Overview
This section addresses the authorization and specific requirements for utilizing specialized bonds, such as advance payment and patent infringement bonds, when standard performance bonds are not provided.
Key Rules
- Approval Authority: The head of the contracting activity (HCA) must approve the use of these "other" bond types for specific supplies or services.
- Advance Payment Bonds:
- May only be required if the contract includes an advance payment provision.
- Can only be used when a performance bond is not furnished.
- The Contracting Officer (CO) is responsible for determining the necessary bond amount.
- Patent Infringement Bonds:
- May only be required if the contract includes patent indemnity and no performance bond is furnished.
- Specifically reserved for cases where the contractor’s financial responsibility is unknown or doubtful.
- The CO determines the penal sum of the bond.
Practical Implications
- These bonds serve as targeted risk-mitigation tools for the government when a contractor lacks the financial standing or the general performance coverage necessary to protect the government's interests in high-risk financial areas.
- Contracting Officers must exercise discretionary judgment to calculate bond amounts that sufficiently protect the public interest without placing undue financial burden on the contractor.