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SFAA Comments on Commerce Department Bond Waivers for Vessel Contracts

Tuesday, May 19, 2015  
SFAA submitted comments on an interim final rule that the Department of Commerce (Department) adopted to implement a new law that authorizes waiver of the bond requirements under the Miller Act for contracts for the construction, alteration, or repair of vessels for the National Atmospheric and Oceanographic Administration (NOAA). Due the technical nature of the projects and the frequent need for emergency repairs, the Department believes that bonding has inhibited competition by placing an undue burden on smaller shipyards bidding for this work. SFAA requested that the Department reconsider its decision to exercise this waiver authority, explaining the benefits of performance and payment bonds through pre-qualification of the principal and financial protection in the event of a default for the Department and tax payers as well as for subcontractors and suppliers. SFAA urged that if the waiver authority will be exercised, there needs to be a clear standard for when bonds will be waived. The interim final rule  only indicates that the contracting officer will require bonds in “unusual circumstances.

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