on Wednesday, February 20, 2002 - 09:51 am:
When an Attorney-in-Fact signs a bid bond (SF-24) for a
corporate surety and the bond is accompanied by a power of
attorney, does the location (or place of business) of the
Attorney-in-Fact need to be included on the power of attorney?
In such a situation if neither the bond nor the power of
attorney provides the location of the Attorney-in-Fact, how
would a KO know if the Attorney-in-Fact is located in a state
which the corporate surety is licensed?
Note (c) at the bottom of the TC 570 webpage states the
"A surety company must be licensed in the State or other area in
which it provides a bond, but need not be licensed in the State
or other area in which the principal resides or where the
contract is to be performed [28 Op. Atty. Gen. 127, Dec. 24,
1909; 31 CFR Section 223.5(b)]."
In my view, the Attorney-in-Fact sigining a bond for a surety
should (in-fact) be located in a state that the surety is
licensed to conduct business.
on Wednesday, February 20, 2002 - 10:06 am:
Let me phrase it another way. Does it matter if the
Attorney-in-Fact, signing a bond for a surety, is located within
a state that the surety is licensed to do business?
anon1 on Wednesday, February 20, 2002 - 11:57 am:
Anonymous, according to the section quoted and the definition
of what an attorney-in-fact is entitled to do, it would appear
that he/or she is acting as an agent for the principal soooooo
if the principal does not have to reside in the state where the
surety company is licensed, I would surmise that neither does
the agent. Make sense? I hope
on Wednesday, February 20, 2002 - 12:37 pm:
Sorry, TC 570 is short for Treasury Circular 570, your
"Approved Sureties" link at
Anon1, if the bond is being "provided" in a state which the
surety company isn't licensed in, i.e., the state that the
Attorney-in-Fact is providing the bond from, then I would think,
according to Note (c), that the bond would be improper.
anon1 on Wednesday, February 20, 2002 - 02:25 pm:
Let me try it from a different angle:
According to your cite: I interpret this to mean that a surety
company MUST be licensed in the state FROM which it issues the
bond. (i.e., it must be licensed in the state or area in order
to conduct this type of business.) The principal of the company
that is involved in the business decisions or other duties of
authority does not have to reside in that state or area nor does
the surety company have to be licensed in the state where the
work is being performed.
The attorney-in-fact is acting as an agent of the principal (Law
of Agency) or standing in the principal's shoes. Now if the
principal does not have to reside in the state where the surety
company is licensed then why would the attorney-in-fact have to?
Example: ACME Bonding is licensed to conduct bonding activities
in Massachusetts. The bond must be signed by a principal who
resides in Rhode Island. The attorney-in-fact lives in New York
but acts as the agent. The bond is for work being done in
Virginia. It looks pretty on point to me according to the cite.
on Wednesday, February 20, 2002 - 05:03 pm:
Anon1, the attorney-in-fact is acting as an agent of the
surety, not the principal. The principal on a bond is the
contractor. The cite I referenced says "a surety company must be
licensed in the State or other area in which it provides a
bond". If the surety's agent, the attorney-in-fact, provides a
bond in a state which the surety isn't licensed, then it seems
to me the bond must be considered improper. It sounds as if you
are saying that a surety need only be licensed in one state. If
so, then why would any surety company listed in Treasury
Circular 570 need to show that it was licensed in more than one
anon1 on Wednesday, February 20, 2002 - 05:52 pm:
Your last message clarifies some unknowns. I'll do a little more
checking and get back if someone doesn't answer beforehand.
anon1 on Wednesday, February 20, 2002 - 08:00 pm:
It's somewhat difficult to figure what your concern may be but
here is what I have found in dealing with some bonding personnel
and based on some personal experience in my own business a few
years back. The attorney-in-fact is nothing more than the
individual that has authority to sign documents or whatever
powers are delegated to him by the principal. Defining principal
is the key. In this case, the principal in the law of agency is
the surety company at least as far as the attorney-in-fact is
concerned. You say that the principal in this situation is the
contractor(different position)-okay. So real life scenario is
The surety company is licensed in the State of Massachusetts to
provide a construction bond. The work to be performed is in the
state of New York. My agent (attorney-in-fact) resides in Rhode
Island and has the power to sign my bonds. So what? Any service
of process and notification to the surety company still goes
back to the surety company licensed in Massachusetts.I think it
is a proper bond.
on Thursday, February 21, 2002 - 09:12 am:
Here's the facts. A contractor submitted a bid bond with it's
bid as required by the terms of the IFB. The bond was furnished
by an attorney-in-fact acting for a surety company incorporated
in the state of PA. The power of attorney accompanying the bond
appointed the attorney-in-fact to "...make, execute, and
deliver" surety bonds for the surety (act as the surety's
agent). Neither bond or the power of attorney provided the
address of the attorney-in-fact. The address of the
attorney-in-fact on the bond was the home office of the surety.
