Bonds for Special Use Authorization

 (Forest Service Handbook 6509.11K Chapter 80)

Obtaining and Administering Bond Security

Performance or payment bonds may be required to secure the obligations imposed by the terms of special use authorization or any applicable law, regulation or order. Bonds are not used to enforce the general terms of the special use authorization.

The penal sum of the bond must equal the estimated financial loss to the government. An example would be the cost to remove improvements, cleanup, and return the site to an acceptable condition should the special use authorization holder fail to do so. Form SF 25 is used for a performance bond.

Bonds may be secured with corporate surety, deposited securities, cash, irrevocable letter of credit or assignment of savings account or certificate of deposit.

To ensure bond coverage, the bond and the special use authorization must be for the same company and in the same legal name.

 The bond-approving or fiscal officer must be informed immediately of mailing address changes or a principal’s death or declaration of bankruptcy. This would affect the Forest Service’s ability to return cash bonds, draw on bonds or protect the government’s interest by meeting required deadlines.


Bond Approving Officer - The individual who 1) executes a contract, permit, license, special use authorization or comparable document on behalf of the United States, 2) obtains the bond or bonds in the required penal sum 3) approves and periodically reviews bonds for sufficiency of security, and 4) administers the terms of the bond.

Consent of Surety - An acknowledgement by a-surety that its bond given in connection with a contract or permit continues to apply to any modification of that contract or permit.

Par Value of Securities - The stated dollar or denominational amount appearing on the face of a security.

Penal Sum or Penalty Amount - The maximum financial liability for which a surety is obligated.

Performance Bond - A bond to secure fulfillment by the principal of the obligations of the permit. It may also be issued as a blanket bond securing the obligations of separate permits of the same principal.

Principal - The permit holder primarily liable to the Government for the obligations of the permit, as distinguished from the surety.

Surety - A corporate surety company or responsible person bound to the Government for a

principal’s failure to fulfill the obligations covered by the bond.

Surety Bond - A written instrument which insures the fulfillment of the obligations of an outside party doing business with the Government. The bond provides protection from financial loss, up to the penal sum stated therein, due to the failure of the bonded party (principal) to fulfill the obligations covered by the bond. The bond is secured by cash, corporate surety, deposited securities, irrevocable letter of credit, assignment of savings account or individual sureties.

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