(1) The state may, at its discretion, require bid or proposal security and/or contract performance security for the procurement of services and supplies.

(2) Bid or proposal security and contract performance security requirements must be stated in the invitation for bids or the request for proposals.

(3) The preferred types of security are bonds as described in 18-4-312 (3) (a) , MCA, and cash as described in 18-4-312 (3) (c) and (d) , MCA. The security must be payable to the state of Montana and the contract performance security must remain in effect for the entire contract period. The department will supply bid and proposal security bond and contract performance security bond forms when security is required. These are the only acceptable forms for surety bond or irrevocable letter of credit submission.

(a) If a certificate of deposit, money market certificate, cashier's check, certified check, irrevocable letter of credit, bank money order, or bank draft is determined to be acceptable, it must be issued from a federally chartered or state-chartered bank or savings and loan association that is insured by or for which insurance is administered by the federal deposit insurance corporation or that is drawn and issued by a credit union insured by the national credit union share insurance fund.

(b) Irrevocable letters of credit in excess of $100,000 from a single financial institution will not be accepted as security for contracts.

(c) Facsimile, electronic or photocopy copies of bid or contract security are not acceptable.

(d) Certificates of deposit or money market certificates will not be accepted as security for bid, proposal, or contract security unless the certificates are assigned only to the state. All interest income from these certificates must accrue only to the contractor and not the state.

(4) Factors to consider in requiring bid/proposal security and in determining the amount of the security include:

(a) type of commodity;

(b) past state experience;

(c) labor required to perform contract;

(d) materials required to perform contract.

(5) All negotiable instruments provided as bid security and proposal security will be returned to the unsuccessful bidders/offerors within 30 days from date of the award.

(6) Factors to consider in requiring contract performance security and in determining the amount of security include:

(a) type of commodity;

(b) past state experience;

(c) labor required to perform contract;

(d) materials required to perform contract;

(e) amount and number of subcontracts;

(f) damages chargeable to the state if the contractor defaults;

(g) estimated dollar amount of total contract.

(7) All contract performance security, except bonds, will be returned to the successful bidder or offeror upon completion of the contract, or at the discretion of the procurement official as documented to assure contract completion, or warranty period as declared within the contract.