Jump to content
The Wifcon Forums and Blogs
California2012

Proof of ability to obtain bonds from non-US bank for non-US project

Recommended Posts

We're looking at an RFP for USACE work outside the US and the RFP asks for a letter confirming bonding capacity from a US federally insured bank.  Our local banks are willing to provide such letter, but if USACE only accepts letters from US-federally insured banks and we don't have prior relationships with US banks, what can we do?  

Share this post


Link to post
Share on other sites

For contracts performed in a foreign country, the contracting officer determines the acceptability of a surety if it is impracticable for the contractor to use Treasury-listed sureties. See FAR 28.202(b). Here, the contracting officer is already reaching beyond Treasury-listed sureties by allowing bonds from any federally-insured bank — that is generous of the contracting officer — it might be unreasonable to expect him or her to stretch any further, especially if adequate competition can be obtained with the current generosity.

Any person required to furnish a bond has the option, instead of furnishing a surety on the bond, of depositing certain U.S. bonds or notes in an amount equal at their par value to the penal sum of the bond. In such a case, the contractor must also provide a duly executed power of attorney and agreement authorizing the collection or sale of each bond or note in the event of default. See FAR 28.204-1. Similarly, such a contractor may also provide cash or an irrevocable letter of credit in lieu of a bond.  See FAR 28.204-2 and -3. 

The solicitation lists what the contracting officer thinks of as acceptable, but this does not limit you from using one of these other alternatives.  See FAR 28.201(b).

Share this post


Link to post
Share on other sites
2 hours ago, California2012 said:

We're looking at an RFP for USACE work outside the US and the RFP asks for a letter confirming bonding capacity from a US federally insured bank.  Our local banks are willing to provide such letter, but if USACE only accepts letters from US-federally insured banks and we don't have prior relationships with US banks, what can we do?  

Can you quote the solicitation provision language?

Share this post


Link to post
Share on other sites

duplicate.  

Edited by joel hoffman
Duplicate

Share this post


Link to post
Share on other sites
On 12/20/2019 at 10:29 PM, joel hoffman said:

Can you quote the solicitation provision language?

"Offerors are required to submit proof of their ability to obtain surety for performance and payment bonds for orders issued under the awarded contract in the form of commercial surety bonds, irrevocable letters of credit, or other acceptable surety under FAR 52.228-15, which is included in this solicitation. The evidence shall prove that the offeror is able to provide bonds for a total of $X million U.S. Dollars coverage for a period of at least 300 calendar days. Performance and payment bonds must be supported by acceptable security as defined in FAR 28.201. A letter of commitment from an acceptable corporate surety as defined in FAR Subpart 28.2 will provide acceptable proof of the offeror’s ability to obtain the required coverage. Only a (U.S.) federally insured financial institution may confirm the offeror’s ability to obtain an ILC. The guidance below should assist the Contractor is determining what it must submit as proof: The evidence of ability to obtain adequate surety must come from an entity that would be acceptable as the surety during contract performance. Accordingly, a letter from a bank that is not (U.S.) federally insured would not be adequate proof of ability to obtain surety without an accompanying letter from a federally insured financial institution that would confirm an ILC issued by the bank that is not federally insured."

Share this post


Link to post
Share on other sites

Just as I suspected. The Federally insured Bank requirement is for an irrevocable letter of credit ILC from a bank. Banks don’t normally issue surety bonds. Surety companies issue bonds.

Share this post


Link to post
Share on other sites
On 12/20/2019 at 10:59 AM, California2012 said:

We're looking at an RFP for USACE work outside the US and the RFP asks for a letter confirming bonding capacity from a US federally insured bank.  Our local banks are willing to provide such letter, but if USACE only accepts letters from US-federally insured banks and we don't have prior relationships with US banks, what can we do?  

What country “owns” the property/building/facility?  Is it a US or a host nation owned facility?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


×
×
  • Create New...