Overview
This section defines the purpose of FAR Subpart 28.2, which establishes the administrative procedures for using sureties and other forms of security to mitigate financial risk to the government.
Key Rules
- Purpose: The subpart is designed to protect the Government from financial losses resulting from a contractor's failure to perform or fulfill financial obligations.
- Sureties: Covers the requirements for both corporate and individual sureties.
- Alternative Security: Prescribes the use of "other security," such as assets, cash, or irrevocable letters of credit, in lieu of traditional bonds.
Practical Implications
- This subpart provides the framework for Contracting Officers to evaluate the acceptability of bonds and the financial solvency of sureties before awarding a contract.
- It ensures that if a contractor defaults or fails to pay subcontractors, the government has a guaranteed source of funds to cover the completion of the work or satisfy legal claims.