3682 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

■ b. In paragraph (b)(3)(i), removing ‘‘; 

or’’ and adding ‘‘;’’ in its place; 

■ c. In paragraph (b)(3)(ii), removing 

‘‘supplier.’’ and adding ‘‘supplier; and’’ 

■ d. Adding paragraph (b)(3)(iii). 

The addition reads as follows: 

13.106–3 Award and documentation. 

* * * * * 

(b) * * * 

(3) * * * 

(iii) Except for DoD, when using 

lowest price technically acceptable 

source selection process, justifying the 

use of such process. 

* * * * * 

PART 15—CONTRACTING BY 

NEGOTIATION 

■ 5. Amend section 15.101–2 by adding 

paragraphs (c) and (d) to read as follows: 

15.101–2 Lowest price technically 

acceptable source selection process. 

* * * * * 

(c) Except for DoD, in accordance 

with section 880 of the John S. McCain 

National Defense Authorization Act for 

Fiscal Year 2019 (Pub. L. 115–232, 41 

U.S.C. 3701 Note), the lowest price 

technically acceptable source selection 

process shall only be used when— 

(1) The agency can comprehensively 

and clearly describe the minimum 

requirements in terms of performance 

objectives, measures, and standards that 

will be used to determine the 

acceptability of offers; 

(2) The agency would realize no, or 

minimal, value from a proposal that 

exceeds the minimum technical or 

performance requirements; 

(3) The agency believes the technical 

proposals will require no, or minimal, 

subjective judgment by the source 

selection authority as to the desirability 

of one offeror’s proposal versus a 

competing proposal; 

(4) The agency has a high degree of 

confidence that reviewing the technical 

proposals of all offerors would not 

result in the identification of 

characteristics that could provide value 

or benefit to the agency; 

(5) The agency determined that the 

lowest price reflects the total cost, 

including operation and support, of the 

product(s) or service(s) being acquired; 

and 

(6) The contracting officer documents 

the contract file describing the 

circumstances that justify the use of the 

lowest price technically acceptable 

source selection process. 

(d) Except for DoD, in accordance 

with section 880 of the John S. McCain 

National Defense Authorization Act for 

Fiscal Year 2019 (Pub. L. 115–232, 41 

U.S.C. 3701 Note), contracting officers 

shall avoid, to the maximum extent 

practicable, using the lowest price 

technically acceptable source selection 

process in the case of a procurement 

that is predominantly for the acquisition 

of— 

(1) Information technology services, 

cybersecurity services, systems 

engineering and technical assistance 

services, advanced electronic testing, 

audit or audit readiness services, health 

care services and records, 

telecommunications devices and 

services, or other knowledge-based 

professional services; 

(2) Personal protective equipment; or 

(3) Knowledge-based training or 

logistics services in contingency 

operations or other operations outside 

the United States, including in 

Afghanistan or Iraq. 

PART 16—TYPES OF CONTRACTS 

■ 6. Amend section 16.505 by— 

■ a. Removing from the end of 

paragraph (b)(1)(ii) ‘‘must—’’ adding 

‘‘shall—’’ in its place; 

■ b. Removing from paragraph 

(b)(1)(ii)(D) ‘‘contract; and’’ and adding 

‘‘contract;’’ in its place; 

■ c. Removing from paragraph 

(b)(1)(ii)(E) ‘‘decision.’’ and adding 

‘‘decision;’’ in its place; 

■ d. Adding paragraphs (b)(1)(ii)(F) and 

(b)(1)(ii)(G); and 

■ e. Adding paragraph (b)(7)(iii). 

The additions read as follows: 

16.505 Ordering. 

* * * * * 

(b) * * * 

(1) * * * 

(ii) * * * 

(F) Except for DoD, ensure the criteria 

at 15.101–2(c)(1)–(5) are met when 

using the lowest price technically 

acceptable source selection process; and 

(G) Except for DoD, avoid using the 

lowest price technically acceptable 

source selection process to acquire 

certain supplies and services in 

accordance with 15.101–2(d). 

* * * * * 

(7) * * * 

(iii) Except for DoD, the contracting 

officer shall document in the contract 

file a justification for use of the lowest 

price technically acceptable source 

selection process, when applicable. 

* * * * * 

PART 37—SERVICE CONTRACTING 

■ 7. Amend section 37.102 by adding 

paragraph (j) to read as follows: 

37.102 Policy. 

* * * * * 

(j) Except for DoD, see 15.101–2(d) for 

limitations on the use of the lowest 

price technically acceptable source 

selection process to acquire certain 

services. 

[FR Doc. 2020–29087 Filed 1–13–21; 8:45 am] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 19, 28, 32, 52, and 53 

[FAC 2021–03; FAR Case 2017–003; Item 

III; Docket FAR–2017–0003, Sequence No. 

