The Secretary or the Commandant may require bid, payment, performance, payment and performance, or completion bonds or other financial instruments from contractors for construction, alteration, repair, or maintenance of Coast Guard vessels if—

1. (1) the bond is required by law; or
2. (2) the Secretary or Commandant determines after investigation that the amount of the bond in excess of 20 percent of the value of the base contract quantity excluding options, would not prevent a responsible bidder or offeror from competing for award of the contract.

(Added Pub. L. 101–595, title III, § 306(a), Nov. 16, 1990, 104 Stat. 2985.)