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ing the patent policy of the institution;

(4) Procedures for invention evaluation; and

(5) An active and effective promotional program for the licensing and marketing of inventions.

(c) Federal Coordinating Council for Science, Engineering, and Technology List. A list of organizations that have technology transfer programs meeting the critieria set forth in § 1-9.109-7(b), prepared by a subcommittee of the Committee on Intellectual Property and Information of the Federal COordinating Council for Science, Engi. neering, and Technology, may be used in lieu of individual agency determinations of eligibility for Institutional Patent Agreements. However, the inclusion of an organization on the list will not preclude the agency from declining an application for an Institutional Patent Agreement. It is also expected that the list may be used by some agencies in connection with greater rights determinations or requests for the inclusion of clauses in contracts giving the nonprofit organization the first option to principal rights in inventions made under the contract. (43 FR 4427, Feb. 2, 1978]

Sec. 1-10.103-4 Failure to submit proper bid

guarantee. 1-10.104 Performance bonds. 1-10.104-1 Construction contracts. 1-10.104-2 Other than construction con

tracts. 1-10.104-3 Annual performance bonds. 1-10.105 Payment bonds. 1-10.105-1 Construction contracts. 1-10.105-2 Other than construction co

tracts. 1-10.105-3 Furnishing information to sub

contractors and suppliers. 1-10.106 Advance payment bonds. 1-10.107 Patent infringement bonds. 1-10 107 Patent infrin 1-10.108 Other types of bonds. 1-10.109 Execution and administration of

bonds.

Subpart 1-10.2—Sureties on Bonds 1-10.201 General. 1-10.202 Corporate sureties. 1-10.203 Individual sureties. 1-10.204 Options in lieu of sureties. 1-10.204-1 United States bonds or notes. 1-10.204-2 Certified or cashier's checks,

bank drafts, money orders, currency, or

irrevocable letters of credit. 1-10.205 Consent of surety. 1-10.206 Furnishing information to sure

ties.

PART 1-10—BONDS AND

INSURANCE

Subpart 1-10.3—Insurance-General 1-10.300 Scope of subpart. 1-10.301 General. 1-10.302 Notice of cancellation or change. 1-10.303 Responsibility for loss of or

damage to Government property. 1-10.304 Insurance against loss of or

damage to Government property. 1-10.305 Procedures to be followed in the

event of loss or damage to Government property.

Sec. 1-10.000 Scope of part.

Subpart 1-10.1-Bonds

Subpart 1-10.4- Insurance Under Fixed-Price

Contracts

1-10.400 Scope of subpart. 1-10.401 Policy. 1-10.402 Workmen's Compensation insur

ance overseas.

1-10.100 Scope of subpart. 1-10.101 Applicability. 1-10.102 Definitions. 1-10.102-1 Bond. 1-10.102-2 Bid guarantee. 1-10.102-3 Performance bond. 1-10.102-4 Payment bond. 1-10.102-5 Advance payment bond. 1-10.102-6 Patent infringement bond. 1-10.102-7 Construction contract. 1-10.102-8 Annual bid bond. 1-10.102-9 Annual performance bond. 1-10.102-10 Consent of surety. 1-10.102-11 Penal sum or amount. 1-10.103 Bid guarantees. 1-10.103-1 Policy on use. 1-10.103-2 Amount required. 1-10.103-3 Invitation for bids provisions.

Subpart 1-10.5-Insurance Under Cost

Reimbursement Type Contracts 1-10.500 Scope of subpart. 1-10.501 Policy. 1-10.502 Types of insurance. 1-10.502-1 Workmen's compensation and

employers' liability insurance. 1-10.502-2 General liability insurance. 1-10.502-3 Automobile liability insurance. 1-10.502-4 Aircraft public and passenger li.

ability insurance.

Sec. 1-10.502-5 Vessel collision liability and pro

tection and indemnity liability insur

ance. 1-10.503 Self-insurance. 1-10.504 Government property. (Reserved]

AUTHORITY: Sec. 205(c), 63 Stat. 390; 40 U.S.C. 486(c).

SOURCE: 29 FR 10247, July 24, 1964, unless otherwise noted.

party for whose protection the bond (including any necessary coinsurance or reinsurance agreements) was furnished, to the extent provided in the bona. (42 FR 56116. Oct. 21, 1977)

$ 1-10.000 Scope of part.

