[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: 48CFR28.203-2]

[Page 540]
 
            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.  28.203-2  Acceptability of assets.

    (a) The Government will accept only cash, readily marketable assets, 
or irrevocable letters of credit from a federally insured financial 
institution from individual sureties to satisfy the underlying bond 
obligations.
    (b) Acceptable assets include--
    (1) Cash, or certificates of deposit, or other cash equivalents with 
a federally insured financial institution;
    (2) United States Government securities at market value. (An escrow 
account is not required if an individual surety offers Government 
securities held in book entry form at a depository institution. In lieu 
thereof, the individual shall provide evidence that the depository 
institution has (i) placed a notation against the individual's book 
entry account indicating that the security has been pledged in favor of 
the respective agency; (ii) agreed to notify the agency prior to 
maturity of the security; and (iii) agreed to hold the proceeds of the 
security subject to the pledge in favor of the agency until a 
substitution of securities is made or the security interest is formally 
released by the agency);
    (3) Stocks and bonds actively traded on a national U.S. security 
exchange with certificates issued in the name of the individual surety. 
National security exchanges are--(i) the New York Stock Exchange; (ii) 
the American Stock Exchange; (iii) the Boston Stock Exchange; (iv) the 
Cincinnati Stock Exchange; (v) the Midwest Stock Exchange; (vi) the 
Philadelphia Stock Exchange; (vii) the Pacific Stock Exchange; and 
(viii) the Spokane Stock Exchange. These assets will be accepted at 90 
percent of their 52-week low, as reflected at the time of submission of 
the bond. Stock options and stocks on the over-the-counter (OTC) market 
or NASDQ Exchanges will not be accepted. Assistance in evaluating the 
acceptability of securities may be obtained from the Securities and 
Exchange Commission, Division of Enforcement, 450 Fifth Street NW., 
Washington, DC 20549.
    (4) Real property owned in fee simple by the surety without any form 
of concurrent ownership, except as provided in paragraph (c)(3)(iii) of 
this subsection, and located in the United States or its outlying areas. 
These assets will be accepted at 100 percent of the most current tax 
assessment value (exclusive of encumbrances) or 75 percent of the 
properties' unencumbered market value provided a current appraisal is 
furnished (see 28.203-3).
    (5) Irrevocable letters of credit (ILC) issued by a federally 
insured financial institution in the name of the contracting agency and 
which identify the agency and solicitation or contract number for which 
the ILC is provided.
    (c) Unacceptable assets include but are not limited to--
    (1) Notes or accounts receivable;
    (2) Foreign securities;
    (3) Real property as follows:
    (i) Real property located outside the United States and its outlying 
areas.
    (ii) Real property which is a principal residence of the surety.
    (iii) Real property owned concurrently regardless of the form of co-
tenancy (including joint tenancy, tenancy by the entirety, and tenancy 
in common) except where all co-tenants agree to act jointly.
    (iv) Life estates, leasehold estates, or future interests in real 
property.
    (4) Personal property other than that listed in paragraph (b) of 
this subsection (e.g., jewelry, furs, antiques);
    (5) Stocks and bonds of the individual surety in a controlled, 
affiliated, or closely held concern of the offeror/contractor;
    (6) Corporate assets (e.g., plant and equipment);
    (7) Speculative assets (e.g., mineral rights);
    (8) Letters of credit, except as provided in 28.203-2(b)(5).

[54 FR 48987, Nov. 28, 1989, as amended at 68 FR 28083, May 22, 2003]