§ 6989 — Performance bond

(a) Simultaneous with the execution of the formal contract, the agency may require the successful proposing firm 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 solicitation.

(b)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 proposing firm’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 proposing vendor’s failure to comply and perform the work and complete the contract in accordance with the contract.

(c)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 moneys 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 proposing firm is liable may maintain an action on the bond for the person’s own use in the name of the State 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 proposing vendor 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.

(d)Other security for contracts under threshold amount. —

Contracts valued less than the threshold amount set by the Contracting and Purchasing Advisory Council may contain a waiver of the bond requirement provided that the successful proposing firm posts 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 earlier than 3 years subsequent to the date of final acceptance by the agency or to the extent of the warranty period, whichever is later. 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 solicitation.

(e)Waivers from performance bonds. —

The State may, at its discretion, reduce or waive the bond or other form of security. Such waiver shall be stated in the solicitation.

Legislative History

84 Del. Laws, c. 489, § 17