January 26, 2004

FEDERAL CLAIMS COURT UPHOLDS TERMINATION FOR DEFAULT FOR FAILURE TO MAINTAIN AN ADEQUATE PAYMENT BOND

United States Court of Federal Claims

By Lawrence E. Conley, AIA, Esq.
Contributing Editor

When the surety became insolvent, the contractor on a Corps of Engineers project did not take steps to obtain a payment bond. The contractor was terminated for default. Its multiple defenses, including its assertion that the reinsurance covered both performance and payment bonds, was insufficient to overturn the termination.

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