R23-1-1102. Bid Security Requirements for Projects

  (1) Application. The requirements for bid security and bonds under this Rule R23-1-11 shall apply as follows:(a) For the Division, the award of construction contracts where the face amount of the contract is $100,000 or more.

  (b) For other state agencies that are required to use the same or similar documents as the Division for their construction contracts, the award of construction contracts where the face amount of the contract is $50,000 or more, unless the Division Director, in writing, approves a $100,000 or more requirement similarly to the Division, based on:

  (i) The Division Director's finding that the agency has a selection process for such contracts that are under $100,000, that ensures a responsible, financially solvent contractor is selected; and

  (ii) that the agency has the financial capability to absorb the potential responsibility that can occur due to the lack of the bid security and bonding requirements for the contract under $100,000.

  (c) At any time the Division or any other state agency can require acceptable bid security as well as performance and payment bonds on contracts that are for amounts below the standard requirements set forth above in this Rule.

  (2) Acceptable Bid Security. The term "bid" as used in this Rule R23-1-1102 shall also be deemed to apply to "offer."

  (a) Invitations for Bids and Requests For Proposals shall require the submission of acceptable bid security in an amount equal to at least five percent of the bid, at the time the bid is submitted. If a contractor fails to accompany its bid with acceptable bid security, the bid shall be deemed nonresponsive, unless this failure is found to be nonsubstantial as hereinafter provided.

  (b) If acceptable bid security is not furnished in accordance with Rule R23-1-907(3), the bid shall be rejected as nonresponsive, unless the failure to comply is determined by the Director to be nonsubstantial. Failure to submit an acceptable bid security may be deemed nonsubstantial if:

  (i) the bid security is submitted on a form other than the Division's required bid bond form and the bid security meets all other requirements including being issued by a surety meeting the requirements of Subsection (5);

  (ii) the contractor provides acceptable bid security by 5 p.m. of the next business day after notice is provided by the Division of the defective bid security; or

  (iii) only one bid is received.

  (3) Payment and Performance Bonds. Except as provided in this Rule R23-1-1102(1) above, payment and performance bonds in the amount of 100% of the contract price are required for all contracts in excess of $50,000. These bonds shall cover the procuring agencies and be delivered by the contractor to the Division at the same time the contract is executed. If a contractor fails to deliver the required bonds, the contractor's bid shall be found nonresponsive and its bid security shall be forfeited.

  (4) Forms of Bonds. Bid Bonds, Payment Bonds and Performance Bonds must be from sureties meeting the requirements of Rule R23-1-1102(5) and must be on the exact bond forms most recently adopted by the Board and on file with the Division.

  (5) Surety firm requirements. All surety firms must be authorized to do business in the State of Utah and be listed in the U.S. Department of the Treasury Circular 570, Companies Holding Certificates of Authority as Acceptable Securities on Federal Bonds and as Acceptable Reinsuring Companies for an amount not less than the amount of the bond to be issued. A co-surety may be utilized to satisfy this requirement.

  (6) Waiver. The Director may waive any bonding requirements set forth in this Rule if the Director finds circumstances in which the Director considers any or all of the bonds to be unnecessary to protect the State. Any such waiver shall be stated in writing, explain the circumstances why the bond(s) is not necessary to protect the procurement unit, and the waiver shall be made part of the project file.

  (7) The Director may require an acceptable bid security on projects that are for amounts less than the standard amount set forth in this Rule R23-1-1102.