28.103-3
Payment bonds
Payment bonds are only required when a performance bond is also required and when it serves the Government’s interest, with additional coverage possible if the contract price increases.
Overview
FAR 28.103-3 outlines the requirements for payment bonds in contracts other than construction. A payment bond is only mandated when a performance bond is also required and when it serves the Government’s interest. Additionally, if the contract price increases, the Government may require additional payment bond coverage to ensure adequate protection for suppliers of labor and materials. This provision ensures that subcontractors and suppliers are protected against non-payment in applicable contracts.
Key Rules
- Payment Bond Requirement
- A payment bond is only required if a performance bond is also required and if it benefits the Government.
- Additional Bond Protection
- If the contract price increases, the Government can require the contractor to provide additional payment bond coverage to protect suppliers and laborers.
Responsibilities
- Contracting Officers: Must determine when payment bonds are necessary and ensure additional coverage is obtained if the contract price increases.
- Contractors: Must provide payment bonds when required and secure additional coverage if requested after a contract price increase.
- Agencies: Oversee compliance and ensure suppliers and laborers are protected.
Practical Implications
- This section exists to protect suppliers and subcontractors from non-payment in non-construction contracts where performance bonds are required.
- Contractors should be prepared to provide payment bonds and adjust coverage if the contract value increases.
- Failure to comply can result in delays, non-compliance findings, or inability to proceed with contract modifications.