The Grateful Dead lyric, “Lately it occurs to me, what a long, strange trip it’s been,” by Robert Hunter seems a fitting way to describe the process of the enactment and finalization of the rules pertaining to individual sureties. Some may recall that the 2015 Highlights Year in Review detailed a step-by-step timeline of events beginning in 2011 and culminating in 2015, with language included in the annual defense spending bill to mandate types of assets individual sureties are required to pledge to secure their bond obligations on federal construction contracts. Who could have imagined that it would take nearly six years for this legislative goal to become a reality?

Even though the 2015 Highlights timeline of events notes a start time of 2011, NASBP’s pursuit of requiring individual sureties to furnish legitimate and verifiable assets predates 2011, as noted in the 2010 American Bar Association white paper “The Importance of Surety Bond Verification” authored by NASBP CEO, Mark McCallum, and previous SFAA General Counsel, Edward Gallagher. Moreover, as far back as 2008, NASBP, SFAA, and other interested stakeholders, such as the Associated General Contractors and the American Subcontractors Association, met with representatives from the Office of Federal Procurement Policy (that provides overall direction for government-wide procurement policies) to describe various instances where individual sureties furnished bonds on federal contracts that proved to be worthless and left both small businesses and the federal government unprotected.

Enacting legislation and adopting regulations can–and did–move at a snail’s pace. Finally, after nearly a dozen plus years of meeting with federal procurement officials and countless federal lawmakers and testifying before the U.S. House Judiciary Subcommittee on Courts, Commercial and Administrative Law, last month, the Federal Acquisition Regulation (FAR) Council made it official by requiring individual sureties to use only “eligible obligations” (U.S.-backed securities) as collateral for their obligations to the federal agencies and to deposit such assets in the care and custody of the federal government. Specifically, the final rule requires the Department of the Treasury, Bureau of the Fiscal Service to review those assets to ensure they meet established eligibility requirements. The FAR went into effect on February 16, 2021.

For those of you who assisted with this herculean effort, which included contacting your federal legislators, attending multiple NASBP Fly-ins, and making a grassroots outreach that NASBP asked you to perform, thank you!! It may have been a long, strange, and exhausting trip; but the end result was certainly well worth the effort.