[Alleged Air Force Increase of Bonding Requirements in Solicitations for Housekeeping Services]
Highlights
GAO reviewed the Air Force's increased use of bond requirements in solicitations for housekeeping services. GAO found that: (1) although a bonding requirement may restrict competition, it can be a necessary and proper means of securing a contractor's obligations; (2) a performance bond may be required in a nonconstruction contract when necessary to protect the government's interest; (3) it is within the contracting officer's discretion to determine whether bonds are needed in a particular procurement; and (4) those responsible for maintaining the applicable Federal Acquisition Regulation section must decide whether bonding requirements should be eliminated on procurements set aside for small businesses.
B-221571, JAN 31, 1986, OFFICE OF GENERAL COUNSEL
DIGEST: ALTHOUGH BONDING REQUIREMENTS MAY IN SOME CASES RESTRICT COMPETITION, THEY CAN BE A NECESSARY AND PROPER MEANS OF SECURING FULFILLMENT OF A CONTRACTOR'S OBLIGATIONS. THE DECISION AS TO WHETHER TO REQUIRE BONDS SHOULD BE LEFT TO THE CONTRACTING AGENCY SINCE IT IS BEST SITUATED TO DETERMINE WHETHER IN A PARTICULAR PROCUREMENT THE CONTRACTOR'S OBLIGATIONS NEED TO BE SECURED.
JBS MISSOURI, INC.: 260 COCHITUATE ROAD SUITE 109 FRAMINGHAM, MASSACHUSETTS 01701
THIS IS IN RESPONSE TO YOUR LETTER OF DECEMBER 31, 1985, IN WHICH YOU EXPRESS CONCERN OVER THE AIR FORCE'S ALLEGED INCREASING USE OF BOND REQUIREMENTS IN SOLICITATIONS FOR HOUSEKEEPING SERVICES. YOU CONTEND THAT BONDING REQUIREMENTS RESTRICT COMPETITION BECAUSE IT IS VIRTUALLY IMPOSSIBLE FOR BONA FIDE SMALL BUSINESSES TO OBTAIN BONDS. YOU REQUEST THAT BONDING REQUIREMENTS ON PROCUREMENTS SET ASIDE FOR SMALL BUSINESS BE ELIMINATED EXCEPT WHERE COMPELLING REASONS FOR THEIR INCLUSION EXIST.
ALTHOUGH IT IS TRUE THAT BONDING REQUIREMENT MAY IN SOME CASES RESTRICT COMPETITION, IT NEVERTHELESS CAN BE A NECESSARY AND PROPER MEANS OF SECURING TO THE GOVERNMENT FULFILLMENT OF A CONTRACTOR'S OBLIGATIONS. HARRIS SYSTEM INTERNATIONAL, INC., B-219763, OCT. 18, 1985, 85-2 CPD PARA. 423. UNDER THE FEDERAL ACQUISITION REGULATION (FAR), A PERFORMANCE BOND MAY BE REQUIRED IN A NONCONSTRUCTION CONTRACT WHEN NECESSARY TO PROTECT THE GOVERNMENT'S INTEREST. A PAYMENT BOND IS REQUIRED ONLY WHEN A PERFORMANCE BOND IS REQUIRED AND IT IS IN THE GOVERNMENT'S INTEREST. C.F.R. SEC. 28.103-2 (1984). THE USE OF A BID BOND IS AUTHORIZED WHERE PERFORMANCE AND PAYMENT BONDS ARE REQUIRED. 48 C.F.R. SEC. 28.101-1. UNDER THE CURRENT REGULATION IT IS WITHIN THE DISCRETION OF THE CONTRACTING OFFICER TO DETERMINE WHETHER BONDS ARE NEEDED IN A PARTICULAR PROCUREMENT. SPACE SERVICES INTERNATIONAL CORP., B-215402.2, OCT. 22, 1984, 84-2 CPD PARA. 430.
WHETHER BONDING REQUIREMENTS ON PROCUREMENTS SET ASIDE FOR SMALL BUSINESS SHOULD BE ELIMINATED IS A POLICY MATTER THAT MUST BE DECIDED BY THOSE RESPONSIBLE FOR ISSUING THE FAR. SHOULD YOU WISH TO EXPRESS YOUR VIEWS ON THIS MATTER, YOU SHOULD CONTACT THE FAR SECRETARIAT (URS), GENERAL SERVICES ADMINISTRATION, 18 & F STREETS, N.W., ROOM 4041, WASHINGTON, D.C. 20405.