FAR 28.203-2—Substitution of assets.
Plain-English Summary
FAR 28.203-2 addresses how an individual surety can replace one pledged asset with another while a bond or guarantee remains outstanding. It covers the surety’s right to request substitution, the requirement to make that request in writing, the need to submit a revised SF 28 (Affidavit of Individual Surety), and the contracting officer’s authority to approve or deny the request. The section also ties the decision back to FAR 28.203-1, meaning the substitute asset must meet the same adequacy and acceptability standards used for the original pledged asset. In practice, this provision matters because it allows flexibility when a surety needs to change collateral, but it also protects the Government by ensuring the replacement asset still fully secures the bond or guarantee obligations. For contractors and sureties, the key issue is that substitution is not automatic; it depends on a contracting officer’s determination that the new asset is sufficient. For contracting officers, the section requires a fresh review of the collateral before agreeing to any change.
Key Rules
Written substitution request
An individual surety must ask the Government to accept a substitute asset by submitting a written request. Oral requests or informal communications are not enough to trigger the Government’s consideration under this section.
Revised SF 28 required
The request must include a revised SF 28, which updates the surety’s affidavit information. This gives the contracting officer current information needed to evaluate the new pledged asset and the surety’s continuing qualification.
Contracting officer decides
The responsible contracting officer has discretion to agree to the substitution, but only after making the required determination. The surety does not have a right to substitution unless the Government approves it.
Adequacy of substitute asset
The substitute asset must be adequate to protect the outstanding bond or guarantee obligations. The contracting officer must be satisfied that the replacement provides sufficient security before approving the change.
Must meet 28.203-1 standards
The substitution decision must follow the requirements in FAR 28.203-1. In practice, this means the new asset must be evaluated under the same rules used to determine whether an individual surety’s pledged assets are acceptable in the first place.
Responsibilities
Individual Surety
Submit a written request to substitute assets and provide a revised SF 28. The surety must ensure the proposed replacement asset is sufficient to secure the remaining bond or guarantee obligations.
Responsible Contracting Officer
Review the request, apply the requirements of FAR 28.203-1, and determine whether the substitute asset is adequate. The contracting officer may approve the substitution only if the Government’s security is protected.
Government
Evaluate the proposed substitution through the contracting officer and accept the new asset only when it adequately protects the outstanding obligation.
Practical Implications
This section gives sureties flexibility to change collateral, but it also creates a documentation burden: the request must be written and supported by an updated SF 28.
Contracting officers should not treat substitution as a clerical update; they need to re-check the value, acceptability, and sufficiency of the new asset before approving it.
A common pitfall is assuming the new asset can simply replace the old one without a formal determination. Until approved, the original pledged asset remains the operative security.
Because the rule refers back to FAR 28.203-1, parties must confirm that the substitute asset satisfies all applicable asset-acceptance requirements, not just that it has nominal value.
For contractors relying on an individual surety, delays in substitution approval can affect bond continuity, so requests should be submitted early and with complete supporting information.
Official Regulatory Text
An individual surety may request the Government to accept a substitute asset for that currently pledged by submitting a written request, including a revised SF 28 , to the responsible contracting officer. Following the requirements set forth in 28.203-1 , the contracting officer may agree to the substitution of assets upon determining that the substitute assets to be pledged are adequate to protect the outstanding bond or guarantee obligations.