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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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protection of the Government. Generally, the penal amount of each performance bond shall be 100 percent of the contract price at the time of award. But where the contracting officer finds that to require a 100 percent performance bond would be disadvantageous to the Government, he may prescribe a lesser penal amount, which should normally be not less than 50% of the original contract price, and in all cases no less than the amount of the payment bond. The performance bond shall specifically provide coverage for taxes imposed by the United States which are collected, deducted, or withheld from wages paid by the contractor in carrying out the contract with respect to which such bond is furnished.

(b) Additional performance bond protection shall be required in connection with any modification effecting an increase in price under any contract for which a bond is required pursuant to (a) above if:

(i) the modification is for new or additional work which is beyond the scope of the existing contract; or

(ii) the modification is pursuant to an existing provision of the contract and is expected to increase the contract price by $50,000 or 25 percent of the basic contract price, whichever is less. The penal amount of the bond protection should generally be increased so that the total performance bond protection is 100 percent of the contract price as revised by (i) the modification requiring such additional protection, and (ii) the aggregate of any previous modifications; provided, that lesser penal amounts may be authorized by the contracting officer as indicated in (a) above. The increased penal amount may be secured either by increasing the bond protection provided by the existing surety or sureties (the format set forth in 10.111-1 may be used when an additional bond is obtained from the original surety), or by obtaining an additional performance bond from a new surety; but see 10.111-2 with respect to requiring consent of surety. (c) In making allowance for bond premium in equitable adjustments or other price modifications affecting contracts, the allowance shall not be more than that calculated at the rate paid for the bonds furnished under the original contracts.

10.103-2 Payment 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, a payment bond shall be required in a penal amount as follows:

(i) when the contract price is not more than $1,000,000, the penal sum shall be 50 percent of the contract price;

(ii) when the contract price is more than $1,000,000 but not more than $5,000,000, the penal sum shall be 40 percent of the contract price; and (iii) when the contract price is more than $5,000,000, the penal sum shall be $2,500,000.

(b) Additional payment bond protection shall be required in connection with any modification effecting an increase in price under any contract for which a bond is required pursuant to (a) above if:

(i) the modification is for new or additional work which is beyond the scope of the existing contract; or

(ii) the modification is pursuant to an existing provision of the contract and is expected to increase the contract price by $50,000 or 25 percent of the basic contract price, whichever is less.

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The penal amount of the additional bond protection should generally be such that the total payment bond protection is 50 percent of the contract price as revised by (i) the modification requiring such additional protection, and (ii) the aggregate of any previous modifications; provided, that when the contract price as so revised is more than $1,000,000 but not more than $5,000,000 the total payment bond protection shall be in a penal amount of 40 percent of the revised contract price; provided further, that when the contract price as so revised is more than $5,000,000, the total payment bond protection shall be in the penal amount of $2,500,000. The additional protection may be secured either by increasing the bond protection provided by the existing surety or sureties or by obtaining an additional payment bond from a new surety; but see 10.111-2 with respect to requiring consent of surety.

(c) In making allowance for bond premium in equitable adjustments or other price modifications affecting any contract, the allowance shall not be more than that calculated at the rate paid for the bonds furnished under the original contract.

10.103-3 Waiver of Performance and Payment Bonds. The contracting officer may waive the requirement for a performance and payment bond for that work under the contract which is to be performed in a foreign country provided he finds it impracticable for the contractor to furnish such bonds. However, the authority available to the Military Departments pursuant to 40 U.S.C. 270e to waive performance and payment bonds under the Miller Act in cost-reimbursement type contracts is not available to NASA.

10.103-4 Furnishing Information to Subcontractors and Suppliers.

(a) It is NASA policy to furnish subcontractors or suppliers only general information with respect to the status of work and of payments made to prime contractors. Accordingly, subcontractors and suppliers may be furnished general information on such matters as the progress of the work, the accomplishment of payments as of certain dates, and the estimated percentage of completion.

(b) Where a payment bond has been required, a subcontractor or supplier, after satisfying the contracting officer that he is a bona fide subcontractor or supplier and stating that he has not been paid for work performed or supplies delivered, may be furnished the name and address of the surety furnishing the required bonds on the contract in question. The Government will not withhold contract payments due to the contractor or his assignee for the reason that subcontractors or suppliers have not been paid for work performed or supplies delivered.

10.103-5 Requirements and Indefinite Quantity Contracts. In requirements type contracts, for purpose of determination of the penal sum of bonds, the contract price will be deemed to be the price payable for the estimated quanity. In indefinite quantity contracts, the contract price will be deemed to be the price payable for the specified minimum quanity. When such estimated or minimum quantities are exceeded, 10.103-1(b) and 10.103-2(b) will be applied.

10.103-6 Construction Subcontracts. NASA prime contractors who in the course of their contract performance, will acquire by subcontract construction work determined by NASA to be public work subject to the Miller Act, but who are not required under 10.103 to furnish Miller Act bonds, shall be required to obtain such performance and payment bonds

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from their construction subcontractors. The bonds shall be provided on Standard Forms 25 and 25A (modified to name the NASA príme contractor as well as the United States of America as obligees), or on other forms acceptable to the NASA General Counsel. The penal amount of such bonds shall be established by the contracting officer in accordance with the provisions of 10.103.

