When deemed necessary by the City Manager, bid securities and/or performance bonds shall be required and prescribed in the public notices inviting bids. Bid securities and performance bonds shall be required for all competitive sealed bids for construction contracts when the cost is estimated to equal or exceed $100,000.
(A) Bid security.
(1) A bid security shall be a bond provided by a security company authorized to do business in the State of Michigan, or the equivalent in cash, or otherwise supplied in a form satisfactory to the City. Nothing contained herein shall prevent the requirement of such security on any contract under $100,000, when in the determination of the City Manager, circumstances warrant bid security.
(2) Bid security shall be in an amount equal to, but not less than, 5% of the amount of the bid.
(3) When the invitation for bids requires a bid security, noncompliance requires that the bid be rejected, unless it is determined that the bid fails to comply in a non-substantial manner with bid security requirement.
(B) Performance bonds.
(1) When a performance bond is required, it shall be delivered to the City at the time of or before the signing of the contract by the Mayor.
(2) A performance bond, satisfactory to the City and executed by a surety company authorized to do business in the State of Michigan, or otherwise secured in a manner satisfactory to the City shall be in an amount equal to 100% of the price specified in the contract.
(3) A payment bond satisfactory to the City and executed by a surety authorized to do business in the State of Michigan, or otherwise secured in a manner satisfactory to the City of Big Rapids, for the protection of all persons supplying labor and materials to the contractor or its subcontractors for the performance of the work provided in the contract shall be required. The bond shall be in an equal amount to 100% of the price specified in the contract
(C) Failure of bidder. A successful bidder shall forfeit any bid deposit required upon failure on the bidder's part to enter into a contract within the time specified after the award.
(D) Reduction of bond amount. Such bonds may be reduced in value proportionate to the completed work during the construction cycle of the project upon written approval of the City Manager.
(Ord. 657-03-13, passed 3-4-13)