1] 

RIN 9000–AN39 

Federal Acquisition Regulation: 

Individual Sureties 

AGENCY: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: DoD, GSA, and NASA are 

issuing a final rule amending the 

Federal Acquisition Regulation (FAR) to 

implement a section of the National 

Defense Authorization Act for Fiscal 

Year 2016 to change the kinds of assets 

that individual sureties must pledge as 

security for their bonds. 

DATES: Effective: February 16, 2021. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Zenaida Delgado, Procurement Analyst, 

at 202–969–7207 or zenaida.delgado@

gsa.gov for clarification of content. For 

information pertaining to status or 

publication schedules, contact the 

Regulatory Secretariat Division at 202– 

501–4755 or GSARegSec@gsa.gov. 

Please cite FAC 2021–03, FAR Case 

2017–003. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD, GSA, and NASA published a 

proposed rule at 85 FR 7910 on 

February 12, 2020, to implement section 

874 of the National Defense 

Authorization Act for Fiscal Year 2016 

(Pub. L. 114–92), codified at 31 U.S.C. 

9310, Individual Sureties. 

FAR subpart 28.2 requires agencies to 

obtain adequate security for bonds when 

bonds are used with a contract. A 

corporate or individual surety is an 

acceptable form of security for a bond. 

Corporate sureties are vetted by the 

Department of the Treasury to ensure 


khammond on DSKJM1Z7X2PROD with RULES5
Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3683 

they are sufficiently capitalized and are 

listed on Department of the Treasury’s 

Listing of Approved Sureties (Treasury 

Department Circular 570). Individual 

sureties are not listed on Treasury 

Department Circular 570; currently 

contracting officers determine if an 

individual surety is acceptable. 

Under 31 U.S.C. 9310, when Federal 

law permits acceptance of a surety bond 

from a surety not subject to 31 U.S.C. 

9305 and 9306 (i.e., an individual surety 

that is not a corporate surety), the 

individual surety must pledge assets 

that are eligible obligations. Eligible 

obligations are public debt obligations 

of the United States Government whose 

principal and interest are 

unconditionally guaranteed by the 

United States Government. The 

requirements of 31 U.S.C. 9310 are 

intended to strengthen the assets 

pledged by individual sureties, thereby 

mitigating risk to the Government. 

This rule requires individual sureties 

to support their bond obligations with 

stable U.S.-backed securities as 

specified in 31 CFR part 225 and 

requires the Department of the Treasury, 

Bureau of the Fiscal Service to review 

those assets to ensure they meet 

established eligibility requirements. 

This rule is expected to provide some 

benefit to subcontractors (adequate 

security in case of default), and 

contracting officers (easier to determine 

value of assets pledged), to the extent 

that individual surety bonds are used, 

but there was some concern as to 

whether small businesses would have a 

more difficult time obtaining surety 

bonds if fewer individual sureties were 

providing bonds. DoD, GSA, and NASA 

requested public input, specifically 

from subcontractors, prime contractors, 

and individual sureties to more fully 

understand the impact of this regulation 

on affected parties. Individual sureties 

and prime contractors (including small 

businesses) did not provide input and 

did not indicate any concerns with the 

rule. One respondent representing 

subcontractors and suppliers in the 

construction industry had positive 

comments about the rule (see section 

II.B.1. of this preamble), confirming the 

anticipated benefits. Several 

respondents expressed the view that the 

rule will not negatively impact the 

availability of bonding for small 

construction businesses, noting the 

bonding assistance of the Small 

Business Administration and that the 

standard surety market has significantly 

expanded in recent years, providing 

many and varied avenues for small 

businesses to obtain bonding. 

Therefore, based on public comments 

received, DoD, GSA, and NASA have 

concluded that the initial assessment is 

correct that there is very limited use of 

individual sureties on Federal 

construction contracts and the impact of 

this rule is not significant, and any 

impact is predominantly positive. 

Six respondents submitted comments 

on the proposed rule. 

II. Discussion and Analysis 

The Civilian Agency Acquisition 

Council and the Defense Acquisition 

Regulations Council (the Councils) 

reviewed the public comments in the 

development of the final rule. 

A. Summary of Significant Changes 

From the Proposed Rule 

There are no significant changes made 

to the rule as a result of the public 

comments. One website reference has 

been corrected. 

B. Analysis of Public Comments 

Of the six responses received, most 

strongly supported the rule, and none 

provided negative comments on the 

rule. One respondent noted a 

nonfunctioning link to a website, and 

one provided comments of a political 

nature that did not address the rule. 

1. Strong support for the rule. 

Comment: Many respondents strongly 

supported the proposed rule. These 

respondents noted positive factors 

regarding this rule as follows: 

• Protects the Government from 

fraud. 

• Eliminates the gamesmanship by 

unlicensed persons acting as sureties. 

• Ensures a level playing field for 

small businesses. 

• Ensures adequate and reliable 

security is in place to guarantee 

payment to subcontractors and 

suppliers on Federal construction 

projects and protect them against 

default. 

• Eliminates the burden on 

contracting officers in determining the 

true value of proposed assets, 

streamlining the procurement process. 