10.104 Performance and Payment Bonds for Contracts Other Than Construction Contracts.

10.104-1 General.

(a) Generally, performance and payment bonds shall not be required in connection with contracts other than construction contracts, except as provided in 10.104-2, 10.104-3 and 10.103-6.

(b) Standard Form 25 (Performance Bond), Standard Form 35 (Annual Performance Bond), and the NASA version of DD Form 1673 (Payment Bond for Other Than Construction Contracts) are authorized for use for other than construction contracts. Payment bonds for other than construction contracts shall not be executed on Standard Form 25-A.

(c) With respect to performance and payment bonds required for construction subcontracts under prime contracts other than for construction, see 10.103-6.

(d) When a contractor supports a contract with an annual performance bond, in a cumulative penal sum, the contracting officer shall notify the office to which the contractor has furnished such bond so that the amount of coverage required may be recorded against the penal sum of the bond. (e) Performance and payment bonds shall not be required unless the solicitation requires such bonds, or the requirement of such bonds is in the interest of the Government, and not prejudicial to other bidders or offerors. Where the solicitation requires such bonds, they shall not be waived except in the case of an otherwise acceptable bidder or offeror where such waiver will be favorable to the Government and the contract price will be reduced.

(f) When the requirement for performance and payment bonds is made by the terms of a contract, but the bonds are not furnished by the contractor within the time specified, the contracting officer shall notify the contractor that the contract will be terminated for default if the bonds are not furnished within the time specified in the contract clause providing for such termination (e.g., 8.707, par. (a)(ii)).

(g) Where a bid guarantee is not required and a performance or payment bond is required as a condition precedent to the formation of the contract, but is not furnished within the time specified, the contracting officer shall if the making of the award can be delayed without prejudice to other bidders notify the bidder that if the bond is not furnished within 10 days (or such other period as the contracting officer may specify) after receipt of the notice, his bid will not be considered for award.

(h) Requirements for additional bond or consent of surety in connection with contract modifications are prescribed in 10.111.

10.104-2 Performance Bonds.

(a) Performance bonds shall not be used as a substitute for determinations of contractor responsibility as required by Part 1, Subpart 9. Subject to this general policy, performance bonds may be required in individual procurements when, consistent with the following criteria, the contracting officer determines the need therefore. Justification for any such requirement must be fully documented.

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(i) Where the terms of the contract provide for the contractor to have the use of Government material, property or funds and further provide for the handling thereof by the contractor in a specified manner, a performance bond shall be required if needed to protect the Government's interests therein.

(ii) Where the circumstances applicable to a particular procurement are such that for financial reasons a performance bond is necessary to protect the interests of the Government a performance bond shall be required. (See for example, 26.402(c) (iii). Where such bonds are authorized, the penal sum will usually be no less than 20 percent and only rarely will it exceed 40 percent of the total amount of the contract.

(b) Subject to the general policy stated in (a) above, determinations that performance bonds will be required in specified classes of cases (e.g., for particular types of supplies or services) may be made by the head of the installation. A copy of each such determination covering a class of cases shall be forwarded to the Assistant Administrator for Procurement (Code HP).

(c) Annual performance bonds may be used only in connection with contracts other than construction contracts. When such a bond in a cumulative penal sum is used and has been completely obligated by contracts in an appropriate amount equal to the penal sum thereof, an additional bond shall be obtained to cover additional contracts.

10.104-3 Payment Bonds. Generally, payment bonds for contracts other than construction contracts may be required only if a performance bond is also required, in which case the penal sum of the payment bond should ordinarily be equal to or less than that of the performance bond. Ordinarily if a performance bond is required, a payment bond of equal penal amount can be obtained at no additional cost.

10.105 Other Types of Bonds.

10.105-1 Advance Payment Bonds. Generally, the security provisions of an advance payment agreement should make it unnecessary to require a bond to protect the interests of the Government. Advance payment bonds shall not be used without the approval of the Assistant Administrator for Procurement who shall prescribe the penal sum thereof.

10.105-2 Patent Infringement Bonds. Patent infringement bonds shall be required only in connection with contracts containing provision for patent indemnity, and then only if a performance bond has not been executed and if the financial responsibility of the contractor is unknown or doubtful. Whenever such a bond is required, the penal sum thereof shall be in an amount deemed adequate by the contracting officer for the protection of the Government.

10.105-3 Fidelity and Forgery Bonds.

(a) Fidelity and forgery bonds are not generally required in any procurement. However, in connection with cost-reimbursement contracts for supplies, construction, or for operation of Government-owned plants, such bonds may be required when necessary for the protection of the Government or the contractor, or when it is considered desirable to obtain the investigative and claims services of a surety company. Approval for requiring these bonds shall be obtained from the head of the installation.

(b) When a fidelity bond is required, a Primary Commercial Blanket Bond or a Blanket Position Bond in the penal sum of $10,000 will or

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