Attachment E (Amdt 0001) - Bank Letter of Guarantee Sample.pdf

ATTACHMENT E

PERFORMANCE SURETY – BANK LETTER OF GUARANTY

(Applicable at Task Order Level)

A. FORM OF SURETY:

(1) This contract will be performed outside of the United States, and the Contracting Officer has determined that it maybe impracticable for many otherwise eligible offerors to access bonding or other financial assurance from U.S. Treasury approved sureties.

As such, and in accordance with FAR Part 28 and applicable contract clauses, the additional bonding and financial assurance instruments that will be considered acceptable by the Contracting Officer include, but are not limited to, Irrevocable Letters of Credit, Bank Letters of Guaranty (BLG), Escrow Agreements, and Certificates of Deposit.

(2) The Government will draw on the surety instrument when the Contractor fails to comply with the terms and conditions of the contract or does not fulfill the undertaking in whole or in part. As this contract requires prime contractor to ensure the timely payment of satisfactorily performing subcontractors (FAR 52.232-2), the failure to pay subcontractors can be considered a breach of contract and may result in the Government drawing in the surety instrument.

(3) Within ten (10) calendar days after the date of contract award, the Contractor shall furnish the Contracting Officer with a valid financial assurance instrument, acceptable to the Contracting Officer, for performance of work, in the amount of fifteen percent (15%) of the contract price or $150,000.00 U.S. Dollars, whichever is less.

Notice to Proceed will not be issued until the contractor has furnished an acceptable financial assurance instrument. Failure to furnish an acceptable financial assurance instrument may be deemed a breach of contract. Instruments securing performance shall be in effect until the work under the contract has been finally inspected and accepted by the Government, and during all applicable warranty periods or extensions thereof.

(4) The Contracting Officer may require the Contractor to Contractor to increase amounts secured by financial assurance instruments due to increases in the contract value.

(5) BLG: To the extent the Contractor assures its performance with a BLG (or Letter of Guaranty), the following provisions apply:

(a) Within ten (10) days after the date of the contract award, the Contractor shall furnish the Contracting Officer a BLG or Letter of Guaranty for the performance of work in the amount of fifteen percent (15%) or $150,000 U.S. Dollars, whichever is less of the contract price, conforming to the exact format as the sample BLG attached.

(b) The Letter of Guaranty shall state that it will continue in effect until the work under the contract has been finally inspected and accepted by the Government, and thereafter it will continue in effect without change in amount or terms until expiration of any applicable warranty periods or extensions thereof.

(c) The Letter of Guaranty shall also state that the bank agrees and consents that the contract may be modified by a change order or supplemental agreement without affecting the validity of the Letter of Guaranty. The Contracting Officer may require, and the Contractor shall furnish, an increase in the Bank Letter of Guaranty due to increases to the contract value. The Bank Letter of Guaranty may be issued by a Bank, Insurance Company, or other valid financial institution deemed acceptable to the Contracting Officer.

(d) The BLG must be accompanied by a notarized Certificate of Authority verifying the authority of the signatory to execute the Guaranty on behalf of the institution issuing the Guaranty.

The provisions of paragraph (g) of the Contract Clause 52.232-5 titled

“PAYMENTS UNDER FIXED PRICE CONSTRUCTION CONTRACTS (MAY 2014)

applies to Letters of Guaranty.

Note: Contract Clause 52.232-5 does not provide for reimbursement to the

Contractor for premiums above and beyond the contract amount.

(6) Notice to Proceed will not be issued until the Contractor has submitted a properly formatted and executed BLG.

(End of Requirement)

B. SAMPLE PERFORMANCE SURETY - BANK LETTER OF GUARANTY

BANK LETTER OF GUARANTY

[Bank Letterhead]

[Place]

[Date]

To: U.S. Army Corps of Engineers, Transatlantic Expeditionary District Attn: Yvette Walker, Contracting Officer Building T-340

APO, AE 09366

Letter of Guaranty Number: _____________________________

The undersigned, acting as the duly authorized representative of the bank, declares that the bank hereby guarantees to effect payment to the Contracting Officer by check made payable to the Treasurer of the United States, within seven (7) days after receipt of written request from the Contracting Officer, immediately and entirely without any need for the Contracting Officer to protest or to take any legal action or obtain the prior consent of the Contractor or for any other proof, action or decisions by any other authority, up to the sum of (Amount Equal to fifteen percent (15%) or $150,000.00 U.S.

Dollars, whichever is less of the contract price in U.S. Dollars) which represents the deposit required of the Contractor to Guaranty fulfillment of his obligations for the satisfactory, complete, and timely performance of the work under Contract (Contract Number) for (Description of Work) at (Location of Work) in strict compliance with the terms, conditions, and specifications of said contract entered into between the Government and (Name of Contractor) of (Address of Contractor) on (Contract Date), plus interest of 10.25% per annum on the amount called due, calculated from the sixth day following receipt of the Contracting Officer’s written request until the date of payment.

The undersigned agrees and consents that said contract may be modified by Change Order or Supplemental Agreement without affecting the validity of this Guaranty provided; however, that the amount of this Guaranty shall remain unchanged.

The Letter of Guaranty will remain in effect at an amount equal to fifteen percent (15%) or $150,000.00 U.S. Dollars, whichever is less of the contract price until anticipated completed date or until the work has been finally accepted by the Government, and during all applicable warranty periods or extensions thereof.

The obligation of the bank guarantor to make payment under this Letter of Guaranty upon the Contracting Officer’s demand is unconditional and not subject to any defense, based on alleged invalidity of this Guaranty, invalidity of the contract between the U.S.

and the party on whose behalf this Guaranty was issued, lack or failure of consideration, or any other circumstances or representations not contained within this Letter of Guaranty.

This Bank Letter of Guaranty shall be governed by and interpreted in accordance with the laws of the State of New York, without regard to its conflict of laws principles.

The exclusive forum for resolution of any and all disputes arising from or related to this Bank Letter of Guaranty shall be the United States District Court for the District of Columbia.

Printed Name of Signature Authority: _______________________________________

Signature / Signed By:___________________________________________________

Title: ________________________________________________________________

Note: Certificate of Authority is attached evidencing authority of the signers to bind the Bank in this document.