Tripartite Escrow Agreements

If you are a small-sized contractor, you are often unable to submit proposals or offers to Federal Government agencies or departments. This not only shuts you out of the competition, but also denies the government the benefits of working with smaller companies, that offer more individualized attention, quicker response time and lower costs. Pursuant to the Federal Acquisition Streamlining Act of 1994, Public Law 103-355 and 41 U.S.C. 431 Tripartite Escrow Agreements are approved as an alternative payment protection for federal government contracts up to $150,000. For more information on this Act click here. This law created Tripartite Escrow Agreements to increase the business opportunities among small-sized contractors, while presenting the government with more available contractors.

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PAYMENT PROTECTION OPTIONS

A contractor now has five (5) alternative payment protection options, per Federal Acquisition Regulation Part 28 Section 102, (for more information on FAR §28.102, click here), and Defense Federal Acquisition Regulation Part 52 Section 228-13, (for more information on DFAR §52.228-13, click here), the options are:

Payment bond
An irrevocable letter of credit
A certificate of deposit.
Other deposits for the type of security listed in FAR 28.204-1 and FAR 28.204-2.

OPTION #5 - Tripartite Escrow Agreement (contracts up to $150,000)

There is a better choice. Pursuant to the regulations FAR §28.102 and the DFAR §52.228-13 the Government authorizes Tripartite Escrow Agreements in lieu of payment bonds, and other indicated payment protection alternatives. To utilize the Tripartite Escrow Agreement the fee is only 1½% of the contract. With the Tripartite Escrow Agreement no financial statements, tax returns, working capital or work experience are needed to be approved. If you have a Tripartite Escrow Agreement as an option in your solicitation, you can save money and time, and the financial restrictions of an irrevocable letter of credit or certificate of deposit, (For a general overview of the Tripartite Escrow Process, click here.).