March 3, 2015 Issue
Currently there are forty-two legislatures in session. They are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, District of Columbia, and Federal.
Federal Commercial Surety
- S.148 (Portman-R-OH) amends Title XVIII (Medicare) of the Social Security Act with respect to the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) competitive acquisition program by requiring licenses and bid bonds for entities submitting bids under DMEPOS. S.148 was referred to the Senate Committee on Finance and currently has 6 co-sponsors which include Senators: Cardin (D-MD), Hoeven (R-ND), Casey (D-PA), Bennet (D-CO) and Grassley (R-IA). The bill prohibits the Secretary of Health and Human Services from accepting a bid from an entity for an area unless it: (1) meets state licensure requirements for the area for all items in the submitted bid for a product category, and (2) has obtained a bid surety bond of between $50,000 and $100,000 for each such area. The surety industry is beginning to meet with the Sponsor and co-sponsors to discuss the parameters of the bill.
Bond Threshold Increases
- NV SB 108 (Settlemeyer) increases the current bonding threshold from $100k to $1M. The bill was referred to the committee on Government Affairs on 02/02/2015 and has not moved. NASBP sent aletter to the bill sponsor, Senator Settlemeyer, detailing the importance of the surety product and the millions of dollars saved in Nevada alone, by having projects properly bonded.
- North Dakota Bidding Documents of Venture Project No. 130014, for the Burleigh & Morton County Detention Center, specifically Section 11.4, “Performance Bond and Payment,” which stated the owner has the right to “waive either or both bond requirements.” NASBP contacted the contracting officer to argue that such a waiver would be a violation of North Dakota’s statutory requirements. On 02/11/2015, NASBP heard back from the agency who stated "upon receipt of your letter, a discussion occurred with our Architect Team and an addendum was issued for our bid to reflect your concerns." A copy of the letter can be found here.
Bonding Assistance Programs
- MD HB 279/SB 396 (Robinson/Pugh) which prohibited “excessive bonding,” has been voted unfavorably by the House Health and Government Operations Committee and has been withdrawn for further consideration. NASBP’s contract lobbyist testified at the hearing of the bill, pointing out its imprecise language and the need for clarifications. With the withdrawal of HB 279, the hearing in the Senate Education, Health, and Environment Committee on its counterpart, SB 396, sponsored by Senator Pugh, was cancelled.
With an unfavorable report and the Senate bill being withdrawn it appears that HB 279/SB 396 will not advance in this legislative session.
- MD HB 844/SB 579 (Branch/Pugh) increases the maximum bond amount available for a bond guarantee issued by the Small Business Surety Bond Program of the Maryland Small Business Development Financing Authority (MSBDFA) from $1 million to $2.5 million. NASBP sent a letter of support to the House Economic Matters and Senate Finance Committees.
- MO HB 935 (Green) creates a bonding review board that may "establish criteria and procedures to create credit ratings for any individual, partnership, or corporation as described in section 143.441 or 143.471, that markets or provides individual sureties for the satisfaction of bonding requirements and assign such credit ratings." HB 935 was referred to the House Banking Committee on 02/26/2015. NASBP has made outreach to its Missouri members inquiring about the bill's sponsor.
Performance and Payment Bonds
- AR HB 1252 (Hutchinson) amends current civil statutes law to "A civil action brought in this state by or in behalf of an insured or beneficiary against a domestic or foreign surety on a contractor’s payment or performance bond may be brought in the county." NASBP Past President and Arkansas Government Affairs Representative Matt Cashion contacted the bill sponsors directly requesting clarification in the wording of the bill. The bill misuses the word "insured" when it should in fact state "obligee." The bill passed the House on 03/02/2015 and has been referred to the Senate Committee on Judiciary.
- GA SB 59 (Hill) authorizes the state to enter in P3 agreements. These agreements require delivery of performance and payment bonds in the amounts required in the state's Little Miller Acts and in a form acceptable to the responsible public entity for those components of the qualifying project that involve construction, and bonds, letters of credit, or other forms of security acceptable to the responsible public entity for other phases and components of the development of the qualifying project. These amendments were proposed by SFAA and were accepted on the bill last week. Originally the bill allowed for alternative forms of security on the construction portion of the contract.
- MN SB 87 (Dibble) authorizes the Commissioner of Transportation to establish a P3 pilot program. Private entities would have to provide for financial protection for the state in case of default but bonds are not specified. SB 87 was referred to the Senate Transportation and Public Safety Committee on 01/12/2015.
