[Federal Register Volume 86, Number 9 (Thursday, January 14, 2021)]
[Rules and Regulations]
[Pages 3682-3687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29088]


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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.

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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 <a href="/cdn-cgi/l/email-protection#48322d2629212c29662c2d242f292c27082f3b29662f273e"><span class="__cf_email__" data-cfemail="611b040f000805004f05040d0600050e210612004f060e17">[email protected]</span></a> for clarification 
of content. For information pertaining to status or publication 
schedules, contact the Regulatory Secretariat Division at 202-501-4755 
or <a href="/cdn-cgi/l/email-protection#6b2c382a390e0c380e082b0c180a450c041d"><span class="__cf_email__" data-cfemail="53140012013634003630133420327d343c25">[email protected]</span></a>. 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

[[Page 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:
    <bullet> Protects the Government from fraud.
    <bullet> Eliminates the gamesmanship by unlicensed persons acting 
as sureties.
    <bullet> Ensures a level playing field for small businesses.
    <bullet> Ensures adequate and reliable security is in place to 
guarantee payment to subcontractors and suppliers on Federal 
construction projects and protect them against default.
    <bullet> 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

[[Page 3684]]

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:

0
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]

0
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]

0
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.

0
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).

0
5. Amend section 28.202 by--
0
a. Revising paragraph (a)(1);

[[Page 3685]]

0
b. Revising the first sentence of paragraph (a)(2);
0
c. Removing from paragraph (a)(3) ``Department of the Treasury 
regulations'' and adding ``Department of the Treasury (Treasury) 
regulations'' in its place;
0
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;
0
e. Revising the first sentence of paragraph (c); and
0
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.

0
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 <a href="/cdn-cgi/l/email-protection#f8bab5acb89e918b9b9994d68c8a9d998b8d8a81d69f978e"><span class="__cf_email__" data-cfemail="6b29263f2b0d0218080a07451f190e0a181e1912450c041d">[email protected]</span></a> 
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

[[Page 3686]]

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]

0
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]

0
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]

0
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

0
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)


[[Page 3687]]



0
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]

0
12. Amend section 53.228 by--
0
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;
0
b. Removing paragraph (o);
0
c. Redesignating paragraph (p) as paragraph (o); and
0
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]

0
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


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