chapter 5 procurement of construction architect …

2 GAR - ADMINISTRATIONDiv. 4 - Procurement Regulations

CH. 5 - CONSTRUCTION, ARCHITECT-ENGINEER & LAND SURVEYINGSERVICES - 2002 UPDATE P. 1

CHAPTER 5PROCUREMENT OF CONSTRUCTION ARCHITECT-ENGINEER

AND LAND SURVEYING SERVICES

§5101. Reserved.§5102. Responsibility for Selection of Methods of Construction

Contracting Management.§5103. Bid Security (Requirement).§5104. Contract Performance and Payment Bonds.§5105. Bond Forms and Copies.§5106. Contract Clauses and Their Administration. §5107. Fiscal Responsibility.§5108. Architect-Engineer and Land Surveying Services.

§5101. Reserved.§5102. Responsibility for Selection of Methods of

Construction Contracting Management. (1) Application ofRegulation and General Policy.

(a) Application. This Section contains provisionsapplicable to the selection of the appropriate method ofmanagement for construction contracts, that is, thecontracting method and configuration that will mostlikely result in timely, economical, and otherwisesuccessful completion of the construction project.

(b) Flexibility. It is intended that the Director ofPublic Works or the head of the Purchasing Agency,acting through the Procurement Officer, have sufficientflexibility in formulating the project delivery approachin a particular project to fulfill the territory's needs. Ineach instance, consideration commensurate with theproject's size and importance should be given to all theappropriate and effective means of obtaining both thedesign and construction of the project. The methods forachieving those purposes set forth in this Section are notto be construed as an exclusive list.

(c) Selecting the method of ConstructionContracting. In selecting the construction contractingmethod, the Director of Public Works or the head of thePurchasing Agency should consider the results achievedon similar projects in the past and the methods used.Consideration should be given to all appropriate andeffective methods and their comparative advantages anddisadvantages and how they might be adapted orcombined to fulfill territorial requirements.

(d) Use of Regulation. This Regulation is intendedto guide territory personnel in selecting the appropriatecontracting method. It is not intended to create any thirdparty rights.

2 GAR - ADMINISTRATIONDIV. 4 - PROCUREMENT REGULATIONS

CH. 5 - CONSTRUCTION, ARCHITECT-ENGINEER & LAND SURVEYINGSERVICES - 1997 P. 2

(2) Lease, Buy, or Building. Before initiating aconstruction project, consideration shall be given to leasingor buying existing building space as well as to constructingnew space. As appropriate the Director of Public Works andthe head of the Using Agency should participate in decidingwhether to lease, buy, or build. Factors to consider whenchoosing between these three alternatives include, but are notlimited to:

(a) whether the territory's requirements will becontinuing or temporary;

(b) the need for territorial control over the building;(c) the adequacy of available space to fit territorial

needs;(d) to the extent they are reasonably known or

ascertainable, the life-cycle costs associated with leasing,buying, or building;

(e) which method can most timely meet andcontinue to meet territorial requirements;

(f) the need to physically separate and distinguishterritory facilities from private facilities;

(g) the dislocation of existing tenants, bothcommercial and residential, that may result; and

(h) environmental affects.(3) General Description.

(a) Use of Descriptions. The following descriptionsare to provide a common vocabulary for use in thecontext of this regulation and for general discussionconcerning the construction contracting activities ofthis territory. The methods described are not allmutually exclusive and often may be combined onone project. These descriptions are not intended tobe fixed in respect to all construction projects of theterritory. In each project these descriptions may beadapted to fit the circumstances of that project.However, the Procurement Officer should endeavorto ensure that these terms are described adequatelyin appropriate contracts, are not used in amisleading manner, and are understood by allrelevant parties. Significant deviations from thedescriptions provided in these Regulations shouldbe explicitly noted.(b) Single Prime Contractor. The single prime

contractor method of contracting is typified by onebusiness (general contractor) contracting with theterritory to timely complete an entire constructionproject in accordance with plans and specifications



provided by the territory. Often these plans andspecifications are prepared by a private architecturalfirm under contract to the territory. Further, while thegeneral contractor may take responsibility for successfulcompletion of the project, much of the work may beperformed by specialty contractors with whom theprime contractor has entered into subcontracts.

(c) Multiple Prime Contractors. Under the multipleprime contractor method, the territory or the territory'sagent contracts directly with a number of specialtycontractors to complete portions of the project inaccordance with territory plans and specifications. Theterritory or its agent may have primary responsibility forsuccessful completion of the entire project, or thecontracts may provide that one of the multiple primecontractors has this responsibility.

(d) Design Build or Turnkey. In a design-build orturnkey project, a business contracts directly with theterritory to meet the territory's requirements asdescribed in a set of performance specifications byconstructing a facility to its own plans and specifications.Design responsibility and construction responsibilityboth rest with the design-build contractor. This methodcan include instances were the design-build contractorsupplies the site as part of the package.

(e) Construction Manager. A construction manageris a person experienced in construction that has theability to evaluate and to implement plans andspecifications as they affect time, cost, and quality ofconstruction and ability to coordinate the design andconstruction of the project, including the administrationof change orders. The territory contracts with a qualifiedconstruction manager to act for the territory in theconstruction project as specified in the constructionmanagement contract. At times, the constructionmanager may become the single prime contractor, ormay guarantee that the project will be completed ontime and will not exceed a specified maximum price. Atsuch times, the construction manager will becomeresponsible, just as any single prime contractor, tocomplete the project at or below the specified price.

(f) Sequential Design and Construction. Sequentialdesign and construction denotes a method in whichdesign of substantially the entire structure is completedprior to beginning the construction process.

(g) Phased Design and Construction. Phased



design and construction denotes a method in whichconstruction is begun when appropriate portions havebeen designed, but before substantial design of the entirestructure has been completed. This method is alsoknown as “fast-track construction”.(4) Criteria for Selecting Construction contracting

Methods. (a) Territory Requirements. Before choosing the

construction contracting method to use, a carefulassessment must be made by the Director of PublicWorks or the head of an Agency, of requirements theproject must satisfy and those other characteristics thatwould be desirable. In addition to those set forth inSubsections 5102(4)(b) and 5102(4)(c) of this Section,some of the factors to consider are:

(1) when the project must be ready to beoccupied;

(2) the type of project - for example, housing,offices, or heavy or specialized construction such ashighway or water treatment;

(3) the extent to which the territory'srequirements and the ways in which they are tobe met are known;(4) the location of the project and whether a

contractor's site may be used; and(5) the size, scope, complexity, and economics

of the project.(b) Territory Resources.

(1) The amount and type of financing availablefor the project is relevant to the selection of theappropriate construction contracting methodincluding:

(i) whether the budget is fixed or flexible;(ii) what the source of funding is, for

example, general or special appropriation,federal assistance monies, public improvementbonds, or general obligation bonds.(2) Proper selection of a contracting method

depends upon a realistic appraisal of theavailability, qualifications, and experiencedterritorial personnel can bring to the project and, ofequal importance, how much time such personnelcan devote to the project.

