Sec. 5. Each vendor in a major procurement must, at the time of executing the contract with the commission, post an appropriate bond or a letter of credit with the commission in an amount equal to the full amount estimated to be paid annually to the vendor under contract. However, the commission may, by a majority vote of all the members of the commission, adopt a resolution expressly permitting the director to decrease the bond or letter of credit requirement for a procurement, if the director determines that the decrease will result in a cost savings to the commission while still providing adequate protection against nonperformance. In lieu of a bond or letter of credit, a vendor may, to assure the faithful performance of its obligations, deposit and maintain with the commission securities that are interest bearing or accruing and that, with the exception of those specified in subdivision (1) or (2), are rated in one (1) of the four (4) highest classifications by an established nationally recognized investment rating service. Securities eligible under this section are limited to the following:

(1) Certificates of deposit issued by solvent banks or savings associations organized and existing under Indiana law or under the laws of the United States and having their principal place of business in Indiana.

(2) United States bonds 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.

(3) General obligation bonds and notes of any political subdivision of the state.

(4) Corporate bonds of a corporation that is not an affiliate or subsidiary of the depositor.

Securities shall be held in trust and must have at all times a market value at least equal to the full amount estimated to be paid annually to the vendor under contract.

As added by P.L.341-1989(ss), SEC.1.