Appendix 7. Bonds

Below is a list of the types of Bonds that may be required for this solicitation and resulting contract. If required, it will be noted in the solicitation when to submit the requested Bond to the Procurement Officer.

Bid Bond

Each Bidder/Offeror must submit with its Bid/Proposal a Bid/Proposal Bond or other suitable security, as summarized in Section 7.4 below, in the amount of five percent (5%) of the Total Evaluated Price, guaranteeing the availability of the goods and services at the offered price for 180 days after the due date for receipt of Bids/Proposals.

The bond shall be in the form provided in Attachment C – Bid Bond.

The Bidder/Offeror may request a release of the bond after the date of the award in return for a release signed by the Contractor and accepted by the State.

The cost of this bond, or other suitable security, is to be included in the total prices proposed and is not to be proposed and will not be recoverable as a separate cost item.

Performance Bond

[[Performance bonds should be used for high risk procurements. If this solicitation does not require a Payment Bond, you may delete the entire section INCLUDING the section heading. If this solicitation does require software escrow, see DoIT for attachments appropriate to this section. Note: a Performance Bond must be submitted not later than the date of contract execution.]]

The successful Bidder/ Offeror shall deliver a Performance Bond, or other suitable security, to the State after notification of recommended award.

The successful Bidder/Offeror must submit a Performance Bond, or other suitable security in the amount of <<$1,000,000.00>>, guaranteeing that the Contractor shall well and truly perform the Contract.

The Performance Bond shall be in the form provided in Attachment W – Performance Bond and underwritten by a surety company authorized to do business in the State and shall be subject to approval by the State, or other acceptable security for bond as described in COMAR 21.06.07, as summarized in Section 7.4 below.

The Performance Bond shall be maintained throughout the term of the Contract, and renewal option period(s), if exercised. Evidence of renewal of the Performance Bond and payment of the required premium shall be provided to the State.

The Performance Bond may be renewable annually. The Contractor shall provide to the State, thirty (30) days before the annual expiration of the bond, confirmation from the surety that the bond will be renewed for the following year and subsequently provide confirmation to the State that the bond has been renewed. Failure to timely provide this notice shall constitute an event of default under the Contract. Such a default may be remedied if the Contractor obtains a replacement bond that conforms to the requirements of the Contract and provides that replacement bond to the State prior to the expiration of the existing Performance Bond.

The cost of this bond, or other suitable security, is to be included in the total prices proposed and is not to be proposed and will not be recoverable as a separate cost item.

After the first year of the Contract, the Contractor may request a reduction in the amount of the Performance Bond. The amount and the duration of the reduction, if any, will be at the State’s sole discretion.The State shall have the right to increase the amount of any reduced Performance Bond to any amount, up to the original amount, at any time and at its sole discretion.

Any performance or payment bonds shall be in the form specified in COMAR 21.07.02 in accordance with COMAR 21.06.07.10(C).

Payment Bond

[[If this solicitation does not require a Payment Bond, you may delete the entire section INCLUDING the section heading.]]

Any performance or payment bonds shall be in the form specified in COMAR 21.07.02 in accordance with COMAR 21.06.07.10(C). The Payment Bond shall be in the form provided in Attachment X – Payment Bond.

Acceptable security

Acceptable security shall be as described below, identified within and excerpted from COMAR 21.06.07.01:

Acceptable security for bid/proposal, performance, and payment bonds is limited to:

A bond in a form satisfactory to the State underwritten by a surety company authorized to do business in this State;

A bank certified check, bank cashier's check, bank treasurer's check, cash, or trust account;

Pledge of securities backed by the full faith and credit of the United States government or bonds issued by the State;

An irrevocable letter of credit in a form satisfactory to the Attorney General and issued by a financial institution approved by the State Treasurer.

Surety Bond Assistance Program

Assistance in obtaining bid/proposal, performance and payment bonds may be available to qualifying small businesses through the Maryland Small Business Development Financing Authority (MSBDFA). MSBDFA can directly issue bid/proposal, performance or payment bonds up to $750,000. MSBDFA may also guarantee up to 90% of a surety's losses as a result of a Contractor’s breach of Contract; MSBDFA exposure on any bond guaranteed may not, however, exceed $900,000. Bonds issued directly by the program will remain in effect for the duration of the Contract, and those surety bonds that are guaranteed by the program will remain in effect for the duration of the surety’s exposure under the Contract. To be eligible for bonding assistance, a business must first be denied bonding by at least one surety on both the standard and specialty markets within ninety (90) days of submitting a bonding application to MSBDFA. The applicant must employ fewer than 500 full-time employees or have gross sales of less than $50 million annually, have its principal place of business in Maryland or be a Maryland resident, must not subcontract more than 75 percent of the work, and the business or its principals must have a reputation of good moral character and financial responsibility. Finally, it must be demonstrated that the bonding or guarantee will have a measurable economic impact, through job creation and expansion of the state’s tax base. Applicants are required to work through their respective bonding agents in applying for assistance under the program. Questions regarding the bonding assistance program should be referred to:

Maryland Department of Commerce

Maryland Small Business Development Financing Authority

MMG Ventures

826 E. Baltimore Street

Baltimore, Maryland 21202

Phone: (410) 333-4270

Fax: (410) 333-2552