§ 1-10.201

(a) In connection with contracts for supplies or services (including construction) to be delivered or performed in the United States, Puerto Rico, and the Virgin Islands, any corporate surety offered for a bond furnished the Government must appear on the list contained in Treasury Department Circular 570 and the amount of the bond must not be in excess of the underwriting limits stated in that list.

(b) In connection with contracts to be performed in the Canal Zone, corporate Panamanian surety companies which are acceptable on bonds required by the Panama Canal Company may be accepted in addition to the corporate sureties appearing on the Treasury List. The acceptability of Panamanian sureties shall be subject to the conditions and restrictions (including any requirement for security deposits) imposed by the Panama Canal Company.

(c) For contracts to be performed outside the United States, Puerto Rico, the Virgin Islands, and the Canal Zone, sureties not appearing on Treasury Department Circular 570 may be accepted if determined by the contracting officer to be in the best interest of the Government.

(d) Treasury Department Circular 570 may be obtained from the U.S. Treasury Department, Bureau of Accounts, Division of Deposits and Investments. Surety Bonds Branch, Washington, D.C 20226.

§ 1-10.203 Individual sureties.

(a) It is the responsibility of the con tracting officer to determine the acceptability of individuals proposed as sureties on bonds. At least two individual sureties must execute the bond and the net worth of each individual must be not less than the penal amount of the bond The number and amounts of other bonds upon which a proposed individual surety is bound, and the status of the contracts in connection with which such bonds were furnished, must be considered in determining the acceptability of the indi vidual surety. (See also the instructions on the reverse of Standard Form 28. Affidavit of Individual Surety, FPR 1-16.901-28.)

(b) Each individual surety must ex ecute and Affidavit of Individual Surety. Standard Form 28. The information thus provided is helpful in determining the net worth of proposed individua! sureties.

(c) In order to ascertain the continuing acceptability of individual sureties. the official executing the Certificate of Sufficiency on the reverse of Standard Form 28 may be required to execute further certificates, as contemplated by Instruction 5 on that form, with such frequency as the agency may deem necessary and appropriate. Further certificates indicating additional assets, or a new surety, may be required to assure protection of the Government' interest. [29 F.R. 10247, July 24, 1964, as amended at 31 F.R. 15093, Dec. 1, 1966]

§ 1-10.204 Options in lieu of sureties.

Any one or more of the types of security listed in this § 1-10.204 may be deposited by the contractor in lieu of furnishing corporate or individual sureties on bonds. Where any such type of security is deposited, a statement shall be incorporated in the bond form pledg ing such security, and the bond form shall be executed by the contractor as principal. Agencies shall establish such safeguards as may be necessary to protect against loss of the security and shall return such security or its equivalent when, by its terms, the obligation of the

(6 U.S.C. 15) and Treasury Department Circular No. 154 dated February 6, 1935 (31 CFR Part 225), any person required to furnish a bond to the Government has the option, in lieu of furnishing a surety or sureties thereon, of depositing certain United States bonds or notes in an amount equal at their par value to the penal sum of the bond, together with a duly executed power of attorney and agreement authorizing the collection or sale of such United States bonds or notes in the event of default of the principal on the bond. The contracting officer may turn these securities over to the finance or other officer as provided in agency procedures, or deposit them with the Treasurer of the United States, a Federal Reserve Bank, branch Federal Reserve Bank having the requisite facilities, or other depository duly designated for the purpose by the Secretary of the Treasury, under procedures prescribed by the agency concerned and Treasury Department Circular No. 154. However, the contracting officer shall deposit with the Treasurer of the United States all such bonds and notes received by him in the District of Columbia.

§ 1-10.204-2 Certified or cashier's checks, bank drafts, money orders, currency, or irrevocable letters of credit.

