FAR 28.101-1—Policy on use.
Plain-English Summary
FAR 28.101-1 explains when a contracting officer may or must require a bid guarantee, and how that requirement relates to performance bonds and performance and payment bonds. It also distinguishes between acceptable forms of bid guarantees for supply and service contracts versus construction contracts, including the special rule that construction contracts require separate bid guarantees and may be limited further by agency policy. The section also gives the Government a waiver mechanism when a bid guarantee is not in the Government’s best interest for a particular acquisition, with examples such as overseas construction, emergency acquisitions, and sole-source contracts. In practice, this section is about aligning bid security with the risk of award and performance, so the Government does not impose unnecessary bid protection or use the wrong form of security for the contract type. It matters because bid guarantees can affect competition, bidder participation, and the Government’s ability to protect itself against a bidder’s failure to execute the contract or provide required performance security.
Key Rules
No bid guarantee alone
A contracting officer may not require a bid guarantee unless the solicitation also requires a performance bond or a performance and payment bond. The bid guarantee requirement is tied to the later performance security requirement, not used as a standalone condition.
Bid guarantees usually required
Except when waived under paragraph (c), a bid guarantee must be required whenever the solicitation requires a performance bond or a performance and payment bond. This makes the bid security part of the overall protection package for the Government.
Supply and service flexibility
For supply or service contracts, all types of bid guarantees are acceptable. This gives agencies flexibility to accept different forms of bid security permitted by the FAR and the solicitation.
Construction requires separate bid bonds
For construction contracts, only separate bid guarantees are acceptable. Agencies may go further and specify that only separate bid bonds are acceptable, which means other forms of bid security may be excluded by agency policy.
Waiver for best interest
The chief of the contracting office may waive the bid guarantee requirement when a performance bond or performance and payment bond is required, if the waiver is in the Government’s best interest for a specific acquisition. The FAR gives examples such as overseas construction, emergency acquisitions, and sole-source contracts.
Class waivers allowed
Class waivers may be authorized by the agency head or a designee. This allows broader relief from the bid guarantee requirement when the agency determines that a category of acquisitions warrants it.
Responsibilities
Contracting Officer
Determine whether the solicitation requires a performance bond or performance and payment bond, and if so, require a bid guarantee unless a valid waiver applies. For supply and service contracts, accept any allowable type of bid guarantee; for construction contracts, ensure the guarantee is a separate bid bond and follow any agency restriction to separate bid bonds only.
Chief of the Contracting Office
Approve a waiver of the bid guarantee requirement when the required performance security is in place but a bid guarantee is not in the Government’s best interest for a specific acquisition. Ensure the waiver decision is supported by the acquisition circumstances.
Agency Head or Designee
Authorize class waivers of the bid guarantee requirement when the agency determines that a broader category of acquisitions justifies relief from the requirement.
Bidders/Offerors
Provide the required bid guarantee in the form permitted by the solicitation and contract type, and understand that construction procurements may require a separate bid bond. If a waiver is granted, comply with the remaining solicitation requirements without providing the waived bid guarantee.
Agency
Set policy on whether only separate bid bonds are acceptable for construction contracts, and establish procedures for approving individual or class waivers consistent with the FAR.
Practical Implications
This section prevents agencies from demanding bid security unless they are also requiring performance security, which helps avoid unnecessary barriers to competition.
Contracting officers must match the form of bid guarantee to the contract type; using the wrong form in a construction procurement is a common compliance error.
Waivers are discretionary and must be justified by the Government’s best interest, so they should not be treated as routine or automatic.
Agency-specific rules can be stricter than the FAR baseline for construction contracts, so bidders should always check the solicitation and agency policy.
When a waiver is used, the file should clearly document the rationale, because bid guarantee decisions can be scrutinized in protests, audits, or contract reviews.
Official Regulatory Text
(a) A contracting officer shall not require a bid guarantee unless a performance bond or a performance and payment bond is also required (see 28.102 and 28.103 ). Except as provided in paragraph (c) of this subsection, bid guarantees shall be required whenever a performance bond or a performance and payment bond is required. (b) All types of bid guarantees are acceptable for supply or service contracts (see annual bid bonds and annual performance bonds coverage in 28.001 ). Only separate bid guarantees are acceptable in connection with construction contracts. Agencies may specify that only separate bid bonds are acceptable in connection with construction contracts. (c) The chief of the contracting office may waive the requirement to obtain a bid guarantee when a performance bond or a performance and payment bond is required if it is determined that a bid guarantee is not in the best interest of the Government for a specific acquisition ( e.g., overseas construction, emergency acquisitions, sole-source contracts). Class waivers may be authorized by the agency head or designee.