Government Construction Contracts Require Bonds, Even When Contract Doesn’t Say So

Requirements may exist outside the four corners of the contract when such requirements are: (1) otherwise mandatory and (2) express a significant or deeply ingrained strand of public procurement policy. In other words, your contract may include requirements not shown or otherwise indicated in the contract documents.

In an example of this, a Contractor agreed to provide pre-engineered metal buildings for the Army’s use at Camp Edwards, Massachusetts. Under the Miller Act and the FAR, bonds for construction projects are mandatory. The mandate for payment bonds is based upon the “deeply ingrained strand of public procurement policy” that security should be provided for entities or persons furnishing labor and materials in the performance of government contracts. The mandate for performance bonds is due to the Government’s need for security to ensure the use of public funds results in a finished product since not completing a public project could be a waste or misuse of public funds. Of course, (dripping with sarcasm) we’ve never seen a public entity waste or misuse public funds, right.

The Armed Services Board of Contract Appeals held bonds were part of the contract even though bonding requirements were not expressly stated nor incorporated by reference. The U.S. Court of Appeals for the Federal Circuit agreed with the Board. K-Con, Inc. v. Secretary of the Army, U.S. Court of Appeals for the Federal Circuit, Case No.: 2017-2254 (Nov. 5, 2018).

Next time you review an RFP, carefully consider what you don’t see but that may still be required.

Read another short example here: Adding Terms to a Government Contract without Saying So.