Most change-order conversations are about price and time. On a bonded federal job there is a third consequence, and it is the one nobody raises in the meeting.
The rule is written into the amount itself
FAR 28.102-2(b)(1) does not set the performance bond penal amount at 100 percent of the contract and stop. It sets it at
“(i) 100 percent of the original contract price; and (ii) If the contract price increases, an additional amount equal to 100 percent of the increase.”
The payment bond is written the same way at 28.102-2(b)(2), with the added floor that “the amount of the payment bond must be no less than the amount of the performance bond.”
So the required bond is not a number fixed at award. It is a formula that tracks the contract price upward for the life of the job.
“Original contract price” is a defined term, and the definition matters
FAR 28.102-2(a) defines it as the award price of the contract; for requirements contracts, the price payable for the estimated total quantity; and for indefinite-quantity contracts, the price payable for the specified minimum quantity. And it
“does not include the price of any options, except those options exercised at the time of contract award.”
That produces a specific and easily missed result. A contract with substantial unexercised options is bonded on the award price only. When an option is later exercised, the price increases — and the increase carries the same additional requirement under FAR 28.102-2(b)(1)(ii) as any other increase: an additional amount equal to 100 percent of the increase. A contractor who read the option-heavy contract value at award and assumed the bond was sized for all of it has the arithmetic backwards.
Who has to do something about it
This is the part contractors tend to have upside down. FAR 28.102-2(d):
“If the contract price increases, the Government must secure any needed additional protection by directing the contractor to — (1) Increase the penal sum of the existing bond; (2) Obtain an additional bond; or (3) Furnish additional alternative payment protection.”
Two things follow.
The obligation is mandatory and it is the Government’s. The regulation says must secure, and the actor is the Government. This is not a contractor election.
The contractor’s only variable is which of three routes it is directed to take. Increase the existing bond, add a second one, or furnish additional alternative payment protection. All three end in the same place — the protection matches the enlarged contract — and the choice among them is a matter of what is available and what the contracting officer directs.
The instrument that keeps the existing bond on the enlarged contract
When the route taken is to increase or extend the existing bond, the surety’s agreement is documented. FAR 28.001 defines consent of surety as
“an acknowledgment by a surety that its bond given in connection with a contract continues to apply to the contract as modified.”
That definition is doing quiet work. A bond is written against a contract; modify the contract materially and the question of whether the bond still answers for it is a real one. The consent of surety is how that question is answered on the record rather than assumed.
The same rule below the main threshold
The increase mechanic is not exclusive to large contracts. FAR 28.102-2(c) covers contracts exceeding $35,000 but not exceeding $150,000, and requires the payment bond or the alternative payment protection to equal 100 percent of the original contract price and, on an increase, “an additional amount equal to 100 percent of the increase.”
Different band, different instruments available, same escalation rule.
Why this becomes a capacity problem
A surety underwrites to a limit. Change orders spend that limit without any new bid being submitted and often without any new underwriting conversation being scheduled. A contractor running several bonded jobs, each growing through change orders, can find aggregate exposure well past where it stood at award — and discover it at the moment a new pursuit needs approval.
The practical habit is to tell the surety about material change orders while they are pending, not after they are executed.
What this page does not cover
Everything here is FAR Part 28, which governs federal contracts. State public-works statutes handle contract increases in their own terms, and some are silent on the point, leaving it to the bond form and the contract documents.
It also does not address decreases, terminations, or what happens to the penal sum when scope is deleted, and it does not address the separate question of whether a surety will agree to the increase — a regulation that requires protection does not compel any particular surety to write it.
