Approved security in the form of a bank guarantee and / or insurance bond (security) is required for all construction contracts. This is to provide some assurance and an avenue of recourse under the contract should the contractor not perform as specified in the contract. This is an unconditional undertaking in the form set out in the Schedule of Collateral Documents and the guarantee / bond is sourced by the contractor from a financial institution. The guarantee / bond must be reviewed by the PMCA to confirm that it does not contain any clauses that restrict the use being ‘unconditional’. The guarantee / bond is held by the Commonwealth for the term specified in the contract and released back to the contractor upon satisfactory execution of the contract scope and terms. The process for managing the receipt and release of guarantees / bond is described below.
Outcome / Deliverable
Note: In some circumstances (as defined in the contract) the CFI Officer may exercise their rights to withhold the release of the guarantee / insurance bond. If at any stage the CFI Project Officer is uncertain that the bank guarantee / bond should be released then advice shall be sought through the projects legal advisor or DCFPC before such a release is executed.
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