[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR28.102-1]



[Page 551]

 

            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. 3131 et seq.) 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 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 40 U.S.C. 3132, 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; 

70 FR 57454, Sept. 30, 2005]