(3) When examining resources for a proposedconstruction project, the availability of outsideconsultants may be considered. Such consultants



may be able to handle tasks and supply valuableexpertise otherwise unavailable to the territory.(c) Prospective Contractors. Choice of the proper

construction contracting method entails not only theinternal examination described in Subsection 5102(4)(a)and 5102(4)(b)of this Section, but must take into accountthe characteristics, experience, and availability of thecontractors who can work on the project. The designfirms the territory may contract with to prepare theplans and specifications must be evaluated as a group todetermine whether they can efficiently divide the workinto specialty packages if multiple prime contractor areto be used, or design the project in phases appropriate touse of phased design and construction. Prospectiveconstruction contractors must also be appraised as agroup to determine whether they have the capabilityand willingness to bid on the construction project asdesigned and as required by the contracting methodchosen. Similarly, if the contracting method involves useof consultants, an evaluation of the availability ofqualified consultants should also be made. If thedesign-build method or some variation of it isconsidered, availability of firms capable of bothdesigning and constructing the facility must beascertained. In respect to all of the potential contractors,it is important to consider the amount of competitioncurrent in the market for the particular type of territorycontract and whether a price can be obtained that is fairand reasonable when considered together with thebenefit to the territory potentially obtainable from sucha contract.

(d) Chief Engineer's Determination. The ChiefEngineer shall make a written determination that mustbe approved by the Director of Public Works or the headof an agency. The determination shall describe theconstruction contracting method chosen and set forth thefacts and conclusions which led to the selection of thatmethod. This determination need only support thecontracting method selected. It shall, however,demonstrate that the territory's requirements, itsresources, and the various groups of potentialcontractors were all considered in making the selection.(5) Single Prime Contractor.

(a) Use with Sequential Design and Construction.When sequential design and construction is used with asingle prime contractor, comprehensive plans and



specifications that are precise enough to allowprospective prime (general) contractors to submit acompetitive sealed bid should be prepared. Thecontractor awarded the contract takes responsibility forthe coordination of the specialty subcontractors andtimely completion of the project at the price specified inthe contract. The architect-engineer, the territory projectmanager, and if used, the construction manager shallmonitor the progress of the project and otherwiserepresent the territory's interest all as set forth in thepertinent contracts.

(b) Advantages. The primary advantage of thesingle prime contractor method is that the territory canlook to one prime contractor who has principalresponsibility for completing the project. The singleprime contractor method may also give the territorycontractual insulation from many subcontractor claims.Also, when sequential design and construction is used,the territory is given a fixed price for completion of theentire project before the construction has begun.

(c) Disadvantages. The single prime contractormethod removes specialty contractors from directterritory control. This method is likely to entail includingin the cost of the total project the prime contractor'spotential markup on each specialty contract. On theother hand, the prime contractor's services in managingthese contractors may well offset any possible markupby eliminating the need for a construction manager.

(d) Use with Phased Design and Construction. Asingle prime contractor may also be used with phaseddesign and construction through the letting by theterritory of the early construction phases to specialtycontractors, and the letting of a portion of the project toa prime contractor when the plans and specifications aresufficiently complete to allow bids to be made. If foundadvantageous after letting the prime contract, theterritory may transfer or assign to the contractor theadministration of the specialty contracts it let earlier, asprovided in the contract.

(e) Advantages and Disadvantages of Use withPhased Design and Construction. Using a single primecontractor with phased design and construction has theadvantages of having a single prime contractorresponsible for the entire job and also allowingconstruction to begin before all of the design iscompleted. The disadvantages are that the territory or its



construction manager must supervise and coordinate thework of the early specialty contractors, and the primecontractor will not be able to choose those early specialtycontractors and may have to work with someone theprime contractor would not have chosen. As aconsequence, the territory may be exposed to moreclaims based upon assertions of mismanagement, andthe prime contractor bids may be proportionately higherthan they would have been otherwise.

(f) Contractual Provisions. The rights, duties, andresponsibilities of the territory representatives, thearchitect-engineer, the general prime contractor, and, ifapplicable, the construction manager and any specialtycontractors who contract with the territory must becarefully detailed. If phased design and construction isused, administration of on-going specialty contracts letbefore the prime contract will have to be transferred orassigned to the prime contractor. The terms of thisassignment or transfer (including the duties of theterritory to ensure that the specialty contractors are at acertain point of completion at the time of assignment),what liability to the specialty contractors remains withthe territory after assignment, if any, and what dutiesand responsibilities the general prime contractor haswith respect to the assigned specialty contractors mustall be set forth in the specialty contracts and the contractwith the prime contractor.(6) Multiple Prime Contractors.

(a) Use. Multiple prime contractors may be usedwith sequential design and construction by splitting theplans and specifications into packages pertinent torecognized trade specialties. The territory mayundertake to manage and coordinate their work orcontract with a construction manager to do so. Thecontracts may provide that responsibility for successfulcompletion of the entire project rests with the territory,the territory's agent, or one of the multiple primecontractors. The contracts shall specify where thisresponsibility shall rest. Multiple prime contractors maybe used effectively with phased design and constructiononly if the architect-engineer's work is closelycoordinated with the specialty contractors' work. Thespecialty contractors may either contract directly withthe territory or with its construction manager.

(b) Advantages. The multiple prime contractorsmethod can lessen the prime contractor's markup, if any,



on the specialty contractors' contracts and gives theterritory much greater control over the contractors doingthe work. It permits the territory to be more involved inthe selection of specialty contractors, allows the territoryto prescribe how they will compete for the contract, andgive the territory more flexibility in deciding when toenter the construction market and with what sizecontracts.

(c) Disadvantages. The multiple prime contractormethod places all the risks of managing andcoordinating the construction work with the territory.The territory or its representatives must actively andaggressively supervise the project to ensure timely andsuccessful completion. A contract that merely requiresspecialty contractors to cooperate and to coordinate theirwork is insufficient. To undertake this responsibilitysuccessfully requires vesting clear authority in a territoryrepresentative to quickly make decisions essential to thecontinuation of the project.

(d) Contractual Provisions. Whenever multipleprime contractors are used, the contract between theterritory and each prime contractor must clearly state thescope of each contractor's responsibility, when theportions of its work are to be completed, and provide asystem of timely reports on progress of the contractor'swork and problems encountered. The contract shouldalso specify that each contractor is liable for damagescaused other contractors and the territory whetherbecause of delay or otherwise. Such clauses should not,however, attempt to relieve the territory of liabilitywhere it fails to properly coordinate and manage theproject. Further, the duties and authority of the territoryrepresentative, the architect-engineer, and, if one isemployed, the construction manager with respect to thespecialty contractors should be clearly delineated in allthe parties' contracts.(7) Design Build or Turnkey.

(a) Use. The design-build or turnkey method givesthe contractor maximum control of the constructionproject consistent with territory needs. The territoryprepares a set of performance specifications includingfunctional criteria, any life- cycle cost considerations,and other evaluation factors. The territory shall alsospecify the degree of detail necessary in a designproposal. The contractor is selected on the basis of itsdesign proposal, proposed price, and other stated



evaluation criteria. It may be appropriate to use amulti-step process to lessen the number of firmssubmitting final design proposals to reduceadministrative burden and to keep preparation costsdown. In appropriate circumstances, it may beadvantageous to provide in the solicitation for paymentto all or any of the firms of proposal preparation costs ora stipulated stipend to ensure adequate continuingcompetition. After award, the contractor completes thedesign, subject to review by the territory or itsarchitect-engineer as set forth in the contract, andconstructs the project. The contractor chooses whether tophase the project. Upon completion, the territory eitheraccepts or rejects the project depending on how well thecontractor has met the specifications.