Several respondents noted that the 

rule will not negatively impact the 

availability of bonding for small 

construction businesses, noting the 

bonding assistance of the Small 

Business Administration and that the 

standard surety market has significantly 

expanded in recent years, providing 

many and varied avenues for small 

businesses to obtain bonding. The rule 

does not eliminate individual surety 

bonds as an option; it just ensures that 

the bonds will be backed by stable and 

secure assets in the control of the 

Federal Government. 

Response: Noted. 

2. Treasury website for list of 

acceptable assets. 

Comment: One respondent stated that 

the link to the website provided at FAR 

28.203–1(a) for the Treasury list of 

acceptable assets entitled ‘‘Acceptable 

Collateral for 31 CFR part 225’’ does not 

work. 

Response: The directions for 

accessing the website have been 

amended as follows: ‘‘A list of 

acceptable assets entitled ‘‘Acceptable 

Collateral for 31 CFR part 225’’ may be 

accessed by going to https://

www.treasurydirect.gov/instit/statreg/ 

collateral/collateral.htm and clicking on 

‘‘Acceptable Collateral for 31 CFR part 

225’’. 

III. Applicability to Contracts at or 

Below the Simplified Acquisition 

Threshold (SAT) and for Commercial 

Items, Including Commercially 

Available Off-the-Shelf (COTS) Items 

Although applicability of this rule to 

acquisitions below the SAT will be rare, 

DoD, GSA, and NASA do intend to 

apply the requirements of this rule to 

solicitations for contracts valued at or 

below the SAT. FAR 28.102–1(b) gives 

an example of when a bond could be 

required for an acquisition under the 

SAT. As noted in FAR 28.102–1(b), 40 

U.S.C. 3132 requires the contracting 

officer to select two or more payment 

protections for construction contracts 

greater than $35,000, but not greater 

than $150,000, one of the possible 

protections being a payment bond. 

Individual sureties may provide security 

for a payment bond in this situation. 

The FAR Council has determined that it 

is not in the best interest of the 

Government to waive the applicability 

of section 874 below the SAT, because 

the new requirement will create greater 

certainty of payment for subcontractors. 

Applying the rule below the SAT will 

continue the FAR uniformity in the type 

of assets allowed to be pledged, whether 

the acquisition is above or below the 

SAT. 

Although applicability of this rule to 

acquisitions of commercial items will be 

rare, DoD, GSA, and NASA do intend to 

apply the requirements of this rule to 

solicitations for the acquisition of 

commercial items. FAR 28.103–1(a) 

states that ‘‘Generally, agencies shall not 

require performance and payment bonds 

for other than construction contracts.’’ 

However, performance and payment 

bonds may be used for other than 

construction contracts as permitted in 

FAR 28.103–2 and 28.103–3. 

The FAR Council has determined that 

it is not in the best interest of the 

Government to waive the applicability 

of section 874 to acquisitions of 

commercial items because the new 

requirement will create greater certainty 


khammond on DSKJM1Z7X2PROD with RULES5
3684 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

of payment for subcontractors. Applying 

the rule to the acquisition of commercial 

items will continue the FAR uniformity 

in the type of assets allowed to be 

pledged, whether the acquisition is for 

the acquisition of commercial or other 

than commercial items. 

IV. Executive Orders 12866 and 13563 

Executive Orders (E.O.s) 12866 and 

13563 direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. This rule is a not a 

significant regulatory action and 

therefore, this rule was not subject to 

the review of the Office of Information 

and Regulatory Affairs under section 

6(b) of E.O. 12866. This rule is not a 

major rule under 5 U.S.C. 804. 

V. Executive Order 13771 

This rule is not subject to E.O. 13771, 

because this rule is not significant under 

E.O. 12866. 

VI. Regulatory Flexibility Act 

DoD, GSA, and NASA have prepared 

a Final Regulatory Flexibility Analysis 

(FRFA) consistent with the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq. The 

FRFA is summarized as follows: 

This FAR rule changes the kinds of assets 

that individual sureties must pledge as 

security for their individual surety bonds. 

The objective of the FAR rule is to implement 

section 874 of the National Defense 

Authorization Act (NDAA) for Fiscal Year 

2016 (FY 2016) (Pub. L. 114–92), which adds 

31 U.S.C. 9310, Individual sureties, and 

limits the security for an individual surety 

bond to eligible obligations, i.e., cash and/or 

Government obligations. This section was 

intended to strengthen coverage for 

individual sureties, thereby mitigating risk to 

the Government. 

There were no significant issues raised by 

the public comments in response to the 

initial regulatory flexibility analysis. 

DoD, GSA, and NASA do not expect this 

rule to have a significant economic impact on 

a substantial number of small entities within 

the meaning of the Regulatory Flexibility Act, 

5 U.S.C. 601, et seq. The final rule applies 

to all offerors and contractors who wish to 

use an individual surety as security for bonds 

required under a solicitation or contract for 

supplies or services (including construction). 