The reference I cited is a note found at the bottom of the
Treasury Circular 570. Treasury Circular 570 is a list of
approved surety companies that provides the sureties State of
incorporation, underwriting limitation, and the States that the
surety is licensed to do business in.
Since the address of the attorney-in-fact is unknown the State
in which the bond was provided is therefore unknown. I realize
the surety is licensed to do business in PA (and numerous other
states), but what I don't know is if the state that the
attorney-in-fact provided the bond is a state that the surety is
licensed in. What you are saying, however, is that the surety is
from PA and PA is a state that the surety is licensed in, so it
doesn't matter which state the attorney-in-fact provides the
I don't agree with you, but you're the only advice I've
received, I appreciate it.
AnonX on Thursday, February 21, 2002 - 09:16 am:
Reject the bond and the bid. The protest decision should settle
the question for you. You win either way it goes (think about
it) and you advance our procurement knowledge.
anon1 on Thursday, February 21, 2002 - 10:51 am:
Am I missing something here? Your last post, in the first
sentence said " the address of the attorney-in-fact was the home
office of the surety" I assume the home office is in PA and that
they are licensed to provide bonds. Your second to last para.
says the attorney-in-fact address is unknown. I glad to see Bob
might agree with some aspect of the agency theory-AnonX--where's
your spirit of adventure?
Anonymous, from your last post and as more facts become known,
how about this?
The surety company is licensed in the state of PA to issue bonds
(not to be confused with licensed to provide bonds in the state
of PA ONLY-see the difference.)Now taking the aforementioned
cite, the contractor is performing services in New York.
The surety company does not have to be licensed in the state of
New York and it doesn't really matter where the attorney in fact
Thanks for keeping the neurons kicking.
on Friday, February 22, 2002 - 10:07 am:
I have a couple of questions:
Why does Treasury Circular 570 list all the states that a surety
company is licensed to provide Miller Act bonds in?
Why don't Miller Act sureties obtain a license in a single state
and then just appoint attorney-in-facts throughout the U.S. to
issue it's bonds?
on Friday, February 22, 2002 - 09:19 pm:
Bonds are somewhat like insurance. You must be licensed in
the state to sell bonds for projects in that state. The states
have regulatory agencies. Believe me, they need to regulate
on Monday, February 25, 2002 - 08:51 am:
Anon-9:19 pm, are you saying that a surety must be licensed
in the state that it provides bonds in, or that a surety must be
licensed in the state in which the project is being performed
on Monday, February 25, 2002 - 09:28 am:
Anon, 0851, I just spoke with a local agent for various
construction bonding companies. She confirmed that the bonding
company must be licensed in the state that the project is
Some states (there are a few left) also require the agent,
selling a bond for a project in that state, to be a local, state
Finally, the bonding company has to be licensed in the state in
which its agent is located.
You can call a local agent and obtain more clarification. They
are in the yellow pages and are usually very helpful.
on Monday, February 25, 2002 - 09:53 am:
Anon-9:28 am, the original posting contains a quote from Note
(c) found at the bottom of the Treasury Circular 570 webpage. It
tends to agree with everything you're bonding agent said except
that a bonding company need be licensed in the state that the
project is being performed in.
Did she mention anything about the law of agency theory?
on Monday, February 25, 2002 - 10:33 am:
Vern Edwards on
Monday, February 25, 2002 - 10:49 am:
I called the Department of the Treasury's Surety Bond Branch
this morning at (202) 874-6850. (Their phone number is on
Circular 570.) Anybody with a question about bonds can call
them. They were very nice and helpful. (Hint, hint.) According
to them, both the surety company and the attorney-in-fact must
be licensed in the state in which the bond is executed. Thus, in
order to be sure that the bond is valid, you need to know the
location of the attorney-in-fact who signed the bond. That does
not mean that if the attorney-in-fact's location does not appear
on the power of attorney you should reject the bid as
nonresponsive (I checked the GAO decisions and couldn't find a
case on point), but it probably means that you should find out
where the attorney is located. If it turns out that either the
surety company or its attorney is not properly licensed, then I
suppose that you must reject the bid bond as being invalid and
reject the bid as nonresponsive.
