Sec. 21.06.07.10. Performance and Payment Bonds

A. Performance Bonds.

(1) General. A performance bond is required for all construction contracts in excess of $100,000 in the amount equal to at least 100 percent of the contract price. A performance bond may be required for a contract for services, supplies, maintenance, or construction-related services expected to exceed $100,000, as determined by the procurement officer. The performance bond shall be delivered by the contractor to the State not later than the time the contract is executed. If a contractor fails to deliver the required performance bond, the contractor’s bid shall be rejected, its bid security shall be enforced, and award of the contract may be made to the next lowest responsive and responsible bidder.

(2) Reduction of Amount Before Solicitation. The head of a procurement agency may reduce the amount of the performance bond required before solicitation if, after completing appropriate analysis, it is determined in writing by the head of a procurement agency to be less costly or more advantageous to the State to self-insure a part of the performance of the contractor. An analysis may be made for groups of contracts, or may be made on particular contracts, as the head of a procurement agency chooses. A copy of the analysis shall be available for public inspection.

B. Payment Bonds.

(1) General. A payment bond is required for all construction contracts in excess of $100,000 in the amount equal to at least 100 percent of the contract price. The payment bond shall be delivered by the contractor to the State not later than the time the contract is executed. If a contractor fails to deliver the required payment bond, the contractor's bid shall be rejected, its bid security shall be enforced, and award of the contract shall be made to the next lowest responsive and responsible bidder.

(2) Reduction of Amount Before Solicitation. Before solicitation, the head of a procurement agency may reduce the amount of the payment bond to not less than 50 percent of the contract price if a written determination is made that it is in the best interest of the State to do so. Factors to be considered in order to make the determination include, but are not limited to:

(a) The value and number of subcontracts to be awarded by the contractor; and

(b) The value of the contract.

C. Forms for Performance and Payment Bonds. The required performance and payment bonds shall be in the form specified in COMAR 21.07.02.10.