Moosie, your sleeping bag goes inside the bivy. I've used them from time to time, they add about 10 degrees to the rating of your sleeping bag and more importantly they provide another layer of water-proofing.
Even though you have a good tent, if you get into a good AK down pour, you'll be glad you got one.
I had a buddy who had to sleep in his rain gear, inside his sleeping bag, while on a goat hunt in AK, for several days. He had a top quality tent, but 32 hours of continual rain, and even the best tents leak. I bet my buddy would have given up his left one for a bivy, and I bet he'd never be without one again.
The good thing though, he killed one hell of a goat on that trip.