We are bidding on a federal construction project. The Invitation for Bid (IFB) for this general construction project (NAICS 236220) is due next week. The project is above $35,000 but less than the Miller Act threshold for full bonding. My company has not done federal work in this range before. I know the contracting officer has options. What kind of payment protection will the contracting officer require for a federal construction contract in this dollar range? What are those options?
The contracting officer will select at least two alternative payment protections for a federal construction contract between $35,000 and the Miller Act threshold. This is per FAR 28.102-1(b)(1).
For federal construction contracts in this range, the contracting officer has several options to ensure payment protection. These include a payment bond, which is similar to what is required for larger contracts under the Miller Act. Other options are an irrevocable letter of credit from a financial institution or a tripartite escrow agreement. The contracting officer determines which of these options, or a combination, best fits the project's needs. We usually see a payment bond requested even on these smaller federal jobs, but sometimes they go with a letter of credit. Make sure you read the IFB closely to see which options they are requiring.