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Payment and Performance Bonds

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Under construction contracts, how long can the Federal Government retain a payment and performance bond after completion of the contract. Was this timeframe established under the Miller Act, US Code, Title 40, Section 3131 (B) (4) - Payment Bonds

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Miller does not establish a specific period for release of obligation under a federal construction performance bond.

Performance bonds guarantee a specific contract. The surety is obligated until contractual promises are fulfilled by the obligated principal, i.e. contractor. So I would say it would depend on the terms of the specific contract. If there have been no claims of breach or termination for default and all contractual obligations met by the contractor, the surety is released of obligation.

WRT payment bonds, I believe claims must be made within one year of the date of the sub's or suppliers last work on the project.

Hope that helps.

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Guest carl r culham

Read the claues or termsn and conditions found on the Performance and Payment bond themselves. For example if you are using the SF 25 Perofmrance Bond and the SF 25A Payment Bond the "OBLIGATIONS" and "CONDITIONS" stipulate when the bond is released. In the former it is after the term of the original contract and any modifications thereto have been met and for the latter it is when payment has been made by the Principle and subcontractors of the Principal to those furnishing labor, material or both.

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I have seen contracts which stipulated that the performance bond was effective through the construction warranty period.

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Guest carl r culham

Joel - It is my understanding that if you have a warranty period stipulated in the contract, and the SF 25 is the Performance Bond, the warranty is then a "undertakings, covenants, terms, conditions and agreement of the contract" and therefore the performance bond is in effect until the warranty period has ended. The Performance Bond then becomes enforceable if the Principle or subcontractor of the Principal fails to perform the required warranty work.

With this belief it seems to be an extra term/condition of the contract to stipulate something the bond already does. I guess stating twice is always good but seems like extra effort to me. I would also question whether a term of the contract is an enforceable obligation and condition of the bond? It seems the bond is a standalone surety document and must contain when, where and how it is enforceable otherwise why even have the bond as a separate document just include bonding clauses/endorsements in the contract itself?

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Joel - It is my understanding that if you have a warranty period stipulated in the contract, and the SF 25 is the Performance Bond, the warranty is then a "undertakings, covenants, terms, conditions and agreement of the contract" and therefore the performance bond is in effect until the warranty period has ended. The Performance Bond then becomes enforceable if the Principle or subcontractor of the Principal fails to perform the required warranty work.

With this belief it seems to be an extra term/condition of the contract to stipulate something the bond already does. I guess stating twice is always good but seems like extra effort to me. I would also question whether a term of the contract is an enforceable obligation and condition of the bond? It seems the bond is a standalone surety document and must contain when, where and how it is enforceable otherwise why even have the bond as a separate document just include bonding clauses/endorsements in the contract itself?

So what is the construction warranty period?

FAR Release of Liens . . .. . .

(1) Contracts subject to the Miller Act. The security interest shall be maintained for the later of?

(i) 1 year following final payment;

(ii) Until completion of any warranty period (applicable only to performance bonds); or . . .

Says any warranty period. So can a contractor be on the hook for a 10 year warranty on a roof? The commitment seems a bit excessive. Any thoughts?

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