PUR 501–03: Bid Security and Performance and Payment Bonds
To define requirements for bid security and performance and payment bonds
Arizona Board of Regents Policy Manual - 3-804
The requirement for bonds or other security must be included in the invitation to bid (ITB).
Bid security submitted by the bidder guarantees that the bidder will execute a contract with the university at the bid price upon award of the bid. If the successful bidder refuses to enter into a contract, the bid security will be forfeited to the university.
Bid security in the amount of 10 percent of the bid price is normally required with all sealed bids for construction projects when the construction cost is estimated to exceed $50,000.
If a bidder fails to submit the required bid security with the bid, the bid shall be considered nonresponsive and subject to rejection unless the director of Purchasing and Business Services determines in writing that the bid substantially complies with the security requirements.
Bid security is not normally required for material or service contracts. The director of Purchasing and Business Services is authorized, however, to require bid security for procurements of this nature if such a requirement is advantageous to the university.
Acceptable bid security shall be a bond underwritten by a company licensed to issue bonds in Arizona or a certified or cashier’s check payable to the Arizona Board of Regents.
Before Bid Opening
If a bid is withdrawn at any time before bid opening, the bid security shall be returned to the bidder. If a bidder is permitted by the director of Purchasing and Business Services to withdraw the bid before award, no action may be taken against the bidder or bid security.
After Bid Opening
A successful bidder may not withdraw the bid after bid opening without forfeiture of bid security unless the bidder can establish by clear and convincing evidence that a nonjudgmental mistake was made in the bid. If withdrawal of a bid after bid opening is permitted by the director of Purchasing and Business Services, no action may be taken against the bidder or bid security.
Performance and payment bonds submitted by the successful bidder upon award of the contract guarantee faithful performance of the contract and payment of materials and labor by the contractor to all subcontractors and material suppliers. Performance and payment bonds in the amount of 100 percent of the contract price shall be required for all construction contracts.
Performance Bonds for Material or Service Contracts
Performance bonds for material or service contracts may be required if the director of Purchasing and Business Services determines the requirement is necessary to protect the interests of the university. The amount of the bond shall be determined by the director of Purchasing and Business Services.
See the procedure for bid security and performance and payment bonds on the Purchasing and Business Services Web site.
For related information on bidding, see: