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FAR and DFARS › FAR Part 31: Contract Cost Principles and Procedures › Subpart 31.2

FAR 31.205-4 Bonding costs.

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 explains when bonding costs are allowable under Government contracts. Bonding costs arise when the Government or the contractor needs protection against financial loss from the contractor's acts or defaults. Costs required by the contract are allowable, and costs the contractor incurs in its general business are allowable if they follow sound business practice and the rates and premiums are reasonable.

Applies to: Contractors incurring bonding costs

Key terms: bonding costs · bid bonds · performance bonds · payment bonds · sound business practice

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

The text

(a) Bonding costs arise when the Government requires assurance against financial loss to itself or others by reason of the act or default of the contractor. They arise also in instances where the contractor requires similar assurance. Included are such bonds as bid, performance, payment, advance payment, infringement, and fidelity bonds.

(b) Costs of bonding required pursuant to the terms of the contract are allowable.

(c) Costs of bonding required by the contractor in the general conduct of its business are allowable to the extent that such bonding is in accordance with sound business practice and the rates and premiums are reasonable under the circumstances.

← 31.205-3 Bad debts. · 31.205-5 [Reserved] →

Rule changes for FAR Part 31

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

FAR 31.205-4 Bonding costs · SpendQuery