[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: 48CFR28.203-1]



[Page 557-558]

 

            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



[[Page 558]]



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]