Performance Bond

Background:
Contractor A is engaged in a contract with a U.S. Military Procurement Office for the repair and maintenance of existing sewer & water lines inside a military base. The contract is an IDIQ (Indefinite Delivery Indefinite Quantity) type good for 5 years - one year basic, the other 4 optional.

Contractor B is a joint venture partner of contractor A but is not a partner in the above contract that contractor A signed with the customer.

Contractor A, after receiving a diluge of high costs delivery orders, found out that it has already reached its performance bond limit with its surety company. The latter is also no longer willing to issue additional performance bond to contractor A to cover the newly-issued delivery orders needing bonding.

Contractor B would like to assist contractor A and, thru its surety company, would like to put up a performance bond with its name and that of contractor A in it as if in a joint venture.

Question:
1. Considering that contractor B has nothing to do with the cited contract of contractor A, is the contemplated performance bond contractor B would like to post is acceptable to the U.S. procurement office?

Ver Pana

Since no one wants to take a shot at this oe, I might as well.

First of all, your question can only be totally answered by the Procurement Officer. Within guidelines, he can pretty much do what he wants.

That being said, I doubt they would accept a bond from another contractor who is not a party to the original contract. The bond guarantees a specific contract and that contract is between A and the Gov't.

Does that mean you are out of luck? Not necessarily. If Contractor B is strong enough, perhaps he can convince his surety to write a bond for Contractor A utilizing Contractor B's indemnity and probably a silent joint venture agreement tying both contractors into the contact in the eyes of the surety. The contract may however require Contractor A to disclose significant subs or joint venture partners. At that point, it would again be up to the contracting officer as to wether it could be done.

Contractor B would have to convince their surety that the situation makes sense. They wouldnt be pleased if all he was doing was selling his bonding power. Is any of the work going to be done by Contractor B? Both contractors (and in this case, especially Contractor B) need to realize that their indemnity both corporate and personal (if personal is taken) is joint and several. In other words, Contractor B better know what he is getting into because he is on the hook for the whole shebang.

[Ver Videz]

To the unregistered guest who replied to my question, I would like to say thank you. I discussed your suggestions to the people concerned. As I also thought before posting the thread, acceptance of any scheme to be done outside of the normal process will totally depend on the procurement officer.