Subject to the provisions of Article 143 of the code, each contract holder shall be bound to provide:
(a) A security as guarantee for the complete execution of the contract, hereinafter referred to as the “final bond”;
(b) A security as guarantee, where applicable, for the proper execution of the contract and the recovery of the amounts of money for which the holder may be liable with respect to the contract, in replacement of the “retention bond” to be deducted from the payments on account made by the Administration’s contracting partner, hereinafter referred to as the “performance bond”.
The final bond may not be less than 2 (two) percent or more than 5 (five) percent of the initial value of the contract, increased, as appropriate, by the amount of the contract amendments.
The retention bond shall be deducted or the performance bond constituted where the contract has a guarantee or maintenance period. It may not be more than 10 (ten) percent of the initial value of the contract, increased, as appropriate, by the amount of the contract amendments.
The performance bond or proper performance guarantee shall not be required for intellectual service contracts.
The final bond must be constituted within 20 (twenty) calendar days following notification of the contract and, in any case, before first payment.
The validity of the final bond must cover the period for the delivery of services up to their provisional acceptance.
The validity of the performance bond must cover the guarantee or maintenance period stated in the contract up to final acceptance.
The terms and conditions and deadline for the refund of securities shall be fixed by the general administrative clauses, subject to the exemptions that could be introduced by the special administrative clauses.
The security may be replaced by a bond issued to the Project Owner or the Delegated Project Owner by a banking institution authorized in accordance with the instruments in force, or by a personal joint and several guarantee.
Public contract holders must provide guarantees from financial institutions approved by the Minister in charge of finance or that have a local correspondent approved by the said Minister.
Small- and medium-size enterprises with national share capital and managed by nationals, as well as civil society organizations may, in lieu of security, provide a certified cheque, bank cheque, a legal mortgage or a bond issued by a banking institution or financial institution authorized in accordance with the instruments in force.
Any entity having produced a joint and several personal guarantee or any banking institution referred to above must undertake to pay, on the orders of the Project Owner or the Delegated Project Owner and up to the amount guaranteed, sums for which the Administration’s contracting partner may be liable under the contract.
The provisions above shall be implemented in accordance with the rules laid down by the Project Owner or the Delegated Project Owner.
Where the Administration’s contracting partner has fulfilled its contractual obligations:
(a) The final bond shall be refunded after a release order issued by the Project Owner or the Delegated Project Owner with effect from the final acceptance of the works, supplies or services, where the contract does not have a guarantee deadline, or from the provisional acceptance where the contract has such period.
(b) The retention bond shall be released or the performance bond refunded after a release order issued by the Project Owner or the Delegated Project Owner with effect from the final acceptance of the works, supplies or services after the expiry of the guarantee period.
Upon expiry of the 30 (thirty) calendar days, the competent body shall be bound to refund the bonds or release the retention bond referred to above at the request by the Administration’s contracting partner.
Upon expiry of the period referred to above, the bonds shall cease to have any effect, even in the absence of the release, unless the Project Owner or the Delegated Project Owner has duly notified the contracting partner that he has not fulfilled all his obligations.
In this case, the bond commitment may cease to have effect only following a release order issued by the Project Owner or the Delegated Project Owner.
Holders of jobbing orders may be exempted from the obligation to produce the securities provided for in Article 137 of the code.
Add comment