2.5.502    BID, PROPOSAL, AND CONTRACT PERFORMANCE SECURITY

(1) If an agency requires bid or proposal security and/or contract performance security, the types of security that may be used are those specified in 18-4-312, MCA.

(2) The department will supply bid and proposal security bond forms 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.

(3) Facsimile or photocopy copies of bid or contract security are not acceptable.

(4) 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.

(5) 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.

(6) 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.

(7) 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; and

(g) estimated dollar amount of total contract.

(8) All contract performance security, except bonds, must be returned to the contractor:

(a) upon completion of the contract;

(b) if a warranty period is specified in the contract and no claims are pending under the warranty, then upon expiration of the warranty period; and

(c) if the agency waives all rights and claims to the performance security as described in ARM 2.5.305.

(9) If the contract was established by the division, agencies requiring contract security shall provide written notification to the division within 30 calendar days from the expiration of the contract stating that:

(a) the contract has been successfully performed;

(b) if a warranty period is specified in the contract, that no claims are pending under the warranty; and

(c) the agency waives all rights and claims to the contract security.

(10) If the contract was established within an agency's delegated authority, the notification must be provided to the agency's contracting office. 

History: 18-4-221, 18-4-312, MCA; IMP, 18-1-201, 18-4-312, MCA; NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1986 MAR p. 242, Eff. 2/28/86; AMD, 1987 MAR p. 1961, Eff. 10/30/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 2814, Eff. 10/28/94; AMD, 1995 MAR p. 1788, Eff. 9/15/95; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2000 MAR p. 2962, Eff. 10/27/00; AMD, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2002 MAR p. 2651, Eff. 9/27/02; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2008 MAR p. 2616, Eff. 12/25/08; AMD, 2014 MAR p. 1077, Eff. 5/23/14; AMD, 2016 MAR p. 1160, Eff. 7/9/16.