The State does not require Project Co to provide Performance Bonds in favour of the State and does not require Project Co to obtain Performance Bonds from any of its Subcontractors. However, the security package put forward by Project Co to secure the performance of the Project Activities is relevant to the evaluation of Proposals. Where Performance Bonds are provided by Subcontractors in favour of Project Co, the State has certain limited rights to require Project Co to call those Performance Bonds up to an amount specified in the Contract Particulars and pay the proceeds to the State. This is discussed in more detail in section 2.22.
All Performance Bonds provided by Key Subcontractors for the amounts specified in the Contract Particulars must be bank guarantees issued by an Australian licensed financial institution with the Required Rating and payable on demand by presentation at the issuer's office in Melbourne. The Performance Bond must recognise the State as a beneficiary if the State exercises its step-in rights under the Project Deed.
If Project Co requires its Subcontractors to provide Performance Bonds in excess of the amount specified in the Contract Particulars, the State does not require this additional bonding to be provided by way of a bank guarantee issued by a financial institution, although this may be a matter of evaluation in considering the appropriateness of the security package put forward by Project Co as part of its Proposal.