The number of solicitations and contracts 

requiring the submission of bid guarantees, 

performance bonds, or payment bonds, 

correlates roughly to the number of contract 

awards containing FAR clause 52.228–11, 

Pledge of Assets. Based on FY 2017 data 

contained in the Electronic Document Access 

system (DoD official contract file system), 

8,603 DoD contract awards, containing FAR 

clause 52.228–11 with an obligated amount 

of over $35,000, were made to 1,990 unique 

vendors; of these 1,672 were small business 

entities. These contractors could be using 

corporate sureties under 28.202, individual 

sureties under 28.203, or pledging the 

contractor’s own assets under 28.204; this 

FAR case only covers individual sureties 

under 28.203. Therefore, based on 

contracting officers’ experience in the field 

DoD, GSA, and NASA estimate that less than 

0.1 percent of contractors are using 

individual sureties to meet the required 

bonding under contracts. 

This final rule does not include additional 

reporting or recordkeeping requirements. 

Although the rule creates a new provision to 

distinguish instructions to offerors from 

instructions to a contractor by relocating the 

‘‘offeror’’ language from the existing FAR 

clause at 52.228–11, Pledge of Assets, the net 

effect of projected reporting and 

recordkeeping is unchanged. The use of 

Standard Form (SF) 28, Affidavit of 

Individual Surety, an existing reporting 

requirement under 52.228–11, is covered 

under the Office of Management and Budget 

(OMB) Control No. 9000–0001. The SF 28 is 

revised as a result of this rule. However, this 

will have a negligible impact on offerors, 

contractors, and respondents. 

The effect on small business is that 

individual sureties will no longer be able to 

pledge real property, corporate stocks, 

corporate bonds, or irrevocable letters of 

credit. DoD, GSA, and NASA anticipate that 

some individual sureties may not want to 

transform their assets into the kind that 

qualify under the new legislation, and so 

there will be fewer individual sureties 

available to meet the needs of small business 

offerors and contractors. This may mean that 

some small businesses that have been using 

individual sureties will have their costs 

change, as they go to a different individual 

surety, or to a corporate surety. 

There are no available alternatives to the 

rule to accomplish the desired objective of 

the statute. 

DoD, GSA, and NASA do not expect this 

rule to have a significant economic impact on 

a substantial number of small entities 

because this only applies to (1) offerors and 

contractors who are using an individual 

surety as security for bonds required under 

a solicitation or contract for supplies or 

services (including construction), and (2) 

individual sureties, a small number of whom 

may not want to transform their assets into 

the kind that qualify under the new 

legislation. 

Interested parties may obtain a copy 

of the FRFA from the Regulatory 

Secretariat Division. The Regulatory 

Secretariat Division has submitted a 

copy of the FRFA to the Chief Counsel 

for Advocacy of the Small Business 

Administration. 

VII. Paperwork Reduction Act 

The Paperwork Reduction Act (44 

U.S.C. Chapter 35) does apply; however, 

the changes to the FAR do not impose 

additional information collection 

requirements. This rule modifies the SF 

28, which is used by all executive 

agencies to obtain information from 

individuals wishing to serve as sureties 

to Government bonds. However, the 

modification merely updates the 

language in the form to be consistent 

with the changes to the FAR text; it will 

have no impact on offerors or 

contractors. 

The modification of the SF 28 does 

not impose additional information 

collection requirements to the 

paperwork burden previously approved 

under OMB Control Number 9000–0001, 

Standard Form 28, Affidavit of 

Individual Surety. 

List of Subjects in 48 CFR Parts 19, 28, 

32, 52, and 53 

Government procurement. 

William F. Clark, 

Director, Office of Government-wide 

Acquisition Policy, Office of Acquisition 

Policy, Office of Government-wide Policy. 

Therefore, DoD, GSA, and NASA 

amend 48 CFR parts 19, 28, 32, 52, and 

53 as set forth below: 

■ 1. The authority citation for 48 CFR 

parts 19, 28, 32, 52, and 53 continues to 

read as follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

chapter 137; and 51 U.S.C. 20113. 

PART 19—SMALL BUSINESS 

PROGRAMS 

19.602–1 [Amended] 

■ 2. Amend section 19.602–1 by 

removing from paragraph (a) ‘‘and 

28.203(c))’’ and adding ‘‘and 28.203– 

1(e))’’ in its place. 

PART 28—BONDS AND INSURANCE 

28.102–2 [Amended] 

■ 3. Amend section 28.102–2 by 

removing from paragraph (e) ‘‘of 

28.203–5(c)’’ and adding ‘‘of 28.203– 

3(c)’’ in its place. 

■ 4. Amend section 28.106–1 by 

removing paragraph (o); redesignating 

paragraph (p) as paragraph (o); and 

revising the new redesignated paragraph 

(o) to read as follows. 

28.106–1 Bonds and bond related forms. 

