2016 Delaware Code
Title 29 - State Government
CHAPTER 69. STATE PROCUREMENT
Subchapter III Materiel and Nonprofessional Services
§ 6927. Bid and contract security.

(a) Bid bonds. — For the purchase of materiel and nonprofessional services, in accordance with § 6923 of this title, the agency or a representative delegated by the agency may, at their discretion, require that bids be accompanied by:

(1) A deposit of either a good and sufficient bond to the State for the benefit of the agency involved; such bonds shall be issued with a corporate surety authorized to do business in this State, the surety shall be approved by the agency, and the bond form used shall be the standard form included as part of the bid documents issued by the Office of Management and Budget for this purpose; or

(2) A security of the bidder assigned to the agency for a sum equal to at least 10% of the bid.

The bid bond or bid security need not be for a specific sum but may be stated to be for a sum equal to 10% of the bid to which it relates. A bid bond or bid security may be stated as a certain stated sum provided that the sum is equal to or greater than 10% of the bid.

Bid or performance bonds shall not be used as a substitute for a determination of bidder responsibility. If a bid is withdrawn at any time before bid opening, any bid security shall be returned to the bidder.

(b) Loss of bid bond as damages. — In the event of any successful bidder refusing or neglecting to execute a formal contract and bond within 20 days of awarding the contract, the bid bond or security deposited by the successful bidder shall be taken and become the absolute property of the State for the benefit of the agency as liquidated damages. Such damages shall neither constitute a forfeiture nor a penalty and shall be deposited with the Secretary of Finance. Such monies pertaining to Department of Transportation contracts shall be deposited in the Transportation Trust Fund. The contracting agency may award the contract to the next lowest responsible bidder or re-advertise for new bids.

(c) Return of bid bond. — Upon the execution of a formal contract and performance bond, the bid bond shall be returned to the successful bidder.

(d) Performance bonds. — Simultaneous with the execution of the formal contract where required by §§ 6923(k)(1) and 6924(j)(1) of this title, the procuring agency may require the successful bidder to execute a good and sufficient bond to the State for the benefit of the agency. Such performance bonds shall:

(1) Be with a corporate surety authorized to do business in this State;

(2) Be in a sum equal to 100% of the contract award, except as otherwise provided in this subsection; and

(3) Be in the standard form issued by the Office of Management and Budget for this purpose and shall be included in the projects' bid documents.

Contracts for the purchase of material with a value less than the threshold amount(s) established by the Contracting and Purchasing Advisory Council may reduce or waive this bond requirement from the successful bidder. Such reduction or waiver shall be stated in the bid specifications.

(e) Contents of performance bonds. — The bond shall be conditioned upon the faithful compliance and performance by the successful bidder of each and every term and condition of the contract and the proposal, plans and specifications thereof. Each term and condition shall be met at the time and in the manner prescribed by the contract and the specifications, including the payment in full to every person furnishing materiel or performing labor in the performance of the contract, of all sums of money due the person for such labor and materiel. The bond shall also contain the successful bidder's guarantee to indemnify and save harmless the State and the agency from all costs, damages and expenses growing out of or by reason of the successful bidder's failure to comply and perform the work and complete the contract in accordance with the contract.

(f) Invoking a performance bond. — The agency may, when it considers that the interests of the State so require, cause judgment to be confessed upon the bond. All sums received through confession of judgment shall be deposited with the Secretary of Finance for the credit of the agency. Such monies pertaining to Department of Transportation contracts shall be deposited in the Transportation Trust Fund. Every person furnishing materiel or performing labor under the contract for which the successful bidder is liable may maintain an action on the bond for the person's own use in the name of the State or the contracting county in any court of competent jurisdiction for the recovery of such sum or sums as may be due such person from the successful bidder, but if the bond so provides, no suit shall be commenced after the expiration of 1 year following the date on which the successful bidder ceased work on the contract, otherwise suits may be commenced at any time within 3 years following the date the last work was done on the contract. No person or surety, in any action brought under this section or on the bond required in this section shall assert as a defense to such action the claim that the bond given pursuant to this section contained a limitation or restriction not provided for by this section.

(g) Other security for contracts under threshold amount(s). — Contracts for the purchase of materiel and nonprofessional services valued less than the threshold amount(s) set by the Contracting and Purchasing Advisory Council may contain a waiver of the bond requirement provided that the successful vendor post with the State an irrevocable letter of credit or other suitable or readily collectible financial security for the project. Such letter of credit or other security shall be issued for a term commencing simultaneously with the execution of the formal contract and terminating no later than 3 years subsequent to the date of delivery of such materiel or nonprofessional service or to the extent of the warranty period, whichever is greater. In no event shall such security expire without the express written approval of the State. Such waiver as described in this paragraph shall be stated in the bid specifications.

(h) Waivers from performance bonds. — On a contract for the purchase of a materiel or nonprofessional service, the State may, at its discretion, reduce or waive the bond or other form of security. Such waiver shall be stated in the bid specifications.

(i) In the case of bids submitted to agencies other than any county of this State and other than any public school district, wherever security is required under this section, the vendor shall also supply with its bid its taxpayer identification number (i.e., federal employer identification number or social security number) or a Delaware business license number and, should the vendor be awarded a contract, such vendor shall provide to the agency the taxpayer identification or Delaware business license numbers of such subcontractors. Such numbers shall be provided on the later of the date on which such subcontractor is required to be identified or the time the contract is executed. The agency shall report to the Division of Revenue each vendor selected for award within 15 days of execution of the contract and each subcontractor within 15 days of such contractor having been identified to the agency or on the date of execution of the contract, whichever is later, unless the Director of the Division of Revenue has notified the agency of criteria according to which, in the Director's discretion, reporting is not required, and the contract meets such criteria.

70 Del. Laws, c. 601, § 7; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 428, §§ 1, 2; 75 Del. Laws, c. 88, § 16(5).;