Any person required to furnish a bond has the option, in lieu of furnishing surety or sureties thereon, of depositing a certified or cashier's check, a bank draft, a Post Office money order, currency, or an irrevocable letter of credit, in an amount equal to the penal sum of the bond. Certified or cashier's checks, bank drafts, or Post Office money orders shall be drawn to the order of the appropriate Federal agency.

§ 1-10.205 Consent of surety.

In connection with any amendment, modification, or supplemental agreement with respect to which the waiver of notice to the surety contained in the bond form is inapplicable and which would otherwise effect the release of a surety, or in any other situation as prescribed by each agency, the contracting officer shall obtain the written consent thereto of the surety or sureties on the existing bond or bonds (notwithstanding the fact that there may be an additional bond supported by a new surety); provided, that no such consent need be ob

Ordinarily, it is the policy of the Government not to insure its own risks. In the absence of specific statutory authority for the payment of insurance premiums, appropriated moneys of the United States generally are not regarded as available for that purpose. There are, however, exceptions to these two statements. Insurance will be required where it is mandatory by law, and may be required in the absence of any statutory prohibition when in the best interest of the Government. Examples of situations which may warrant obtaining insurance are (a) where it is considered desirable to utilize the facilities and services of the insurance industry (e.g.. safety protection and claim services), (b) where, in special instances, it is deemed necessary or desirable in connection with the performance of a contract (e.g., transportation of particularly valuable items), or (c) where commingling of property or the conditions of the contract make the carrying of insurance reasonably necessary for the protection of the several interests concerned.

§ 1-10.302 Notice of cancellation or change.

Where insurance is required by contract provision or in writing by the approving authority, the policies evidencing such insurance shall contain an endorsement to the effect that cancellation or material change in the policies, adversely affecting the interest of the Government in such insurance, shall not be

all such subcontractors & like requirement to comply with the Defense Base Act.

(b) Upon the recommendation of the head of the agency concerned, the Secretary of Labor may waive the applicability of the Defense Base Act with respect to any contract, subcontract, or subordinate contract, work location, or classification of employees. Insurance Under Subpart 1-10.5 Cost-Reimbursement Type Contracts § 1-10.500 Scope of subpart.

This subpart sets forth general policies with respect to insurance under costreimbursement type contracts for supplies and services (including construction).

§ 1-10.501

Policy.

The kinds of insurance referred to in this § 1-10.501, with limits of liability as prescribed by the agency, ordinarily shall be required under cost-reimbursement type prime contracts and cost-reimbursement type subcontracts under costreimbursement type prime contracts. However, a program of self-insurance approved by the agency concerned, as provided in § 1-10.503, may be substituted for any of the kinds of required insurance.

§ 1-10.502 Types of insurance. § 1-10.502-1 Workmen's compensation and employers' liability insurance, Compliance with applicable workmen's compensation and occupational disease statutes will be required, and employers liability coverage will be cotained where available. In decus where all secupational diseases are act compensable under applicable lav romance for oncupational diseases vite required inder the employers' facility sention of the insurance policy over sich widitional insurance will not be squir where contact merations mingled with esser sammercial operamuns so hatt vid bempracticante a mire sh

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(b) Property damage hrabiny DISHance will be required only in special eltcumstances as determined by the agen concerned. Property damage liability Insurance may be approved when the na ture of the contract operations warrant its purchase or where such operations are not separable from the contractor's commercial operations.

§ 1-10.502-3 Automobile liability insur

ance.

Automobile liability Insurance will be required on the comprehensive form of policy and will provide for bodily Injury and property damage liability covering the operation of all automobiles used in connection with the performance of the contract.

§ 1-10.502-4 Aircraft public and pan. senger liability insurance,

Where aircraft are used in connection with the performance of the contract, aircraft public and passenger llability in surance ordinarily will be considered re quired coverage,

1-10.502-5 Vessel collision liability and protection and indemnity liabil ity insurance,

Where vessels are used in connection with the performance of the contract, vessel collision liability and protection and indemnity liability Insurance will be required whenever destned tankesary by the agency concerned.

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