* * * * * 

(o) OF 91, Release of Personal 

Property from Escrow (see 28.203–3). 

■ 5. Amend section 28.202 by— 

■ a. Revising paragraph (a)(1); 


khammond on DSKJM1Z7X2PROD with RULES5
Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3685 

■ b. Revising the first sentence of 

paragraph (a)(2); 

■ c. Removing from paragraph (a)(3) 

‘‘Department of the Treasury 

regulations’’ and adding ‘‘Department of 

the Treasury (Treasury) regulations’’ in 

its place; 

■ d. Removing from paragraph (a)(4) 

‘‘Standard Form 273’’, ‘‘Standard Form 

274’’ and ‘‘Standard Form 275’’ and 

adding ‘‘Standard Form (SF) 273’’, ‘‘SF 

274’’, and ‘‘SF 275’’ in their places, 

respectively; 

■ e. Revising the first sentence of 

paragraph (c); and 

■ f. Revising paragraph (d). 

The revisions read as follows: 

28.202 Acceptability of corporate sureties. 

(a)(1) Corporate sureties offered for 

bonds furnished with contracts 

performed in the United States or its 

outlying areas must appear on the list 

contained in the Department of the 

Treasury’s Listing of Approved Sureties 

(Treasury Department Circular 570), 

‘‘Companies Holding Certificates of 

Authority as Acceptable Sureties on 

Federal Bonds and as Acceptable 

Reinsuring Companies.’’ 

(2) The penal amount of the bond 

should not exceed the surety’s 

underwriting limit stated in the 

Treasury Department Circular 570. 

* * * 

* * * * * 

(c) Treasury issues supplements to 

Treasury Department Circular 570, 

notifying all Federal agencies of new 

approved corporate surety companies 

and the termination of the authority of 

any specific corporate surety to qualify 

as a surety on Federal bonds. * * * 

(d) Treasury Department Circular 570 

may be obtained from the U.S. 

Department of the Treasury, Bureau of 

the Fiscal Service, Surety Bond Branch, 

3201 Pennsy Drive, Building E, 

Landover, MD 20785 or at https://

www.fiscal.treasury.gov/fsreports/ref/ 

suretyBnd/c570.htm. 

■ 6. Revise section 28.203 to read as 

follows: 

28.203 Individual sureties. 

28.203–1 Acceptability of individual 

sureties. 

(a) An individual surety is acceptable 

for all types of bonds except position 

schedule bonds. Assets pledged by an 

individual surety shall meet the 

eligibility requirements of Treasury’s 

Bureau of the Fiscal Service. Per 31 

U.S.C. 9310, individual sureties must 

pledge eligible obligations, which 

Treasury refers to as acceptable 

collateral or eligible collateral. A list of 

acceptable assets, entitled ‘‘Acceptable 

Collateral for 31 CFR part 225,’’ may be 

accessed by going to https://

www.treasurydirect.gov/instit/statreg/ 

collateral/collateral.htm and clicking on 

‘‘Acceptable Collateral for 31 CFR part 

225’’. 

(b)(1) An individual surety shall 

execute the bond (e.g., bid bond (SF 24), 

performance bond (SF 25), payment 

bond (SF 25A)). 

(2) The net adjusted value of 

unencumbered assets is their market 

value minus the margin. The margin 

tables are available at 

www.treasurydirect.gov. The net 

adjusted value of unencumbered assets 

pledged by the individual surety must 

equal or exceed the penal amount (i.e., 

face value) of each bond. 

(3) The individual surety shall 

execute the SF 28, Affidavit of 

Individual Surety, and provide a 

security interest. One individual surety 

is adequate support for a bond, provided 

the net adjusted value of unencumbered 

assets pledged by that individual surety 

equals or exceeds the amount of the 

bond. 

(4) An offeror or contractor may 

submit up to three individual sureties 

for each bond, in which case the net 

adjusted value of the pledged 

unencumbered assets, when combined, 

must equal or exceed the penal amount 

of the bond. Each individual surety is 

jointly and severally liable to the extent 

of the penal amount of the bond. 

(c) Using the information from the SF 

28 submitted by the offeror or 

contractor, the contracting officer shall 

notify the Treasury’s collateral 

operations support team by email at 

BMT@fiscal.treasury.gov or by phone at 

888–568–7343, of the individual surety, 

the assets to be pledged, and the amount 

necessary to cover the individual surety 

bond, i.e., the required amount to be 

collateralized. Treasury will advise the 

contracting officer whether the assets 

are eligible to be pledged, consistent 

with 28.203–1(a), and of the valuation of 

the assets offered to be pledged, 

consistent with the valuation standards 

in 28.203–1(b)(2). If after 3 business 

days the contracting officer has not 

received a response from Treasury, the 

contracting officer may seek assistance 

from the Director, Bank Policy and 

Oversight, at 202–504–3502. The 

contracting officer shall determine 

whether the individual surety bond is 

acceptable as to the amount necessary to 

cover the individual surety bond based 

on the asset eligibility and valuation 

assessment from Treasury. The 

contracting officer shall notify both the 

offeror or contractor and the individual 

surety of this determination. 

