Section 526.2047  Security Requirements

a)         An SPO may require that a vendor furnish bid, proposal, or performance security on University contracts.  Whenever security is required, except as provided herein, the solicitation will clearly indicate the type and amount of security.  The cost of providing security will be borne by the vendor unless otherwise stated in the solicitation.

b)         Security, unless otherwise specified, may be in the form of cashier's check, certified check, money order, irrevocable letter of credit or bond.  Any bond must be issued by a surety company authorized to do business in the State of Illinois and having a rating acceptable to the University.

c)         Unless the amount is set by law, the SPO will determine the amount, in dollars or percentage of contract price, that will adequately protect the University's interests.  That amount will vary depending on the type of procurement and the risks and potential losses associated with delay or failure to complete the project, and for other such reasons.

d)         A vendor may be required to furnish up to 100% performance security at any time during contract performance and at its cost, if it appears that delivery or production schedules cannot be met, quality is poor, responsibility is questioned and for similar reasons.

e)         The vendor's source of supply may also be required to furnish security. If the vendor does not have a stock of the commodity in question in the amount required or the facilities to produce the item in such amount, the University may, in addition, require the vendor to have the source of supply furnish security acceptable to the University, conditioned on such source supplying the vendor as required in the solicitation.

f)          Bid or Proposal Security

1)         Bid or proposal deposit.  The solicitation may require each vendor to file a bid or proposal deposit, the amount of which will not ordinarily exceed 5% of the bid or proposal amount.

2)         Retention or use of bid or proposal deposit.  The bid or proposal deposit will be considered as security for full performance of all obligations imposed on the vendor under the law and this Part, including the obligation to keep the price, bid, or proposal firm for as long a period as specified in the solicitation and the obligation to file performance security, if required, when a contract is awarded.  If the vendor fails to perform any such obligations, the University will negotiate the bid or proposal deposit and retain from the proceeds thereof an amount sufficient to compensate it for damages suffered.  The University may retain the bid or proposal deposit as liquidated damages if the solicitation so specifies.

3)         Disposition of bid or proposal deposit.  If a vendor is not one of the three lowest qualified vendors, the bid or proposal deposit will be returned to the vendor as soon as is practicable after the bid or proposal opening.  The three lowest qualified vendors' deposits will be returned as soon as possible after the contract is awarded or, if performance security is required, as soon as the successful vendor has filed acceptable performance security.