Chapter 4 Refund Bond for Advance Payment
An entity may, upon considering the characteristics and actual needs of the procurement, prescribe in the tender documentation that the winning tenderer may receive an advance payment and amount thereof, and that the tenderer shall, prior to receiving the advance payment, provide a refund bond for advance payment in the like amount.
Where necessary, an entity may notify the supplier to furnish an explanation as to the use of advance payment after receiving such payment.
An entity shall, upon considering the characteristics and actual needs of the subject procurement, prescribe in the tender documentation that the refund bond for advance payment may either be reduced progressively, pro rata to the progress or the contract value of the part that has been performed by the supplier, or released in whole upon satisfactory inspection and acceptance.
Where a supplier fails to perform as required by the contract, or that the contract is terminated or rescinded, an entity may, at any time, demand that the supplier repay the remaining portion of the refund bond for advance payment plus interest, or that such amount be set off against the amount payable to the supplier.
The calculation of the interest referred to in the preceding paragraph, and the circumstances under which the entity may demand for refund, shall be prescribed explicitly in the tender documentation, and the same shall also be stated in the refund bond for advance payment.
Where a tenderer deposits a refund bond for advanced payment in the form of an irrevocable standby letter of credit issued or confirmed by a bank, bank’s written joint and several guarantee or insurer’s insurance policy of joint and several guarantee, unless otherwise prescribed by the tender documentation, the validity period of such instruments shall be 90 days longer than the time-limit for final construction, supply or installation prescribed in the contract.
Where a supplier fails to perform the contract within the time-limit prescribed in the contract, or that inspection and acceptance may not be accomplished within the validity period referred to in the preceding paragraph due to causes attributable to the supplier, the validity period of refund bond for advance payment shall be extended according to the duration of such delay.