DFARS Part 228: Bonds and Insurance

In plain English

DFARS Part 228 implements FAR Part 28 for DoD acquisitions, covering bonds, insurance, and risk allocation. It matters to contractors because it sets specific requirements for performance and payment bonds on construction subcontracts, insurance under cost-reimbursement contracts, and ground and flight risk for aircraft work.

Key rules

• For cost-reimbursement contracts, performance and payment bonds are waived, but the prime contractor must obtain performance and payment protections from construction subcontractors for fixed-price subcontracts over $40,000. (228.102-1)
• For fixed-price construction subcontracts over $40,000 but not exceeding $150,000, the prime contractor must obtain payment protection sufficient to pay labor and material costs. (228.102-1)
• For fixed-price construction subcontracts over $150,000, the prime contractor must obtain a payment bond and, if available at no additional cost, a performance bond in an equal amount. (228.102-1)
• For Defense Environmental Restoration Program construction contracts, the surety's liability on the performance bond is limited to the cost of completion less unexpended funds, and the surety is not liable for personal injury or property damage. (228.102-70)
• Fidelity and forgery bonds are generally not required but are authorized when necessary for Government or contractor protection or when surety investigative services are desired. (228.105)
• The clause at FAR 52.228-7, Insurance—Liability to Third Persons, must be used in cost-reimbursement contracts other than construction and architect-engineer services, unless waived by the head of the contracting activity. (228.311-1)
• The clause at 252.228-7001, Ground and Flight Risk, must be used for aircraft acquisitions, development, production, modification, maintenance, repair, flight, or overhaul of Government-owned or to-be-delivered aircraft, with certain exceptions. (228.371)

Who does what

In practice

• If you are a prime contractor on a cost-reimbursement contract with construction subcontracts over $40,000, you must ensure your subcontractors provide payment and performance protections, which may increase your administrative burden.
• For aircraft work, the Ground and Flight Risk clause may apply, requiring you to have appropriate insurance or self-insurance and to cooperate with a preaward survey.
• Under cost-reimbursement contracts, you may be required to carry liability insurance as specified in FAR 52.228-7, unless the clause is waived.

Common pitfalls

• Assuming that performance and payment bonds are never required on cost-reimbursement contracts; while waived for the prime contract, they are required for construction subcontracts over $40,000.
• Overlooking the requirement to obtain a performance bond for fixed-price construction subcontracts over $150,000 if it is available at no additional cost.
• Failing to use the Ground and Flight Risk clause when required for aircraft work, which could leave the Government and contractor without proper risk allocation.

Written by AI from this part's codified text (2026-10-04); cited sections are checked against the part. A guide, not legal advice: the regulation text, the solicitation and your contract rule.