Pennsylvania § 11901.6 - Bid, performance and payment security.

§ 11901.6. Bid, performance and payment security.

(a) Bid security.--The following shall apply to bid security:

(1) Council may require that bids received pursuant to advertisement be accompanied by bid security, in a reasonable amount, which shall be in the form of a certified or bank check or a bond provided by a surety company authorized to do business in this Commonwealth or another form of security as specified in the advertisement for bids.

(2) In the event the successful bidder shall, upon award of the contract, fail to comply with the requirements of subsection (b) as to performance security, the bid security shall be forfeited to the city as liquidated damages.

(b) Performance security.--The following shall apply to performance security:

(1) In the case of a contract that had been subject to advertising and bidding, the successful bidder shall be required to furnish performance security in the form of a bond or irrevocable letter of credit in an amount equal to 100% of the contract price with suitable reasonable requirements guaranteeing the performance of the contract. Performance security shall be provided within 20 days after the contract has been awarded, unless council prescribes a shorter period of not less than 10 days. Failure to furnish the security within the required time period shall void the award.

(2) The provisions of this subsection requiring successful bidders to furnish performance security shall not be mandatory as to contracts for the purchase of motor vehicles or other pieces of equipment but only as to those contracts which involve furnishing of labor and materials. Council may, in all cases of contracts or purchases, require security for performance, delivery or other terms.

(c) Payment security.--The following shall apply to payment security:

(1) In conformity with the act of December 20, 1967 (P.L.869, No.385), known as the Public Works Contractors' Bond Law of 1967, it shall be the duty of every city to require any individual, partnership, association or corporation entering into a contract with the city for the construction, erection, installation, completion, alteration, repair of or addition to any public work or improvement of any kind, where the amount of the contract is in excess of $10,000, before commencing work under the contract, to provide payment security in a form acceptable to and approved by the city, which may include, but need not be limited to, any of the following equal to 100% of the contract amount:

(i) A bond.

(ii) Federal or Commonwealth-chartered lending institution irrevocable letters of credit.

(iii) Restrictive or escrow accounts in the lending institutions under subparagraph (ii).

(2) The payment security shall be solely for the protection of claimants supplying labor or materials to the prime contractor to whom the contract was awarded, or to any of the prime contractor's subcontractors, in the execution of the work provided for in the contract. The payment security shall be conditioned for the prompt payment of all material furnished or labor supplied or performed in the execution of the work under the contract.