The standards under this section apply to construction contracts that exceed the small purchase limit. There are no bonding requirements for small purchases or for competitive proposals. The PHA may require bonds in these latter circumstances when deemed appropriate; however, non-construction contracts should generally not require bid bonds.
Bid Bonds
For construction contracts exceeding the small purchase limit, offerors shall be required to submit a bid guarantee from each bidder equivalent to 5% of the bid price.
Payment Bonds
For construction contracts exceeding the small purchase limit or $100,000, whichever is less, the successful bidder shall furnish an assurance of completion. This assurance may be any one of the following four:
- A performance and payment bond in a penal sum of 100% of the contract price; or
- Separate performance and payment bonds, each for 50 % or more of the contract price; or
- A 20% cash escrow; or
- A 25% irrevocable letter of credit.
These bonds must be obtained from guarantee or surety companies acceptable to the U. S. Government and authorized to do business in the state where the work is to be performed. Individual sureties shall not be considered. U. S. Treasury Circular Number 570 lists companies approved to act as sureties on bonds securing government contracts, the maximum underwriting limits on each contract bonded, and the states in which the company is licensed to do business. The use of companies on this circular is mandatory.
