D.C. Mun. Regs. tit. 27, r. 27-3717
The contracting officer shall carefully consider proposals by the surety concerning completion of the work. The contracting officer shall take action on the basis of the District's interests, including the possible effect of the action upon the District's rights against the surety.
If the surety offers to complete the contract work, the contracting officer shall accept the offer unless the contracting officer has reason to believe that the persons or firms proposed by the surety to complete the work are not competent or qualified and the interests of the District would be substantially prejudiced.
If the surety conditions its offer of completion upon the execution by the District of a "takeover" agreement fixing the surety's rights to payment from unpaid prior earnings (retained percentage and unpaid progress estimates), the contracting officer may, at any time after the effective date of the termination, enter into a written agreement with the surety.
The takeover agreement shall provide for the surety to complete the work according to all the terms and conditions of the contract and for the District to pay the surety the balance of the contract price, less any setoffs or assessed damages, but not in excess of the surety's costs and expenses, in the manner provided by the contract subject to the following conditions set forth in §§ 3717.5 through 3717.8.
Under a takeover agreement, any unpaid earnings of the defaulting contractor, including retained percentages and progress estimates for work accomplished before termination, shall be subject to debts and assessed damages due the District by the contractor.
The takeover agreement shall not waive or release the District's right to liquidated damages for delays in completion of the work, except to the extent that they are excusable under the contract.
If the contract proceeds have been assigned to a financing institution, the surety may not be paid from unpaid earnings under a takeover agreement, unless the assignee consents to the payment in writing.
Under a takeover agreement, the surety shall not be paid any amount in excess of its total expenditures necessarily made in completing the work and discharging its liabilities under the payment bond of the defaulting contractor.
The contracting officer shall make payments to the surety to reimburse it for discharging its liabilities under the payment bond of the defaulting contractor only on the basis of one (1) of the following:
D.C. Mun. Regs. tit. 27, r. 27-3717