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B-207993 1 (1982-08-18)

handle is hein.gao/gaobadqmr0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFiCE WASHIN~GTON, D.C. 20548 O1rZCe OF GMERAL COUNSM August 18, 1982 B-207993 Dear Mr.. This is in response to your june 16, 1982, letter concerning a surety's role under defaulted construction contracts. You note that this Office has indicated in one of its reports that a surety generally has the option, up default of a Federal construction contract, of deciding the manner in which the contract will be completed. You add that the report recognized that one method available to the surety is for the surety to secure another contractor, accceptable to the agency, with whom the agency then contracts to complete th~e project You are concerned that the National Aeronautics arid Space Administration (NAS?) may not allow the surety the option of finding a substitute contractor, thus limiting the surety to entering into a takeover agreement° The report to which you refer is entitled Use of Surety Bonds In Federal Construction Should Be Improved (January l7 1975, LCD-74-3!9)o In that report, we noted that when a default occurs, the surety generally ma either: (!) enter into a takeover agreement with the Government; (2) secure another conitractor acceptable to the Government with whom the( Gcvernment will contract for project completion; or (3) decide not to act and thus allow the agency to determine how to complete the pro ject°

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