(b) Advantages. In the design-build method, a fixedprice for the project is established early. Anotheradvantage is that the contractor designs and builds theproject with its own forces. Consequently, the duty andrisk of proper management of project design andconstruction lies with the contractor. It also allows thecontractor to design and perform in a manner best suitedto its operations and experience. It may give the territoryearlier definition of the project. This method is mostappropriate when the territory will not need to bedeeply involved in the project's design and construction.

(c) Disadvantages. Less control over the design andconstruction process is one of the disadvantages indesign-build. The contract is awarded on the basis of adesign proposal, not a complete set of plans andspecifications. The territory's needs may not be met if thespecifications are deficient, if the contractor's designproposals are not carefully evaluated, and if the designand construction process is not carefully monitored toensure that both the specifications and the designproposals are being followed.

(d) Contractual Provisions. Careful preparation ofthe specifications evaluation criteria is crucial tosuccessful use of the design-build method. The contractdocuments should also delineate clearly the territory'srights to inspect plans and specifications and theconstruction work in progress. They should also indicateprecisely what constitutes completion of the project bythe contractor.(8) Construction Manager.

(a) Use in Planning and Design Phases. A



construction manager may bring valuable practicalconstruction perspective to the territory in both theplanning and design phases of the project. For purposesof this Section, the planning phase encompasses theactivities involved in determining territoryrequirements, selecting the construction contractingmanagement method, selecting an architect-engineer,and establishing progress schedules. During design, theconstruction manager reviews plans and makessuggestions to cut construction costs that may relate tothe practicality of construction, market conditions in theconstruction industry, and items which should beordered early. A construction manager would also assistin phasing the design and construction process.

(b) Use in Construction Phase. Once constructioncommences the construction manager's role may belimited to monitoring construction progress, andinspecting and otherwise representing the territory'sinterest if sequential design and construction with asingle prime contractor is used. If the project isconstructed by the phased design construction methodor the multiple prime contractors method, theconstruction manager will be responsible for thesupervision and management of their work and may letcontracts to the specialty contractors pursuant to themanagement contract with the territory. In a projectusing phased design, the construction manager may alsogive the territory a guaranteed maximum price forcompletion of the project prior to completion of all thedrawings and specifications. To the extent theconstruction manager is the territory's representative,the manager may assist in the final inspection andacceptance of the project by the territory.

(c) Advantages. The construction manager addsconstruction expertise to the territory's team. Severalbenefits of this are:

(1) the selection of the construction contractmanagement technique, project design, and othercrucial decisions in the early phases of the projectcan be made with a better understanding of theirimpact upon construction;

(2) the construction manager can manage thework of the various construction contractors as theterritory's representative instead of using a singleprime contractor whose interests may not coincidewith those of the territory. In this way, the territory



may gain more control of the actual constructionproject.(d) Disadvantages. The construction manager's fee

is added cost to the construction project. On smallerconstruction projects of less than $3 million, constructionmanagement may not be cost effective.

(e) Contractual provisions. It is imperative that theconstruction management contract clearly set forth theduties and authority of the construction manager inrespect to all the participants in the project. The contractshould also attempt to define the possible liability of theterritory and the construction manager for failure toproperly coordinate the specialty contractors' work.(9) Sequential Design and Construction.

(a) Use. The initial step in using sequential designand construction is to gather a team to design the projectand provide a complete set of drawings andspecifications to use in awarding the constructioncontract or contracts. This team may include aconstruction manager who, in addition to reviewing theplans as they develop, may assist in separating them intopackets if multiple prime contractors are to be used.Except for redesign necessitated by changes in territoryrequirements or problems encountered duringconstruction, design is complete at the time constructionhas begun.

(b) Advantages. A project using sequential designand construction proceeds in clearly defined steps whichmay aid in financing and gaining any necessaryapprovals as well as aiding in managing the entireproject. Complex or unique projects can be completelythought through and planned before construction hasbegun. Also, before any construction has begun, a fixedprice for the project can be established.

(c) Disadvantages. Sequential design andconstruction requires a longer time to complete theproject than phased design and construction. Thecomplete package of drawings and specifications alsofreezes design decisions months or years beforeoccupancy which will reduce flexibility.(10) Phased Design and Construction.

(a) Use. Phased design and construction may beused when the architect-engineer, working with theconstruction manager, if one is used, can settle on themajor design decisions and then do the detail designwork in the sequence necessary to construct the project.



This design process then allows construction to beginbefore design is complete for the entire project (ofcourse, design is complete on those portions beingconstructed). Construction should only be begun afterthe territory's requirements are set, the overall(schematic) design is complete, and the completedrawings and specifications for the first constructionphase are ready. (It may be possible to start sitepreparation prior to this stage). A construction manageris often necessary to assist in packaging the variousspecialty contracts and to manage the work under thesecontracts.

(b) Advantages. Phased design and construction canresult in reduced project completion time. It can alsoallow reduction in the scope of the project if prices onearly portions indicate the project may exceed thebudget. In a sequential project such redesign mightdelay the entire project. It also gives the territory addedflexibility in deciding when to let the various specialtycontracts to take advantage of market conditions.

(c) Disadvantages. In phased design andconstruction, portions of the project are begun beforelater portions are completely designed. Major changes inthese later portions may necessitate costly changes in theearly portions and result in costly delays to many otherspecialty contractors. The territory bears the risks bothfor at least some coordination of specialty contractorsand for ensuring that design of later portions does notadversely affect earlier ones. Neither of these risks needbe assumed by the territory in sequential design andconstruction.

(d) Contractual Provisions. The contract mustclearly establish the architect-engineer's duty to designto allow phasing, and the contracts with the specialtycontractors must clearly delineate their scope of workand duties to other contractors and the territory. Further,the management's rights of the territory and itsconstruction manager, if one is used, must be set forth.§5103. Bid Security (Requirement). (1) Requirement for

Bid Security. Bid security shall be required for all competitivesealed bidding for construction contracts when the price isestimated by the Director of Public Works to exceed $25,000.Bid security shall be a bond provided by a surety companyauthorized to do business in this territory, or the equivalentin cash, or otherwise supplied in a form satisfactory to theterritory. Nothing herein prevents the requirement of such



bonds on construction contracts under $25,000 when thecircumstances warrant (5 GCA §5303 of the GuamProcurement Act).

(2) Withdrawal of Bids. After the bids are opened, theyshall be irrevocable for the period specified in the Invitationfor Bids, except as provided in 5 GCA §5211(f) of the GuamProcurement Act, (Competitive Sealed Bidding, Correction orWithdrawal of Bids; Cancellation of Awards). If a bidder ispermitted to withdraw its bid before award, no action shallbe had against the bidder or the bid security.

