FAR 28.106-2—Substitution of surety bonds.
Plain-English Summary
FAR 28.106-2 addresses when and how a new surety bond may replace an existing bond that has already been approved, and what notice must follow that approval. The section covers substitution of surety bonds, the approval authority for that substitution, the possibility that agency regulations may assign or modify that authority, and the contracting officer’s duty to notify the principal and surety on the original bond once the new bond becomes effective. In practice, this rule matters when a contractor needs to change sureties, replace an inadequate or expiring bond, or otherwise update bond coverage without leaving the government unprotected. It ensures continuity of financial security for the bonded obligation while also creating a clear administrative record of when the old bond is superseded. For contractors, it means a replacement bond is not effective just because it has been issued; it must be approved by the proper authority. For contracting officers, it means they must track the effective date carefully and make sure the original bond parties are informed so there is no confusion about which bond is in force.
Key Rules
Substitution Requires Approval
A new surety bond may replace an original approved bond only if the substitution is approved by the head of the contracting activity, unless agency regulations assign that authority differently. The new bond can cover all or only part of the obligations on the prior bond.
Agency Rules May Control
The FAR allows agency regulations to specify a different approval process or approving official. Users must check agency-specific procedures before assuming the head of the contracting activity is the approving authority.
Coverage May Be Partial
The replacement bond does not have to mirror the original bond exactly; it may cover all obligations or only a portion of them. That means the contracting officer must confirm what obligations remain covered after substitution.
Notice Is Mandatory After Approval
Once the new bond is approved, the contracting officer must notify the principal and the surety on the original bond of the effective date of the new bond. This notice establishes when the original bond is replaced for administrative purposes.
Responsibilities
Head of the Contracting Activity
Approve substitution of a new surety bond for an existing approved bond, unless agency regulations assign that approval authority elsewhere.
Contracting Officer
Process the substitution, ensure the new bond has been properly approved, determine and record the effective date, and notify the principal and surety of the original bond when the new bond becomes effective.
Agency
Issue any regulations that modify who may approve substitution or otherwise govern the substitution process.
Principal
Obtain and submit the replacement bond when a substitution is needed, and rely on the approved effective date rather than assuming the new bond is immediately operative.
Surety on Original Bond
Receive notice of the effective date of the new bond and understand when its obligations under the original bond are superseded or reduced, as applicable.
Practical Implications
A replacement bond is not effective just because it has been signed; it becomes operative only when approved by the proper authority and tied to an effective date.
Contracting officers should verify whether the new bond covers all obligations or only part of them, because partial substitution can leave multiple bonds in force at once.
Failure to notify the original principal and surety can create confusion about liability periods and may complicate claims or enforcement later.
Agency-specific regulations can change the approval workflow, so contractors and COs should not rely on the default FAR text alone.
This section is mainly about continuity and clarity: it prevents gaps in bond protection while documenting exactly when the government accepted the new surety arrangement.
Official Regulatory Text
(a) A new surety bond covering all or part of the obligations on a bond previously approved may be substituted for the original bond if approved by the head of the contracting activity, or as otherwise specified in agency regulation. (b) When a new surety bond is approved, the contracting officer shall notify the principal and surety of the original bond of the effective date of the new bond.