Part 28 Bonds and Insurance
Source: FAR 28 on acquisition.gov
FAR Part 28 ensures government contracts are protected by requiring appropriate bonds and insurance, safeguarding both government and subcontractor interests.
Overview
FAR Part 28, "Bonds and Insurance," establishes the requirements and procedures for obtaining, administering, and accepting bonds and insurance in federal government contracts. It is organized into three main subparts: (1) Bonds and Other Financial Protections, (2) Sureties and Other Security for Bonds, and (3) Insurance. The part covers when and how bid guarantees, performance and payment bonds, and other types of financial protections must be used, as well as the standards for acceptable sureties and alternative forms of security. It also details insurance requirements for various contract types, including construction, cost-reimbursement, and contracts performed overseas. The part ensures that the government and subcontractors are protected against contractor default, non-payment, and certain liabilities, and that contractors maintain adequate insurance coverage as required by law or contract terms.
Key Rules
- Bonds and Other Financial Protections
- Outlines requirements for bid guarantees, performance and payment bonds, and alternative protections, especially for construction contracts.
- Sureties and Other Security for Bonds
- Specifies standards for corporate and individual sureties, and allows for alternatives like U.S. bonds, letters of credit, or cash.
- Insurance
- Sets forth insurance requirements, including types of coverage, notice of cancellation, and special provisions for overseas and cost-reimbursement contracts.
Responsibilities
- Contracting Officers: Must ensure appropriate bonds and insurance are required, obtained, and administered; verify acceptability of sureties and security; include necessary clauses in solicitations and contracts.
- Contractors: Must provide required bonds and insurance, use acceptable sureties or security, and maintain coverage throughout contract performance.
- Agencies: Oversee compliance, review documentation, and enforce requirements to protect government interests.
Practical Implications
- FAR Part 28 exists to mitigate financial risk to the government and ensure payment to subcontractors and suppliers. It impacts daily contracting by requiring careful review of bonding and insurance provisions, timely submission of documentation, and ongoing compliance. Common pitfalls include failing to provide adequate bonds, using unacceptable sureties, or lapses in required insurance coverage.
Subpart 28.1 - Bonds and Other Financial Protections
28.101-2 Solicitation provision or contract clause.
28.101-3 Authority of an attorney-in-fact for a bid bond.
28.101-4 Noncompliance with bid guarantee requirements.
28.102 Performance and payment bonds and alternative payment protections for construction contracts.
28.103 Performance and payment bonds for other than construction contracts.
28.104 Annual performance bonds.
28.105-1 Advance payment bonds.
28.105-2 Patent infringement bonds.
28.106-1 Bonds and bond-related forms.
28.106-2 Substitution of surety bonds.
28.106-3 Additional bond and security.
28.106-6 Furnishing information.
28.106-7 Withholding contract payments.
28.106-8 Payment to subcontractors or suppliers.
Subpart 28.2 - Sureties and Other Security for Bonds
28.201 Requirements for security.
28.202 Acceptability of corporate sureties.
28.203-1 Acceptability of individual sureties.
28.203-2 Substitution of assets.
28.203-3 Release of security interest.
28.203-4 Solicitation provision and contract clause.
28.203-5 Exclusion of individual sureties.
28.204 Alternatives in lieu of corporate or individual sureties.
28.204-1 United States bonds or notes.
28.204-2 Certified or cashier’s checks, bank drafts, money orders, or currency.
28.204-3 Irrevocable letter of credit.
28.302 Notice of cancellation or change.
28.303 Insurance against loss of or damage to Government property.
28.304 Risk-pooling arrangements.
28.305 Overseas workers’ compensation and war-hazard insurance.
28.306 Insurance under fixed-price contracts.
28.307 Insurance under cost-reimbursement contracts.
28.307-1 Group insurance plans.
28.309 Contract clauses for workers’ compensation insurance.
28.310 Contract clause for work on a Government installation.
28.311-2 Agency solicitation provisions and contract clauses.
28.312 Contract clause for insurance of leased motor vehicles.
28.313 Contract clauses for insurance of transportation or transportation-related services.