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  1. Our office had a construction contractor (I'll call them "Acme") fail to perform, so we did a termination for default. They had bonds issued from a bonding company (I'll call them "Bondo"). We then attempted to get Bondo to get the work completed. Bondo started discussing with us and then when they discovered that the amount was around $800k, they simply refused to communicate further. Our agency's attorney spoke with a DOJ attorney who advised that the only costs we would be able to recover are reprocurement costs, which will probably only be a few thousand dollars. The DOJ attorney said that Bondo probably did an analysis and decided it would be cheaper for them to not perform and only pay reprocurement costs than it would be for them to complete the work. There are more details (including the Government paying Acme for work not completed), but I don't want to make this question longer than it already is. My question is this. What good is the performance bond if the surety can simply decline to perform? The Government pays for these bonds (as the contractors roll that cost into their bid) and from this experience it seems like a waste of money. I've never had a bonding company do this so this is new territory for me. Is there a step we may be missing? If not, I think I need to go into the bonding business. Seems like a very low-risk business if all they can hit me up for is reprocurement costs!
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