§3131 — Title 40 Public Buildings, Property, and Works | U.S. Code

Summary

Requires a person who wins a federal contract over $100,000 for building, changing, or fixing a public building or public work to give two bonds before the award. One bond guarantees the work will be done (performance bond) and the other guarantees people who supply labor and materials get paid (payment bond). The contracting officer must find the bond company acceptable and set the amounts. The payment bond normally must equal the total contract price unless the officer writes that this is impractical and sets a lower amount; it cannot be smaller than the performance bond. The performance bond must also cover taxes the government takes out or withholds from workers’ pay. The government must notify the bond company in writing about unpaid taxes within 90 days after the contractor files a return, but no later than 180 days after the return was due, and it cannot sue on the bond for those taxes unless notice was given and the suit is filed within one year after the notice. Contractor: the person awarded the contract described above. A contracting officer can waive both bonds for work done in a foreign country if the bonds are impractical to get. The officer can also require extra or different security beyond these rules.

Title 40, §3131

Public Buildings, Property, and Works — Source: USLM XML via OLRC

(a)In this subchapter, the term “contractor” means a person awarded a contract described in subsection (b).

(b)Before any contract of more than $100,000 is awarded for the construction, alteration, or repair of any public building or public work of the Federal Government, a person must furnish to the Government the following bonds, which become binding when the contract is awarded:

(1)A performance bond with a surety satisfactory to the officer awarding the contract, and in an amount the officer considers adequate, for the protection of the Government.

(2)A payment bond with a surety satisfactory to the officer for the protection of all persons supplying labor and material in carrying out the work provided for in the contract for the use of each person. The amount of the payment bond shall equal the total amount payable by the terms of the contract unless the officer awarding the contract determines, in a writing supported by specific findings, that a payment bond in that amount is impractical, in which case the contracting officer shall set the amount of the payment bond. The amount of the payment bond shall not be less than the amount of the performance bond.

(c)(1)Every performance bond required under this section specifically shall provide coverage for taxes the Government imposes which are collected, deducted, or withheld from wages the contractor pays in carrying out the contract with respect to which the bond is furnished.

(2)The Government shall give the surety on the bond written notice, with respect to any unpaid taxes attributable to any period, within 90 days after the date when the contractor files a return for the period, except that notice must be given no later than 180 days from the date when a return for the period was required to be filed under the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.).

(3)The Government may not bring a civil action on the bond for the taxes—

(A)unless notice is given as provided in this subsection; and

(B)more than one year after the day on which notice is given.

(d)A contracting officer may waive the requirement of a performance bond and payment bond for work under a contract that is to be performed in a foreign country if the officer finds that it is impracticable for the contractor to furnish the bonds.

(e)This section does not limit the authority of a contracting officer to require a performance bond or other security in addition to those, or in cases other than the cases, specified in subsection (b).

Notes & Related Subsidiaries

Historical and Revision Notes

Revised SectionSource (U.S. Code)Source (Statutes at Large) 3131(a)40:270a(a) (words before cl. (1) related to definition).Aug. 24, 1935, ch. 642, § 1(a)–(c), 49 Stat. 793; Pub. L. 95–585, Nov. 2, 1978, 92 Stat. 2484; Pub. L. 103–355, title IV, § 4104(b)(1)(B), Oct. 13, 1994, 108 Stat. 3342; Pub. L. 106–49, § 2(a), Aug. 17, 1999, 113 Stat. 231. 40:270d.Aug. 24, 1935, ch. 642, § 4, 49 Stat. 794. 3131(b)40:270a(a) (words before cl. (1) related to furnishing bond), (1), (2). 40:270d–1.Aug. 24, 1935, ch. 642, § 5, as added Pub. L. 103–355, title IV, § 4104(b)(1)(A), Oct. 13, 1994, 108 Stat. 3341. 3131(c)40:270a(d).Aug. 24, 1935, ch. 642, § 1(d), as added Pub. L. 89–719, title I, § 105(b), Nov. 2, 1966, 80 Stat. 1139. 3131(d)40:270a(b). 3131(e)40:270a(c). In subsection (a), the text of 40:270d is omitted because of 1:1. In subsections (b) and (c), the words “or sureties” are omitted because of 1:1.

References in Text

The Internal Revenue Code of 1986, referred to in subsec. (c)(2), is classified to Title 26, Internal Revenue Code.

Editorial Notes

Amendments

2006—Subsec. (e). Pub. L. 109–284 substituted “To” for “to” in heading.

§3131 Bonds of contractors of public buildings or works