Computer Systems Acquisitions and the Use of Performance Bonds© Available to Purchase

A performance bond typically guarantees that a contractor, such as a computer vendor or software developer, will perform the contract. It usually provides that if the contractor defaults in his performance and fails to fulfill his contractual promises, the surety can itself complete the contract, or pay damages up to the limit of the bond. One myth about performance bonds is that they obviate the need for the library to litigate in the event of a default by the vendor. Performance bonds will not insure the library against having to resolve a dispute. Also, a failure to follow the terms and the law involving the performance bond could release the surety. Yet the proper positioning of the performance bond could provide needed resources and negotiating leverage to the user in the computer system acquisition process.