(d) If the contracting officer 

determines the individual surety is 

acceptable, the contracting officer shall 

request the Treasury’s collateral 

operations support team set up the 

necessary individual surety pledged 

asset collateral account. 

(e) 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 Certificate of Competency. (See 

19.602–1(a) and 61 Comp. Gen. 456 

(1982).) 

(f) If a contractor submits an 

unacceptable individual surety, or one 

that Treasury could not assess the asset 

eligibility and valuation within a 

reasonable time, then the contracting 

officer may permit the contractor to 

substitute an acceptable surety within a 

reasonable time. 

(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. 

28.203–2 Substitution of assets. 

An individual surety may request the 

Government to accept a substitute asset 

for that currently pledged by submitting 

a written request, including a revised SF 

28, to the responsible contracting 

officer. Following the requirements set 

forth in 28.203–1, the contracting officer 

may agree to the substitution of assets 

upon determining that the substitute 

assets to be pledged are adequate to 

protect the outstanding bond or 

guarantee obligations. 

28.203–3 Release of security interest. 

(a) After consultation with legal 

counsel, the contracting officer shall 

release the security interest on the 

individual surety’s assets using the 

Optional Form 91, Release of Personal 

Property from Escrow, or a similar 

release as soon as possible consistent 

with the conditions in subparagraphs 

(a)(1) and (2) of this section. A surety’s 

assets pledged in support of a payment 

bond may be released to a subcontractor 

or supplier upon Government receipt of 

a Federal district court judgment, or a 

sworn statement by the subcontractor or 

supplier that the claim is correct along 

with a notarized authorization of the 

release by the surety stating that it 

approves of such release. 

(1) Contracts subject to the Bonds 

statute. See section 1.110 and section 


khammond on DSKJM1Z7X2PROD with RULES5
3686 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

28.102–1, paragraph (a). The security 

interest shall be maintained for the later 

of— 

(i) 1 year following final payment; 

(ii) Until completion of any warranty 

period (applicable only to performance 

bonds); or 

(iii) Pending resolution of all claims 

filed against the payment bond during 

the 1 year period following final 

payment. 

(2) Contracts subject to alternative 

payment protection. See section 28.102– 

1, paragraph (b)(1). The security interest 

shall be maintained for the full contract 

performance period plus 1 year. 

(3) Other contracts not subject to the 

Bonds statute. The security interest 

shall be maintained for 90 days 

following final payment or until 

completion of any warranty period 

(applicable only to performance bonds), 

whichever is later. 

(b) Upon written request by the 

individual surety, the contracting officer 

may release the security interest on the 

individual surety’s assets in support of 

a bid guarantee based upon evidence 

that the offer supported by the 

individual surety will not result in 

contract award. 

(c) Upon written request by the 

individual surety, the contracting officer 

may release a portion of the security 

interest on the individual surety’s assets 

based upon substantial performance of 

the contractor’s obligations under its 

performance bond. Release of the 

security interest in support of a payment 

bond must comply with the 

subparagraphs (a)(1) through (3) of this 

section. In making this determination, 

the contracting officer will give 

consideration as to whether the 

unreleased portion of the security is 

sufficient to cover the remaining 

contract obligations, including 

payments to subcontractors and other 

potential liabilities. The individual 

surety shall, as a condition of the partial 

release, furnish an affidavit agreeing 

that the release of such assets does not 

relieve the individual surety of its 

obligations under the bond(s). 

28.203–4 Solicitation provision and 

contract clause. 

(a) Insert the provision at 52.228–17, 

Individual Surety—Pledge of Assets 

(Bid Guarantee), in solicitations that 

require the submission of a bid 

guarantee. 

(b) Insert the clause at 52.228–11, 

Individual Surety—Pledge of Assets, in 

solicitations and contracts that require 

the submission of performance or 

payment bonds. 

28.203–5 Exclusion of individual sureties. 

(a) An individual may be excluded 

from acting as a surety on bonds 

submitted by offerors on procurement 

by the executive branch of the Federal 

Government, by the acquiring agency’s 

head or designee utilizing the 

procedures in subpart 9.4. The 

exclusion shall be for the purpose of 

protecting the Government. 

(b) An individual may be excluded for 

any of the following causes: 

(1) Failure to fulfill the obligations 

under any bond. 

(2) Failure to disclose all bond 

obligations. 

(3) Misrepresentation of the value of 

available assets or outstanding 

liabilities. 

(4) Any false or misleading statement, 

signature or representation on a bond or 

affidavit of individual suretyship. 

(5) Any other cause affecting 

responsibility as a surety of such serious 

and compelling nature as may be 

determined to warrant exclusion. 

(c) An individual surety excluded 

pursuant to this section shall be entered 

as an exclusion in the System for Award 

Management (see 9.404). 

