28.001
Definitions
FAR 28.001 matters because it defines the bonding and surety terms that determine what security contractors must provide and how the Government protects itself from bid withdrawal, nonperformance, and nonpayment.
Overview
- FAR 28.001 provides the foundational definitions used throughout Part 28 - Bonds and Insurance. It explains the core bonding and surety terms that govern how agencies and contractors understand bid security, contract bonds, and related surety relationships.
- Its purpose is to create a common vocabulary for applying bonding requirements in solicitations and contracts, especially where the Government needs financial assurance that a bidder or contractor will meet its obligations.
Key Rules
- Bid and Bidder
- A bid includes any response to a solicitation, including proposals in negotiated acquisitions, and a bidder includes any entity that submits or has submitted such a response.
- Bid Guarantee and Bond Types
- A bid guarantee assures the bidder will keep its bid open for acceptance and, if selected, execute the contract and furnish required bonds. The section also defines major bond types, including advance payment, annual bid, annual performance, patent infringement, payment, and performance bonds.
- Surety-Related Terms
- The section defines attorney-in-fact, consent of surety, penal sum, and reinsurance, clarifying who may bind a surety, when surety acknowledgment is needed after contract modification, and the maximum amount of surety liability.
Responsibilities
- Contracting Officers: apply these definitions consistently when drafting solicitations, evaluating bid security, and administering bond requirements.
- Contractors: understand which bond instruments may be required and ensure sureties, powers of attorney, and bond amounts are valid and sufficient.
- Agencies: use these definitions as the baseline for Part 28 bonding and insurance compliance.
Practical Implications
- This section exists to prevent misunderstandings in bonding and surety arrangements.
- It affects daily contracting by defining the legal and financial instruments that protect the Government against nonperformance, withdrawal of bids, and nonpayment of labor or material suppliers.
- Common pitfalls include confusing bond types, overlooking surety consent after modifications, and misunderstanding the penal sum as the cap on surety liability.