Capitol Hill Update

On February 10, U.S. Representative Richard Hanna (R-NY-22nd) introduced H.R. 838, the “Security in Bonding Act of 2015,” which addresses the type of assets eligible to back individual surety bonds on federal construction projects and increases the guarantee from 70% to 90% in the U.S. Small Business Administration (SBA) Bond Guarantee Preferred Program. H.R. 838 is cosponsored by the Chairman of the House Small Business Committee, Steve Chabot (R-OH-1st), and Representative Grace Meng (D-NY-6th).

As you may recall, the House version of the National Defense Authorization Act (NDAA) in the prior Congress included these provisions from H.R. 776, the predecessor bill to H.R. 838. Unfortunately, the H.R. 776 provisions were not included in the final NDAA bill that was signed into law last December. Representative Hanna has introduced the Security in Bonding Act for the third time. Here’s hoping that the third time is a charm as Hanna and the industry have worked tirelessly attempting to enact this meaningful and common sense legislation into law.

The new Chairman of the House Small Business Committee, Steve Chabot, is slated to host a series of hearings, the first of which was held on February 12, titled “Contracting and the Industrial Base,” which was before the full committee.

This particular hearing focused on surety bonding, the use of reverse auctions on federal construction contracts, failure to properly use a two-step procurement process for design-build contracts, the use of joint ventures and teaming arrangements, and the non-manufacturer rule. Most of these issues are supported by the Construction Procurement Coalition (CPC). NASBP and SFAA submitted a joint statement to the Committee asking for their continued support of legislation addressing pledged assets of individual sureties, including H.R. 838. Among those organizations testifying before the Committee were representatives from the American Council of Engineering Companies (ACEC), the Associated General Contractors of America (AGC) and the Mechanical Contractors Association of America (MCAA). See pictures in this article from the hearing.

You may recall that NASBP testified in February 2012 and in May 2013 regarding H.R. 776 and its predecessor, H.R. 3534, before the Committee’s Small Business Subcommittee on Contracting and Workforce. This month’s hearing was important for members of the Committee, many of whom were recently appointed to serve on the Committee, to learn how the individual surety issue impacts not only the surety industry but also the construction industry as a whole. Moreover, because the Committee has oversight over the SBA Surety Bond Guarantee Program, it was important for Committee members to learn how the Program has improved and evolved over the past several years and what particular enhancements are necessary to encourage greater surety participation to assist small and emerging contractors, without a risk to the federal government.

The CPC continues to speak with the offices of Senator Rob Portman (R-OH) and Senator Ben Cardin (D-MD) with the hope of having a procurement bill introduced soon that provides a framework for growth in the construction industry and for more efficient federal government procurement through simple, no-cost-to-the-government solutions.

Specifically, the bill will address reverse auction procurement for design and construction services for all federal agencies, encourage better utilization of design-build project delivery, and help to prevent fraud by providing financial certainty to assets that support individual surety bonds. Additionally, the bill would require bonds on federal public-private partnership (P3) opportunities and would eliminate periodic threshold increases to the federal Miller Act. NASBP will keep its membership apprised if a bill is formally introduced in the U.S. Senate.