When deemed necessary by the city manager, bid securities and/or performance/payment bonds shall be required and prescribed in the public notices inviting bids. Bid securities and performance bonds are generally required for most competitive bids for larger construction contracts.
(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, when in the determination of the city manager, circumstances warrant bid security.
(2) Bid security shall be in an amount equal to five (5) percent of the amount of the bid, or fifty dollars ($50), whichever is greater.
(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 the bid security requirements.
(b) Performance bonds
(1) When a performance bond is required, it shall be delivered to the city at the time 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 one hundred (100) percent of the price specified in the contract.
(3) A payment bond satisfactory to the city an executed by a surety authorized to do business in the State of Michigan, or otherwise secured in a manner satisfactory to the city, 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. The bond shall be in an amount equal to one hundred (100) percent of the price specified in the contract.
(c) A successful bidder shall forfeit any bid deposit required upon failure on the bidder’s part to enter a contract within the time specified after the award.
(Ord. No. 0-94-01, 2-21-94)