FAR 28.202 Key Requirements: Corporate Sureties and Underwriting Limits
On federal construction projects, obtaining the required bonding is a critical step toward contract award and performance. Federal contracting officers evaluate proposed corporate sureties under specific regulatory criteria rather than standard commercial assumptions. Governed by FAR 28.202, the government enforces strict rules regarding which companies can issue bonds, how their underwriting limitations are measured, and the exact procedures required if a project's bond exceeds an underwriter's established capacity. Understanding these parameters ensures contractors submit acceptable security and maintain compliant coverage throughout the contract lifecycle, especially when managing requirements outlined in our guide to bid bonds, performance bonds, and payment bonds.
The Treasury Circular 570 Listing Mandate
Under federal procurement guidelines, corporate sureties backing contracts executed within the United States or its outlying areas must hold official federal approval. The corporate surety must appear on the Department of the Treasury's Listing of Approved Sureties, formally designated as Treasury Department Circular 570. This directory lists companies holding certificates of authority as acceptable sureties on federal bonds and as acceptable reinsuring companies.
A specific exception applies only to federal work performed outside domestic boundaries. For contracts performed in a foreign country, sureties that do not appear in Treasury Department Circular 570 can be accepted if the contracting officer determines that requiring the contractor to use Treasury-listed sureties is impracticable.
Underwriting Limits and Penal Amounts
Securing an approved surety company is only the starting point. The penal amount of the bond should not exceed the underwriting limit published for that company in Treasury Department Circular 570. If the required penal sum surpasses the single underwriter's authorized ceiling, the bond will be deemed acceptable by the contracting officer only when two core conditions are met:
- The precise portion of the bond exceeding the specified underwriting limit is fully coinsured or reinsured.
- The specific dollar value of the coinsurance or reinsurance allocated to each partner does not exceed the individual underwriting limit established for each coinsurer or reinsurer.
Reinsurance Execution and Treasury Regulations
When multiple sureties step in to back a single high-value obligation, their agreements must align with federal standards. All coinsurance or reinsurance agreements must conform strictly to the Department of the Treasury regulations found in 31 CFR 223.10 and 223.11. Contracting offices generally require that these executed reinsurance agreements be finalized and submitted directly with the bond package before making a final determination on whether the bonds are acceptable.
Direct Writing Exceptions and Standard Reinsurance Forms
In certain procurement situations, a solicitation may outline an alternative submission path for large bonds. When expressly authorized in the solicitation, the contracting officer may accept a bond from a direct writing company to satisfy the total contract bond obligation, even if that total amount exceeds the company's designated underwriting limitation. This relief remains temporary while the required reinsurance agreements are being arranged.
The contractor must follow clear timing and documentation rules during this transitional phase:
- The contractor must execute and submit all necessary reinsurance agreements within the timeframe indicated on the bid form, which may not exceed 45 calendar days after the execution of the bond.
- Standard Form (SF) 273 must be used when submitting a Reinsurance Agreement for a Bonds Statute Performance Bond.
- Standard Form (SF) 274 must be used when submitting a Reinsurance Agreement for a Bonds Statute Payment Bond.
- Standard Form (SF) 275 must be used when furnishing reinsurance with bonds required for other purposes.
Monitoring Revocations and Maintaining Continuous Security
Acceptability is not a one-time assessment. The Department of the Treasury periodically publishes supplements to Treasury Department Circular 570 to advise federal agencies about newly approved corporate sureties as well as terminations of authority. When an existing company loses its qualifying status, the government takes immediate protective steps.
Upon receiving notification that a surety's authority has been terminated, the contracting officer must review all outstanding contracts tied to that firm. The contracting officer is mandated to take necessary actions to safeguard the government, including securing new replacement bonds from acceptable sureties to replace any outstanding bonds provided by the disqualified company.
Locating Circular 570 Resources
Contractors, estimators, and project teams can verify the qualification status and underwriting limits of any prospective surety through official government sources. As indicated in FAR 28.202, Treasury Department Circular 570 can be obtained by contacting the U.S. Department of the Treasury, Bureau of the Fiscal Service, Surety Bond Branch, located at 3201 Pennsy Drive, Building E, Landover, MD 20785, or by reviewing the published electronic records maintained by the Bureau of the Fiscal Service.
Sources
FAR 28.202 Acceptability of corporate sureties. | Acquisition.GOV
Published October 30, 2026. No affiliate links on this page. Facts come from the sources linked above; check them for updates.