Ariz. Admin. Code § R7-2-1114 - Bid Security, Contract Performance and Payment Bonds, and Payment and Retention

A. Bid security shall be provided pursuant to R7-2-1102.

B. Contract performance and payment bonds shall be provided pursuant to R7-2-1103 .

1. An assignment of time certificates of deposit by financial institutions licensed by this state;

2. Share certificate of a savings and loan institution or credit union authorized to transact business in this state; or

3. Security issued or guaranteed as to principal and interest by:

a. The United States;

b. The state;

c. Counties, municipalities and school districts within this state.

C. Contract payment retention and substitute security shall be in accordance with R7-2-1104 .

1. A contractor may submit substitute security to replace contract payment retention if:

a. The use of substitute security is requested of the school district or designee for work performed under the contract. The contractor shall have the option of submitting the substitute security:

i. Prior to each progress payment in an amount of no less than 10% of each progress payment; or

ii. Once, prior to the first progress payment in an amount no less than 10% of the total contract amount.

b. The interest earned on such security shall accrue to the benefit of the contractor, but shall be retained until the school district has approved completion and acceptance of all work to be performed under the contract;

c. The term of such security shall not mature until after the estimated contract completion date; and

d. The security shall mature no later than one year after the estimated contract completion date.

2. The substitute security shall not be released without written approval by the school district.

3. A contractor may submit a single substitute security for more than one project provided that:

a. The amount of such security is sufficient to cover the aggregate retention amount;

b. The school district determines that such single substitute security is advantageous to the school district; and

c. Such security complies with the requirements of subsection (C)(1) of this Section.

D. D. Progress payments shall be in accordance with R7-2-1105 .

E. The school district shall not accept any substitute security unless accompanied by a signed and acknowledged waiver of any right or power of the obligor to set off any claim against either the school district or the contractor in relationship to the security assigned. In any instance in which the school district accepts substitute security as provided in this Section, any subcontractor undertaking to perform any part of the contract is entitled to provide such security to the contractor.

Notes

Ariz. Admin. Code § R7-2-1114

Adopted effective December 17, 1987 (Supp. 87-4). Amended effective March 21, 1991 (Supp. 91-1). Amended effective October 22, 1992 (Supp. 92-4). Amended by exempt rulemaking at 33 A.A.R. 1526, effective 7/1/2014.