This part prescribes policies and procedures with respect to the use of bonds and insurance in connection with procurement contracts. Specifically dealt with are such subjects as bid guarantees, bonds, sureties, and insurance.

$ 1-10.102-2 Bid guarantee.

"Bid guarantee" means a firm commitment, such as a bid bond, postal money order, certified check, cashier's check, irrevocable letter of credit, or certain bonds or notes of the United States, accompanying a bid as assurance that the bidder will, upon acceptance of his bid, execute such contractual documents as may be required, if any, and give bond(s) within the time specified after the forms are presented to him.

Subpart 1-10.1--Bonds

§ 1-10.102-3 Performance bond.

“Performance bond" means a bond executed in connection with a contract to secure fulfillment of all the contractor's obligations under such contract.

§ 1-10.100 Scope of subpart.

This subpart deals, primarily, with the use of bonds. It deals also, howev. er, with the use of bid guarantees which, while most frequently in bond form, may take other forms. § 1-10.101 Applicability.

This Subpart 1-10.1 is applicable both to negotiated and formally advertised procurements. In its application to negotiated procurements, the terms “bid” and “invitations for bids” used in this subpart shall be construed to include their counterparts, i.e., "proposal" and "request for proposals”, and the substitution of the latter terms whenever appropriate is authorized.

§ 1-10.102–4 Payment bond.

“Payment bond” means a bond executed in connection with a contract to assure payment as required by law of all persons supplying labor and material in the prosecution of the work provided for in the contract.

8 1-10.102-5 Advance payment bond.

“Advance payment bond" means a bond executed in connection with a contract to secure fulfillment of the contractor's obligations under an advance payments provision.

§ 1-10.102 Definitions.

As used in this subpart, the following terms have the meanings set forth in this f 1-10.102.

§ 1-10.102–6 Patent infringement bond.

“Patent infringement bond” means a bond executed in connection with a contract to secure fulfillment of the contractor's obligation under a patent clause.

§ 1-10.102-1 Bond.

“Bond” means a written instrument executed by a bidder or contractor, identified in the instrument as the “principal”, together with a third party, identified in the instrument as the “surety”, to secure fulfillment by the bidder or contractor of his obligations as set out in the bond and, in the event of his failure so to do, to assure payment of any loss sustained by the

§ 1-10.102-7 Construction contract.

“Construction contract” means any contract for construction, alteration, or repair as provided in $ $ 1-12.402-1 and 1-18.101-1. [33 FR 14287, Sept. 21, 1968)

§ 1-10.102-8 Annual bid bond.

“Annual bid bond” means a single bond furnished by a bidder, in lieu of separate bid bonds, to serve as his bid guarantee in connection with bids submitted during a specific fiscal year of the Government.

percent of the bid price but shall not exceed $3,000,000.

(b) The penal sum of a bid bond may be expressed as a specified percentage of the bid price. In this fashion, the bid bond may be written by the surety before the bidder's final determination of his bid price. Where such penal sum is expressed as a percentage, a maximum dollar limitation may be stated. $ 1-10.103–3 Invitation for bids provisions.

(a) When a bid guarantee is required, the invitation for bids shall

8 1-10.102-9 Annual performance bond.

“Annual performance bond" means a single bond furnished by a contractor, in lieu of separate performance bonds, to secure fulfillment of all of the contractor's obligations under contracts entered into during a specific fiscal year of the Government. 8 1-10.102-10 Consent of surety.

"Consent of surety” means an acknowledgement by a surety that its bond given in connection with a contract continues to apply to the contract as modified.

(1) A statement that a bid guarantee is required with the bid and that identifies details which will enable bidders to determine the amount of the bid guarantee; and

(2) The following provision (modified, if appropriate, in accordance with paragraph (b) of this § 1-10.103-3).

8 1-10.102-11 Penal sum or amount.

“Penal sum” or “penal amount” means the amount specified in a bond (expressed in terms of dollars or, in the case of a bid bond, as a percentage of the bid price) as the maximum pay. ment for which the surety is obligated. § 1-10.103 Bid guarantees. § 1-10.103-1 Policy on use.

(a) The use of bid guarantees is required when a performance bond or a performance and payment bond is required.