(3) Bid Security (General) (a) General. Invitation for Bids on territory

construction contracts shall require the submission ofbid security in an amount equal to at least 15% of theamount of the bid, at the time the bid is submitted. If acontractor fails to accompany its bid with the requiredbid security, the bid shall be deemed nonresponsive, inaccordance with §3109(n)(2) (Bid Evaluation and Award,Responsibility and Responsiveness) of these Regulationsexcept as provided by Subsection 5103(a)(3) of thisSection.

(b) Purpose. Bid security protects the territoryagainst the failure or refusal of the low bidder to supplythe necessary performance and payment bonds, asrequired, and to proceed with performance under thecontract.

(c) Acceptable Bid Security. Acceptable bid securityshall be limited to:

(1) an annual or one-time bid bond in a formsatisfactory to the territory underwritten by acompany licensed to issue bid bonds in thisterritory; or

(2) a bank certified check or cash.(d) Nonsubstantial Failure to Comply. If a bid does

not comply with the security requirements of thisSection, the bid shall be rejected as nonresponsive,unless the failure to comply is determined by theDirector of Public Works, the head of a PurchasingAgency, or the designee of such officer to benonsubstantial where:

(1) only one bid is received, and there is notsufficient time to rebid the contract;

(2) the amount of the bid security submitted,though less than the amount required by theInvitation for Bids, is equal to or greater than thedifference in the price stated in the next higher



acceptable bid; or(3) the bid guarantee becomes inadequate as a

result of the correction of a mistake in the bid or bidmodification in accordance with §3109(m) (Mistakesin Bids) of these Regulations, if the bidder increasesthe amount of guarantee to required limits withinforty-eight (48) hours after the bid opening.

§5104. Contract Performance and Payment Bonds. (1)Performance Bonds.

(a) General. A performance bond satisfactory to theterritory, executed by a surety company authorized todo business in this territory or otherwise secured in amanner satisfactory to the territory, is required for allcontracts in excess of $25,000 in the amount of 100% ofthe contract price. The performance bond shall bedelivered by the contractor to the territory at the sametime the contract is executed. If a contractor fails todeliver the required performance bond, the contractor'sbid shall be rejected, its bid security shall be enforced,and award of the contract shall be made to the nextlowest bidder in accordance with §3109(n)(2) (BidEvaluation and Award, Responsibility andResponsiveness) of these Regulations.

(b) Purpose. A performance bond indemnifies theterritory against loss resulting from the failure of thecontractor to perform a construction contract inaccordance with the plans and specifications.

(c) Reduction of Amount Prior to Solicitation. TheDirector of Public Works or the head of a PurchasingAgency may reduce the amount of the performancebond required prior to solicitation to not less than 50%of the contract price if, after completing appropriateanalysis, it is determined in writing by the Director ofPublic Works or the head of a Purchasing Agency to beless costly or more advantageous to the territory toself-insure a part of the performance of the contractor.An analysis may be made for groups of contracts, forexample, contracts in excess of $10 million, or may bemade on particular contracts, as the Director of PublicWorks or the head of a Purchasing Agency chooses. Acopy of the analysis shall be available for publicinspection.

(d) Reduction of Amount During Performance. Ifpermitted by the contract and solicitation, the Director ofPublic Works or the head of a Purchasing Agency mayreduce the amount of the performance bond as work is



completed if such officer determines in writing that suchreduction is in the best interest of the territory.(2) Payment Bonds.

(a) General. A payment bond satisfactory to theterritory, executed by a surety company authorized todo business in this territory or otherwise secured in amanner satisfactory to the territory is required for allconstruction contracts in excess of $25,000, in the amountof 100% of the contract price. The payment bond shall bedelivered by the contractor to the territory at the sametime the contract is executed. If a contractor fails todeliver the required payment bond, the contractor's bidshall be rejected, its bid security shall be enforced, andaward of the contract shall be made to the next lowestbidder in accordance with §3109(n)(2) (Bid Evaluationand Award, Responsibility and Responsiveness) of theseRegulations.

(b) Purpose. A payment bond guarantees paymentand protection for those furnishing labor and materialsto the contractor or its subcontractors for the workbonded.

(c) Reduction of Amount Prior to Solicitation. Priorto solicitation the Director of Public Works or the headof a Purchasing Agency may reduce the amount of thepayment bond to not less than 50% of the contract priceif a written determination is made that it is in the bestinterest of the territory to do so. Factors to be consideredin order to make such a determination include, but arenot limited to:

(1) the value and number of subcontracts to beawarded by the contractor; and

(2) the value of the contract.(d) Reduction of Amount During Performance.

During performance, the Director of Public Works or thehead of a Purchasing Agency may reduce the requiredcoverage of the payment bond as payments are made bythe contractor.§5105. Bond Forms and Copies.(1) Forms.

(a) Bid Bond. The required bid bond shall be insubstantially the following form:

BID BONDBOND NO.___________

KNOW ALL MEN BY THESE PRESENTS, that we,_____________________, as Principal, hereinafter called thePrincipal, and Bonding Company, a corporation duly organizedunder the laws of the Territory of Guam, as Surety, hereinafter



called the Surety, are held and firmly bound unto the Territory ofGuam for the sum of _______ Dollars ($_________), for payment ofwhich sum well and truly to be made, the said Principal and thesaid Surety bind ourselves, our heirs, executors, administrators,successors and assigns, jointly and severally, firmly by thesepresents.WHEREAS, the Principal has submitted a bid for (identify projectb y n u m b e r a n d b r i e f d e s c r i p t i o n_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _________________________________________________________ NOW, THEREFORE, if the Territory of Guam shall accept the bidof the Principal and the Principal shall enter into a Contract withthe Territory of Guam in accordance with the terms of such bid,and give such bond or bonds as may be specified in the bidding orContract Documents with good and sufficient surety for the faithfulperformance of such Contact and for the prompt payment of laborand material furnished in the prosecution thereof, or in the event ofthe failure of the Principal to enter such Contract and give suchbond or bonds, if the Principal shall pay to the Territory of Guamthe difference not to exceed the penalty hereof between theamounts specified in said bid and such larger amount for which theTerritory of Guam may in good faith contract with another party toperform work covered by said bid or an appropriate liquidatedamount as specified in the Invitation for Bids then this obligationshall be null and void, otherwise to remain in full force and effect.Signed and sealed this ____ day of __________, 19__.

___________________________________(Principal) (Seal)

___________________________________ (Witness)

___________________________________ (Title)___________________________________

(Witness) ___________________________________(Surety) (Seal)___________________________________(Title)BY:___________________________________(Attorney-in-Fact)

(b) Performance Bond. The required performancebond shall be in substantially the following form:

PERFORMANCE BONDBOND NO. ________________KNOW ALL MEN BY THESE PRESENTS that (here insert full

name and address or legal title of Contractor) as Principal,hereinafter called Contractor, and (Bonding Company), acorporation duly organized under the laws of the Territory ofGuam as Surety, hereinafter called Surety, are held and firmly



bound unto the Territory of Guam as Obligee, in the amount of(Full Amount) Dollars ($___________), for the payment whereofContractor and Surety bind themselves, their heirs, executors,administrators; successors and assigns, jointly and severally, firmlyby these presents.

WHEREAS, Contractor has by written agreement dated___________, 19___, entered into a contract with the Territory ofGuam for (describe project and insert project number) inaccordance with drawings and specifications prepared by (hereinsert full name and address or legal title of architect) whichcontract is by reference made a part hereof, and is hereinafterreferred to as the Contract.