(d) Contracting officers shall not 

accept the bonds of individual sureties 

whose names appear in an active 

exclusion record in the System for 

Award Management (see 9.404) unless 

the acquiring agency’s head or a 

designee states in writing the 

compelling reasons justifying 

acceptance. 

(e) An exclusion of an individual 

surety under this section will also 

preclude such party from acting as a 

contractor in accordance with subpart 

9.4. 

28.204 [Amended] 

■ 7. Amend section 28.404 by removing 

from paragraph (b) ‘‘lien in 28.203–5(c)’’ 

and adding ‘‘security in 28.203–3(c)’’ in 

its place. 

28.204–1 [Amended] 

■ 8. Amend section 28.204–1 by 

removing from the first sentence of the 

text ‘‘dated July 1, 1978’’. 

PART 32—CONTRACT FINANCING 

32.202–4 [Amended] 

■ 9. Amend section 32.202–4 by 

removing from paragraph (c) ‘‘28.203–2, 

28.203–3, and’’ and adding ‘‘28.203 

and’’ in its place. 

PART 52—SOLICITATION PROVISIONS 

AND CONTRACT CLAUSES 

■ 10. Revise section 52.228–11 to read 

as follows: 

52.228–11 Individual Surety—Pledge of 

Assets. 

As prescribed in 28.203–4(b), insert the 

following clause: 

Individual Surety—Pledge of Assets (Feb 

2021) 

(a) The Contractor shall obtain from each 

person acting as an individual surety on a 

performance bond or a payment bond— 

(1) A pledge of assets that meets the 

eligibility, valuation, and security 

requirements described in the Federal 

Acquisition Regulation (FAR) 28.203–1; and 

(2) Standard Form 28, Affidavit of 

Individual Surety. 

(b) The Contracting Officer may release a 

portion of the security interest on the 

individual surety’s assets based upon 

substantial performance of the Contractor’s 

obligations under its performance bond. The 

security interest in support of a performance 

bond shall be maintained— 

(1) Contracts for the construction, 

alteration, or repair of any public building or 

public work of the Federal Government 

exceeding $150,000 (40 U.S.C. 3131). Until 

completion of any warranty period, or for 1 

year following final payment, whichever is 

later. 

(2) Contracts subject to alternative 

payment protection (see FAR 28.102–1(b)(1)). 

For the full contract performance period plus 

1 year. 

(3) Other contracts not subject to the 

requirements of paragraph (b)(1) of this 

clause. Until completion of any warranty 

period, or for 90 days following final 

payment, whichever is later. 

(c) A surety’s assets pledged in support of 

a payment bond may be released to a 

subcontractor or supplier upon Government 

receipt of a Federal district court judgment, 

or a sworn statement by the subcontractor or 

supplier that the claim is correct along with 

a notarized authorization of the release by the 

surety stating that it approves of such release. 

The security interest on the individual 

surety’s assets in support of a payment bond 

shall be maintained— 

(1) Contracts for the construction, 

alteration, or repair of any public building or 

public work of the Federal Government 

exceeding $150,000 which require 

performance and payment bonds (40 U.S.C. 

3131). For 1 year following final payment, or 

until resolution of all pending claims filed 

against the payment bond during the 1-year 

period following final payment, whichever is 

later. 

(2) Contracts subject to alternative 

payment protection (see FAR 28.102–1(b)(1)). 

For the full contract performance period plus 

1 year. 

(3) Other contracts not subject to the 

requirements of paragraph (c)(1) of this 

clause. For 90 days following final payment. 

(d) The Contracting Officer may allow the 

Contractor to substitute an individual surety, 

for a performance or payment bond, after 

contract award. The Contractor shall comply 

with the requirements of paragraph (a) of this 

clause within the timeframe established by 

the Contracting Officer. 

(End of clause) 


khammond on DSKJM1Z7X2PROD with RULES5
Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3687 

■ 11. Add section 52.228–17 to read as 

follows: 

52.228–17 Individual Surety—Pledge of 

Assets (Bid Guarantee). 

As prescribed in 28.203–4(a), insert 

the following provision: 

Individual Surety—Pledge of Assets 

(Bid Guarantee) (Feb 2021) 

(a) Offerors shall obtain from each person 

acting as an individual surety on a bid 

guarantee— 

(1) A pledge of assets that meets the 

eligibility, valuation, and security 

requirements described in the Federal 

Acquisition Regulation (FAR) 28.203–1; and 

(2) Standard Form 28, Affidavit of 

Individual Surety. 

(b) The Offeror shall include with its offer 

the information required at paragraph (a) of 

this provision within the timeframe specified 

in the provision at FAR 52.228–1, Bid 

Guarantee, or as otherwise established by the 

Contracting Officer. 

(c) The Contracting Officer may release the 

security interest on the individual surety’s 

assets in support of a bid guarantee based 

upon evidence that the offer supported by the 

individual surety will not result in contract 

award. 

