We do not know for certain. The most favored spots are near the polar regions where water ice has been detected, especially at the south pole. There have also been speculations that there could be water locked up just below the surface of Mars. Bacterial life could exist there, at least in principle. We know that bacteria exist as far as 2 kilometers below the Earth's surface under extremes of pressure and temperature far higher than on the surface. If life managed to form on Mars billions of years ago, it might have survived by going underground. A recent discovery by British astronomers studying a more recent Mars meteorite, suggests that there may have been life as recently as 1 million years ago or so. But some scientists studying this museum specimen have suggested that what the British have detected is just contamination from Earth bacteria. We will just have to wait intil we get news from a Mars probe that actually lands and collects deep subsurface samples, and even this may not be conclusive if we happen to land where the bacteria no longer thrive.