NOW, THEREFORE, THE CONDITION OF THISOBLIGATION is such that, if Contractor shall promptly andfaithfully perform said Contract then this obligation shall be nulland void; otherwise it shall remain in full force and effect. TheSurety hereby waives notice of any alteration or extension providedthe same is within the scope of the contract. Whenever Contractorshall be and is declared by the Territory of Guam to be in defaultunder the Contract, the Territory of Guam having performedterritorial obligations thereunder, the Surety may promptly remedythe default or shall promptly:

1) Complete the Contract in accordance with its termsand conditions; or

2) Obtain a bid or bids for completing the Contract inaccordance with its terms and conditions, and upondetermination by the Territory of Guam and the Surety jointlyof the lowest responsive, responsible bidder, arrange for acontract between such bidder and the Territory of Guam, andmake available as work progresses (even though there shouldbe a default or a succession of defaults under the contract orcontracts of completion arranged under this paragraph)sufficient funds to pay the cost of completion less the balanceof the contract price; but not exceeding, including other costsand damages for which the Surety may be liable hereunder,the amount set forth in the first paragraph hereof. The term“balance of the contract price”, as used in this paragraph shallmean the total amount payable by the Territory of Guam toContractor under the Contract and any amendments thereto,less the amount properly paid by the Territory of Guam toContractor. No right of action shall accrue on this bond to orfor the use of any person or corporation other than theTerritory of Guam or successors of the Territory of Guam.

Signed and sealed this _____ day of ___________, 19__.___________________________________(Principal) (Seal)

___________________________________ (Witness)___________________________________

(Title)



___________________________________(Witness)

__________________________________(Bonding Company)___________________________________(Title)BY: ___________________________________(Attorney-in-Fact)

(c) Payment Bond. The required payment bond shallbe in substantially the following form:

LABOR AND MATERIAL PAYMENT BONDBond No. ________________KNOW ALL MEN BY THESE PRESENTS that (here insert full

name and address or legal title of Contractor) as Principal,hereinafter called Principal, and (Bonding Company), a corporationduly organized under the laws of the Territory of Guam, as Surety,hereinafter called Surety, are held and firmly bound unto theTerritory of Guam as Obligee, hereinafter called Territory, for theuse and benefit of claimants as herein below defined, in the amountof (Full Amount) Dollars ($__________) for the payment whereofPrincipal and Surety bind themselves, their heirs, executors,administrators, successors and assigns, jointly and severally, firmlyby these presents.

WHEREAS, Principal has by written agreement dated____________, 19__, entered into a contract with the Territory for(describe project and insert project number) in accordance withdrawings and specifications prepared by (here insert full name andaddress or legal title of Architect) which contract is by referencemade a part hereof, and is hereinafter referred to as the Contract.

NOW, THEREFORE, THE CONDITION OF THISOBLIGATION is such that, if Principal shall promptly makepayment to all claimants as hereinafter defined, for all labor andmaterial used or reasonably required for use in the performance ofthe Contract, then this obligation shall be void; otherwise it shallremain in full force and effect, subject, however, to the followingconditions:

1) A claimant is defined as one having a direct contractwith the Principal or with a Subcontractor of the Principal forlabor, material, or both, used or reasonably required for use inthe performance of the Contract, labor and material beingconstrued to include that part of water, gas, power, light, heat,oil, gasoline, telephone service, or rental of equipment directlyapplicable to the Contract.

2) The above-named Principal and Surety hereby jointlyand severally agree with the territory that every claimant asherein defined, who has not been paid in full before theexpiration of a period of ninety (90) days after the date onwhich the last of such claimant's work or labor was done orperformed, or materials were furnished by such claimant, may



sue on this bond for use of such claimant, prosecute the suit tofinal judgment for such sum or sums as may be justly dueclaimant, and have execution thereon. The Territory shall notbe liable for the payment of any costs or expenses of any suchsuit.

3) No suit or action shall be commenced hereunder byany claimant:

a) Unless claimant, other than one having a directcontract with the Principal, shall have given writtennotice to any two of the following: the Principal, theterritory, or the Surety above named, within ninety (90)days after such claimant did or performed the last of thework or labor, or furnished the last of the materials forwhich said claim is made, stating with substantialaccuracy the amount claimed and the name of the partyto whom the materials were furnished, or for whom thework or labor was done or performed. Such notice shallbe personally served or served by mailing the same byregistered mail or certified mail, postage prepaid, in anenvelope addressed to the Principal at any place thePrincipal maintains an office or conducts its business.

b) After the expiration of one (1) year following thedate on which the last of the labor was performed ormaterial was supplied by the party bringing suit.

c) Other than in a court of competent jurisdiction forthe county or district in which the construction contractwas to be performed.

4) The amount of this bond shall be reduced by andto the extent of any payment or payments made in goodfaith hereunder, inclusive of the payment by Surety ofmechanics' liens which may be filed of record againstsaid improvement, whether or not claim for the amountof such lien be presented under and against this bond.

Signed and sealed this _____ day of _____________, 19__.___________________________________(Principal) (Seal)

___________________________________(Witness)

___________________________________(Title)

___________________________________(Witness)

___________________________________(Bonding Company)___________________________________(Title)BY:___________________________________(Attorney-in-Fact)

(2) Certified Copies of Bonds. Any person may request



and obtain from the territory a certified copy of a bond uponpayment of the cost of reproduction of the bond and postage,if any. A certified copy of a bond shall be prima facieevidence of the contents, execution and delivery of theoriginal (5 GCA §5305(b) of the Guam Procurement Act).

§5106. Contract Clauses and Their Administration. (1)Introduction. The contract clauses presented in this Sectionare promulgated for use in construction contracts inaccordance with 5 GCA §5306 (Contract Clauses and TheirAdministration) of the Guam Procurement Act. Alternativeclauses are provided in one instance to permitaccommodation of differing contract situations.

(2) Revisions to Contract Clauses. The clauses set forthin this Section may be varied for use in a particular contractwhen, pursuant to the provisions of 5 GCA §5306(d)(Contract Clauses and Their Administration, Modification ofRequired Clauses) of the Guam Procurement Act, theDirector of Public Works or the head of a Purchasing Agencymakes a written determination describing the circumstancesjustifying the variation or variations.

Any material variations from these clauses shall bedescribed in the solicitation documents in substantially thefollowing form:

”Clause No. ________, entitled _____________,is not a part of the general terms and conditions ofthis contract, and has been replaced by SpecialClause No. _______, entitled __________. Yourattention is specifically directed to this clause.”

(3) changes Clauses Changes.(a) Change Order. The Director of Public Works or

the head of a Purchasing Agency, at any time, andwithout notice to the sureties, in a signed writingdesignated or indicated to be a change order, may order:

(1) changes in the work within the scope of thecontract; and

(2) changes in the time for performance of thecontract that do not alter the scope of the contract.(b) Adjustments of Price or Time for Performance.

