52.228-1 Bid Guarantee
Source: FAR 52.228-1 on acquisition.gov
Bidders must provide a proper bid guarantee by the deadline or risk bid rejection and potential liability if they fail to execute the contract.
Overview
FAR 52.228-1, Bid Guarantee, establishes the requirements for bidders to provide a bid guarantee with their bid submissions on certain government contracts. The provision ensures that bidders are financially committed to entering into a contract if awarded and protects the government from costs incurred if the successful bidder fails to execute the contract. The clause specifies acceptable forms of bid guarantees, the required amount, and the consequences of failing to provide or honor the guarantee.
Key Rules
- Bid Guarantee Submission
- Bidders must submit a bid guarantee in the proper form and amount by the bid opening deadline, or risk rejection of their bid.
- Acceptable Forms of Guarantee
- Guarantees may be in the form of a bid bond (with acceptable surety), postal money order, certified check, cashier’s check, irrevocable letter of credit, or certain U.S. bonds/notes.
- Return of Guarantees
- Unsuccessful bidders receive their guarantees back promptly; the successful bidder’s guarantee is returned after contract execution and required bonds are furnished.
- Guarantee Amount
- The required amount is a specified percentage or dollar value of the bid price, as stated in the solicitation.
- Default and Liability
- If the successful bidder fails to execute the contract or provide required bonds within 10 days, the government may terminate for default and use the bid guarantee to cover excess costs.
Responsibilities
- Contracting Officers: Ensure bid guarantees are received, in proper form and amount, and manage their return or forfeiture.
- Contractors/Bidders: Submit the required bid guarantee by the deadline and fulfill all post-award obligations.
- Agencies: Oversee compliance and enforce remedies in case of default.
Practical Implications
- This clause protects the government from financial loss if a bidder backs out after award. Bidders must carefully follow instructions for bid guarantees to avoid disqualification. Common pitfalls include submitting the wrong form, insufficient amount, or missing the deadline.
As prescribed in 28.101-2 , insert a provision or clause substantially as follows:
Bid Guarantee (Sept 1996)
(a) Failure to furnish a bid guarantee in the proper form and amount, by the time set for opening of bids, may be cause for rejection of the bid.
(b) The bidder shall furnish a bid guarantee in the form of a firm commitment, e.g., bid bond supported by good and sufficient surety or sureties acceptable to the Government, postal money order, certified check, cashier’s check, irrevocable letter of credit, or, under Treasury Department regulations, certain bonds or notes of the United States. The Contracting Officer will return bid guarantees, other than bid bonds-
(1) To unsuccessful bidders as soon as practicable after the opening of bids; and
(2) To the successful bidder upon execution of contractual documents and bonds (including any necessary coinsurance or reinsurance agreements), as required by the bid as accepted.
(c) The amount of the bid guarantee shall be ______ percent of the bid price or $________, whichever is less.
(d) If the successful bidder, upon acceptance of its bid by the Government within the period specified for acceptance, fails to execute all contractual documents or furnish executed bond(s) within 10 days after receipt of the forms by the bidder, the Contracting Officer may terminate the contract for default.
(e) In the event the contract is terminated for default, the bidder is liable for any cost of acquiring the work that exceeds the amount of its bid, and the bid guarantee is available to offset the difference.
(End of clause)