Vern Edwards on
Monday, February 25, 2002 - 10:55 am:
P.S.: Contrary to what Anonymous of 2/25 at 9:28am's "local
agent" says, Treasury Circular 570 says that the surety does
not have to be licensed in the state in which the project is
located. Here is the note from the Circular:
"(c) A surety company must be licensed in the State or other
area in which it provides a bond, but need not be licensed in
the State or other area in which the principal resides or where
the contract is to be performed [28 Op. Atty. Gen. 127,
Dec.24, 1909; 31 CFR Section 223.5 (b)]. The term 'other area'
includes the District of Columbia, American Samoa, Guam, Puerto
Rico, and the Virgin Islands."
anon1 on Monday, February 25, 2002 - 12:07 pm:
So Vern, according to anonymous post of 2-21-2002 9:12, the
attorney in fact address seems to be at the location where the
PA firm is licensed. Brings us to another interesting scenario.
Is the the attorney-in-fact really an attorney which must be
licensed in the state since the attorney-in-fact transacts
business or other matters in general not of a legal
Vern Edwards on Monday, February 25, 2002 - 01:21 pm:
Well, it's a question. But that's easy to check.
on Monday, February 25, 2002 - 01:28 pm:
FYI--the contractor who provided the bid bond has responded
to an inquiry I made. The attorney-in-fact (his bonding agent)
operates out of Georgia and issued the bond from Georgia. The
state of Georgia is listed on the TC-570 as a state that the
surety company (the one headquartered in Pennsylvania), is
licensed to do business in. Therefore the bond was considered
However, the bid would've been declared nonresponsive if the
bonding agent (attorney-in-fact) had provided the bond from a
state which the surety wasn't licensed to do business in.
Vern Edwards on Monday, February 25, 2002 - 01:33 pm:
I'll tell you one thing--all these @#%$*& Anonymouses sure
make this thread hard to follow. I can't tell who's talking to
whom. Why can't people who won't give their real names at least
give themselves distinct phony names like: Anonymighty, Clueless
in DC, TrustMe, TheTruth, Gandalf, Delphi or ThePythoness, etc.?
And while I can understand the original questioner not wanting
to provide his/her name, why should anyone trust an answer from
someone who won't give his real name?
I only wrote in to show that the original Anonymous could have
gotten his or her answer simply by calling Treasury.
anon1 on Monday, February 25, 2002 - 03:36 pm:
Cripes Vern, I always used ANON1
Vern Edwards on Monday, February 25, 2002 - 03:53 pm:
I wasn't talking about you or AnonX. There appear to be at least
two other people in this thread who are using just plain
anon1 on Monday, February 25, 2002 - 04:44 pm:
Actually looks like there might have been three ,Vern, but it
looks like Anonymous (original) at 1:28 got his answer. Now
anonymous (orignal) aren't you glad you didn't reject it out of
hand per anonX. Would cost protest money.
Original Anon on Tuesday, February 26, 2002 - 09:31 am:
Sure am, Anon1.
anon1 on Tuesday, February 26, 2002 - 07:45 pm:
Right on, seems like you are one of the type of Contracting
people I still like to work with on the Federal side of the
house, i.e., you asked-Good luck
on Wednesday, March 06, 2002 - 03:03 pm:
Below is a response from the Treasury folks to question I
(original Anonymous) asked originally:
This is in response to your 2/22/02 email.
We have consulted our Legal Advisor and have been referred back
to the regulation at 31 CFR Section 223.5(b) which is referenced
in the note to the Circular 570.
A surety company must be licensed in the state where it or its
agent executes (signs) a bond.
Stated another way, a bond is not acceptable if the
agent/attorney in fact executes (signs) the bond in a state
where the surety company is not
licensed to do business.
This is fairly clearly stated in 31 CFR Section 223.5(b), a copy
of which may be obtained from our web site at www.fms.treas.gov/c570/index.html
under "Regulations". We have now modified footnote (c) on the
Circular 570 to clarify this.
For your convenience, I am also inserting the language from this
31 C.F.R. Sec. 223.5 Business.
(a) The company must engage in the business of suretyship
whether or not also making contracts in other classes of
insurance, but shall not be engaged in any type or class of
business not authorized by its charter or the laws of the State
in which the company is incorporated. It must be the intention
of the company to engage actively in the execution of surety
bonds in favor of the United States.
