- To guarantee the faithful performance by the PROPONENT of its obligations and duties under this Agreement, the PROPONENT shall put up a Construction Security, within the period and in the form and amount stipulated in the Notice of Award. The security may be in the form of cash, manager's check, cashier's check, bank draft or guarantee confirmed by a reputable local bank acceptable to the LGU, standby letter of credit issued by a reputable bank acceptable to the LGU, provided that if a letter of credit is issued by a foreign bank, it must be confirmed by a local bank or offshore banking unit, surety bond callable on demand issued by the GSIS, by surety or insurance companies duly accredited by the Office of the Insurance Commissioner, or a combination thereof, in accordance with the following schedules:
a. Cash, irrevocable letter of credit, bank draft - a minimum of two percent (2%) of the total Project Cost
b. Bank Guarantee - a minimum of five percent (5%) of the total Project Cost
c. Surety Bond - a minimum of ten percent (10%) of the total Project Cost
The Construction Security shall be released by the LGU after the issuance of the "Certificate of Completion and Acceptance" of the Construction works, and the acceptance by the LGU of the PROJECT as completed in accordance with the agreed standards and specifications, provided that there are no claims filed against the PROPONENT or its Contractor.
In the event the completion timetable for the PROJECT is extended in accordance with this Agreement, the term of the Construction Security shall be extended accordingly.