May / June 2009
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 Fulfill Yourself Through Participation in the NASBP |
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I truly believe that to be successful in what you do, you have to participate. In the past, when I have forgotten this, Jack Curtin would pleasantly remind me of my responsibility as an advocate of the surety industry. That is why I have chosen the following for my theme for the coming year: Fulfillment Through Participation.NASBP gives its members and affiliates numerous opportunities to become involved in the association. Our committees are filled with dedicated surety professionals who are constantly working to improve our industry. As stated on our NASBP Web site, “Central to NASBP’s member-driven focus are the NASBP committees. Members and affiliates can choose to serve on a number of committees where their experience and advice help shape the association’s activities.” Our current economic conditions dictate that we become more involved with our industry than ever before. The Stimulus Package has a strong emphasis on the disadvantaged contractor. We must, as an organization, be proactive in our attempts to educate the public on the bonding process. In May, I participated in the first NASBP/U.S. Small Business Administration (SBA) Virtual Seminar, titled “New Enhancements to the SBA Surety Bond Guarantee Program.” The content of the presentation was excellent, and participation by members and affiliates was outstanding. However, this is just the first step in our joint effort with SBA to support the SBA Surety Bond Guarantee Program. I encourage every member and affiliate to get involved in local programs, which seek to educate and assist the disadvantaged contractor. It is our duty and responsibility as surety advocates to educate our clients and potential clients about the bonding process. We must also step-up our education of public officials on the benefits and legal background of the surety product. On Tuesday, September 22nd, 2009, NASBP will be having a “Legislative Fly-in Day” in Washington D.C. This event will provide our members and affiliates the opportunity to advocate for surety bonds face-to-face with their respective U.S. Senators and House of Representatives. Tools and objectives for members and affiliates will be provided in an orientation session the morning of the 22nd followed by an ascent to Capitol Hill for visits in the afternoon with members of Congress and their staff. The day will culminate with an NASBP hosted reception on Capitol Hill later that evening at the Rayburn House Office Building. All that we need is your participation to make this a fantastic success. For more information, I encourage you to go to http://www.nasbp.org/legflyin Members and affiliates of NASBP are fortunate to have a staff in Washington, D.C. that is topnotch. They provide you with tools, documents, and advice that make it easy to participate in the activities of NASBP and to promote the surety product. Remember, NASBP’s Government Relations Committee states, “The strength and fulfillment of NASBP’s government relations initiatives resides in the many efforts of its volunteer members, who work with professional association staff to accomplish NASBP’s annual government relations agenda for action at all levels of government.” NASBP has given me the opportunity to come out of my shell and realize dreams and achievements that I never thought possible. Allow NASBP to be the driving force behind your success; you will be glad you did! Todd P. Loehnert Todd P. Loehnert is Senior Vice President, Bond Manager, and Co-chair of the National Surety Practice Group of Wells Fargo Insurance Services. Todd resides in Louisville, Kentucky and can be reached at Todd_Loehnert@wellsfargois.com |
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 Case Law Redux: Update on the Tip Top Construction Case |
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| My August/September 2008 column, accessed by clicking here, focused on a decision of the United States Court of Federal Claims interpreting the federal regulations governing the acceptability of assets pledged by individual sureties on federal public works projects. The Court of Federal Claims affirmed a decision of a federal contracting officer who rejected a construction contractor’s bid because it was submitted with a bid bond from an individual surety that, in the opinion of the contracting officer, was supported by assets that did not meet FAR requirements. In fact, the asset supporting the bid bond—“an allocated portion of $191,350,000.00 of previously mined, extracted, stockpiled and marketable coal”—which later turned out to be “coal refuse,” was considered by the contracting officer to be a speculative asset not acceptable under the applicable federal regulations. The disappointed bidder filed a protest with the Government Accountability Office (GAO), seeking a stay of the performance of the contract. The GAO denied the protest on the grounds that mined coal is an unacceptable asset because it cannot be placed in an escrow account, as required under the applicable federal regulations.After the GAO denial, the disappointed bidder filed a protest suit in the Court of Federal Claims, which subsequently agreed with the GAO determination. The decision of the Court of Federal Claims then was appealed to the United States Court of Appeals for the Federal Circuit, which issued its decision upholding the decision of the Court of Federal Claims on April 29, 2009.
The US Court of Appeals for the Federal Circuit determined in Tip Top Construction, Inc. v. United States that the contracting officer correctly concluded that coal was an unacceptable asset. Noting that the purpose of bid bonds is “to protect the government in the event that the bidder withdraws its bid,” the Federal Circuit observed that the applicable federal regulations define the types of “acceptable bid bond assets as those that have an identifiable value and are readily marketable, so that they can easily be sold to cover any expenses incurred by the government as a result of the bidder’s failure to satisfy its obligation” and that the “distinction in the [regulations] between acceptable assets (such as cash, stocks, and bonds) and unacceptable assets (such as jewelry, antiques, and furs) reflects that concern with the discernible value and liquidity of pledged assets.” The Federal Circuit addressed the disappointed bidder’s argument that coal is readily marketable and therefore should be an acceptable asset as follows:
The Federal Circuit also commented on the negative impact that acceptance of such commodities would have on the government.
