[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]

[Page 538-539]
 
            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  Acceptability of individual sureties.

    (a) An individual surety is acceptable for all types of bonds except 
position schedule bonds. The contracting officer shall determine the 
acceptability of individuals proposed as sureties, and shall ensure that 
the surety's pledged assets are sufficient to cover the bond obligation. 
(See 28.203-7 for information on excluded individual sureties.)
    (b) An individual surety must execute the bond, and the unencumbered 
value of the assets (exclusive of all outstanding pledges for other bond 
obligations) pledged by the individual surety, must equal or exceed the 
penal amount of each bond. The individual surety shall execute the 
Standard Form 28 and provide a security interest in accordance with 
28.203-1. One individual surety is adequate support for a bond, provided 
the unencumbered value of the assets pledged by that individual surety 
equal or exceed the amount of the bond. An offeror may submit up to 
three individual sureties for each bond, in which case the pledged 
assets, when combined, must equal or exceed the penal amount of the 
bond. Each individual surety must accept both joint and several 
liability to the extent of the penal amount of the bond.

[[Page 539]]

    (c) If the contracting officer determines that no individual surety 
in support of a bid guarantee is acceptable, the offeror utilizing the 
individual surety shall be rejected as nonresponsible, except as 
provided in 28.101-4. A finding of nonresponsibility based on 
unacceptability of an individual surety, need not be referred to the 
Small Business Administration for a competency review. (See 19.602-
1(a)(2)(i) and 61 Comp. Gen. 456 (1982).)
    (d) A contractor submitting an unacceptable individual surety in 
satisfaction of a performance or payment bond requirement may be 
permitted a reasonable time, as determined by the contracting officer, 
to substitute an acceptable surety for a surety previously determined to 
be unacceptable.
    (e) When evaluating individual sureties, contracting officers may 
obtain assistance from the office identified in 28.202(d).
    (f) Contracting officers shall obtain the opinion of legal counsel 
as to the adequacy of the documents pledging the assets prior to 
accepting the bid guarantee and payment and performance bonds.
    (g) Evidence of possible criminal or fraudulent activities by an 
individual surety shall be referred to the appropriate agency official 
in accordance with agency procedures.

[54 FR 48986, Nov. 28, 1989]