§ Mrs. RocheTo ask the Minister of Agriculture, Fisheries and Food what is his Department's policy on the use of performance bonds; in what circumstances they are used; what was the total sum paid by bond in each of the last five years; and if his Department requires bonds from businesses with under(a) 100, (b) 50 and (c) 20 employees. [29415]
§ Mr. Boswell[holding answer 20 May 1996]: The Ministry's policy is to review the need for performance bonds in the light of the value and complexity of the contract to be let. The Ministry has occasionally used performance bonds which would allow it to call in financial guarantees should a contractor fail to meet specified standards. These would be used to compensate the Ministry should a contractor fail to complete a contract because of, say, liquidation or default. The Ministry regards "on demand" performance bonds as unjust and undesirable. The Ministry believes that bonds are not always necessary and are no substitute for considered judgments about the risks of a particular contract and the capabilities and financial resources of the chosen contractor. These factors will vary for each contract independent of the size of the contractor.
175WFrom records held centrally no performance bonds have been called in during the last five years.