Of course, A312 has been around for quite some time, being first published in 1984, and has been institutionalized in the procurement systems and procedures for many local public owners and private owners. These owners may not be aware of or understand the concerns of the surety community with the form and may be resistant to or refuse entirely any modifications, especially when no such bond modifications were requested in the past. In the current environment, producers often are being placed in difficult situations, such as when a long-term, qualified client is desirous of bidding a job where the local public owner mandates an unmodified A312 but the client’s surety refuses to write it or keeping straight the different surety company modifications to A312 to ensure no inadvertent errors or omissions. Clearly, no one is or should be satisfied with the current situation.

To address concerns, NASBP has taken immediate action through education and advocacy efforts. Hopefully, you were able to listen to the recent NASBP teleconference with Ted Baum, an attorney with the Rochester, NY law firm of Ernstrom & Dreste LLP, who provided an excellent rundown of the legal decisions that have triggered this crisis. An audio recording of the teleconference is available to members and affiliates in the password-protected section of the NASBP web site. Click here to listen to the audio recording of the NASBP teleconference.

Beyond educational efforts, NASBP has pursued a substantive dialogue with AIA, which, at the request of NASBP, convened an in-person meeting among myself, Edward Gallagher, General Counsel of The Surety & Fidelity Association of America, Suzanne Harness, Managing Director of the AIA Documents Program, and Howard Goldberg, an attorney in the Baltimore, MD law firm of Goldberg, Pike & Besche, PC and outside counsel to the AIA Documents Program, on February 27. The purpose of the meeting was to convey to AIA the import of the situation for producers and for sureties, to assess AIA’s ability to expedite its revision process for A312 and, if for political, practical, or other reasons AIA was not able to expedite revision of A312, to seek an interim or “stopgap” measure through the issuance by AIA of a standardized amendment to the A312 payment bond form.

From the outset of the meeting, AIA representatives made clear that they understood the gravity of the situation and wished to work productively with NASBP and SFAA in an effort to address concerns with the A312 payment bond. AIA representatives stated that working towards a “stopgap” amendment likely would be the most expeditious means to mitigate the immediate situation, and they would review proposed amendment language forwarded from SFAA that represents a consensus position among SFAA member companies and, in short order, would convene follow-up meetings toward the goal of developing the “stopgap” amendment. They also indicated that they believe that maintaining the original revision cycle for A312 is important and ultimately beneficial to the construction and surety communities as AIA intends to review the substance of both the payment and performance bonds contained in A312 as well as review the merits of other bond approaches, such as bonds predicated on the federal Miller Act.

My personal thanks to Suzanne Harness and Howard Goldberg for appreciating the concerns of the surety community and making a commitment to look for means to address them.