Solutions Bond - Existing Client Performance & Payment Application (Performance Plus) in All States
Table of Contents
Brief Summary
If you are already bonded with us and have a new job that calls for performance and payment bonds, this is the application to use. Your file is already underwritten, so the request centers on the new contract: the price, the owner, the scope and the schedule. Most owners want both bonds at the full contract price, so have the final contract figure ready before you apply.
This application is for existing clients requesting performance and payment bonds on a new contract. A performance bond guarantees the contractor will finish the work as the contract requires. A payment bond guarantees subcontractors and suppliers of labor and material get paid. On federal construction contracts over $150,000, FAR 28.102-2 sets both bonds at 100% of the original contract price unless the contracting officer decides otherwise.
We can help with all All States bonds!
How to Apply for a Solutions Bond:
- Provide the final contract or award letter with the contract price.
- Name the project owner or obligee and give the project location.
- Describe the scope of work and the start and completion dates.
- Attach the owner's required bond forms, if the contract specifies them.
- Update your work in progress schedule if your backlog has changed since your last bond.
- Return the executed bonds to the owner before notice to proceed or the contract's bond deadline.
Detailed Information About the All States Solutions Bond:
What the two bonds do
A performance bond protects the project owner. If the contractor defaults, the surety steps in to see the work completed or pays the owner's loss, up to the penal sum. A payment bond protects the people below the contractor. Subcontractors and suppliers who furnished labor or material can claim against it if they are not paid. Owners usually require both together, which is why they are requested on one application.
How much the bonds have to be
The owner's contract or bid documents set the amount. On federal work, the rules are written down. Under 40 U.S.C. 3131 and FAR 28.102-1, performance and payment bonds are required on construction contracts exceeding $150,000. FAR 28.102-2 sets both at 100% of the original contract price, plus 100% of any later price increase, unless the contracting officer approves a lower figure. The payment bond can never be less than the performance bond. For federal contracts over $35,000 up to $150,000, the contracting officer picks payment protection options, and a payment bond is one of them.
State and local public owners have their own bonding statutes, and private owners set terms in the contract. Read the bond section of your contract and use any bond form the owner provides.
Timing
Under FAR 28.102-1(c), the contractor must furnish the bonds before receiving notice to proceed or being allowed to start work. Other owners set their own deadline in the contract. If the contract price goes up later, the owner can require a higher penal sum or an additional bond.
What the surety looks at
Because you are an existing client, the surety already has your company file. For a new job it reviews the contract size against your approved program, your current backlog and work in progress, the owner, the type of work, and the contract terms. Larger or unusual jobs may call for updated financial statements.
Eligibility and Requirements for an All States Solutions Bond:
- An existing bonding relationship with an approved account on file.
- Performance and payment bond amounts as the contract specifies, often 100% of the contract price.
- Payment bond not less than the performance bond on federal work.
- Owner's bond forms used where the contract requires them.
- Current financial statements and work in progress when the surety asks for them.
All States Solutions Bond FAQs:
Whatever the contract requires. On federal construction contracts over $150,000, FAR 28.102-2 sets both bonds at 100% of the original contract price unless the contracting officer approves less. State, local and private owners state their figure in the bid or contract documents.
The performance bond protects the owner if the contractor fails to complete the work. The payment bond protects subcontractors and suppliers if the contractor fails to pay them for labor or material.
On federal work, before notice to proceed or before work starts, under FAR 28.102-1(c). Other owners set the deadline in their bid or contract documents, so check yours.
The owner can require the penal sum to be increased or an additional bond. On federal contracts, FAR 28.102-2 adds 100% of the increase to both bonds unless the contracting officer decides otherwise.
The surety applies your approved rate to the contract price. The rate depends on your company's financial strength, track record and the terms of your bonding program.
