[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]



[Page 557]

 

            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.

    (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]