Federal Bond Sizing Under FAR 28.102-2: What to Ask the GC
When estimators, trade contractors, and small general contractors prepare bids on federal construction projects, understanding project bonding requirements is essential. Federal rules mandate exact security baselines based on contract value. Under FAR 28.102-2, the required penal sums for performance and payment protection follow explicit statutory calculations. Before finalizing your bid numbers or accepting flow-down bond expectations, use this guide of questions to ask the prime general contractor.
1. Does the Contract Exceed $150,000, and Is the Bond Set at 100 Percent?
On federal construction awards exceeding $150,000, federal acquisition regulations establish clear defaults for project security. Understanding whether these baselines apply to the prime contract helps subcontractors evaluate general risk and check requirements outlined in bid bonds, performance bonds and payment bonds.
Under FAR 28.102-2(b), performance bonds must equal 100 percent of the original contract price, unless the contracting officer determines that a lesser amount is adequate for the protection of the Government. For payment bonds, the amount must also equal 100 percent of the original contract price, unless the contracting officer makes a written determination supported by specific findings that a payment bond in this amount is impractical. In addition, the payment bond amount must be no less than the amount of the performance bond.
What to ask the GC: Has the contracting officer issued any written determination to lower either bond, or are both instruments set at the full 100 percent penal sum?
2. How Is the Original Contract Price Calculated for the Bond Baseline?
Bond premiums and required protection amounts stem from the original contract price. However, contract structures differ across federal solicitations. FAR 28.102-2(a) provides explicit definitions that determine what is included in that initial price:
- Standard awards: The award price of the contract.
- Requirements contracts: The price payable for the estimated total quantity.
- Indefinite-quantity contracts: The price payable for the specified minimum quantity.
- Options: The original contract price does not include the price of any options, except those options exercised at the time of contract award.
What to ask the GC: Is the project structured as a firm-fixed-price award, a requirements contract, or an indefinite-quantity contract, and are any option items being exercised at the initial award?
3. What Mechanism Will Be Used to Bond Contract Price Increases?
Federal projects frequently encounter modifications and scope growth. Sizing bonds is not a one-time calculation. FAR 28.102-2 mandates that if the contract price increases, an additional amount equal to 100 percent of the increase must be secured for performance bonds, payment bonds, or alternative payment protections.
According to FAR 28.102-2(d), if the contract price increases, the Government must secure needed additional protection by directing the contractor to take one of three actions:
- Increase the penal sum of the existing bond;
- Obtain an additional bond; or
- Furnish additional alternative payment protection.
What to ask the GC: If approved changes push the contract value up, which of the three methods does the prime contract require to secure the additional 100 percent protection?
4. If the Project Is Between $35,000 and $150,000, Which Protection Applies?
Small interior contractors and specialty trades often work on smaller federal packages. Under FAR 28.102-2(c), contracts exceeding $35,000 but not exceeding $150,000 carry specific requirements. Unless the contracting officer determines that a lesser amount is adequate for the protection of the Government, the penal amount of the payment bond or the amount of alternative payment protection must equal 100 percent of the original contract price, plus an additional amount equal to 100 percent of any price increase.
Subcontractors navigating these thresholds can review Miller Act bonds on federal projects: thresholds and rules to understand how payment protections operate in this tier.
What to ask the GC: For contracts exceeding $35,000 but not exceeding $150,000, did the contracting officer establish a standard payment bond, or was an alternative payment protection approved at 100 percent?
5. Has the Contracting Officer Reduced Any Supporting Security?
Even when a bond is required, the underlying security provided to support it may be adjusted under federal rules. FAR 28.102-2(e) states that the contracting officer may reduce the amount of security to support a bond, subject to the conditions of 28.203-3(c) or 28.204(b).
What to ask the GC: Has the contracting officer authorized any reduction in the security supporting the prime contractor's bonds under FAR 28.203-3(c) or FAR 28.204(b)?
Sources
FAR 28.102-2 Amount required. | Acquisition.GOV
Published October 29, 2026. No affiliate links on this page. Facts come from the sources linked above; check them for updates.