By: Hopewell Darneille
The FAR Council recently issued a final rule amending five standard forms prescribed by the Federal Acquisition Regulation (FAR) for contracts involving bonds and other financial protections. The revisions are aimed at expanding the options for organization types and clarifying liability limitations.
More particularly, the new rule addresses the concerns by surety bond producers that they may be adversely affected by differing Federal Agency views on the proper type of organization to indicate on Standard Forms (SFs) 24, 25, 25A, 34, and 35 when the subject business was a limited liability company (LLC). It does so by adding a box labelled “Other: (Specify)” to the ‘‘Type of Organization’’ block on each of the five forms so that the range of possible business types now includes not just LLCs, but others, as they may evolve.
In addition, in response to recent questions from the construction industry regarding the appropriate value to report in the “Liability Limit” block on SFs 24, 25, and 25A, the rule adds this clarifying instruction to those SFs: “The value put into the LIABILITY LIMIT block is the penal sum (i.e. the face amount) of the bond, unless a co-surety arrangement is proposed.”
The new rule goes into effect on August 15, 2016.
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