Bid Surety Bond FAQs

Two companies are commonly owned/controlled. They plan to bid together for one product category in a competitive bidding area (CBA) and obtained a bid surety bond for that CBA. They also plan to bid individually in two different product categories within the same CBA. Do they have to obtain a separate bond for each of their individual bids?

One bid surety bond is required, per bidding entity, for each CBA where a bid(s) is submitted. A bidding entity is the entity whose legal business name is identified in the “Form A: Business Organization Information” section of the bid. Please see the table below for clarification on this scenario.

Bids in CBA

Supplier
Included in
Bid

Bidding Entity Baltimore-Columbia-Towson, MD CBA Who Needs Bid Surety Bond?

Enteral
Nutrition

Nebulizers

Standard
Power
Mobility
Devices

Bid
#1
ABC DME ABC
DME
X     ABC DME is the bidding entity and must obtain a bid surety bond for this CBA where ABC DMC is the principal/obligor.
123
Medical
Bid
#2
ABC DME ABC
DME
  X   ABC DME is the bidding entity, but already obtained a bid surety bond for this CBA for Bid #1. A separate bond does not need to be obtained for this CBA for Bid #2.
Bid
#3
123
Medical
123
Medical
    X 123 Medical is the bidding entity and must obtain a separate bid surety bond for the CBA, where 123 Medical is listed on the bond as the principal/obligor. The bid surety bond for Bid #1 was obtained by ABC DME (the bidding entity) and does not extend to 123 Medical for Bid #3.

 

Can authorized sureties issue one bond to the same bidding entity that covers multiple competitive bidding areas (CBAs), or must authorized sureties issue a separate bond for each CBA?

Authorized sureties must issue an individual bid surety bond for each CBA for which the bidding entity submits a bid. Bidding entities are not permitted by regulation to obtain one bond that would cover multiple CBAs.

How will a bidder be notified of the bid surety bond liability being returned?

The liability for bid surety bonds that do not meet the forfeiture conditions for a particular competitive bidding area will be returned within 90 days of the public announcement of contract suppliers. CMS will return the bid surety bond(s) liability to the bidder through a notice posted to Connexion, the DMEPOS Competitive Bidding Program’s secure portal.

How will an authorized surety be notified of the bid surety bond liability being returned?

CMS will provide written notice returning the bid surety bond liability to each authorized surety within 90 days of the public announcement of contract suppliers. The notice will be individually addressed to the surety company and contain all the bid surety bonds issued by that company for which the liability is being returned. 

How will bidders know if their bid is at or below the median composite bid rate when accepting or declining contract offers?

Each contract offer will indicate when the bidder’s bid amount is at or below the median composite bid rate for the competitive bidding area and product category combination.

How will the authorized surety be notified if the bond is forfeited?

CMS will provide a written notice to the authorized surety of CMS’ intent to collect on the bid surety bond(s) that meets the forfeiture conditions as outlined in 42 CFR §414.412(g)(3).

If a bidder has multiple bidder numbers for the same competitive bidding area (CBA) but different product categories, is the bidder required to purchase separate bonds for each bidder number?

If the bidding entity is the same for each bidder number, then the bidding entity can upload in Connexion the same bid surety bond for that CBA under multiple bidder numbers. If the bidding entity declines any contract offer(s) for that CBA where its composite bid amount is at or below the median composite bid rate for the associated product category(s), then the bidding entity will forfeit the bid surety bond for that CBA. It’s important to remember that the bidding entity is the legal business name (LBN) associated with the Provider Transaction Access Number (PTAN) used to register in DBidS, the online bidding system. This LBN will be auto-populated in the Business Organization Information section of Form A in DBidS. To use the same bid surety bond for multiple bidder numbers in the same CBA, the bidding entity’s LBN on the bond must match the LBN for each bidder number.
 

If a bidder is offered a contract AFTER contract suppliers are publicly announced, and the bidder declines the offer, will the bid surety bond be forfeited?

