28.203
Individual Sureties
FAR 28.203 establishes strict requirements for the use, documentation, and oversight of individual sureties to ensure the government’s interests are protected in bonded contracts.
Overview
FAR 28.203 outlines the requirements and procedures for using individual sureties as security for government contract bonds. This section details the criteria for acceptability, the process for substituting assets, the release of security interests, required solicitation provisions and contract clauses, and the circumstances under which individual sureties may be excluded. The regulation ensures that individual sureties provide adequate and reliable security, protecting the government’s interests in contract performance and payment bonds.
Key Rules
- Acceptability of Individual Sureties
- Individual sureties must meet specific financial and legal criteria to be accepted as security for bonds.
- Substitution of Assets
- Procedures are provided for substituting assets pledged by individual sureties, ensuring continuous and sufficient security.
- Release of Security Interest
- Outlines when and how the government may release its security interest in assets pledged by individual sureties.
- Solicitation Provision and Contract Clause
- Requires inclusion of specific provisions and clauses in solicitations and contracts involving individual sureties.
- Exclusion of Individual Sureties
- Establishes grounds and procedures for excluding individual sureties who fail to meet requirements or are otherwise unsuitable.
Responsibilities
- Contracting Officers: Must verify the acceptability of individual sureties, ensure proper documentation, and enforce compliance with all requirements.
- Contractors: Must provide acceptable individual sureties and comply with all asset and documentation requirements.
- Agencies: Oversee the process, maintain records, and may initiate exclusion proceedings if necessary.
Practical Implications
- This section protects the government from financial risk by ensuring only qualified individual sureties are accepted.
- Contractors must carefully select and document individual sureties to avoid delays or disqualification.
- Common pitfalls include inadequate documentation, unqualified sureties, or failure to follow substitution and release procedures.