FAR 28.103—Performance and payment bonds for other than construction contracts.

General.

FAR 28.103-1 explains the basic government-wide rule for performance and payment bonds and when they may be required. It addresses three main topics: the general prohibition on requiring these bonds for non-construction contracts, the limited exceptions that allow their use under FAR 28.103-2 and 28.103-3, the timing requirement that a contractor must provide all required bonds before receiving a notice to proceed, and the rule that agencies may not add a bond requirement after award unless the need arises from a contract modification. In practice, this section protects contractors from unexpected bonding burdens on non-construction work, while preserving the Government’s ability to require bonds where the FAR specifically allows it. It also gives contracting officers a clear timing and documentation rule so that bonding is handled before performance starts, not after work is underway. For contractors, the section is important because it affects bid planning, financing, and the ability to mobilize on time. For agencies, it limits discretion and requires careful drafting of solicitations and contracts if bonding is intended.

Performance bonds.

FAR 28.103-2 explains when a contracting officer may require a performance bond and what that bond is meant to protect. It covers the general rule that performance bonds may be required for contracts above the simplified acquisition threshold when needed to protect the Government’s interest, and it identifies specific situations that may justify the requirement: when Government property or funds are furnished to the contractor, when a contractor sells assets or merges and the Government recognizes a successor in interest, when substantial progress payments are made before delivery begins, and when the work involves dismantling, demolition, or removal of improvements. The section also addresses the Government’s ability to require additional performance bond protection if the contract price increases. Finally, it makes clear that bonding does not replace the responsibility determination required under FAR subpart 9.1; the contracting officer must still decide whether the contractor is responsible. In practice, this section gives contracting officers a risk-management tool for higher-risk contracts and reminds contractors that bonding may be required even when they are otherwise eligible to compete.

Payment bonds.

FAR 28.103-3 addresses when a payment bond is required and when the Government may ask for more bond protection after a contract price increase. It ties the payment bond requirement to the existence of a performance bond and to the Government’s judgment that a payment bond is in its interest, rather than making payment bonds automatic in every case. The section also covers what happens when the contract price goes up: the Government may require additional bond protection in an amount sufficient to protect suppliers of labor and material. In practice, this provision is about protecting subcontractors, suppliers, and laborers from nonpayment on bonded construction-type work while also giving the Government flexibility to match bond protection to the risk created by the contract and any later price growth. For contracting officers, it is a control point for deciding whether the bond package remains adequate; for contractors, it is a reminder that bond obligations can expand if the contract value increases.

Contract clause.

FAR 28.103-4 tells contracting officers how to write the solicitation and contract clause when a non-construction acquisition requires surety protection through bonds. It covers four main subjects: inserting the proper clause from FAR 52.228-16, deciding when the clause applies because both payment and performance bonds are required, setting the bond amounts, and establishing the deadline for the contractor to return executed bonds. It also addresses use of Alternate I when only a performance bond is needed. In practice, this section ensures the Government has enforceable financial protection against contractor default and unpaid subcontractors or suppliers, while giving the contracting officer discretion to tailor bond amounts to the risk of the acquisition. The rule matters because the bond clause is not automatic in every contract; it must be deliberately included and properly completed so the Government’s protection is legally effective and commercially workable.