FAR 37.302—Bonds or other security.
Plain-English Summary
FAR 37.302 addresses when bonds are not automatically required and when a contracting officer may still require security for a demolition-type contract. It applies only to contracts that are solely for dismantling, demolition, or removal of improvements, and it states that the statutory bond requirements in 40 U.S.C. chapter 31, subchapter III do not apply in that narrow situation. Even though the statute does not apply, the contracting officer retains discretion to require a performance bond or other security under FAR 28.103. The section also explains the purposes for which that security may be set: to ensure completion of the work, to protect Government-retained property, to protect property given to the contractor as compensation, and to protect the Government from damage to adjoining property. In practice, this provision gives the Government flexibility to tailor risk protection to demolition and removal contracts, where the usual construction-bond framework may not fit the transaction. It is important because these contracts can involve significant site, property, and third-party damage risks even when the work is not traditional construction.
Key Rules
Statutory bonds do not apply
If the contract is solely for dismantling, demolition, or removal of improvements, the bond requirements in 40 U.S.C. chapter 31, subchapter III do not apply. This means the contracting officer is not bound to require the statutory bonds that would otherwise be associated with covered construction work.
Security remains discretionary
Even though the statute does not apply, the contracting officer may still require a performance bond or other security. The decision is discretionary and should be based on the needs and risks of the specific contract.
Security amount must be adequate
Any bond or other security must be in an amount the contracting officer considers adequate. The amount should be tied to the risks the Government needs to cover, rather than set arbitrarily.
Completion of work protection
The security may be required to ensure completion of the demolition, dismantling, or removal work. This protects the Government if the contractor defaults or abandons the site.
Property protection
The security may be used to protect property retained by the Government and property provided to the contractor as compensation. This is especially important where materials, salvage, or other assets are involved.
Adjoining property protection
The security may also protect the Government against damage to adjoining property. This recognizes that demolition and removal work can create significant risk to neighboring structures, utilities, or other third-party property.
Responsibilities
Contracting Officer
Determine whether the contract is solely for dismantling, demolition, or removal of improvements; recognize that the statutory bond requirements do not apply in that case; decide whether to require a performance bond or other security; and set the amount at a level considered adequate to cover completion, property, and adjoining-property risks.
Contractor
If the contracting officer requires it, furnish the performance bond or other security in the required amount and form. The contractor must also understand that the absence of statutory bond requirements does not mean the Government will accept the work without risk protection.
Agency
Support the contracting officer by applying agency procedures, risk assessments, and any applicable FAR Part 28 requirements when deciding whether and how to secure performance in demolition or removal contracts.
Practical Implications
This section is a risk-allocation tool, not a blanket waiver of protection. Contractors should not assume that demolition or removal work will be unsecured just because the statutory bond rules do not apply.
The contracting officer should document the basis for requiring or not requiring security, especially where salvage value, retained Government property, or nearby structures create exposure.
The phrase "other security" gives flexibility, but the chosen instrument still needs to be effective and enforceable for the risk involved.
A common pitfall is underestimating site-specific hazards, such as damage to adjacent buildings, utilities, or environmental conditions, which can make a modest bond amount inadequate.
For contractors, the practical issue is cash flow and compliance: if security is required, it can affect pricing, financing, and the ability to start work, so it should be addressed early in the solicitation process.
Official Regulatory Text
When a contract is solely for dismantling, demolition, or removal of improvements, 40 U.S.C. chapter 31 , subchapter III, Bonds, (see 28.102 ) does not apply. However, the contracting officer may require the contractor to furnish a performance bond or other security (see 28.103 ) in an amount that the contracting officer considers adequate to- (a) Ensure completion of the work; (b) Protect property to be retained by the Government; (c) Protect property to be provided as compensation to the contractor; and (d) Protect the Government against damage to adjoining property.