Insights from Meeting with Public Buildings Service of GSA

NASBP and SFAA hosted a joint federal legislative fly-in on Thursday, June 6. As part of that event, NASBP secured meetings with the U.S. Small Business Administration (SBA) and with the Public Buildings Service of the U.S. General Services Administration (GSA). I was fortunate to attend the meeting with key members of the Public Buildings Service, including the Commissioner, Public Buildings Service, Daniel Mathews. Commissioner Mathews is responsible for managing the nationwide asset management, design, construction, leasing, building management, and disposal of approximately 371 million square feet of government-owned and leased space throughout the U.S. and its territories. Also present at the meeting was Tracy Marcinowski, Assistant Commissioner, Office of Acquisition Management. NASBP members and staff joining me at the meeting were NASBP President John Bustard, Past President Lynne Cook, Industry Relations Committee Chair Rusty Lear, and NASBP Director of Communications Kathy Hoffman. SFAA members and staff present were President Lee Covington, MJ Pethick of Zurich Surety, and Rosemary Quinn of CNA Surety.

The meeting lasted approximately one hour and covered various topics of interest to NASBP and SFAA. The meeting provided an excellent opportunity to share current surety market conditions, assuring the Public Buildings Service that surety capacity was readily available for qualified contractors at all size levels. The Public Buildings Service, in turn, reported that a significant focus of its current construction program involved federal courthouse design and construction across the United States and that that focus would remain primary into 2020.

Among the goals of the meeting were to share several recent concerns, including instances where federal contracting officers misinterpreted the significance of the “Expiration Date” that appears on federal standard form bond forms, such as SF24 Bid Bond; SF25, Performance Bond; and SF25A, Payment Bond. It was noted that the current “Expiration Date” on these forms is “7/31/2019.” Attendees related recent instances where federal contracting officers or their legal counsels believed that the “Expiration Date” applied to the validity or enforceability of the bond itself, a misunderstanding of the meaning behind the “Expiration Date,” which refers to certain OMB information collection requirements relating to the form and has nothing to do the actual validity or enforceability of the underlying bond agreement. It was related that such misunderstandings had even resulted in rejections or replacements of bonds. The Public Buildings Service was not previously aware that this feature of the standard bond forms was causing confusion among contracting officers and legal counsel and agreed that education and/or further instruction would be beneficial to avoid confusion in the future. The Public Buildings Service also stated that the SF bond forms would be updated and issued before the occurrence of the present “Expiration Date.”

Attendees also asked if the Public Buildings Service recalled instances on projects where Miller Act bonds were reduced or waived. The Public Buildings Service stated that, although they did not track such information, they believed that bond waivers were rare. They did note that sometimes parties, particularly subcontractors, do not realize that a federal contract on which they are working does not involve a payment bond. The Public Buildings Service related that this occurs on service contracts that may involve some level of construction activity. Miller Act bond requirements do not pertain to service contracts; rather, the contracting officer has broad discretion on whether security will be required. Educational efforts to acquaint subcontractors and suppliers to distinguish between service and construction contracts may be beneficial to avoid surprises on the absence of payment bonds on federal contracts.

Attendees asked for an update on the status of implementing regulations, FAR Case 2017-003, relating to the types of acceptable assets that can be pledged by individual sureties on federal contracts, language included in Section 874 of the National Defense Authorization Act (NDAA) for FY 2016, which became law. GSA is one of three federal agencies that is a member of the Federal Acquisition Regulatory Council, the government body charged with regulatory acquisition matters and implementation. The Public Buildings Service was aware that this matter was an open FAR case and that it currently was proceeding through the federal regulatory process. They acknowledged that the process was slow and that, in the normal course, issuance of such regulations can take approximately four years. They thought that the proposed regulation should be published later this year, perhaps later in the summer.

NASBP and SFAA attendees conveyed that the organizations were ready resources on surety bonding matters, that they were involved in a number of surety bonding awareness and education efforts, including with the U.S. DOT and the U.S. SBA, and that they would value any opportunities to assist GSA and the Public Buildings Service with surety education and information efforts to government acquisition personnel and to businesses seeking to obtain contracts with GSA.

At the end of the meeting, all thought that the opportunity to exchange information, ideas, and concerns had been productive and valuable.