Subpart 28.1
Bonds and Other Financial Protections
FAR Subpart 28.1 ensures the government is financially protected through required bonds and guarantees, making compliance essential for both contract award and performance.
Overview
FAR Subpart 28.1, "Bonds and Other Financial Protections," establishes the requirements and procedures for obtaining, administering, and enforcing bonds and other financial protections in federal contracting. This subpart covers bid guarantees, performance and payment bonds for both construction and non-construction contracts, annual performance bonds, alternative payment protections, and other types of bonds. It also addresses the administration of these financial instruments. The primary purpose is to protect the government’s interests by ensuring contractor performance and payment to subcontractors and suppliers, and to mitigate risks associated with contract default or non-performance.
Key Rules
- Bid Guarantees
- Outlines when bid guarantees are required to ensure serious bidding and protect the government if a bidder withdraws or fails to execute a contract.
- Performance and Payment Bonds
- Specifies requirements for performance and payment bonds, particularly for construction contracts, to guarantee contract completion and payment to subcontractors and suppliers.
- Alternative Payment Protections
- Provides for alternative payment protections when bonds are not required or feasible, especially for certain small contracts.
- Bonds for Non-Construction Contracts
- Details bonding requirements for contracts outside of construction, as applicable.
- Annual Performance Bonds and Other Bonds
- Addresses the use of annual performance bonds and other specialized bonds as needed.
- Administration
- Covers the procedures for administering, monitoring, and enforcing bonds and financial protections throughout the contract lifecycle.
Responsibilities
- Contracting Officers: Must determine when bonds or financial protections are required, ensure proper documentation, and administer these instruments.
- Contractors: Must obtain and submit required bonds or alternative protections and comply with all related terms.
- Agencies: Oversee compliance, maintain records, and enforce bond provisions as necessary.
Practical Implications
- This subpart exists to safeguard government funds and ensure contract fulfillment.
- It impacts daily contracting by requiring careful review of bonding requirements and timely submission of guarantees.
- Common pitfalls include failing to obtain the correct type or amount of bond, missing deadlines, or misunderstanding when alternative protections are acceptable.