When a bidding entity’s composite bid is at or below the median composite bid rate for all bidding entities within the competitive bidding area and product category combination and the entity receives a contract offer after the public announcement of contract suppliers, that entity will still be subject to the bid surety bond requirement when the contract offer is made within 90 days of the announcement of contract suppliers.

If a bidder receives a preliminary bid evaluation notification that a bid surety bond is missing for a competitive bidding area (CBA), can it acquire a bond now and upload the bond in Connexion? What if it had the bid surety bond but forgot to upload the bond in Connexion before the bid window closed?

Bid surety bonds cannot be obtained after the close of the bid window and uploaded in Connexion as part of a bid. If a bid surety bond was obtained prior to the close of the bid window, but not uploaded in Connexion during the bid window (e.g., the bidder forgot to upload a copy of the bond into Connexion), it cannot be accepted, and the bid for that CBA will be disqualified. We encourage bidders to ensure all required documentation is uploaded in Connexion when submitting a bid(s).

If a bidder recognizes a missing element on its bid surety bond after the bid window closes, what can it do to update the bond and still meet the requirements?

All bid surety bonds must be uploaded in Connexion, the DMEPOS Competitive Bidding Program’s secure portal, by the close of the bid window. Bidders will not have the opportunity to provide an updated bid surety bond(s) once the bid window has closed.

Is a sample template of a bid surety bond available?

Yes, a sample template of a bid surety bond is available on the Competitive Bidding Implementation Contractor (CBIC) website. Sureties are not required to use this template provided all requirements specified at 42 §CFR 414.412(g)(2) are included on the bid surety bond issued by the authorized surety.

The regulation at 42 CFR §414.412(g)(3) states that the bid surety bond liability will be returned within 90 days of public announcement of contract suppliers. Since this date is not provided in advance, what end date should be listed on the bond?

Per 42 CFR §414.412(g)(3), when the bid(s) does not meet the specified forfeiture conditions, the bid surety bond liability will be returned within 90 days of the public announcement of contract suppliers. The bid surety bond shall be null and void upon issuance of appropriate notice to both the bidder and the surety by CMS. CMS has provided a sample template for sureties to use when preparing bid surety bonds for bidding entities.

The regulations at 42 §CFR 414.412(g)(2)(C) state that CMS must be named as the obligee. How should CMS be named on the bond?

CMS should be listed as the obligee as the “Centers for Medicare & Medicaid Services.”

What does composite bid mean?

Per 42 CFR §414.402, composite bid means the bid submitted by the supplier for the lead item in the product category. The lead item is the item in a product category with multiple items with the highest total nationwide Medicare allowed charges of any item in the product category prior to each competition.

What does median composite bid rate mean?

Median composite bid rate means the median lead item bid amount for all bidding entities included in the calculation of the single payment amounts within the competition.

What is an authorized surety?

An authorized surety is a company that has been issued a Certificate of Authority by the U.S. Department of the Treasury as an acceptable surety on federal bonds, and the certificate has neither expired nor been revoked. The Department of the Treasury maintains an up-to-date list of authorized sureties on its website.

Why is there a 30 calendar day deadline for bidder inquiry submission and why are bidders only allowed to submit one inquiry?

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) Section 522 and 42 CFR §414.412(g) requires CMS to return the bid surety bond liability within 90 days of the public announcement of contract suppliers. The bid surety bond forfeiture conditions under 42 CFR §414.412(g)(3) apply to bidding entities that are offered a contract for a competitive bidding area and product category combination(s), including those that receive a contract offer(s) as a result of the bidder inquiry process.  As a result, limiting bidders to one bidder inquiry submission within a 30 calendar day deadline is needed to allow CMS to re-evaluate all bid disqualification reasons and, if necessary, issue contract offers within 90 days of the public announcement of contract suppliers.

How long should my bid surety bond be in effect?

