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Performance and Payment Bonding Requirements (Construction Contracts) <br />The Contractor shall be required to obtain performance and payment bonds as follows: <br />(a) Performance bonds <br />1. The penal amount of performance bonds shall be 100 percent of the original contract price, unless <br />the Recipient determines that a lesser amount would be adequate for the protection of the Recipient. <br />2. The Recipient may require additional performance bond protection when a contract price is <br />increased. The increase in protection shall generally equal 100 percent of the increase in contract <br />price. The Recipient may secure additional protection by directing the Contractor to increase the <br />penal amount of the existmg bond or to obtain an additional bond. <br />(b) Payment bonds <br />1. The penal amount of the payment bonds shall equal: <br />(i) Fifty percent of the contract price if the contract price is not more than $1 million. <br />(ii) Forty percent of the contract price if the contract price is more than $1 million but not more than <br />$5 million; or <br />(iii) Two and one half million if the contract price is more than $5 million. <br />2. If the original contract price is $5 million or less, the Recipient may require additional protection <br />as required by subparagraph 1 if the contract price is increased. <br />Performance and Payment Bonding Requirements (Non-Construction Contracts) <br />The Contractor may be required to obtain performance and payment bonds when necessary to <br />protect the Recipient's interest. If the Recipient requires such bonding after execution of the <br />Contract, then Recipient will pay the reasonable cost of the bond premium. <br />(a) The following situations may warrant a performance bond: <br />l. Recipient property or funds are to be provided to the Contractor for use in performing the contract <br />or as partial compensation (as in retention of salvaged material). <br />2. A contractor sells assets to or merges with another concern, and the Recipient, after recognizing the <br />latter concern as the successor in interest, desires assurance that it is financially capable. <br />3. Substantial progress payments are made before delivery of end items starts. <br />4. Contracts are for dismantling, demolition, or removal of improvements. <br />(b) When it is determined that a performance bond is required, the Contractor shall be required to <br />obtain performance bonds as follows: <br />1. The penal amount of performance bonds shall be 100 percent of the original contract price, unless <br />the Recipient determines that a lesser amount would be adequate for the protection of the Recipient. <br />2. The Recipient may require additional performance bond protection when a contract price is <br />increased. The increase in protection shall generally equal 100 percent of the increase in contract <br />Addendum, FTA Contract Requirements <br />Page - 12 <br />0718970102 <br />