28.103-2 Performance bonds.
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(a) Performance bonds may be required for contracts exceeding the simplified acquisition threshold when necessary to protect the Government’s interest. The following situations may warrant a performance bond:
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(1) Government property or funds are to be provided to the contractor for use in performing the contract or as partial compensation (as in retention of salvaged material).
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(2) A contractor sells assets to or merges with another concern, and the Government, after recognizing the latter concern as the successor in interest, desires assurance that it is financially capable.
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(3) Substantial progress payments are made before delivery of end items starts.
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(4) Contracts are for dismantling, demolition, or removal of improvements.
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(b) The Government may require additional performance bond protection when a contract price is increased.
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(c) The contracting officer must determine the contractor’s responsibility (see subpart 9.1) even though a bond has been or can be obtained.