Performance and Payment Bonds-Construction
FAR 52.228-15 mandates that construction contractors provide performance and payment bonds equal to 100% of the contract price, ensuring project completion and payment protection for subcontractors and suppliers.
Overview
FAR 52.228-15 requires contractors awarded construction contracts above a certain threshold to provide both performance and payment bonds. These bonds protect the government and subcontractors by ensuring contract completion and payment for labor and materials. The clause details the required bond amounts, acceptable forms of security, procedures for furnishing bonds, and rules regarding waivers of payment bond rights.
Key Rules
- Bond Amounts
- Contractors must provide performance and payment bonds each equal to 100% of the original contract price for construction contracts above the FAR 28.102-1(a) threshold.
- Additional Bond Protection
- If the contract price increases, the government may require additional bond protection equal to 100% of the increase.
- Furnishing Bonds
- Executed bonds must be submitted to the Contracting Officer before work begins, within the timeframe specified in the solicitation or by the Contracting Officer.
- Acceptable Sureties and Security
- Bonds must be backed by approved corporate sureties (listed in Treasury Circular 570), individual sureties, or other acceptable forms of security.
- Waiver of Payment Bond Rights
- Any waiver of the right to sue on the payment bond by subcontractors or suppliers must be in writing, signed, and executed after furnishing labor or materials.
Responsibilities
- Contracting Officers: Ensure bonds are received and meet requirements before work starts; may require additional bonds if contract price increases.
- Contractors: Obtain and submit required bonds and any additional protection as directed; ensure sureties are approved; comply with waiver rules.
- Agencies: Oversee compliance and maintain records of bonds and sureties.
Practical Implications
This clause protects the government and subcontractors from contractor default or nonpayment. Contractors must plan for bonding costs and administrative requirements. Failure to provide proper bonds can delay contract performance or result in termination. Common issues include late submission, unapproved sureties, or insufficient bond amounts.