Overview
This section outlines the procedures a Contracting Officer must follow to finish a project through a new contract if a defaulted contractor’s surety declines to take over the work.
Key Rules
- Trigger for Action: The Contracting Officer (CO) proceeds with a new contract only if the surety does not arrange for completion of the work.
- Consistency of Scope: The replacement contract is normally awarded based on the same plans and specifications as the original defaulted contract.
- Flexible Procurement Methods: The CO may utilize sealed bidding or any other appropriate contracting method or procedure to secure a new contractor.
- Duty to Mitigate: The CO is legally obligated to exercise "reasonable diligence" to obtain the lowest available price for the completion of the work.
Practical Implications
- Cost Recovery: Because the defaulted contractor (or their surety) is typically liable for excess reprocurement costs, the CO must carefully document their diligence in seeking a low price to withstand potential legal challenges regarding cost reasonableness.
- Procedural Flexibility: The government is not strictly tied to the original procurement method; for instance, a project originally awarded via sealed bidding could be completed via a sole-source or negotiated procurement if justified by the circumstances of the default.