FAR 28.001—Definitions.
Plain-English Summary
FAR 28.001 provides the core definitions used throughout FAR Part 28, which governs bonds and insurance. This section defines the key terms that control when and how bid guarantees, bonds, sureties, powers of attorney, consent of surety, penal sums, and reinsurance are used in federal contracting. It also clarifies who counts as a bidder, what counts as a bid, and the different bond types used in procurement, including advance payment bonds, annual bid bonds, annual performance bonds, patent infringement bonds, payment bonds, and performance bonds. In practice, these definitions matter because they determine whether a contractor has submitted a responsive bid, whether a surety is properly bound, what security the Government may require, and how bond obligations are enforced when contracts are modified or when a contractor defaults. Contracting officers, contractors, and sureties rely on these terms to decide what security is required, how much is required, and whether the submitted instruments are legally sufficient.
Key Rules
Bid includes proposals
For purposes of Part 28, a bid means any response to a solicitation, including a proposal under a negotiated acquisition. This means the bonding and guarantee rules in this part can apply beyond sealed bidding and may reach negotiated procurements when the context requires it.
Bidder covers offerors
A bidder is any entity responding or having responded to a solicitation, including an offeror in a negotiated acquisition. The term is broad so the bond and guarantee requirements can be applied consistently across procurement methods.
Bid guarantee secures bid commitment
A bid guarantee assures that the bidder will not withdraw the bid during the acceptance period and will execute the contract and furnish required bonds, including any needed coinsurance or reinsurance agreements, within the required time. It protects the Government against the cost and delay of a bidder failing to honor its offer.
Bond types are specifically defined
The section identifies several bond forms and their purposes: advance payment bonds, annual bid bonds, annual performance bonds, patent infringement bonds, payment bonds, and performance bonds. Each type secures a different obligation, so the contracting officer must match the bond to the risk and contract requirement.
Surety and attorney-in-fact authority matters
An attorney-in-fact is the person or entity holding a power of attorney from the surety, and the surety is the second party that backs the principal’s obligations. These definitions matter because the Government must be able to verify that the person signing for the surety has authority to bind the surety.
Consent of surety covers contract changes
Consent of surety is the surety’s acknowledgment that its bond continues to apply after a contract modification. This protects the Government from losing bond coverage when the underlying contract changes.
Penal sum sets the maximum exposure
The penal sum or penal amount is the maximum amount the surety may have to pay under the bond, or the amount of security pledged in lieu of a corporate or individual surety. It establishes the ceiling on the surety’s liability and is a key compliance point when evaluating bond sufficiency.
Reinsurance is surety-to-surety protection
Reinsurance is an agreement where one surety indemnifies another surety against loss on a bond it issued. In this part, reinsurance is relevant because bid guarantees and bonds may involve additional surety arrangements that must be properly documented and accepted.
Responsibilities
Contracting Officer
Use these definitions to determine whether a solicitation response is a bid or proposal for Part 28 purposes, decide what bond or guarantee is required, verify the sufficiency of the surety and the authority of any attorney-in-fact, and ensure the penal sum and any consent of surety meet the contract’s requirements.
Contractor
Provide the required bid guarantee or bond in the proper form, ensure the surety is authorized and the signatory has power of attorney, furnish required bonds and related agreements on time, and obtain consent of surety when contract modifications affect bond coverage.
Bidder/Offeror
Submit a responsive bid or offer with any required guarantee, remain bound during the acceptance period, and if selected, execute the contract and provide required bonds within the stated time.
Surety
Issue bonds only through authorized representatives, remain bound to the principal’s obligations up to the penal sum, provide consent when required for contract modifications, and honor the bond obligations if the principal defaults.
Attorney-in-fact
Act only within the authority granted by the surety’s power of attorney and properly execute bond documents on behalf of the surety.
Agency
Apply these definitions consistently in procurement planning, solicitation drafting, bond evaluation, and contract administration so that required security is legally enforceable and aligned with the risk being covered.
Practical Implications
These definitions control whether a submission is treated as a bid or offer for bonding purposes, so using the wrong terminology can lead to evaluation mistakes or improper rejection of security.
The Government should always verify the surety’s authority and the attorney-in-fact’s power of attorney; a bond signed by someone without authority may be unenforceable.
The penal sum is not just a formality: if it is too low or not properly stated, the bond may not provide the protection the Government expects.
Contract modifications can affect bond coverage, so contracting officers should check whether consent of surety is needed whenever the contract changes materially.
Annual bonds can simplify administration for recurring procurements, but they must still cover the correct fiscal year and contract type, or they may not satisfy the requirement.
Official Regulatory Text
As used in this part- Attorney-in-fact means an agent, independent agent, underwriter, or any other company or individual holding a power of attorney granted by a surety (see also "power of attorney" at 2.101 ). Bid means any response to a solicitation, including a proposal under a negotiated acquisition. See the definition of "offer" at 2.101 . Bid guarantee means a form of security assuring that the bidder- (1) Will not withdraw a bid within the period specified for acceptance; and (2) Will execute a written contract and furnish required bonds, including any necessary coinsurance or reinsurance agreements, within the time specified in the bid, unless a longer time allowed, after receipt of the specified forms. Bidder means any entity that is responding or has responded to a solicitation, including an offeror under a negotiated acquisition. Bond means a written instrument executed by a bidder or contractor (the "principal"), and a second party (the "surety" or "sureties") (except as provided in 28.204 ), to assure fulfillment of the principal’s obligations to a third party (the "obligee" or "Government"), identified in the bond. If the principal’s obligations are not met, the bond assures payment, to the extent stipulated, of any loss sustained by the obligee. The types of bonds and related documents are as follows: (1) An advance payment bond secures fulfillment of the contractor’s obligations under an advance payment provision. (2) An annual bid bond is a single bond furnished by a bidder, in lieu of separate bonds, which secure all bids (on other than construction contracts) requiring bonds submitted during a specific Government fiscal year. (3) An annual performance bond is a single bond furnished by a contractor, in lieu of separate performance bonds, to secure fulfillment of the contractor’s obligations under contracts (other than construction contracts) requiring bonds entered into during a specific Government fiscal year. (4) A patent infringement bond secures fulfillment of the contractor’s obligations under a patent provision. (5) A payment bond assures payments as required by law to all persons supplying labor or material in the prosecution of the work provided for in the contract. (6) A performance bond secures performance and fulfillment of the contractor’s obligations under the contract. Consent of surety means an acknowledgment by a surety that its bond given in connection with a contract continues to apply to the contract as modified. Penal sum or "penal amount" means the amount of money specified in a bond (or a percentage of the bid price in a bid bond) as the maximum payment for which the surety is obligated or the amount of security required to be pledged to the Government in lieu of a corporate or individual surety for the bond. Reinsurance means a transaction which provides that a surety, for a consideration, agrees to indemnify another surety against loss which the latter may sustain under a bond which it has issued.