(b) Annual bid bonds are not acceptable in connection with bids for construction contracts. (29 FR 10247, July 24, 1964, as amended at 44 FR 34498, June 15, 1979)

BID GUARANTEE (a) Where a bid guarantee is required by the invitation for bids, 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) A bid guarantee shall be in the form of a firm commitment, such as a bid bond, postal money order, certified check, cashier's check, irrevocable letter of credit or, in accordance with Treasury Department regulations, certain bonds or notes of the United States. Bid guarantees, other than bid bonds, will be returned (1) to unsuccessful bidders as soon as practicable after the opening of bids, and (2) to the successful bidder upon execution of such further contractual documents and bonds (including any necessary coinsurance or reinsurance) as may be required by the bid as accepted.

(c) If the successful bidder, upon acceptance of his bid by the Government within the period specified therein for acceptance (60 days if no period is specified) fails to execute such further contractual documents, if any, and give such bond(s) (including any necessary coinsurance or reinsurance) as may be required by the terms of the bid as accepted within the time specified (10 days if no period is specified) after receipt of the forms by him, his contract may be terminated for default. In such event he shall be liable for any cost of procuring the work which exceeds the amount of his bid, and the bid guarantee shall be available toward offsetting such difference.

(b) The provision set forth in paragraph (a)(2) of this § 1-10.103-3 is the

8 1-10.103-2 Amount required.

(a) Whenever a bid guarantee is required, the contracting officer in accordance with his best judgment shall determine the amount, or percentage which when applied to the bid price will produce an amount, that will provide a bid guarantee which is adequate to protect the Government from loss in the event of termination of the contract for default as provided in § 110.103-3(a)(2). The amount of the bid guarantee shall be not less than 20

same as paragraph 4 of Standard ance bond shall be required in connecForm 22, Instructions to Bidders (Con- tion with any construction contract struction Contract), and the require exceeding $25,000 in amount, except ment of said paragraph (a)(2) is met that this requirement may be waived where that form is furnished to bid (1) by the contracting officer for work ders. Where Standard Form 22 is not to be performed in a foreign country, furnished, the provision must be oth if he finds that it is impracticable for erwise incorporated in the invitation

the contractor to furnish such bond, for bids except that it may be modi- and (2) as otherwise authorized by fied to include the statement required law. by paragraph (a)(1) of this $ 1-10.103

(b) Generally, the penal amount of a 3 and if so modified, the initial phrase

performance bond generally shall be of the first paragraph of the provision

equal to 100 percent of the contract may be omitted. With respect to con

price at the time of award. However, if tracts for supplies or services, the

the contracting officer finds that a phrase “any cost of procuring the

lesser amount would be adequate for work" in the third paragraph also may

the protection of the Government, he be modified to refer to the cost of

may prescribe an amount which is less “supplies," "services,” etc.

than 100 percent of the contract price. [29 FR 10247, July 24, 1964, as amended at The problem of the availability of ade42 FR 56116, Oct. 21, 1977; 44 FR 34498, quate surety credit on large contracts June 15, 1979)

may be resolved through the use of co

insurance or reinsurance agreements $ 1-10.103-4 Failure to submit proper bid

(see § 1-10.202). guarantee.

(c) Whenever the successful bidder Where an invitation for bids requires is to furnish a performance bond, the that a bid be supported by a bid guar invitation for bids shall so state and antee and noncompliance occurs, the shall specify the penal amount rebid shall be rejected, except in the fol quired (in a fixed sum or in terms of a lowing situations when the noncompli percent of the contract price). ance shall be waived unless there are

(d) When a performance bond (incompelling reasons contrary:

cluding any necessary reinsurance (a) Where only a single bid is re

agreements) is not furnished within ceived. In such cases however, the

the period specified by the terms of Government may or may not require

the contract, the contract may be terthe furnishing of the bid guarantee minated for default when deemed to before award.

be in the public interest (see $$ 1(b) Where the amount of the bid

10.103-3(a)(2) and 1-18.803-5). guarantee submitted, though less than

(e) Whenever a contract is modified the amount required by the invitation

in a manner not provided for in any for bids, is equal to or greater than the

provision thereof, consent of surety difference between the price stated in

shall be obtained (see § 1-10.205). the bid and the price stated in the

(f) In any case where a contract is next higher acceptable bid.

