4-51-114 - Vendor Performance bond or letter of credit Minority owned business waiver.
4-51-114. Vendor Performance bond or letter of credit Minority owned business waiver.
(a) (1) Except as provided in subdivision (a)(2), each vendor shall, at the execution of the contract with the corporation, post a performance bond or letter of credit from a bank or credit provider acceptable to the corporation in an amount as deemed necessary by the corporation for that particular bid or contract. In lieu of the bond, a vendor may, to assure the faithful performance of its obligations, deposit and maintain with the corporation securities that are interest bearing or accruing and that are rated in one (1) of the three (3) highest classifications by an established nationally recognized investment rating service. Securities eligible under this section are limited to:
(A) Certificates of deposit issued by solvent banks or savings associations approved by the corporation and that are organized and existing under the laws of this state or under the laws of the United States;
(B) United States bonds, notes, and bills for which the full faith and credit of the government of the United States is pledged for the payment of principal and interest; and
(C) Corporate bonds approved by the corporation. The corporation that issued the bonds shall not be an affiliate or subsidiary of the depositor.
Such securities shall be held in trust and shall have at all times a market value at least equal to the full amount estimated to be paid annually to the lottery vendor under contract.
(2) Because of certain economic considerations, minority businesses may not be financially able to comply with the bonding, deposit of securities, or letter of credit requirements of subdivision (a)(1). In order to assure minority participation in major procurement contracts to the most feasible and practicable extent possible, the chief executive officer is authorized and directed to waive the bonding, deposit of securities, and letter of credit requirements of subdivision (a)(1) for a period of five (5) years from the time that a minority business enters into a major procurement contract in cases where any minority business substantiates financial hardship pursuant to the policies and procedures established by the board.
(b) Each vendor shall be qualified to do business in this state and shall file appropriate tax returns as provided by the laws of this state. All contracts under this section shall be governed by the laws of the state of Tennessee.
(c) No contract shall be secured with any vendor in which a public officer, as covered in § 8-50-501(a), or an employee of such officer, has an ownership interest of one percent (1%) or more.
[Acts 2003, ch. 297, § 2.]