Overview
FAR 37.302 establishes that while the Miller Act's mandatory bonding requirements do not apply to contracts solely for dismantling or demolition, Contracting Officers retain the discretionary authority to require performance bonds or security to mitigate specific risks.
Key Rules
- Miller Act Exemption: 40 U.S.C. chapter 31, subchapter III (Bonds) is not applicable to contracts dedicated exclusively to the dismantling, demolition, or removal of improvements.
- Discretionary Authority: The Contracting Officer (CO) may choose to require a performance bond or other security (per FAR 28.103) if they deem it necessary.
- Determination of Amount: The CO has the authority to set the security amount at a level they consider adequate to protect the government's interests.
- Permissible Objectives for Security: Security may be required to:
- Guarantee the completion of the scope of work.
- Safeguard property that the Government intends to retain.
- Protect property that is being provided to the contractor as a form of payment/compensation.
- Ensure the Government is protected against liability for damages to adjoining properties.
Practical Implications
- Risk-Based Bonding: Contractors should not assume a lack of bonding requirements; instead, they should expect security requirements to scale with the complexity of the site and the proximity of adjoining structures.
- Salvage Value Protection: In "service-for-salvage" contracts where the contractor is compensated with the materials they remove, the CO will likely use this provision to ensure the contractor doesn't "cherry-pick" valuable materials and abandon the site before full cleanup.