Follow-up letter on Policies of the Bureau of Overseas Building Operations – 04/18/2007

Thank you for your letter of March 13, 2007, responding to my inquiry about the bonding policies of the Bureau of Overseas Buildings Operations. As you note in your letter, it appears that we hold different views concerning federally mandated bond requirements. NASBP continues to believe that payment and performance bonds are to be considered “necessary” to the procurement of construction services for federal projects. In fact, it is the contention of NASBP that Miller Act requirements for payment and performance bonds on federal construction projects of a certain dollar threshold, whether located within the United States or overseas, is the rule, not the exception. The fact that Congress included a provision in the Miller Act permitting waiver of such requirements by contracting officers in limited circumstances supports the contention that payment and performance bonds are to be considered necessary requirements of procuring federal construction services. As I noted in my letter of March 1 to Ms. Pinzino, numerous courts have held that the requirements of the federal Miller Act must be construed and applied liberally to affect its remedial purposes—that is, to protect the contracting agency from contractor nonperformance and to provide certain categories of subcontractors and suppliers with assurance that they will be paid for their labor and materials.

Read more…