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buonomma

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  1. Why should the Government be responsible for paying this premium all because their bonding agency demanded it? This is not standard practice nor should it become one. Maybe in certain circumstances in would be advantageous for one/some subcontractors to be bonded, but certainly not in my specific situation. Just because it may be the surety's policy to require bonds of the subs does not make it a "sound business practice". It provides no additional advantages or assurances for the Government, rather only to the surety and maybe the Contractor, so why should we be responsible for reimbursing them (with markups on top, at that) for something we do not require? Regarding the SBA as the prime contractor, this is not the case, and I cannot remember the last time it was. The Government negotiates and issues awards directly with the 8(a) Contractor.
  2. We are currently in negotiations for a FFP sole-source 8(a) construction requirement. The offeror provided a breakdown of all subcontractor costs, which showed that the prime contractor is "back bonding" their subcontractors, essentially requiring performance bonds of them. This is not a requirement of the solicitation, nor of Government policy, for subcontractors to be bonded. Rather the prime will be required to provide payment and performance bonds, which they are, in addition to this "back bonding". This additional cost to the Government for this is a relatively substantial number. I don't believe it's reimbursable under 52.232-5(g), as it's not my opinion that this is either coinsurance or reinsurance. I do not believe this is an allowable cost and should be removed from the proposal. Why would we pay for such "back bonds" in addition to the performance bonds? Is this an allowable cost? I just can't seem to stomach this...
  3. I am very familiar and aware of every point made thus far, and am greatly appreciative for everyone's time. However, I am trying to be creative here to meet my customer's needs, so was trying to find out if there was anything prohibiting me from doing the following... My goal is to NOT require the Contractor (therefore the surety) to increase the penal sum of the bond amount and cover the added work. Given the circumstances of the contract, and the scope of the modification, there is little to no benefit to the Government in requiring payment/performance bonds. Would this require consent from the surety?
  4. I did not mention anything about "reducing" the amount of the bonds, nor do I wish to do so. Rather, the intent is to NOT require any ADDITIONAL bonds as a result of increase in the contract price via modification; we do not require an increase in the penal amount/ A significant portion of work (>90%) is in fact completed.
  5. I appreciate the quick response! It sure does. I am leaning towards the applicable FAR Clause, 52.228-15 -- Performance and Payment Bonds -- Construction, which states: "The Government may require additional performance and payment bond protection if the contract price is increased. The increase in protection generally will equal 100 percent of the increase in contract price." Furthermore, "The Government may secure the additional protection by directing the Contractor to increase the penal amount of the existing bond or to obtain an additional bond."
  6. I have an upcoming modification to a construction contract for work within scope, which will increase the contract price by <$150k. The Payment and Performance Bonds have been required by the contract and provided by the Contractor. In all previous modifications, the Government has paid the Contractor's bond rate for each increase. IAW FAR 28.102-2(d), if the contract price increases, the Government must secure any additional bonding needed. Is there any wiggle room on this? We only have a certain amount of funding and applying the bond rate to the Contractor's proposal puts us over that amount. Can we not require additional bonding for any given modification? Any help would be appreciated.
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