If any such change order increases or decreases thecontractor's cost of, or the time required for,performance of any part of the work under this contract,whether or not changed by the order, an adjustmentshall be made and the contract modified in writingaccordingly. Any adjustment in contract price madepursuant to this clause shall be determined inaccordance with the Price Adjustment Clause of this



contract.Failure of the parties to agree to an adjustment shall

not excuse a contractor from proceeding with thecontract as changed, provided that the territorypromptly and duly make such provisional adjustmentsin payments or time for performance as may bereasonable. By proceeding with the work, the contractorshall not be deemed to have prejudiced any claim foradditional compensation, or an extension of time forcompletion.

(c) Written Certification. The contractor shall notperform any change order in excess of $5,000 unless itbears, or the contractor has separately received, a writtencertification, signed by appropriate fiscal officer or otherresponsible official that funds are available therefor; and,if acting in good faith, the contractor may rely upon thevalidity of such certification.

(d) Time Period for Claim. Within 30 days afterreceipt of a written change order under Paragraph (1)(Change Order) of this clause, unless such period isextended by the Director of Public Works or the head ofthe Purchasing Agency in writing, the contractor shallfile notice of intent to assert a claim for an adjustment.Later notification shall not bar the contractor's claimunless the territory is prejudiced by the delay innotification.

(e) Claim Barred After Final Payment. No claim bythe contractor for an adjustment hereunder shall beallowed if notice is not given prior to final paymentunder this contract.

(f) Claims Not Barred. In the absence of such achange order, nothing in this clause shall restrict thecontractor's right to pursue a claim arising under thecontract, if pursued in accordance with the clauseentitled "Claims Based on a Director of Public Work's orthe Head of a Purchasing Agency's Actions or OmissionsClause' or for breach of contract.”(4) Variations in Estimated quantities Clause. The

following clause shall be inserted only in those constructioncontracts which contain estimated quantity items:

"VARIATIONS IN ESTIMATED QUANTITIES(1) Variations Requiring Adjustments. Where the quantity

of a pay item in this contract is an estimated quantity andwhere the actual quantity of such pay item varies more than15% above or below the estimated quantity stated in thiscontract, an adjustment in the contract price shall be madeupon demand of either party. The adjustment shall be based



upon any increase or decrease in costs due solely to thevariation above 115% or below 85% of the estimated quantity.If the quantity variation is such as to cause an increase in thetime necessary for completion, the Director of Public Works orthe head of the Purchasing Agency shall, upon receipt of atimely written request for an extension of time, prior to thedate of final settlement of the contract, ascertain the facts andmake such adjustment for extending the completion date as inthe judgment of the Director of Public Works or the head ofthe Purchasing Agency the findings justified.

(2) Adjustments of Price. Any adjustment in contractprice made pursuant to this clause shall be determined inaccordance with the Price Adjustment Clause of this contract.”(5) Suspension of Work Clause.

”SUSPENSION OF WORK(a) Suspension for Convenience. The Director of

Public Works or the head of the Purchasing Agency mayorder the contractor in writing to suspend, delay, orinterrupt all or any part of the work for such period oftime as the Director of Public Works or the head of thePurchasing Agency may determine to be appropriate forthe convenience of the territory.

(b) Adjustment of Cost. If the performance of all orany part of the work is, for an unreasonable period oftime, suspended, delayed, or interrupted by an act of theDirector of Public Works or the head of the PurchasingAgency in the administration of this contract, or by thefailure of the Director of Public Works or the head of thePurchasing Agency to act within the time specified inthis contract (or if no time is specified, within reasonabletime), an adjustment shall be made for any increase inthe cost of performance of this contract necessarilycaused by such unreasonable suspension, delay, orinterruption and the contract modified in writingaccordingly. However, no adjustment shall be madeunder this clause for any suspension, delay, orinterruption to the extent:

(1) that performance would have been sosuspended, delayed, or interrupted by any othercause, including the fault or negligence of thecontractor; or

(2) for which an adjustment is provided for orexcluded under any other provision of this contract.(c) Time Restriction on Claim. No claim under this

clause shall be allowed:(1) for any costs incurred more than twenty (20)

days before the contractor shall have notified the



Director of Public Works or the head of thePurchasing Agency in writing of the act or failure toact involved (but this requirement shall not apply asto a claim resulting from a suspension order); and

(2) unless the claim is asserted in writing assoon as practicable after the termination of suchsuspension, delay, or interruption, but not later thanthe date of final payment under the contract.(d) Adjustments of Price. Any adjustment in

contract price made pursuant to this clause shall bedetermined in accordance with the Price AdjustmentClause of this contract.”(6) Differing Site Conditions Clause. Set forth below are

alternative differing site conditions clauses to be used asappropriate.

(ALTERNATIVE A)”DIFFERING SITE CONDITIONS: PRICE ADJUSTMENTS

(1) Notice. The contractor shall promptly, andbefore such conditions are disturbed, notify the Directorof Public Works or the head of a Purchasing Agency of:

(a) subsurface or latent physical conditions atthe site differing materially from those indicated inthis contract; or

(b) unknown physical conditions at the site, ofan unusual nature, differing materially from thoseordinarily encountered and generally recognized asinherent in work of the character provided for inthis contract.(2) Adjustments of Price or Time for Performance.

After receipt of such notice, the Director of Public Worksor the head of a Purchasing Agency shall promptlyinvestigate the site, and if it is found that such conditionsdo materially so differ and cause an increase in thecontractor's cost of, or the time required for,performance of any part of the work under this contract,whether or not changed as a result of such conditions, anadjustment shall be made and the contract modified inwriting accordingly. Any adjustment in contract pricemade pursuant to this clause shall be determined inaccordance with the Price Adjustment Clause of thiscontract.

(3) Timeliness of Claim. No claim of the contractorunder this clause shall be allowed unless the contractorhas given the notice required in this clause; provided,however, that the time prescribed therefor may beextended by the Director of Public Works or the head of



a Purchasing Agency in writing.(4) No Claim After Final Payment. No claim by the

contractor for an adjustment thereunder shall be allowedif asserted after final payment under this contract.

(5) Knowledge. Nothing contained in this clauseshall be grounds for an adjustment in compensation ifthe contractor had actual knowledge of the existence ofsuch conditions prior to the submission of bids.”

(END OF ALTERNATIVE A)- -- - -

(ALTERNATIVE B)”SITE CONDITIONS CONTRACTOR'S RESPONSIBILITY

The contractor accepts the conditions at theconstruction site as they eventually may be found toexist and warrants and represents that the contract canand will be performed under such conditions, and thatall materials, equipment, labor and other facilitiesrequired because of any unforeseen conditions (physicalor otherwise) shall be wholly at the contractor's own costand expense, anything in this contract to the contrarynotwithstanding.”

