This is the Bonding Company’s worst nightmare. In this 160th article of our surety series, we will cover the situations in which no Performance or Payment Bond is needed! Some of the projects are big and federal, some are private, ALL are unbonded. Here we go!
As a point of reference, you may expect that federal, state and municipal contracts demand a Performance and Payment (P&P) Bond equal to the contract amount. Normally they do. General Contractors working for a private owner, such as the construction of an office building or apartment project, may face the same requirement. This can apply to subcontractors, too.
This area includes all branches of the federal government. Examples: Army Corps of Engineers, General Services Administration, Dept. of Energy, etc. Their contracts are administered following the rules of the Federal Acquisition Regulations (FAR).
The FAR says that no P&P bond is required on contracts under $150,000.
For contracts $150,000 and higher that require security, there are times when the bond requirement may be reduced below 100% or waived entirely. These include:
- Overseas Contracts
- Emergency Acquisitions
- Sole-Source Projects
If the bond requirement is mandatory, the