[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR28.102-1]

[Page 532-533]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 28_BONDS AND INSURANCE--Table of Contents
 
           Subpart 28.1_Bonds and Other Financial Protections
 
Sec.  28.102-1  General.

    (a) The Miller Act (40 U.S.C. 270a-270f) requires performance and 
payment bonds for any construction contract exceeding $100,000, except 
that this requirement may be waived (1) by the contracting officer for 
as much of

[[Page 533]]

the work as is to be performed in a foreign country upon finding that it 
is impracticable for the contractor to furnish such bond, or (2) as 
otherwise authorized by the Miller Act or other law.
    (b)(1) Pursuant to Section 4104(b)(2) of the Federal Acquisition 
Streamlining Act of 1994 (Public Law 103-355), for construction 
contracts greater than $25,000, but not greater than $100,000, the 
contracting officer shall select two or more of the following payment 
protections, giving particular consideration to inclusion of an 
irrevocable letter of credit as one of the selected alternatives:
    (i) A payment bond.
    (ii) An irrevocable letter of credit (ILC).
    (iii) A tripartite escrow agreement. The prime contractor 
establishes an escrow account in a federally insured financial 
institution and enters into a tripartite escrow agreement with the 
financial institution, as escrow agent, and all of the suppliers of 
labor and material. The escrow agreement shall establish the terms of 
payment under the contract and of resolution of disputes among the 
parties. The Government makes payments to the contractor's escrow 
account, and the escrow agent distributes the payments in accordance 
with the agreement, or triggers the disputes resolution procedures if 
required.
    (iv) Certificates of deposit. The contractor deposits certificates 
of deposit from a federally insured financial institution with the 
contracting officer, in an acceptable form, executable by the 
contracting officer.
    (v) A deposit of the types of security listed in 28.204-1 and 
28.204-2.
    (2) The contractor shall submit to the Government one of the payment 
protections selected by the contracting officer.
    (c) The contractor shall furnish all bonds or alternative payment 
protection, including any necessary reinsurance agreements, before 
receiving a notice to proceed with the work or being allowed to start 
work.

[48 FR 42286, Sept. 19, 1983, as amended at 61 FR 31652, June 20, 1996]