7.50. Bid and Contract Security

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  1. Surety bonds lapse automatically on expiration of the purpose or period for which they were required. Security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) must be returned to bidders. The bidder must return the letters of credit to the issuer to complete the discharge.
  2. Lapsing of surety bonds or return of security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) must occur in the following way for all requirements except construction:
    1. for all bidders, at the expiration of the bid validity period, either as originally set or as extended;
    2. for unsuccessful bidders, prompt notification or return of a security deposit, immediately after a contract is awarded, is essential in such cases so as not to constrain the their ability to make new bids;
    3. for a successful bidder, if no contract security is required, immediately upon award of a contract or, if contract security is required, once the contract security is received; and
    4. if contract security is required, the contract must be awarded before bid security lapses, if applicable, but not before the contract security has been received.
  3. Lapsing of surety bonds, or return of security deposits (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) for construction requirements must occur as soon as practical following:
    1. the bid solicitation closing date, for those bidders submitting non-compliant bids;
    2. the administrative bid review, for those bidders submitting compliant bids ranked fourth to last on the schedule of bids;
    3. the award of contract, for those bidders submitting the second and third ranked bids; and
    4. the receipt of contract security from the successful bidder; or
    5. the cancellation of the bid solicitation, for all bidders.
    6. If one or more of the bids ranked third to first is withdrawn or rejected for whatever reason, then Canada should reserve the right to hold the bid security of the next highest ranked compliant bid in order to retain the bid security of at least three valid and compliant bids.
  4. For construction services requirements, if contract security is required, the security must be received within 14 days after contract award and before bid security lapses.
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