Secrets of Bonding #120: About the “T-List”

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If:  

  1. You are interested or active in Surety Bonds (bid, performance & payment, etc.), and…
  2. You think the T-list is who you are following on Twitter, then… 
  3. You need to read this article!

What is the T-List?           (Click for mood music) 

For bond producers / agents, bonding companies and bonded contractors, Circular 570 (the official document title) is the list of sureties accepted on federal projects produced annually by the federal Treasury department. It is easily found online.

What does the list provide?

In addition to the name and address of the approved bonding companies, it states the maximum acceptable amount for any one bond (based on the surety’s financial position), and where the surety has indicated it is licensed.

Is a T-listed performance and payment bond required on all federal projects?T

Generally yes, although small and emergency contracts, and some service and commodity contracts are not bonded. The feds will also accept alternatives to a bond such a “cash” deposit held by the government, and tripartite agreements (which is a form of funds administration.)

Federal contracting officers also may have the latitude to accept a non T-listed surety on larger contracts if they deem it is in the best interests of the government.

Is a T-Listed bid bond required on federal projects?

Yes, when bid security is stipulated and a bond is the chosen method of compliance.  For example, a form of cash may be allowed at this stage, then a bond could be used for performance and payment.  Another twist, some federal projects call for a “bondability letter” instead of bid security.  This indicates the sureties interest in supporting the contract, but does not include a penal sum or any form of financial penalty.

Is the T-list required on state or municipal contracts?

Circular 570 is intended to be a federal requirement, although state and municipal owners may choose to stipulate it as a means of pre-qualifying the bonding companies.

t-400

When a surety is on the list, does the federal government “back” the bonding company for the benefit of other parties?

No, it is merely the government’s internal opinion regarding the condition of the surety.  The feds make no guarantee to 3rd parties regarding the viability of the surety, or the correctness of including them on the list

Can a surety fail while enjoying “approved” status on the list?

Yup.

Are there any strong bonding companies that are not on the list?

Yes, many!  Only sureties that decide they want to be on the list are reviewed by the federal analysts.  They must submit their info and go through the process.  Some bonding companies are not intending to bond federal contracts, or may be ineligible for some reason.  They could be among the strongest sureties in the country, but would not be on the list.

Must subcontractors on federal projects use T-listed sureties?

It is not automatically required because these are considered private contracts between the general / prime contractor and the subcontractor. However, see next question…

What about private owners?

On private contracts, such as ALL subcontracts and projects with an owner that is not a public entity, the bonding requirements are at the owner’s discretion – including whether or not they even want a bond. They may demand the use of their own special bond form (some general contractors develop a subcontract bond form extra beneficial to them) and may stipulate a T-list requirement.THE A-TEAM -- Pictured: Mr. T as Sgt. Bosco "B.A." Baracus -- Photo by: Herb Ball/NBCU Photo Bank

In some cases, the GC’s surety makes the subcontract bonding requirements.

Conclusion

In essence, always assume a Circular 570 surety is required on federal contracts.  The bond amount cannot exceed the limit stated on the list, and the bond should state the surety’s address as indicated on 570.

When other public entities require the T-list, such as state or municipal owners, it is mandatory because there is normally no flexibility in their specifications. However private owners set their own rules so subcontractors and GCs working for private owners may have the opportunity to negotiate away the T-list requirement if their viable surety is not on the federal list.

Insurance Agents and Contractors: when tough bonding situations arise, we have the markets and the know-how to succeed even when others have failed.

Give us a call today!  856-304-7348

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