financial assurances provided by bidders to ensure that they will not withdraw their bids and will execute the contract and provide required bonds if awarded. This section outlines when bid guarantees are required, the necessary solicitation provisions or contract clauses, the authority of attorneys-in-fact for bid bonds, and the consequences of noncompliance with bid guarantee requirements. The regulation aims to protect the government from financial loss if a bidder fails to honor their bid commitments.
Key Rules
- Policy on Use
- Bid guarantees are required when specified by agency regulations or when the contracting officer determines they are necessary to protect the government’s interests.
- Solicitation Provision or Contract Clause
- Solicitations and contracts must include the appropriate provisions or clauses regarding bid guarantees when required.
- Authority of Attorney-in-Fact for a Bid Bond
- Bid bonds signed by an attorney-in-fact must be accompanied by evidence of the attorney’s authority to bind the surety.
- Noncompliance with Bid Guarantee Requirements
- Bids that do not comply with bid guarantee requirements may be rejected unless the noncompliance is considered a minor informality or irregularity.
Responsibilities
- Contracting Officers: Determine when bid guarantees are required, ensure proper solicitation provisions are included, and verify the authority of attorneys-in-fact.
- Contractors: Submit required bid guarantees with their bids and ensure all documentation is complete and accurate.
- Agencies: Oversee compliance and enforce consequences for noncompliance.
Practical Implications
- Bid guarantees protect the government from financial risk if a bidder fails to execute the contract.
- Contractors must pay close attention to bid guarantee requirements to avoid bid rejection.
- Common pitfalls include submitting incomplete guarantees or failing to provide proper documentation for attorneys-in-fact.