NPM 039-2013

Requesting Entity: N & N Construction

Issues Concern: Surety Bond as a Protest Fee



Whether a surety bond can be considered as an acceptable form of non-refundable protest fee.

[A] surety bond is a contractual arrangement between the surety, the principal and the obligee whereby the surety agrees to protect the obligee if the principal defaults in performing the principal's contractual obligations. In other words, it provides financial security to the obligee by assuring that in case of default by the principal, the obligee can obtain indemnification from the surety. Incidentally, this is not the rationale and purpose for which the protest mechanism and fee are required under the Law and rules; the purposes being to deter filing of frivolous complaints and answer for the costs of the action.

In view of the foregoing, the posting of a surety bond as a form of non-refundable protest fee should not be countenanced.