Demolition/Abatement Constracts (Folders 1-2)

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Chapter 4: Methods of Selection http://w~•.fta.dot.go~~/fta/libraryiadminBPPman/sect 40.htm UIREMENT In discussing bonding requirements, § 11 of FTA Circular 4220. ID provides: For those construction or facility improvement contracts or suhcontracts exceeding $100,000, FTA may accept the bonding policy and requirements of the grantee, provided that they meet the minimum requirements for construction contracts as follows: a. A bid guaranty from each bidder equivalent to five (5) percent of the bid price. The "bid guaranty" shall consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, upon acceptance of its bid, execute such contractual documents as may be required within the time specified; § 36.c(3)(b) of the Master Agreement states that: ~) Bondin~ - The Recipient agrees to comply with the following requirements. (1) Construction Activities - The recipient agrees to comply with the bid guarantee, performance, and payment bonding provisions of 49 C.F.R. § 18.36(h) or 40 C.F.R. § 19.48(c), as applicable, and with any requirementsFTA may issue. ) Other Activities - The Recipient agrees to comply with any other bonding requirements or strictions FTA may impose.79 State laws are sometimes specific in requiring or prohibiting security and guaranties in public procurements. Performance bonds are often required, and the requirement may also af~ect bid DISCUSSION The primary function of obtaining a bid guaranty is to financially protect the owner from loss should the successful offeror fail to execute further contractual instruments and furnish performance bonds or insurance certificates as required. As required by the FTA, this financial protection on construction contracts is 5% of the amount of the offer. Bid guaranties are usually used onty where there is a requirement for performance and/or payment bonds are required prior to the commencement of performance. We will discuss in other sections ofthe Manua! bonding requirements in particular types of procurements, such as for construction,$~ equipment and supplies,$i and rolting stock. 82 In this section, we will discuss the submission requirements for the various types of bid guaranty, such as bid bonds, certified checks, and other allowable negotiable instruments. As with many other aspects of the procurement process, the use of bid security and the types of security may be addressed in your state laws. In these cases, you will be obligated to follow those laws as tong as they meet the minimum requirements of the federal regulations set forth above. Best Practices 36 of 45 O 1 / 10/97 13:09:51