(b) No bond is acceptable if it has been executed (signed and/or
otherwise validated) by a company or its agent in a State where
it has not obtained that State's license to do surety business.
Although a company must be licensed in the State or other area
in which it executes a bond, it need not be licensed in the
State or other area in which the principal resides or where the
contract is to be performed. The term other area includes the
Canal Zone, District of Columbia, Guam, Puerto Rico, and the
I trust this answers your question. If you have additional
questions about how to interpret this regulation, you may wish
to address your questions with your Agency's legal counsel.
anon1 on Wednesday, March 06, 2002 - 07:59 pm:
Leads us back to your post of 21 Feb at 9:12. You said in your
last sentence 1st para-the attorney in fact listed his address
at the home office of the surety. If it's listed as licensed to
do business in the state-it's valid-Regards
on Thursday, March 07, 2002 - 09:43 am:
Afraid not. According to Treasury, the attorney-in-fact and
the surety are two separate and distinct entities. If a surety
signs a bond on behalf of itself, no power-of-attorney is
required, the individual signing for the surety would have been
given such authority through corporate by-laws or some other
means. If there's a power-of-attorney accompanying a bond, then
the surety is authorizing some entity other than itself to sign
the bond. Therefore, just because an attorney-in-fact signs a
bond using the surety's home office address, doesn't necessarily
mean that the attorney-in-fact is licensed to do business in the
same state that the surety's home office is located. The
attorney-in-fact must still be licensed in the state it executes
Please call the Treasury Department, Surety Bond Branch at (202)
874-6740, if you need further clarification on this matter.
on Thursday, March 07, 2002 - 10:15 am:
I see your point. However, it was found that the
attorney-in-fact was not from the state that the surety's home
office was in. And it was highly unlikely that the bond was
issued by an attorney-in-fact in PA (also home office of surety)
to a contractor in LA.
joel hoffman on Thursday, March 07, 2002 - 10:20 am:
The "attorney-in-fact" typically works for a commercial
insurance/bonding agency (e.g., Willis-Corroon Company), acting
as an agent for the bonding company (e.g., USF&G), often located
in another state. The bonding company has to be licensed in the
state where the agent is located. It's pretty simple - similar
to an insurance company-agent relationship. State Farm has to be
licensed to sell insurance in the state that it's agent is
located. happy sails! joel
joel hoffman on Thursday, March 07, 2002 - 10:29 am:
I forgot to add that, the agent's location doesn't appear on
the bond. Our contract admin offices allow upfront, separate
progress payments for the bond. The Contractor furnishes a paid
invoice from the agency which sold the bond. That's how we
determine who the agent works for - not by reviewing the bond,
itself. One should always require that Contractor submit the
PAID invoice information with it's request for reimbursement for
the bond. You'd be surprised at the number of small constructors
that don't pay the bonding company. happy sails!
on Thursday, March 07, 2002 - 12:28 pm:
31 C.F.R. Sec. 223.5(b), states in part, as follows:
"No bond is acceptable if it has been executed (signed and/or
otherwise validated) by a company or its agent in a State where
it has not obtained that State's license to do surety business."
If it's not known where the surety's agent provided a bond from,
then how would Government know if bond is acceptable? And what
happens if your contract admin office, when processing a payment
for the bond, discovers that the bond was unacceptable because
the surety's agent was unlicensed in the state which they
provided the bond to the contractor?
joel hoffman on Thursday, March 07, 2002 - 07:16 pm:
I've never encountered such a situation. Our attorneys review
the performance and payment bonds before the Contractor is
allowed to begin work
Do the power of attorney accompanying the bid bond and the POA
accompanying the P&P bonds describe the agency the
attorney-in-fact works for? I don't remember and am out of town.
Does anyone working construction contracts know the answer?
happy sails! joel
on Friday, March 08, 2002 - 12:27 pm:
I asked my original question (original anon) due to reciept of a
POA that didn't list the agent's location. I had never seen that
before so I did a little research. I looked at several POA's
received from contractor's. All of them listed the agent's state
(sometimes city and state) at the end of the list of names of
individuals appointed by the surety.
I work strictly with construction contracts. After your 3/7/02
post I went and looked at 13 bid bonds we received in response
to a recent bid. All of the POA forms accompanying the bonds
listed the agents state (or city and state), similar to the
Jeff Johnson, Terry Johnson, Kirby Johnson, Mary Johnson,
individually, Johnsonville, TN
The Treasury Dept. folks have clarified all my questions. Thanks
for the input.