228.102 Performance and payment
bonds for construction contracts.
228.102-1 General.
228.105 Other types of bonds.
228.106 Administration.
228.106-7 Withholding contract
payments.
228.170 Solicitation provision.
228.102 Performance and payment
bonds for construction contracts.
228.102-1 General.
For Defense Environmental
Restoration Program construction contracts entered into pursuant to 10 U.S.C.
2701 and executed between December 5, 1991, and December 31, 1999—
(1) Any rights of
action under the performance bond shall only accrue to, and be for the
exclusive use of, the obligee named in the bond.
(2) In the event of
default, the surety’s liability on the performance bond is limited to the cost
of completion of the contract work, less the balance of unexpended funds. Under no circumstances shall the liability
exceed the penal sum of the bond.
(3) The surety shall
not be liable for indemnification or compensation of the obligee for loss or
liability arising from personal injury or property damage, even if the injury
or damage was caused by a breach of the bonded contract.
(4) Once it has taken
action to meet its obligations under the bond, the surety is entitled to any
indemnification and identical standard of liability to which the contractor was
entitled under the contract or applicable laws and regulations.
(a) The requirement for
performance and payment bonds is waived for cost-reimbursement contracts. However, for cost type contracts with
fixed-price construction subcontracts over $25,000, require the prime
contractor to obtain from each of its construction subcontractors—
(i) A payment bond in favor of the prime
contractor sufficient to pay labor and material costs; and
(ii) A performance bond in an equal amount if
available at no additional cost.
228.105 Other types of bonds.
Fidelity and forgery bonds
generally are not required but may be used when—
(1) Necessary for the
protection of the Government or the contractor; or
(2) The investigative
and claims services of a surety company are desired.
228.106 Administration.
228.106-7 Withholding contract
payments.
(a) Withholding may be
appropriate in other than construction contracts (see 232.970-1(b)).
228.170 Solicitation provision.
When a requirement for a performance bond or other security is included in a solicitation for dismantling, demolition, or removal of improvements (see FAR 37.300), use the provision at 252.228-7004, Bonds or Other Security. Set a period of time (normally ten days) for return of executed bonds.