SBA Seeks Public Comments on Bond Guarantee Program

NASBP members may recall that, at the April 2021 NASBP Small & Emerging Business Committee Meeting, the Director of the U.S. Small Business Administration (SBA) Office of Surety Guarantees updated the Committee members on a ton of potential enhancements soon to be released for public comment for the SBA Bond Guarantee Program (Program). As the Director had indicated, five months later, in September, the SBA released for public comment revised regulations because the current regulations are considered obsolete, unnecessary, ineffective, or burdensome. The proposed revisions are in response to comments received from SBA’s Advance Notice of Proposed Rules that were published on June 3, 2019.

Among those revisions of interest to bond producers and sureties are the following sections: Section 115.10, to clarify the definition for “ancillary maintenance agreements” and to expand the definition of “Contract” to include stand-alone maintenance agreements; Section 115.12, to streamline the process of certifying bond guarantees greater than $6.5MM but not to exceed $10MM; Section 115.14, to increase the amount of the claim reserve from $1,000 to at least $10,000; Sections 115.19 and 115.64, to clarify that work under a contract is considered to have begun or commenced when the contractor takes any action related to the contract or bond that would have exposed its surety to liability under applicable law had a bond been executed; and Section 115.30, to raise the Quick Bond Guarantee Application from $400,000 to $500,000. Should you have specific comments you would like to provide, please share those comments with Larry LeClair at lleclair@nasbp.org. NASBP plans to submit comments, which are due by November 22.

NASBP Submits Comments to West Virginia DOT Division of Highways  

Earlier this month, at the request of our West Virginia members, NASBP submitted a letter to the West Virginia Department of Transportation, Highway Division, commenting on the proposed changes to Sections 102, 103, 108, and 109—Contractor Prequalification and Bonding. This proposal sought to diminish the role of surety prequalification as well as requiring partial bonds. As stated in the NASBP comment letter, there are several reasons why these proposed changes would not be in the Division’s best interest, such as restricting competition, increasing project costs, and supplanting the benefits of prequalification performed by surety underwriters. The Division’s compilation of received responses (see pages 3 and 4) addressed partial bonding, competition, and savings. Prequalification of Division contractors was a constant theme and generated the most questions by stakeholders, which the Division attempted to address. Should your state encounter similar issues, as always, please contact NASBP staff for assistance and guidance at lleclair@nasbp.org.