28.105-1
Advance payment bonds
Advance payment bonds are only required when a contract includes advance payments and no performance bond is provided, with the amount set by the contracting officer to protect the Government.
Overview
FAR 28.105-1 addresses the use of advance payment bonds in government contracts. Advance payment bonds are only required when a contract includes an advance payment provision and a performance bond is not provided. The contracting officer is responsible for determining the appropriate amount of the advance payment bond to ensure the Government's interests are protected. This regulation ensures that the Government has adequate financial security when making advance payments to contractors, especially in the absence of a performance bond.
Key Rules
- Advance Payment Bond Requirement
- Only required if the contract allows advance payments and no performance bond is furnished.
- Determination of Bond Amount
- The contracting officer must set the bond amount sufficient to protect the Government.
Responsibilities
- Contracting Officers: Assess whether an advance payment bond is needed and determine its amount if required.
- Contractors: Provide an advance payment bond if requested and no performance bond is in place.
- Agencies: Ensure proper oversight of bonding requirements for contracts with advance payments.
Practical Implications
- This section exists to safeguard government funds when advance payments are made without the security of a performance bond.
- Contractors should be prepared to furnish an advance payment bond if their contract includes advance payments and no performance bond is required.
- Common pitfalls include failing to provide the required bond or misunderstanding when it is necessary.