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FAR and DFARS › FAR Part 28: Bonds and Insurance › Subpart 28.1

FAR 28.106-7 Withholding contract payments.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section says that during contract performance, agencies must not withhold payments due to contractors or assignees just because subcontractors or suppliers haven't been paid. After the work is done, if the surety notifies the Government in writing that the contractor failed to pay subcontractors or suppliers, the contracting officer must withhold final payment, but only if the surety agrees to hold the Government harmless. Final payment is then authorized when the contractor and surety agree or a court decides the parties' rights.

Applies to: Government agencies and contractors with surety bonds

What it requires

  • Agencies shall not withhold payments due contractors or assignees during contract performance because subcontractors or suppliers have not been paid.
  • If the surety provides written notice of the contractor's failure to pay subcontractors or suppliers after completion, the contracting officer shall withhold final payment.
  • The surety must agree to hold the Government harmless from any liability resulting from withholding the final payment.
  • The contracting officer will authorize final payment upon agreement between the contractor and surety or upon a judicial determination of the rights of the parties.

Key terms: withhold · contract performance · assignees · surety · final payment

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) During contract performance, agencies shall not withhold payments due contractors or assignees because subcontractors or suppliers have not been paid.

(b) If, after completion of the contract work, the Government receives written notice from the surety regarding the contractor's failure to meet its obligation to its subcontractors or suppliers, the contracting officer shall withhold final payment. However, the surety must agree to hold the Government harmless from any liability resulting from withholding the final payment. The contracting officer will authorize final payment upon agreement between the contractor and surety or upon a judicial determination of the rights of the parties.

(c) For any withholding incident to the labor standards provisions of the contract, see part 22.

← 28.106-6 Furnishing information. · 28.106-8 Payment to subcontractors or suppliers. →

Rule changes for FAR Part 28

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 28.106-7 Withholding contract payments · SpendQuery