Bid surety bonds must remain in full force and effect until they are either collected by CMS due to forfeiture or the liability is returned for not meeting forfeiture conditions. The bid surety bond liability will be returned to the bidding entity within 90 days of the Round 2021 public announcement of contract suppliers. That announcement date has not yet been determined, but will be in the fall of 2020, prior to January 1, 2021, when Round 2021 contracts become effective.

How many bid surety bonds do I need?

You must obtain one bid surety bond for each competitive bidding area (CBA) for which you submit a bid, regardless of the number of locations (identified by Provider Transaction Access Number (PTAN)) or product categories included on your bid for the CBA. For example, if you have five locations on your bid for three product categories in one CBA, you must obtain one bond for the CBA. However, if you have three locations on your bid for one product category in three different CBAs, then you must obtain three bid surety bonds, one bond for each CBA.

Is the bid surety bond like the enrollment surety bond I have with the National Supplier Clearinghouse (NSC)?

The bid surety bond required for bidding is not the same as the surety bond required for DMEPOS supplier enrollment purposes. Unlike the annual DMEPOS enrollment bond, the bid surety bond required by 42 CFR §414.412(g) is purchased for the one-time bidding event.

What does a bid surety bond cost?

The cost of the bid surety bond may vary depending on multiple factors, including the bidder’s credit score, the number of bid surety bonds being purchased, and the risk to the authorized surety. We recommend you contact any of the authorized sureties on the Department of the Treasury’s List of Certified Companies to obtain pricing information.

What legal business name (LBN) should be on my bid surety bond?

The LBN on your bid surety bond(s) must be the same as the LBN associated with the Provider Transaction Access Number (PTAN) you use to register for DBidS and Connexion. When you register to request access to the DMEPOS Bidding System, DBidS, and Connexion, the program’s secure portal, you must enter a PTAN that is active in the Provider Enrollment, Chain, and Ownership System (PECOS). The LBN for this PTAN will auto-populate in the Business Organization Information section of Form A in DBidS. The LBN on Form A must match the LBN specified on the bid surety bond in order for CMS to find the bid surety bond acceptable.

When do I need to have a bid surety bond?

You must provide proof of having obtained the bid surety bond(s) by uploading a copy of the bond(s) in Connexion, the DMEPOS Competitive Bidding Program's secure portal, by the close of the bid window. The bid window is scheduled to open on July 16, 2019, and remain open until September 18, 2019. It is strongly recommended that you contact an authorized surety as soon as possible to purchase your bid surety bond(s).

I have not been able to locate a surety from which to obtain the required bid surety bond.

Each bidder must obtain a bid surety bond from an authorized surety on the Department of Treasury’s List of Certified Companies on the Department of the Treasury’s website. If you haven’t already, you may want to contact the surety that provided your bond for enrollment with the National Supplier Clearinghouse (NSC), but please make sure they are still on the list of certified companies. You may also perform a Google search and find sureties that are providing the required bid surety bond for the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (e.g., search for "DMEPOS Bid Surety Bond").

If I obtained a bid surety bond but was not awarded a contract, what is my liability?

If you are not offered a contract or are offered a contract for a product category where your composite bid (your bid amount for the lead item) is above the median composite bid rate (median lead item bid amount of all bidders in the competition) and you do not accept the contract offer, the bid surety bond liability will be returned to you within 90 days of the Round 2021 public announcement of contract suppliers. Please review the Bid Surety Bonds fact sheet for additional information.

What address do I give the insurance agency for my bid surety bond? I contacted multiple sureties from the list provided and they are all asking me for the holder information.

The address for the obligee, Centers for Medicare & Medicaid Services (CMS), is not required by the regulation; however, if the authorized surety requires the address, please use the following CMS address: 7500 Security Boulevard, Baltimore, MD 21244.

We also encourage you to review the Bid Surety Bond Checklist to ensure all bid surety bond requirements are met. As a reminder, the bidding entity’s legal business name must be listed as the principal/obligor. This is the same company name that is in the Business Organization Information section of Form A in the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Bidding System, DBidS.

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Updated: 07/09/2019