modified, whether or not pursuant to (c) Where the bid guarantee is re

a contractual provision, so as to inceived late and the late receipt may be

crease the contract amount to such an waived under the rules established in

extent that the penal sum of the exist§ 1-2.303 for consideration of late bids.

ing bond becomes inadequate to pro(d) Where a bid guarantee ceases to

tect the Government's interests, in the meet the requirements of paragraph

opinion of the contracting officer, ad(b) of this § 1-10.103-4 as a result of

ditional performance bond protection the correction of a mistake in bid

shall be secured, either by increasing under § 1-2.406.

the penal sum of the existing bond or § 1-10.104 Performance bonds.

by obtaining an additional bond from

a new surety. § 1-10.104-1 Construction contracts.

[29 FR 10247, July 24, 1964, as amended at (a) Under the Miller Act, as amend 42 FR 56116, Oct. 21, 1977; 44 FR 34498, ed (40 U.S.C. 270a-270e), a perform- June 15, 1979)

$ 1-10.101-2 Other than construction con circumstances and in the manner set tracts.

forth in § 1-10.104-1(f). (a) Except as provided in paragraphs (29 FR 10247, July 24, 1964, as amended at (b) and (d) of this $ 1-10.104-2, per 33 FR 14287, Sept. 21, 1968) formance bonds shall not be required in connection with other than con $ 1-10.101-3 Annual performance bonds. struction contracts.

Annual performance bonds may be (b) Performance bonds may be re

used only in connection with contracts quired where essential to the best in

other than construction contracts. terests of the Government. Determi

When such a bond is used and has nations to require performance bonds

been completely obligated in an shall be made by the contracting offi

amount equal to the penal sum therecer on individual procurements. Exam

of, an additional bond shall be obples of situations which may warrant

tained to cover additional contracts. requiring a performance bond are:

(1) Where the terms of a proposed 8 1-10.105 Payment bonds. contract provide for the contractor to have the use of Government property § 1-10.105-1 Construction contracts. or funds for the performance of the

(a) Under the Miller Act, as amendcontract or as partial compensation (as

ed (40 U.S.C. 270a-270e), a payment in retention of salvaged material).

bond shall be required in connection (2) Where a Government contractor sells his assets to, or merges his busi

with any construction contract exceed

ing $25,000 in amount, except that this ness with, another firm and the Gov. ernment determines to recognize the

requirement may be waived: (1) by the latter firm as the successor in interest

contracting officer for work to be per

formed in a foreign country, if he to the contract, and desires assurance as to its financial capacity.

finds that it is impracticable for the

contractor to furnish such bond, and (3) Where substantial progress pay

(2) as otherwise authorized by law. ments are made before delivery of end items commences.

(b) The penal amount of the pay(4) Where, in connection with a con

ment bond shall be as follows: tract for dismantling, demolition, or

(1) When the contract price is not removal of improvements, regardless

more than $1,000,000, the penal of amount, a performance bond is de

amount shall be 50 percent of the contermined necessary to ensure comple

tract price; tion of the work and to protect the

(2) When the contract price is more Government against damage to adjoin

than $1,000,000 but not more than ing property during its performance.

$5,000,000, the penal amount shall be (c) Where the contracting officer de 40 percent of the contract price; and termines to require a performance (3) When the contract price is more bond, he shall determine the amount than $5,000,000, the penal amount that will adequately protect the Gov. shall be $2,500,000. ernment.

(c) Whenever the successful bidder (d) Performance bonds shall not be will be required to furnish a payment required unless the invitation for bids bond, the invitation for bids shall so requires such a bond, or the require- state and shall specify the penal ment of such a bond is in the interest amount of the bond (in a fixed sum or of the Government (as in a contract in terms of a percent of the contract modification).

price). In instances where the surety (e) When a performance bond is not credit which is available may be insuffurnished within the period specified ficient, surety credit sufficient to meet by the terms of the contract, the con the statutorily required amount may tract will be subject to termination for be provided through the use of coindefault when in the public interest surance or reinsurance agreements (see $ $ 1-10.103-3(a)(2) and 1-8.602- (see § 1-10.202). 3(c)).

(d) When a payment bond (including (f) Additional performance bond any necessary reinsurance agreeprotection shall be required under the ments) is not furnished within the

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