Pursuant to Federal Acquisition Regulation §28.203-1 individual surety bonds are authorized forms of payment protection for federal procurement. See FAR §28.203-1 below. At TEC our individual sureties can bond up to $4 million.
If approved, Performance Bonds and Payment Bonds for both the bond and escrow fees combined the entire cost is *3% to 5% of the total contract amount. Compared to corporate sureties, our individual sureties are not as stringent and do not require excellent credit, much working capital or vast work experience.
A qualifying contractor can also bid nationwide versus merely in their home state. Bond premiums are paid from the escrow account, and with our individual sureties bid bonds are free with no set-up or service fees.
Conditions:
All bonds require a Notice of Assignment pursuant to
FAR §32.805,
(for more information,
click here),
All bonds
require an escrow account pursuant to FAR §28.203-1, (for more
information,
click here),
All bonds require a Potential Acknowledgment of Default pursuant to FAR
§49.404,
(for more information,
click here),
All
bonds require an Tripartite Escrow Agreement,
(for more information,
click here),
All company owners, officers and indemnitors,
including spouses, execute an Indemnity Agreement,
Bond premium for
both the bond and escrow fees combined the entire cost is *3% to 5% of
the total contract amount,
Surety pays escrow fees,
Applying
contractor must have completed at least three federal government
contracts within the past two years.
A Uniform Commercial Code (UCC) filing will be conducted in the
contractor’s state,
(for more information,
click here),
Additional conditions may apply.
Federal Acquisition Regulation 28.203-1 -- Security Interests by an Individual Surety.
(a) An individual surety may be accepted only if a security interest in assets acceptable under 28.203-2 is provided to the Government by the individual surety. The security interest shall be furnished with the bond.
(b) The value at which the contracting officer accepts the assets pledged must be equal to or greater than the aggregate penal amounts of the bonds required by the solicitation and may be provided by one or a combination of the following methods:
(1) An escrow account with a federally insured financial institution in the name of the contracting agency.
(See 28.203-2(b)(2) with respect to Government securities in book entry form.) Acceptable securities for deposit in escrow are discussed in 28.203-2. While the offeror is responsible for establishing the escrow account, the terms and conditions must be acceptable to the contracting officer. At a minimum, the escrow account shall provide for the following:
(i) The account must provide the contracting officer the sole and unrestricted right to draw upon all or any part of the funds deposited in the account. A written demand for withdrawal shall be sent to the financial institution, after obtaining the concurrence of legal counsel, by the contracting officer with a copy to the offeror/contractor and to the surety. Within the time period specified in the demand, the financial institution would pay the Government the amount demanded up to the amount on deposit. If any dispute should arise between the Government and the offeror/contractor, the surety, or the subcontractors or suppliers with respect to the offer or contract, the financial institution would be required, unless precluded by order of a court of competent jurisdiction, to disburse monies to the Government as directed by the contracting officer.
(ii) The financial institution would be authorized to release to the individual surety all or part of the balance of the escrow account, including any accrued interest, upon receipt of written authorization from the contracting officer.
(iii) The Government would not be responsible for any costs attributable to the establishment, maintenance, administration, or any other aspect of the account.
(iv) The financial institution would not be liable or responsible for the interpretation of any provisions or terms and conditions of the solicitation or contract.
(v) The financial institution would provide periodic account statements to the contracting officer.
*Additional information and conditions for bonding will be required. Issuance of the bonds is subject to the normal underwriting requirements upon bond request.