80 FR 63485 - Federal Acquisition Regulation: Revision to Standard Forms for Bonds

GENERAL SERVICES ADMINISTRATION
DEPARTMENT OF DEFENSE
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

Federal Register Volume 80, Issue 202 (October 20, 2015)

DoD, GSA, and NASA are proposing to revise Standard Forms prescribed by the Federal Acquisition Regulation (FAR) for contracts involving bonds and other financial protections. The revisions are aimed at clarifying liability limitations and expanding the options for organization types.

[Federal Register Volume 80, Number 202 (Tuesday, October 20, 2015)]
[Proposed Rules]
[Pages 63485-63497]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-26581]


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GENERAL SERVICES ADMINISTRATION

DEPARTMENT OF DEFENSE

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 53

[FAR Case 2015-025; Docket No. 2015-0025; Sequence No. 1]
RIN 9000-AN11


Federal Acquisition Regulation: Revision to Standard Forms for 
Bonds

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: DoD, GSA, and NASA are proposing to revise Standard Forms 
prescribed by the Federal Acquisition Regulation (FAR) for contracts 
involving bonds and other financial protections. The revisions are 
aimed at clarifying liability limitations and expanding the options for 
organization types.

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat at one of the addresses shown below on or before 
December 21, 2015 to be considered in the formation of the final rule.

ADDRESSES: Submit comments in response to FAR Case 2015-025 by any of 
the following methods:

[[Page 63486]]

     Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by searching for ``FAR Case 
2015-025''. Select the link ``Comment Now'' that corresponds with ``FAR 
Case 2015-025''. Follow the instructions provided on the screen. Please 
include your name, company name (if any), and ``FAR Case 2015-025'' on 
your attached document.
     Mail: General Services Administration, Regulatory 
Secretariat (MVCB), ATTN: Ms. Flowers, 1800 F Street NW., 2nd Floor, 
Washington, DC 20405-0001.
    Instructions: Please submit comments only and cite FAR Case 2015-
025, Revision to Standard Forms for Bonds in all correspondence related 
to this case. Comments received generally will be posted without change 
to http://www.regulations.gov, including any personal and/or business 
confidential information provided. To confirm receipt of your 
comment(s), please check www.regulations.gov, approximately two to 
three days after submission to verify posting (except allow 30 days for 
posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Kathlyn J. Hopkins, Procurement 
Analyst, at 202-969-7226 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat Division at 202-501-4755. Please cite FAR Case 2015-025.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA are proposing to revise the FAR to clarify 
liability limitations and to expand the options for organization types 
on Standard Forms (SFs) 24, 25, 25A, 34, and 35. This case addresses 
concerns of surety bond producers that may be adversely affected by 
differing Federal Agency views on the proper type of organization to 
indicate on these Standard Forms when a business is a limited liability 
company (LLC), which is an increasingly prevalent form of business in 
the construction industry. In some cases, companies are being told to 
leave the ``Type of Organization'' block blank because there is no good 
fit; in other cases, they select the closest fit and are challenged on 
that selection. To address these concerns, this rule proposes to add a 
box labelled ``Other: (Specify)'' to the ``Type of Organization'' block 
on each of the five forms (SFs 24, 25, 25A, 34, and 35) in order to 
expand the range of business types to include LLCs and others, as they 
evolve.
    In addition, there have been questions about the appropriate value 
to report in the ``Liability Limit'' block on these standard forms 
(i.e., whether to cite the Surety Company's T-limit, as established by 
the Treasury Department, or the penalty limit for a given bond (its 
face value)); this has caused processing delays and even some 
rejections of bids. To address this concern, this rule proposes to add 
clarifying instructions to each of the forms (SFs 24, 25, 25A, 34, and 
35) that amplify the fact that the typical value put into the 
``Liability Limit'' block is the face value of the bond, unless a co-
surety arrangement is proposed. These instructions are inserted into 
item (4) of the SF 24 and into item (3) of SFs 25, 25A, 34, and 35, 
along with some editorial corrections to the existing instructions.

II. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    DoD, GSA, and NASA do not expect this proposed rule to have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act 5 U.S.C. 601, et 
seq., because the rule simply provides additional choices for offerors 
in characterizing their organization types on SFs 24, 25, 25A, 34, and 
35, as well as clarifying what offerors should specify in terms of 
liability limits. However, an initial regulatory flexibility analysis 
(IRFA) has been prepared consistent with 5 U.S.C. 603. The analysis is 
summarized as follows:

    The reason for this action is to provide more choices for 
organization types on five Standard Forms and to clarify 
instructions; the action's objective is to make the forms more 
reflective of current forms of business in the construction 
industry. The proposed rule would apply to all entities, both small 
and other than small, performing as contractors or subcontractors on 
U.S. Government contracts that require bonds and other financial 
protections. The Federal Procurement Data System-Next Generation 
(FPDS-NG) indicates that the U.S. Government awarded 3,495 new 
construction contracts that required bonds and other financial 
protections from October 1, 2014 through August 4, 2015. 
Approximately 78 percent (2,711) of the total awards (3,495) were 
awarded to small entities (comprised of 1,687 unique small 
entities). However, the small entities will not be materially 
affected by this rule, as it simply allows all businesses to choose 
from a broader array of organization types.
    There are no reporting or recordkeeping requirements associated 
with this rule.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There were no significant alternatives identified that would 
meet the objective of the rule.

    The Regulatory Secretariat has submitted a copy of the IRFA to the 
Chief Counsel for Advocacy of the Small Business Administration. A copy 
of the IRFA may be obtained from the Regulatory Secretariat. DoD, GSA, 
and NASA invite comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAR Case 2015-025), 
in correspondence.

IV. Paperwork Reduction Act

    This rule affects the information collection requirements in the 
provisions at FAR 28.1 and 28.2; 52.228-1; 52.228-2; 52.228-13, 52.228-
15; and 52.228-16, currently approved under OMB Control Number 9000-
0045, titled: Bid Guarantees, Performance, and Payments Bonds, in 
accordance with the Paperwork Reduction Act (44 U.S.C. chapter 35). The 
impact, however, is negligible, because this rule simply provides 
additional choices for offerors in characterizing their organization 
types on SFs 24, 25, 25A, 34, and 35, as well as clarifying what 
offerors should specify in terms of liability limits.

List of Subjects in 48 CFR Part 53

    Government procurement.

William F. Clark,
Director, Office of Government-Wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-Wide Policy.

    Therefore, DoD, GSA, and NASA proposes to amend 48 CFR part 53 as 
set forth below:

[[Page 63487]]

PART 53--FORMS

0
1. The authority citation for 48 CFR part 53 continues to read as 
follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

0
2. Amend section 53.228 by revising the introductory text and 
paragraphs (a) through (g) to read as follows:


53.228  Bonds and insurance.

    The following standard forms are prescribed for use for bond and 
insurance requirements, as specified in part 28 of this chapter:
    (a) SF 24 (Rev. (Date)) Bid Bond. (See 28.106-1.) SF 24 is 
authorized for local reproduction and can be found in the GSA Forms 
Library at gsa.gov/forms.
    (b) SF 25 (Rev. (Date)) Performance Bond. (See 28.106-1(b).) SF 25 
is authorized for local reproduction and can be found in the GSA Forms 
Library at gsa.gov/forms.
    (c) SF 25-A (Rev. (Date)) Payment Bond. (See 28.106-1(c).) SF 25-A 
is authorized for local reproduction and can be found in the GSA Forms 
Library at gsa.gov/forms.
    (d) SF 25-B (Rev. 10/83), Continuation Sheet (For Standard Forms 
24, 25, and 25-A). (See 28.106-1(d).) This form can be found in the GSA 
Forms Library at gsa.gov/forms.
    (e) SF 28 (Rev. 6/03) Affidavit of Individual Surety. (See 28.106-
1(e) and 28.203(b).) SF 28 is authorized for local reproduction and can 
be found in the GSA Forms Library at gsa.gov/forms.
    (f) SF 34 (Rev. (Date)), Annual Bid Bond. (See 28.106-1(f).) SF 34 
is authorized for local reproduction and can be found in the GSA Forms 
Library at gsa.gov/forms.
    (g) SF 35 (Rev. (Date)), Annual Performance Bond. (See 28.106-1.) 
SF 35 is authorized for local reproduction and can be found in the GSA 
Forms Library at gsa.gov/forms.
* * * * *
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3. Revise section 53.301-24 to read as follows:


53.301-24  Bid Bond.

BILLING CODE 6820-EP-P

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4. Revise section 53.301-25 to read as follows:


53.301-25  Performance Bond.
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5. Revise section 53.301-25A to read as follows:


53.301-25A  Payment Bond.
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6. Revise section 53.301-34 to read as follows:


53.301-34  Annual Bid Bond.
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7. Revise section 53.301-35 to read as follows:


53.301-35  Annual Performance Bond.
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[FR Doc. 2015-26581 Filed 10-19-15; 8:45 am]
 BILLING CODE 6820-EP-C