It Is Always Time to Educate Decisionmakers about Bonding—Resources to Help You Do That!

Surety professionals are all too familiar with public owners, officials, and others who are unfamiliar with or who hold misperceptions about the role and importance of surety bond requirements. Such unfamiliarity or misperceptions can lead to unfortunate legislative and policy decisions by decisionmakers, which ultimately leave taxpayers and businesses exposed to significant financial losses. Such was the case in Utah this year when the Utah legislature passed HB 508, which exempted the largest state public owner, Utah’s Division of Facilities Construction & Management (DFCM), from long-standing mandatory state performance and payment bond requirements.

The language addressing the bonding exemption was not initially in the bill; rather, it was introduced in a third substitute at a committee hearing, with very little time left in the session. This last-minute maneuver allowed the substitute bill to pass easily. Without base-level knowledge about the importance of surety bond protections, few legislators likely understood the potential adverse consequences of not having bonds in place to protect public coffers and accepted the bill sponsors’ statements at face value that this was merely a cost-savings measure. Local NASBP producers, especially Mike Zahn of Moreton & Company, jumped into the fray immediately, and NASBP staff, SFAA staff, and others mounted a furious advocacy campaign, but reaching and educating all of the critical decisionmakers in a span of four or five days was a Herculean, if not impossible, task. The bill passed through the Utah legislature and was enacted into law, with the Utah Governor choosing not to veto the measure despite written requests by NASBP, AGC of Utah, and others to do so. NASBP will attempt to roll back this legislation next year and has retained a local contract lobbyist for that effort.

This is an unfortunate, state-level illustration of the consequences of the surety bond product not being well understood by decisionmakers, but it is by no means an isolated or infrequent one. Knowledge of the importance of surety bonds by decisionmakers at all levels of government should never be assumed. The surety industry is a relatively small, though important, industry, so all those making a living from suretyship must make it a priority to educate stakeholders proactively and frequently, especially governmental decisionmakers, on why surety bond requirements exist and how these requirements protect vital governmental interests.

Larry LeClair, NASBP’s Director, Government Relations, and I have written an article about how surety professionals, including local surety associations, can be effective state and local advocates, which will be published in the next issue of the Surety Bond Quarterly. The article provides useful tips and takeaways based on our own state and federal advocacy experiences.

You do not need to wait for the article’s publication, however, before engaging local decisionmakers. NASBP has developed numerous resources to help surety professionals with this task; in fact, an entire microsite– https://www.nasbp.org/get-a-bond/be-guaranteed-to-succeed/–houses stories and videos explaining the importance of surety bonding in the words of owners, contractors, lenders, and others. These resources were originally created for the “Be Guaranteed to Succeed™” public relations campaign and remain relevant and powerful testimonials about how surety relationships improve projects and businesses, leading to successes. Further, NASBP members can login at the microsite and access and download the Producers Communications Toolkit, which contains a host of articles, templates, and other materials explaining facets of contract suretyship. Among useful materials is “Answers to 32 Questions Public and Private Owners Ask About Contract Bonding,” available at  https://www.nasbp.org/resource/answers-to-32-questions-public-and-private-owners-ask-about-contract-bonding/.

Few things can be taken for granted, and knowledge of the importance of surety bond requirements certainly is not one of them. Surety relationships do so many wonderful things for people and businesses. We cannot afford to keep that a secret!