52.228-11 Individual Surety—Pledge of Assets
Source: FAR 52.228-11 on acquisition.gov
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.
As prescribed in 28.203-4 (b), insert the following clause:
Individual Surety—Pledge of Assets (Feb 2021)
(a)The Contractor shall obtain from each person acting as an individual surety on a performance bond or a payment bond—
(1)A pledge of assets that meets the eligibility, valuation, and security requirements described in the Federal Acquisition Regulation (FAR) 28.203-1; and
(2)Standard Form 28, Affidavit of Individual Surety.
(b)The Contracting Officer may release a portion of the security interest on the individual surety's assets based upon substantial performance of the Contractor's obligations under its performance bond. The security interest in support of a performance bond shall be maintained—
(1) Contracts for the construction, alteration, or repair of any public building or public work of the Federal Government exceeding $150,000 (40 U.S.C. 3131). Until completion of any warranty period, or for 1 year following final payment, whichever is later.
(2) Contracts subject to alternative payment protection (see FAR 28.102-1(b)(1)). For the full contract performance period plus 1 year.
(3) Other contracts not subject to the requirements of paragraph (b)(1) of this clause. Until completion of any warranty period, or for 90 days following final payment, whichever is later.
(c)A surety's assets pledged in support of a payment bond may be released to a subcontractor or supplier upon Government receipt of a Federal district court judgment, or a sworn statement by the subcontractor or supplier that the claim is correct along with a notarized authorization of the release by the surety stating that it approves of such release. The security interest on the individual surety's assets in support of a payment bond shall be maintained—
(1) Contracts for the construction, alteration, or repair of any public building or public work of the Federal Government exceeding $150,000 which require performance and payment bonds (40 U.S.C. 3131). For 1 year following final payment, or until resolution of all pending claims filed against the payment bond during the 1-year period following final payment, whichever is later.
(2) Contracts subject to alternative payment protection (see FAR 28.102-1(b)(1)). For the full contract performance period plus 1 year.
(3)Other contracts not subject to the requirements of paragraph (c)(1) of this clause. For 90 days following final payment.
(d)The Contracting Officer may allow the Contractor to substitute an individual surety, for a performance or payment bond, after contract award. The Contractor shall comply with the requirements of paragraph (a) of this clause within the timeframe established by the Contracting Officer.
(End of clause)