(End of provision) 

PART 53—FORMS 

53.228 [Amended] 

■ 12. Amend section 53.228 by— 

■ a. Removing from paragraph (e) ‘‘(Rev. 

6/2003)’’ and ‘‘28.203(b).)’’ and adding 

‘‘‘‘(Rev. Feb 2021)’’ and ‘‘28.203– 

1(b)(3).)’’ in their places, respectively; 

■ b. Removing paragraph (o); 

■ c. Redesignating paragraph (p) as 

paragraph (o); and 

■ d. Removing from the newly 

redesignated paragraph (o) ‘‘(See 

28.106–1(p) and 28.203–5(a).)’’ and 

adding ‘‘(See 28.106–1(o) and 28.203– 

3(a).)’’ in its place. 

53.300 [Amended] 

■ 13. Amend section 53.300 by 

removing from the table 53–1 in 

paragraph (a) ‘‘OF 90 Release of Lien on 

Real Property.’’ 

[FR Doc. 2020–29088 Filed 1–13–21; 8:45 am] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 2, 15, 17, 37 and 52 

[FAC 2021–03; Item IV; Docket No. FAR– 

2020–0052; Sequence No. 4] 

Federal Acquisition Regulation; 

Technical Amendments 

AGENCY: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: This document makes 

amendments to the Federal Acquisition 

Regulation (FAR) in order to make 

needed editorial changes. 

DATES: Effective: February 16, 2021. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Lois Mandell, Regulatory Secretariat 

Division (MVCB), at 202–501–4755 or 

GSARegSec@gsa.gov. Please cite FAC 

2021–03, Technical Amendments. 

SUPPLEMENTARY INFORMATION: In order to 

update certain elements in 48 CFR parts 

2, 15, 17, 37, and 52 this document 

makes editorial changes to the FAR. 

List of Subjects in 48 CFR Parts 2, 15, 

17, 37 and 52 

Government procurement. 

William F. Clark, 

Director, Office of Government-Wide 

Acquisition Policy, Office of Acquisition 

Policy, Office of Government-Wide Policy. 

Therefore, DoD, GSA, and NASA 

amend 48 CFR parts 2, 15, 17, 37, and 

52 as set forth below: 

■ 1. The authority citation for 48 CFR 

parts 2, 15, 17, 37, and 52 continues to 

read as follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

chapter 137; and 51 U.S.C. 20113. 

PART 2—DEFINITIONS OF WORDS 

AND TERMS 

2.101 [Amended] 

■ 2. Amend section 2.101, in paragraph 

(b), in the definition ‘‘Ineligible’’ by 

removing from paragraph (4) ‘‘$15,000’’ 

and adding ‘‘$10,000’’ in its place. 

PART 15—CONTRACTING BY 

NEGOTIATION 

■ 3. Amend section 15.209 by adding 

paragraph (e) to read as follows: 

15.209 Solicitation provisions and 

contract clauses. 

* * * * * 

(e) The contracting officer shall insert 

the provision at 52.215–5, Facsimile 

Proposals, in solicitations if facsimile 

proposals are authorized (see 15.203(d)). 

* * * * * 

PART 17—SPECIAL CONTRACTING 

METHODS 

17.502 1 [Amended] 

■ 4. Amend section 17.502–1 by— 

■ a. Removing from the sixth sentence 

of paragraph (a)(1)(i) ‘‘Policy’’ and 

‘‘l_acq/iacll’’ adding ‘‘Policy 

(OFPP)’’ and ‘‘lacq/iacl’’ in their 

place; respectively; and 

■ b. Removing from paragraph (b) 

introductory text ‘‘Office of Federal 

Procurement Policy (OFPP)’’ and adding 

‘‘OFPP’’ in its place. 

PART 37—SERVICE CONTRACTING 

37.103 [Amended] 

■ 5. Amend section 37.103 in paragraph 

(d) by removing ‘‘42 U.S.C. 13041, as 

amended,’’ and adding ‘‘34 U.S.C. 

20351’’ in its place. 

PART 52—SOLICITATION PROVISIONS 

AND CONTRACT CLAUSES 

■ 6. Amend section 52.212–3 by— 

■ a. Revising the date of the provision; 

and 

■ b. Revising paragraph (f)(2); 

■ c. Revising the table in paragraph 

(g)(1)(ii), and the undesignated tables in 

(g)(1)(iii), (g)(2), and (g)(3); 

■ d. Revising the tables in (g)(4) and 

(g)(5)(ii); and 

■ e. Revising the paragraph (i)(1). 

The revisions read as follows: 

52.212–3 Offeror Representations and 

Certifications—Commercial Items. 

* * * * * 

Offeror Representations and 

Certifications—Commercial Items (Feb 

2021) 

* * * * * 

(f) * * * 

(2) Foreign End Products: 

Line item No. Country of origin 

[List as necessary] 

* * * * * 

(g)(1) * * * 

(ii) * * * 


khammond on DSKJM1Z7X2PROD with RULES5