A Military Surface Deployment & Distribution Command (SDDC) bond is a type of surety bond that guarantees that a Transportation Service Provider (TSP) will fulfill its obligations to transport U.S. Department of Defense (DoD) freight. A TSP can be a freight carrier, freight broker, logistic company or freight forwarder. The SDDC bond protects the SDDC from any losses or damages caused by the TSP's failure to deliver the cargo as contracted. The SDDC bond also ensures that taxpayers' money is not wasted on unfinished or sub-par contracts. It will cover any instance where a carrier cannot or will not deliver DOD freight tendered to them. This includes default, abandoned shipments, and bankruptcy by the carrier. The bond will not be utilized for operational problems such as late pickup or delivery, excessive transit times, refusals, no shows, improper/inadequate equipment, payment of subcontractors, or claims for lost or damaged cargo.
The SDDC bond is also known as a Department of Defense performance bond or a DoD performance bond. It was formerly called an MTMC bond after the Military Traffic Management Command (MTMC), which was renamed to SDDC in 2004.
The SDDC bond is required for all TSPs who wish to transport DoD freight. The amount of the bond depends on the type and size of the TSP, as well as the states involved in the service.
Local drayage, commercial zone, barge, rail, sealift and pipeline carriers are exempt from the Performance Bond requirements.
The typical bond amounts are $25,000, $50,000 or $100,000 for freight carriers and $100,000 for freight brokers, forwarders and logistics companies.
The amount of the Performance Bond is based on the size of the company and the number of states intended to service. Movements must begin and end in one of the selected states.
Carriers that have conducted business in their own name with DOD for 3 or more years have the option to submit a Performance Bond in the amount of 2.5% of their total DOD revenue for the previous 12 months, not to exceed $100,000 and not less than $25,000. Bulk fuel carriers are only required to submit a $25,000 Performance Bond. The Performance Bond amount is set at $100,000 for Surface Freight Forwarders, Logistic Companies, Brokers, and Air Freight Forwarders due to the volume of traffic handled by these modes.
Trust Funds, Customs Bond, DOT Bond, and Letters of Credit are not accepted in lieu of the Performance Bond.
To obtain an SDDC bond, a TSP must also have a Standard Carrier Alpha Code (SCAC), which is a unique identifier issued by the National Motor Freight Traffic Association. A TSP must have a separate SDDC bond for each SCAC they have.
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In many cases, there are a number of ways to lower the cost of a surety bond. Possible steps toward lower rates include providing supplementary evidence of financial standing or business statements, obtaining and documenting additional liquid assets, and improving your overall credit score. Working with a surety specialist like The ProSure Group, that takes the time to find the lowest marketplace rate, is also extremely important.
The SDDC bond is required for all TSPs who wish to transport DoD freight. The SDDC bond protects the SDDC from any losses or damages caused by the TSP's failure to deliver the cargo as contracted.
The SDDC bond is required for all TSPs who wish to transport DoD freight. To obtain an SDDC bond, a TSP must also have a Standard Carrier Alpha Code (SCAC), which is a unique identifier issued by the National Motor Freight Traffic Association. A TSP must have a separate SDDC bond for each SCAC they have.
The term of the SDDC Performance bond is one year and is annually renewable. When the bond is renewed, the surety emails confirmation of the renewal to the Obligee's specific email address.