52.228-11
Individual Surety—Pledge of Assets
FAR 52.228-11 requires contractors using individual sureties to secure and document eligible assets, maintain security interests for specified periods, and follow strict procedures for release or substitution to protect government interests.
Overview
FAR 52.228-11 outlines the requirements for contractors using individual sureties to secure performance or payment bonds on federal contracts. It specifies the types of assets that may be pledged, the documentation required, and the duration for which the security interest must be maintained. The clause ensures that individual sureties provide adequate, properly documented, and secured assets to protect the government’s interests throughout the contract and for specified periods after completion or final payment.
Key Rules
- Pledge of Assets and Documentation
- Contractors must obtain a pledge of assets from each individual surety that meets FAR 28.203-1 requirements and submit Standard Form 28 (Affidavit of Individual Surety).
- Duration of Security Interest (Performance Bonds)
- For construction contracts over $150,000, security must be maintained until the warranty period ends or one year after final payment, whichever is later. For contracts with alternative payment protection, it must be maintained for the contract period plus one year. For other contracts, until the warranty period ends or 90 days after final payment, whichever is later.
- Duration of Security Interest (Payment Bonds)
- For construction contracts over $150,000, security must be maintained for one year after final payment or until all claims are resolved. For alternative payment protection, the period is the contract period plus one year. For other contracts, 90 days after final payment.
- Release and Substitution of Surety
- The contracting officer may release part of the security based on substantial performance or allow substitution of an individual surety post-award, provided all requirements are met within the specified timeframe.
Responsibilities
- Contracting Officers: Must verify the adequacy of pledged assets, ensure proper documentation, determine when security can be released, and approve any substitution of surety.
- Contractors: Must secure eligible pledged assets, submit required forms, maintain security for the required period, and comply with substitution procedures if applicable.
- Agencies: Oversee compliance and ensure government interests are protected through proper surety arrangements.
Practical Implications
- This clause protects the government by ensuring individual sureties are financially capable and their assets are properly secured. Contractors must be diligent in documentation and timing, as failure to comply can jeopardize contract performance or payment. Common pitfalls include inadequate asset documentation, premature release of security, or misunderstanding the required maintenance periods.