Activity in Congress Prior to August Recess

Over the past few months, there has been a flurry of activity in Congress. Just prior to the July 4 holiday recess, the U.S. House of Representatives passed its version of the Fiscal Year 2023 National Defense Authorization Act, by a vote of 329-101. NASBP’s press release announced legislation, H.R. 8273, the “Small Business Payment for Performance Act of 2022,” was introduced by Construction Procurement Caucus co-chairs, U.S. Representatives Pete Stauber (R-MN-8^th) and Scott Peters (D-CA-52^nd). The measure was included as an amendment (En Bloc 5) to the annual defense spending bill. The Peters/Stauber legislation has been an issue the Construction Industry Procurement Coalition (CIPC), of which NASBP is a founding member, has worked on tirelessly for a number of years.

Later in July, the U.S. House Small Business Committee conducted a full committee hearing on “Leveraging the Infrastructure Investment and Jobs Act: The Role of the SBA’s Bond Guarantee Program.” Among those who testified were: Peter Gibbs (pictured) of NASBP Member Foundation Surety & Insurance Solutions, on behalf of NASBP; Ralph Pulver of NASBP Affiliate Travelers Bond & Specialty Insurance on behalf of SFAA; and Alan Gravel, owner of Willow Construction, a small business whose bond producer, long-time friend and NASBP Past President, Howard Cowan, suggested that Willow Construction was a good fit for the SBA Bond Guarantee Program (BGP). You may recall Gravel was featured in the Winter 2021 issue of NASBP Surety Bond Quarterly magazine.

U.S. House Small Business Committee Chairwoman Nydia Velázquez (D-NY-7th) (pictured) has committed her support to small business contractors and issued a press release after the hearing. Chairwoman Velázquez said, “As projects related to the bipartisan infrastructure bill continue to develop, demand for Surety Bond Guarantees may increase. Given that, this Committee must look for ways to improve the program to better serve more small businesses,” added Velázquez. If you did not have an opportunity to listen to the hearing, you may do so here. NASBP looks forward to working with Chairwoman Velazquez’s staff on further enhancements to the SBA BGP.

Additional regulatory reforms to the SBA BGP soon to go into effect (September 7) include the following:

• Increasing the Quick Bond Guarantee Application from $400,000 to $500,000;
• Clarifying the definition of “ancillary maintenance agreements” and expanding the definition of “Contract” to include stand-alone maintenance agreements;
• Modifying a requirement for federal contracting officers (COs) to certify and to include a statement that the small business is experiencing difficulty obtaining bonds for guarantees greater than $6.5 million (and up to $10 million) to simply require the CO to certify that the guarantee is necessary;
• Increasing/modernizing the claim reserve from at least $1,000 to at least $10,000; and
• Clarifying the definition of “commencement of work” to mean “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 (or approved, if the Surety is legally bound by such approval) at the time. The work would not have to occur ‘at the job site’ to find that work has begun or commenced under the contract.”

If you had the opportunity to serve on the NASBP Automation and Technology (A&T) Committee over the past decade, you are likely to be familiar with the benefits of eXtensible Business Reporting Language (XBRL). Note that, effective immediately, XBRL now permits all bonding stakeholders to electronically submit information required by SBA Form 994F, “Schedule of Work in Process (WIP).” See the article in this issue of Pipeline, the NASBP Press Release, and the SBA  August 24 press release. This innovative technology impacts NASBP bond producers and prior approval sureties that participate in the SBA Surety Bond Guarantee Program. For additional information, view the SBA Procedural Notice. NASBP thanks the NASBP A&T Committee members for all their hard work on this important matter.

NASBP Outreach with Comment Letters Delivered to Various Federal and State Agencies and NY Governor

In keeping pace with the busy Congressional theme, NASBP/SFAA submitted a joint comment letter to the U.S. Army Corp of Engineers (USACE) to request that bonds be required for the construction portion of projects receiving financing through WIFIA credit arrangements for dedicated USACE projects to maintain, upgrade, and to repair dams as recommended by the USACE.

NASBP also submitted comment letters to the following:

• The General Services Administration (GSA) asking for clarifying information in the instructions for Standard Forms (SF) on the use of the term “expiration date.” This was and continues to be an important issue for NASBP members, which was discussed with GSA officials in conjunction with the 2019 Legislative Fly-in. In his June 2019 Pipeline column, NASBP CEO Mark McCallum described 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 Office of Management and Budget (OMB) information collection requirements relating to the form and has nothing to do with the actual validity or enforceability of the underlying bond agreement. NASBP will notify the NASBP membership about any actions taken by the GSA regarding the GSA SFs.
• The Arkansas Broadband Office asking that bonds be considered an alternative form of security to letters of credit for the Arkansas Rural Connect Broadband Grant Program.
• NY Governor Hochul (D) regarding legislation that creates a duplicate, burdensome, unnecessary, and costly registration system for contractors and subcontractors bidding on NY state public work. NASBP’s letter to the Governor, at the request of the NY contractor community, asked the Governor to veto this nonsensical legislation.
• Illinois Governor Pritzker’s Chief of Staff and the Secretary of the IL DOT requested representation from an IL NASBP bond producer to serve on the “Bond Reform in Construction Industry Task Force,” which was created by the enactment of HB 4600. The Task Force will “study innovative ways to reduce the cost of insurance in the private and public construction industry while protecting owners from risk of nonperformance.”