[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: 48CFR28.203-1]

[Page 539]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 28_BONDS AND INSURANCE--Table of Contents
 
           Subpart 28.2_Sureties and Other Security for Bonds
 
Sec.  28.203-1  Security interests by an individual surety.

    (a) An individual surety may be accepted only if a security interest 
in assets acceptable under 28.203-2 is provided to the Government by the 
individual surety. The security interest shall be furnished with the 
bond.
    (b) The value at which the contracting officer accepts the assets 
pledged must be equal to or greater than the aggregate penal amounts of 
the bonds required by the solicitation and may be provided by one or a 
combination of the following methods:
    (1) An escrow account with a federally insured financial institution 
in the name of the contracting agency. (See 28.203-2(b)(2) with respect 
to Government securities in book entry form.) Acceptable securities for 
deposit in escrow are discussed in 28.203-2. While the offeror is 
responsible for establishing the escrow account, the terms and 
conditions must be acceptable to the contracting officer. At a minimum, 
the escrow account shall provide for the following:
    (i) The account must provide the contracting officer the sole and 
unrestricted right to draw upon all or any part of the funds deposited 
in the account. A written demand for withdrawal shall be sent to the 
financial institution by the contracting officer, after obtaining the 
concurrence of legal counsel, with a copy to the offeror/contractor and 
to the surety. Within the time period specified in the demand, the 
financial institution would pay the Government the amount demanded up to 
the amount on deposit. If any dispute should arise between the 
Government and the offeror/contractor, the surety, or the subcontractors 
or suppliers with respect to the offer or contract, the financial 
institution would be required, unless precluded by order of a court of 
competent jurisdiction, to disburse monies to the Government as directed 
by the contracting officer.
    (ii) The financial institution would be authorized to release to the 
individual surety all or part of the balance of the escrow account, 
including any accrued interest, upon receipt of written authorization 
from the contracting officer.
    (iii) The Government would not be responsible for any costs 
attributable to the establishment, maintenance, administration, or any 
other aspect of the account.
    (iv) The financial institution would not be liable or responsible 
for the interpretation of any provisions or terms and conditions of the 
solicitation or contract.
    (v) The financial institution would provide periodic account 
statements to the contracting officer.
    (vi) The terms of the escrow account could not be amended without 
the consent of the contracting officer.
    (2) A lien on real property, subject to the restrictions in 28.203-2 
and 28.203-3.

[54 FR 48986, Nov. 28, 1989]

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