§ Mrs. Roche
To ask the Secretary of State for Scotland 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 fewer than(a) 100, (b) 50 and (c) 20 employees. 
§ Lord James Douglas-Hamilton
[holding answer 20 May 1996]: The Scottish Office policy on the use of performance bonds is in line with the guidance set out in the central unit on procurement's guidance note No. 48 "Bonds and guarantees", copies of which are available in the Libraries of both Houses. This guidance makes clear 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 available contractors. These will vary for each contract independently of the size of the contractor. In practice the Scottish Office has used performance bonds only on rare occasions in some major road contracts where the risks were considered to merit it. Statistics are not held centrally on the cost of bonds or the size of contractors involved.