- NM HB 299 (Larrañaga) authorizes the delivery of public projects through public-private partnerships. These agreements require a private partner to provide, either directly or through the principal contractor who is in charge of the project, performance and payment bonds as required by New Mexico's Little Miller Act, §13-4-18 NMSA 1978 for those components of a public project that involve construction. On 02/26/2015 HB 299 was reported DO PASS by the Transportation and Public Works Committee and referred to Judiciary Committee.
- Utah Proposed Rule Changes – R23-1-1102, Section 6 "Waiver"The purpose of this repeal and reenactment of this is to establish more specific Rules on the general procurement provisions for the Division of Facilities Construction and Management (DCFM). Additionally, the proposed Rule would be more in line with the Division of Purchasing and General Services' Rules. The proposed Rule, however, allows the Director of DCFM to waive bonding if the “Director finds circumstances in which the Director considers any or all of the bonds to be unnecessary to protect the state.” The proposed Rule expands upon R-23-1-40 (6) “Waiver” and creates uncertainty and ambiguity as to when the Director may waive statutory bonding requirements. NASBP delivered a letter to the Assistant Attorney General Division of DFCM, Mr. Bachman, where he immediately contacted NASBP noting that he had received concerns from others regarding the bond waiver provision. Furthermore, DCFM is concerned that the language may be too vague and invited the industry to provide clarification how to narrow the wavier provision. NASBP and SFAA submitted joint language to Mr. Bachman and we are waiting for his response. We will keep everyone apprised on our progress.
Statute of Limitations
- CT Raised Bill (RB) 1032 (Judiciary Committee) will be heard in the Judiciary Committee on 03/06/2015. The legislation includes a 10-year statute of limitations. Negotiations with the CT Attorney General's Office are ongoing to reach a consensus on the legislation. NASBP has continued its work with the coalition pressing for a statute of limitations for construction work.
March 25, 2015 Issue
Currently there are forty-four legislatures in session. They are Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, District of Columbia and Federal.
- NV AB 345 (Neal) authorizes the State and local governments to accept certain alternate forms of security and provides circumstances under which an individual surety may provide such security. This bill was introduced due to concerns raised by the sponsors’ constituents who believe that bonds are an impediment to them for participation on public contracts. NASBP submitted testimony opposing the bill. NASBP has retained a lobbyist to gather further political intelligence on the bill and has alerted its construction allies, AGC, ASA, and MCA of Nevada to make them aware of the impact to their members.
- AR HB 1111 (Sabin) authorizes the state to enter into public-private partnerships for public facilities and infrastructure. NASBP worked with local member Matt Cashion and SFAA to provide bill writers with language favorable to the industry. HB 1111 is expected to come up for a House floor vote soon.
- MD SB 453 (Guzzone) makes a technical correction to Maryland's P3 law to clarify that both payment and performance bonds are required on P3 agreements under Title 17, Subtitle 1, Maryland's Little Miller Act. SB 453 passed the Senate and will be heard in the House Environment and Transportation Committee on 03/31/2015. The companion bill HB 936 has passed the House.
- MN HF 1924 (Kelly) authorizes the Commissioner of Transportation to establish a P3 pilot program. Private entity would have to provide for financial protection for the state in case of default but bonds are not specified. The bill was heard in committee on 03/16/2015 and during the hearing the bill sponsor offered an oral amendment requiring performance and payment bonds on the contracts as required by Minnesota’s Little Miller Act.
- NM HB 299 (Larrañaga) would have authorized the delivery of public projects through public-private partnerships and would have required performance and payment bonds as required by New Mexico's Little Miller Act. The New Mexico Legislature adjourned on 03/21/2015 and HB 299 died in the Senate.
Subcontractor Default Insurance
- MA HB 2808 (J. Rogers) amends Massachusetts statute to allow the construction manager at-risk (CMAR) to have the option to obtain Subcontractor Default Insurance (SDI) in lieu of performance and payment bonds for some or all trade contractors. Trade contractors not covered through SDI must submit payment and performance bonds to the CMAR at no additional cost to the CMAR or awarding agency. HB 2808 was referred to the Joint Committee on State Administration and Regulatory Oversight. NASBP is in the process of reaching out to local construction groups and the bill sponsor to obtain additional intelligence on the legislation. NASBP is actively working to oppose this bill and will keep the membership posted on developments.