28.106-5
Consent of surety
Contracting officers must obtain surety consent using SF 1414 for significant contract modifications or novations, unless the contract is secured by certain types of security.
Overview
FAR 28.106-5 outlines when a contracting officer must obtain the consent of surety during contract modifications. This requirement ensures that the surety (the party guaranteeing the contractor’s performance or payment) is aware of and agrees to significant changes that could affect their risk. The regulation specifies scenarios requiring consent, such as when a new surety is added, when modifications involve new work or substantial price changes, or when a novation agreement is involved. However, if the contract is secured by certain types of security (as listed in FAR 28.204), consent is not required. Agencies are directed to use Standard Form 1414 for documenting consent of surety in all contract types.
Key Rules
- Consent Required for Certain Modifications
- Obtain consent of surety when adding a new surety, for modifications involving new work, or for price changes exceeding 25% or $50,000.
- Novation Agreements
- Consent of surety is required when a novation agreement is executed.
- Exceptions for Certain Securities
- No consent is needed if the contract is secured by securities listed in FAR 28.204.
- Standard Form Requirement
- Use SF 1414 for all consent of surety documentation.
Responsibilities
- Contracting Officers: Must determine when consent of surety is required and obtain it using SF 1414; ensure compliance with thresholds and exceptions.
- Contractors: Must cooperate in obtaining surety consent when required.
- Agencies: Must ensure proper documentation and adherence to FAR requirements.
Practical Implications
- This section protects the government’s interests by ensuring sureties are informed of significant contract changes that may affect their liability.
- Failure to obtain required consent can jeopardize contract enforceability and surety coverage.
- Common pitfalls include overlooking the need for consent during major modifications or novations, or failing to use the correct form.