(END OF ALTERNATIVE B)- - - - -

(7) Price Adjustment Clause.PRICE ADJUSTMENT

(1) Price Adjustment Methods. Anyadjustment in contract price pursuant to clauses inthis contract shall be made in one or more of thefollowing ways:

(a) by agreement on a fixed priceadjustment before commencement of thepertinent performance or as soon thereafter aspracticable;

(b) by unit prices specified in the contractor subsequently agreed upon;

(c) by the costs attributable to the event orsituation covered by the clause, plusappropriate profit or fee, all as specified in thecontract or subsequently agreed upon;

(d) in such other manner as the partiesmay mutually agree; or

(e) in the absence of an agreement betweenthe parties, by a unilateral determination by theDirector of Public Works or the head of thePurchasing Agency of costs attributable to theevent or situation covered by the clause, plus



appropriate profit or fee, all as computed bythe Director of Public Works or the head of thePurchasing Agency in accordance withgenerally accepted accounting principles andapplicable sections under Chapter 7 (CostPrinciples) of the Guam ProcurementRegulations and subject to the provisions ofArticle 5, Chapter 5 of 5 GCA (Legal andContractual Remedies) of the GuamProcurement Act.(2) Submission of Cost or Pricing Data. The

contractor shall submit cost or pricing data for anyprice adjustments subject to the provisions of §3118(Cost or Pricing Data) of the Guam ProcurementRegulations.”

(8) Claims Based on the Director of Public Works or theHead of the Purchasing Agency's Actions or OmissionsClause.

”CLAIMS BASED ON THE DIRECTOR OF PUBLICWORK'S OR THE HEAD OF A PURCHASING AGENCY'S

ACTIONS OR OMISSIONS(1) Notice of Claim. If any action or omission

on the part of the Director of Public Works or thehead of the Purchasing Agency, or designee of suchofficer, requiring performance changes within thescope of the contract constitutes the basis for a claimby the contractor for additional compensation,damages, or an extension of time for completion,the contractor shall continue with performance ofthe contract in compliance with the directions ororders of such officials, but by so doing, thecontractor shall not be deemed to have prejudicedany claim for additional compensation, damages, oran extension of time for completion; provided:

(a) the contractor shall have given writtennotice to the Director of Public Works, the headof the Purchasing Agency, or designee of suchofficer:

(i) prior to the commencement of thework involved, if at that time thecontractor knows of the occurrence of suchaction or omission;

(ii) within 30 days after the contractorknows of the occurrence of such action oromission, if the contractor did not havesuch knowledge prior to the



commencement of the work; or(iii) within such further time as may

be allowed by the Procurement Officer inwriting.

This notice shall state that the contractorregards the act or omission as a reason which mayentitle the contractor to additional compensation,damages, or an extension of time. The ProcurementOfficer or designee of such officer, upon receipt ofsuch notice, may rescind such action, remedy suchomission, or take such other steps as may bedeemed advisable in the discretion of theProcurement Officer or designee of such officer.

(b) the notice required by Subparagraph (a)of this Paragraph describes as clearly aspracticable at the time the reasons why thecontractor believes that additionalcompensation, damages, or an extension oftime may be remedies to which the contractoris entitled; and

(c) the contractor maintains and, uponrequest, makes available to the ProcurementOfficer within a reasonable time, detailedrecords to the extent practicable, of the claimedadditional costs or basis for an extension oftime in connection with such changes.(2) Limitations of Clause. Nothing herein

contained, however, shall excuse the contractorfrom compliance with any rules of law precludingany territorial officers and any contractors fromacting in collusion or bad faith in issuing orperforming change orders which are clearly notwithin the scope of the contract.

(3) Adjustments of Price. Any adjustment inthe contract price made pursuant to this clause shallbe determined in accordance with the PriceAdjustment Clause of this contract.”

(9) Default - Delay - Time Extensions Clause. Theconditions contained in the following subsections do notapply to supply and other types of contracts where notice ofliquidated damages will apply immediately upon notificationof breach or default of the contract is provided in the bidterms or conditions; or in the purchase order itself. Instead,these conditions apply to construction contracts.

SOURCE: Paragraph added to clarify use of this subsection.(1/1/1999)

”TERMINATION FOR DEFAULT FOR



NONPERFORMANCE OR DELAY - DAMAGES FORDELAY -TIME EXTENSIONS

(1) Default. If the contractor refuses or fails toprosecute the work, or any separable part thereof,with such diligence as will assure its completionwithin the time specified in this contract, or anyextension thereof fails to complete said work withinsuch time, or commits any other substantial breachof this contract, and further fails within fourteen(14) days after receipt of written notice from theProcurement Officer to commence and continuecorrection of such refusal or failure with diligenceand promptness, the Procurement Officer may, bywritten notice to the contractor, declare thecontractor in breach and terminate the contractor'sright to proceed with the work or such part of thework as to which there has been delay. In suchevent the territory may take over the work andprosecute the same to completion, by contract orotherwise, and may take possession of, and utilizein completing the work, such materials, appliances,and plant as may be on the site of the work andnecessary therefor. Whether or not the contractor'sright to proceed with the work is terminated, thecontractor and the contractor's sureties shall beliable for any damage to the territory resulting fromthe contractor's refusal or failure to complete thework within the specified time.

(2) Liquidated Damages upon Termination. Iffixed and agreed liquidated damages are providedin the contract, and if the territory so terminates thecontractor's right to proceed, the resulting damagewill consist of such liquidated damages for suchreasonable time as may be required for finalcompletion of the work.

(3) Liquidated Damages in Absence ofTermination. If fixed and agreed liquidateddamages are provided in the contract, and if theterritory does not terminate the contractor's right toproceed, the resulting damage will consist of suchliquidated damages until the work is completed oraccepted.

(4) Time Extension. The contractor's right toproceed shall not be so terminated nor thecontractor charged with resulting damage if:

(a) the delay in the completion of the work



arises from causes such as: acts of God; acts ofthe public enemy; acts of the territory, and anyother territorial entity in either a sovereign orcontractual capacity; acts of another contractorin the performance of a contract with theterritory; fires; floods; epidemics; quarantinerestrictions; strikes or other labor disputes;freight embargoes; unusually severe weather;delays of subcontractors due to causes similarto those set forth above; or shortage ofmaterials; provided, however, that no extensionof time will be granted for a delay caused by ashortage of materials, unless the contractorfurnished to the Procurement Officer proof thatthe contractor has diligently made every effortto obtain such materials from all knownsources within reasonable reach of the work,and further proof that the inability to obtainsuch materials when originally planned did infact cause a delay in final completion of theentire work which could not be compensatedfor by revising the sequence of the contractor'soperations; and

(b) the contractor, within ten days from thebeginning of any such delay (unless theProcurement Officer grants a further period oftime before the date of final payment under thecontract), notifies the Procurement Office inwriting of the causes of delay. The ProcurementOfficer shall ascertain the facts and the extentof the delay and extend the time for completingthe work when, in the judgment of theProcurement Officer, the findings of fact justifysuch an extension.(5) Erroneous Termination for Default. If, after

notice of termination of the contractor's right toproceed under the provisions of this clause, it isdetermined for any reason that the contractor wasnot in default under the provisions of this clause, orthat the delay was excusable under the provisions ofthis clause, the rights and obligations of the partiesshall, if the contract contains a clause providing fortermination for convenience of the territory, be thesame as if the notice of termination had been issuedpursuant to such clause. If, in the foregoingcircumstance, this contract does not contain a clause



providing for termination for convenience of theterritory, the contract shall be adjusted tocompensate for such termination and the contractmodified accordingly.

(6) Additional Rights and Remedies. Therights and remedies of the territory provided in thisclause are in addition to any other rights andremedies provided by law or under this contract.”

