Section 22-B9807. BONDS, OTHER SECURITY, AND INSURANCE

 

9807.1The CO may require any of the following types of security for any solicitation or contract, other than a small purchase, regardless of the estimated amount of the contract when determined to be in the best interest of the Hospital or when required by District law or regulation:

 

(a)Bid bonds;

 

(b)Other bid or proposal security;

 

(c)Construction performance and payment bonds;

 

(d)Insurance; and

 

(e)Performance or payment bonds or other security on non-construction contracts.

 

9807.2A payment security shall be required only when a performance security is required and the use of the payment security is in the best interest of the Hospital, unless the CO determines, in writing, that either type of security would, by itself, protect the best interests of the Hospital.

 

9807.3When a security is required by the CO, the CO may accept any of the following types of security:

 

(a)A bond provided by a surety;

 

(b)A certified check or irrevocable letter of credit issued by an insured financial institution in the equivalent amount of the security; or

 

(c)United States government securities that are assigned to the Hospital which pledge the full faith and credit of the United States.

 

9807.4When the Hospital’s independent price estimate for a construction contract exceeds seventy-five thousand dollars ($75,000), the CO shall require a bid security for the invitation for bids or request for proposals. For a construction project less than seventy five thousand dollars ($75,000), the CO may require a bid security.

 

9807.5The bid security for a construction contract shall be in an amount equal to at least five percent (5%) of the amount of the bid or price proposal. The bid security for non-construction contracts shall be in an amount set by the CO.

 

9807.6When a bid security is required, the solicitation shall contain the following:

 

(a)A statement that bid security is required;

 

(b)Notice that the bid security will remain in effect for as long as the bid or proposal is required to remain effective; and

 

(c)Sufficient information to allow bidders or offerors to determine the amount of the required bid security.

 

9807.7No action shall be taken against the bid security of a bidder or offeror that is permitted to withdraw a bid or proposal prior to award due to a mistake in the bid or proposal.

 

9807.8If a bid fails to comply with the bid security requirements set forth in the solicitation, the CO shall reject the bid. However, the CO may accept the bid if the CO determines that acceptance of the bid or proposal would be in the best interests of the Hospital and for one of the following reasons:

 

(a)When only one bid is received, that bid may be accepted and the CO shall require the furnishing of the bid security before the contract is signed;

 

(b)The amount of the bid security is less than required, but is equal to or greater than the difference between the bid price and the next higher acceptable bid;

 

(c)The amount of the bid security submitted, although less than that required by the solicitation for the maximum quantity bid upon, is sufficient for a quantity for which the bidder is otherwise eligible for award. Any award to the bidder or offeror shall not exceed the quantity covered by the bid security;

 

(d)The bid security becomes inadequate as a result of the correction of a mistake, if the bidder agrees to increase the bid security to the level required for the corrected bid; and

 

(e)The bid security is received late, and late receipt is waived by the CO for reasons determined to be in the best interests of the Hospital.

 

9807.9The CO shall require a contractor to furnish performance and payment bonds or other security on any construction contract when the Hospital’s independent estimate of the cost of the contract exceeds seventy-five thousand dollars ($75,000). The CO may require a contractor to furnish a payment or performance bond or other security for any construction or non-construction contract, regardless of amount, when the CO determines that the security is necessary or advisable to protect the interests of the Hospital.

 

9807.10The amount of the performance security shall be one hundred percent (100%) of the original contract price, unless the CO determines that a lesser amount or percentage would be adequate for the protection of the Hospital. The CO shall state the amount or percentage in the solicitation.

 

9807.11The CO shall require additional performance security when a contract price is increased. The increase in performance security shall equal one hundred percent (100%) of the increase in the contract price, unless the CO determines that a lesser amount or percentage is adequate for the protection of the Hospital.

 

9807.12The CO may require additional performance security by directing a contractor to increase the original sum of the existing security or to obtain an additional security.

 

9807.13The payment security shall be in an amount of not less than fifty percent (50%) of the total amount of the contract price.

 

9807.14When a contract price is increased, the Hospital may require additional payment security in an amount adequate to protect suppliers of labor and material. However, in no event shall the amount of payment security fall below fifty percent (50%) of the increased contract price.

 

9807.15When performance or payment security is required, the solicitation shall contain the following:

 

(a)A statement that security is required;

 

(b)The amount of the security expressed as a fixed sum or percentage of the contract price; and

 

(c)The deadline for submitting acceptable security.

 

9807.16If the CO uses a letter contract to allow the contractor to proceed with work before execution of the definitive contract, the letter contract shall contain a clause that no payments shall be made under the letter contract until the required payment and performance securities have been received.

 

9807.17Security requirements shall be in accordance with Local Small Disadvantaged Business Enterprises (LSDBE) Act 9-223 as amended.

 

source

Final Rulemaking published at 41 DCR 4508, 4546 (July 8, 1994).