28.203-2
Substitution of assets
Individual sureties may substitute pledged assets only with written approval from the contracting officer, ensuring the Government’s interests remain protected.
Overview
FAR 28.203-2 outlines the process by which an individual surety can request the substitution of assets pledged to the Government as security for a bond. The surety must submit a written request, including a revised Standard Form 28 (Affidavit of Individual Surety), to the responsible contracting officer. The contracting officer, following the requirements in FAR 28.203-1, will evaluate whether the proposed substitute assets are adequate to protect the Government’s interests and may approve the substitution if satisfied. This process ensures that the Government’s bond or guarantee obligations remain fully secured even if the assets backing them change.
Key Rules
- Written Request for Substitution
- Individual sureties must submit a written request and a revised SF 28 to propose substituting pledged assets.
- Contracting Officer Evaluation
- The contracting officer must determine that the substitute assets are adequate, following the requirements of FAR 28.203-1, before approving the substitution.
Responsibilities
- Contracting Officers: Review substitution requests, verify adequacy of substitute assets, and ensure compliance with FAR 28.203-1 before approval.
- Contractors/Individual Sureties: Submit a written request and revised SF 28 when seeking to substitute assets.
- Agencies: Ensure oversight and proper documentation of asset substitutions to protect Government interests.
Practical Implications
- This section exists to allow flexibility for individual sureties while maintaining the Government’s security on bonds.
- It impacts daily contracting by requiring careful documentation and evaluation of asset substitutions.
- Common pitfalls include failing to provide adequate documentation or proposing assets that do not meet the adequacy requirements, leading to delays or rejection of the substitution request.