(10) Liquidated Damages Clause. The following clausemay be used in construction contracts when it is difficult todetermine with reasonable accuracy damage to the territorydue to delays caused by late contractor performance ornonperformance.

”LIQUIDATED DAMAGESWhen the contractor fails to complete the work or

any portion of the work within the time or times fixed inthe contract or any extension thereof, the contractor shallpay to the territory $50 for contracts less than $100,000and $100 for contracts $100,000 and over per calendarday of delay pursuant to the clause of this contractentitle, "Termination for Default for Nonperformance orDelay - Damages for Delay - Time Extension.”(11) Termination for Convenience Clause.

”TERMINATION FOR CONVENIENCE(1) Termination. The Procurement Officer may,

when the interests of this territory so require,terminate this contract in whole or in part, for theconvenience of the territory. The ProcurementOfficer shall give written notice of the terminationto the contractor specifying the part of the contractterminated and when termination becomeseffective.

(2) Contractor's Obligations. The contractorshall incur no further obligations in connection withthe terminated work and on the date set in thenotice of termination the contractor will stop workto the extent specified. The contractor shall alsoterminate outstanding orders and subcontracts asthey relate to the terminated work. The contractorshall settle the liabilities and claims arising out ofthe termination of subcontracts and ordersconnected with the terminated work. theProcurement Officer may direct the contractor toassign the contractor's right, title, and interest underterminated orders or subcontracts to the territory.The contractor must still complete the work not



terminated by the notice of termination and mayincur obligations as necessary to do so.

(3) Right to Construction and Supplies. TheProcurement Officer may require the contractor totransfer title and deliver to the territory in themanner and to the extent directed by theProcurement Officer:

(a) any completed construction; and(b) such partially completed construction,

supplies, materials, parts, tools, dies, jigs,fixtures, plans, drawing, information, andcontract rights (hereinafter called “constructionmaterial”) as the contractor has specificallyproduced or specially acquired for theperformance of the terminated part of thiscontract.The contractor shall protect and preserve

property in the possession of the contractor inwhich the territory has an interest. If theProcurement Officer does not exercise this right, thecontractor shall use best efforts to sell suchconstruction, supplies, and construction materials inaccordance with the standards of 14 GCA §2706(UCC). (See end of Subsection 6101(10)(d) for codequotation.) This in no way implies that the territoryhas breached the contract by exercise of theTermination for Convenience Clause.

(4) Compensation.(a) The contractor shall submit a

termination claim specifying the amounts duebecause of the termination for conveniencetogether with cost or pricing data, submitted tothe extent required by Section 3118 (Cost orPricing Data) of the Guam ProcurementRegulations, bearing on such claim. If thecontractor fails to file a termination claimwithin one year from the effective date oftermination, the Procurement Officer may paythe contractor, if at all, an amount set inaccordance with Subparagraph (c) of thisParagraph.

(b) The Procurement Officer and thecontractor may agree to a settlement providedthe contractor has filed a termination claimsupported by cost or pricing data submitted asrequired by §3118 (Cost or Pricing Data) of the



Guam Procurement Regulations and that thesettlement does not exceed the total contractprice plus settlement costs reduced bypayments previously made by the territory, theproceeds of any sales of construction, supplies,and construction materials under Paragraph (3)of this clause, and the contract price of thework not terminated.

(c) Absent complete agreement underSubparagraph (b) of this Paragraph, theProcurement Officer shall pay the contractorthe following amounts, provided paymentsunder Subparagraph (b) shall not duplicatepayments under this Paragraph:

(i) with respect to all contract workperformed prior to the effective date of thenotice of termination, the total (withoutduplication of any items) of:

(A) the cost of such work plus afair and reasonable profit on suchportion of the work (such profit shallnot include anticipatory profit orconsequential damages) less amountspaid or to be paid for completedportions of such work; provided,however, that if it appears that thecontractor would have sustained aloss if the entire contract would havebeen completed, no profit shall beallowed or included and the amountof compensation shall be reduced toreflect the anticipated rate of loss;

(B) cost of settling and payingclaims arising out of the terminationof subcontracts or orders pursuant toParagraph (2) of this clause. Thesecosts must not include costs paid inaccordance with Subparagraph(c)(i)(A) of this Paragraph.

(C) the reasonable settlementcosts of the contractor includingaccounting, legal, clerical, and otherexpenses reasonably necessary for thepreparation of settlement claims andsupporting data with respect to theterminated portion of the contract and



for the termination and settlement ofsubcontracts thereunder, togetherw i t h r e a s o n a b l e s t o r a g e ,transportation, and other costsincurred in connection with theprotection or disposition of propertyallocable to the terminated portion ofthis contract. The total sum to be paidthe contractor under this Paragraphshall not exceed the total contractprice plus the reasonable settlementcosts of the contractor reduced by theamount of any sales of construction,supplies, and construction materialsunder Paragraph (3) of this clause,and the contract price of work notterminated.

(d) Cost claimed, agreed to, or establishedunder Subparagraphs (b) and (c) of thisParagraph shall be in accordance with Chapter7 (Cost Principles) of the Guam ProcurementRegulations.”

(12) Remedies Clause. ”REMEDIES

Any dispute arising under or out of thiscontract is subject to the provisions of Chapter 9(Legal and Contractual Remedies) of the GuamProcurement Regulations.”

§5107. Fiscal Responsibility. Every contractmodification, change order, or contract price adjustmentunder a construction contract with the territory in excess of$5,000 shall be subject to prior written certification by thefiscal officer of the entity responsible for funding the projector the contract, or other official responsible for monitoringand reporting upon the status of the costs of the total projectbudget or contract budget, as to the effect of the contractmodification, change order, or adjustment in contract priceon the total project budget or total contract budget. In theevent that the certification of the fiscal officer or otherresponsible official discloses a resulting increase in the totalproject budget and/or the total contract budget, the Directorof Public Works or the head of a Purchasing Agency shall notexecute or make such contract modification, change order, oradjustment in contract price unless sufficient funds areavailable therefor, or the scope of the project or contract isadjusted so as to permit the degree of completion that is



feasible within the total project budget and/or total contractbudget as it existed prior to the contract modification, changeorder, or adjustment in contract price under consideration;provided, however, that with respect to the validity, as to thecontractor, of any executed contract modification, changeorder, or adjustment in contract price which the contractorhas reasonably relied upon, it shall be presumed that therehas been compliance with the provisions of this Section (5GCA §5307 of the Guam Procurement Act).

§5108. Architect-Engineer and Land SurveyingServices. (1) Application. The provision of these Regulationsapplies to every procurement of services within the scope ofthe practice of architecture, professional engineering, or landsurveying, as defined by the laws of this territory, except asauthorized by §3111 (Small Purchases), §3112 (Sole SourceProcurement), and §3113 (Emergency Procurement) of theGuam Procurement Regulations.

(2) Policy. It is the policy of this territory to:(a) give public notice of all requirements for

architect-engineer and land surveying services; and(b) negotiate contracts for such services on the basis

of demonstrated competence and qualification for thetype of service required, and at fair and reasonableprices. (c) Source Selection. For the purpose of acquiring the

services, described in this Chapter the provisions of §3114(Competitive Selection Procedures for Services, specified in§2112) of this Guam Procurement Regulations shall befollowed.