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Scope of Subpart......


10.601 10.602


Responsibility for Liabilities to Third Persons.................
Responsibility for Loss or Damage to Facilities.
Facilities Contracts.....







Subpart 1-Bonds

10.000 Scope of Part. This Part sets forth policies and procedures with respect to bonds and insurance in connection with NASA contracts.

10.100 Scope of Subpart. This Subpart deals, primarily, with the use of bonds. It deals also with the use of bid guarantees which while most frequently in bond form, may take other forms of security.

10.101 Definitions. As used in this Subpart, the following terms have the meanings set forth below.

10.101-1 Advance payment bond means a bond which secures the performance and the fulfillment of a contractual provision for the making of advance payments.

10.101-2 Annual bid bond means a single bond (in lieu of separate bid bonds for each contract), without limitation as to penal amount, which secures all bids (on other than construction contracts) requiring bonds submitted by a contractor during a specific fiscal year of the Government in response to formal advertising.

10.101-3 Annual performance bond means a single bond (in lieu of separate performance bonds for each contract) which secures the performance of contracts (other than construction contracts) which require bonds and are entered into by a contractor during a specific fiscal year of the Government. Such bonds may be in different forms, including the following three: the first providing for penal sums separately applicable to each covered contract, regardless of the total amount of covered contracts; the second providing a gross penal sum cumulatively applicable to the total amount of all covered contracts but without a separate limit applicable to each contract; and the third providing both, separate contract and cumulative limits.

10.101-4 Bid guarantee means a form of security accompanying a bid or proposal as assurance that the bidder (i) will not withdraw his bid within the period specified therein for acceptance, and (ii) will execute a written contract and furnish such bonds as may be required within the period specified in the bid (unless a longer period is allowed) after receipt of the specified forms.

10.101-5 Consent of surety means an acknowledgment by a surety that its bond given in connection with a contract continues to apply to the contract as modified.

10.101-6 Construction contract or subcontract means any contract or subcontract for the construction, alteration or repair of buildings, bridges, roads, or other kinds of real property. It does not include any contract or subcontract for the manufacturing, producing, furnishing, construction, alteration, repair, processing, or assembling of vessels, aircraft, or other kinds of personal property, regardless of the terms of any such contract or subcontract as to payment or title.

10.101-7 Fidelity bond means a bond which secures an employer up to an amount stated in the bond for losses caused by dishonesty on the part of an employee. A blanket fidelity bond covers all employees, except those expressly excluded by written endorsement on the bond.

10.101-8 Forgery bond or policy (Depositors Form) means a bond or policy which secures the person or persons named therein up to the


amount stated for losses caused by the forging or altering of a check, draft, or similar instrument issued by or purporting to have been issued by any of the insureds, and for losses resulting from a check or draft having been obtained from the insureds through impersonation.

10.101-9 Patent infringement bond means a bond which secures the performance and fulfillment of the undertakings contained in a patent clause.

10.101-10 Payment bond means a bond which is executed in connection with a contract and which secures the payment of all persons supplying labor and material in the prosecution of the work provided for in the contract.

10.101-11 Penal sum or amount means the dollar amount shown in a bond and represents the maximum payment for which the surety is obligated.

10.101-12 Performance bond means bond which is executed in connection with a contract and which secures the performance and fulfillment of all the undertakings, covenants, terms, conditions, and agreements contained in the contract.

10.102 Bid Guarantees.

10.102-1 Applicability. This paragraph 10.102 applies to both negotiated and formally advertised procurements. Where appropriate, the term "bid" includes "proposal."

10.102-2 Limitations. Bid guarantees shall not be required unless the solicitation specifies that the contract must be supported by a performance bond or performance and payment bonds. In connection with supply and services contracts, the bidder may furnish either an individual bid bond (Standard Form 24) or an annual bid bond (Standard Form 34). A bid guarantee will not be requested unless the bid exceeds $2,000 (see 10.102-4(a)(i)). In connection with construction contracts, only the individual bid bond will be accepted.

10.102-3 Amount Required.

(a) Whenever a bid guarantee is deemed necessary, the contracting officer shall determine the percentage (or amount) which in his best judgment, when applied to the bid price, will produce a bid guarantee amount adequate to protect the Government from loss should the successful bidder fail to execute such further contractual documents and bonds as may be required. The percentage determined shall be not less than 20 percent of the bid price except that the maximum amount required shall be $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.

10.102-4 Solicitation Provisions.

(a) Where a bid guarantee is determined to be necessary, the solicitation shall contain (i) a statement requiring that a bid guarantee be submitted with any bid in excess of $2,000 and containing such details as are necessary to enable bidders to determine the proper amount of bid guarantee to be submitted; and (ii) the following provision:


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.


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 (a) to unsuccessful bidders as soon as practicable after the opening of bids, and (b) to the successful bidder upon execution of such further contractual documents and bonds as may be required by the bid as accepted.

If the successful bidder, upon acceptance of his bid by the Government within the period specified therein for acceptance (sixty days if no period is specified) fails to execute such further contractual documents, if any, and give such bond(s) as may be required by the terms of the bid as accepted within the time specified (ten 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 requirement for the provision in (a) (ii) above is met where Standard Form 22 (Instructions to Bidders (Construction Contracts)) is used in accordance with 16.401-1(vi) and 16.401-3.

(c) The Provision required by (a) (ii) above may be appropriately modified in negotiated contracts.

10.102-5 Noncompliance With Bid Guarantee Requirements. Where a solicitation requires that bids be supported by a bid guarantee, noncompliance with such requirement will require rejection of the bid, except that rejection of the bid is not required in these situations:

(i) where only a single bid is received (in such cases the procurement office may or may not require the furnishing of the bid guarantee before award);

(ii) where the amount of the bid guarantee submitted, though less than the amount required by the invitation for bids, is equal to or greater than the difference between the price stated in the bid and the price stated in the next higher acceptable bid;

(iii) where the amount of the bid guarantee submitted, though less than the amount required by the invitation for bids in relation to the bid price for the maximum quantity bid upon, is sufficient in relation to the bid price for a quantity for which the bidder is otherwise eligible for award (and in that event any award to him shall be limited to the quantity covered by the bid guarantee);

(iv) where the bid guarantee is received late and the late receipt may be waived under the rules established in 2.303 for consideration of late bids;

(v) where an otherwise adequate bid guarantee becomes inadequate as a result of the correction of a mistake in bid under 2.406 if the bidder will increase the amount of the bid guarantee in proportion to the authorized bid correction, and

(vi) where a telegraphic modification of the bid is received without a corresponding modification of the bid guarantee, provided the bid modification expressly refers to the bid previously submitted in response to the invitation for bids and the bid guarantee satisfies the above criteria.

10.103 Performance and Payment Bonds for Construction Contracts. 10.103-1 Performance Bonds.

(a) Pursuant to the Miller Act, as amended (40 U.S.C. 270a-270e), in connection with any construction contract exceeding $2,000 in amount except as provided in 10.103-3 below, a performance bond shall be required in a penal amount deemed adequate by the contracting officer for the

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