Lastly, the Federal Circuit dismissed the disappointed bidder’s argument that the contracting officer acted improperly by not permitting a substitution of the bid bond asset, pointing out that the individual surety never made a proper written request of the contracting officer for such a substitution. The Tip Top Construction decisions underscore the need for immediate review by the federal government of the current regulations governing the assets pledged by individual sureties on federal construction projects. NASBP has developed a position brief on this subject, available by clicking here, and is encouraging lawmakers to amend the applicable federal regulations to limit acceptable assets to cash, certificates of deposit, US government securities, and irrevocable letters of credit, among other measures. Such a regulatory change is needed to lessen the administrative burden of contracting officers; to expedite procurements; to avoid instances where bonds mistakenly have been accepted with assets that are insufficient, inappropriate or illusory; and to ensure that federal contracting agencies receive pledged assets that are in the control of the government and that can be timely and easily liquidated to pay valid bond claims. Clearly, government contractors would benefit from revised regulations that offer an exclusive list of cash or cash equivalent assets so that bidders have better certainty that their bid bonds pledge assets that uniformly are acceptable to federal contracting officers. |
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These materials are provided to NASBP members and affiliates solely for educational and informational purposes. They are not to be considered the rendering of legal advice in specific cases or to create a lawyer-client relationship. Readers are responsible for obtaining legal advice from their own counsels, and should not act upon any information contained in these materials without such advice. |
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| NASBP Legislative Fly-in–“Bond Producers Take the Hill” |
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By now NASBP members and affiliates should have received information inviting them to register for the NASBP Fly-in to be held on Tuesday, September 22. The NASBP has organized the Fly-in to begin with a morning briefing and orientation program. That afternoon is reserved for NASBP members and affiliates to visit with their congressional representatives to discuss issues that impact the surety industry. The day will culminate with an NASBP hosted reception on Capitol Hill later that evening in the Rayburn House Office Building room B-338. Register now and plan to participate in this important NASBP event to help advance NASBP issues and educate members of Congress about the surety product.NASBP has created a web page devoted entirely to the Fly-in that includes information about making your hotel reservations, contacting your members of Congress, and scheduling your Capitol Hill appointments. To access the Fly-in page, please click here. NASBP will continue to populate this web page with updates and relevant material up until the day of the Fly-in. Included on this page will be the materials and issue briefs NASBP members can use and leave behind when they visit their members of Congress.
Since the surety industry is one that is not well-understood by lawmakers, NASBP must make every effort to maintain a presence before their congressional representatives in Washington, DC. Please encourage your NASBP colleagues to attend. Advocacy is often recognized as playing a vital role, if not the most important role, in a professional trade association as such advocacy efforts can shape the future destiny of an industry. Participate in the NASBP Fly-in. Now is the time for your elected officials to recognize the passion and dedication you have for the surety industry. NASBP hopes to see you in Washington on September 22! |
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| NASBP 2009-2010 Leaders Inducted into Office |
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At the recent NASBP Annual Meeting held in April, NASBP inducted the 2009-2010 Officers of the Association into office. NASBP elected Todd P. Loehnert as President, J. Spencer Miller as First Vice President, John M. Rindt as Second Vice President, and Carl Edward Dohn, Jr. as Third Vice President.Loehnert is Senior Vice President, Bond Manager, and Co-chair of the National Surety Practice Group of Wells Fargo Insurance Services. Loehnert resides in Louisville, KY. Miller is President of Schwartz Brothers Insurance Agency, Inc. of Chicago, IL. Rindt is Executive Vice President of the Surety Division of JDW Insurance of El Paso, TX. Dohn is President of Dohn & Associates of Palatine, IL.
The NASBP Executive Committee is comprised of the four officers listed above and two Ex Officio members who represent the NASBP Directors and Regional Vice Presidents. Carl W. Newman, Principal of Parker Smith Feek of Bellevue, WA was elected to represent the Directors. David R. Summerall, Bond Executive of Early, Cassidy & Schilling, Inc. of Rockville, MD, was elected to represent the Regional Vice Presidents. Also, serving on the Executive Committee as NASBP Immediate Past President is William F. Maroney. Bill is Senior Vice President of City Underwriting Agency, Inc. of Lake Success, NY. NASBP also elected Directors and Regional Vice Presidents to the NASBP Board Of Directors. NASBP Directors Paul D. Amstutz, Executive Vice President of Surety of Roanoke Trade Services, Inc. in Schaumburg, IL; Thomas M. English, Member of Thomas McGee, L.C. in Kansas City, MO; Susan Hecker, Executive Vice President of Gallagher Construction Services in San Francisco, CA; Christopher M. McAtee, Principal of The Brower Insurance Agency in Dayton, OH; Lawrence F. McMahon, Senior V.P. / Surety Manager of Alliant Insurance Services, Inc./Driver Commercial Group in San Diego, CA; Richard G. Minick, President of Minick & Company in Albuquerque, NM; and Christopher R. Saul, Managing Member of Saul-Metcho LLC in Leesburg, VA. Directors serve three years. A complete list of the NASBP Directors currently serving on the Board are as follows.
NASBP Regional Vice Presidents Don Appleby, Vice President of Willis HRH in Denver, CO, Region 3 that includes Colorado, New Mexico, Utah, and Wyoming. Bradley S. Babcock, Bond Manager of The Forker Company in Arlington Heights, IL, Region 7 that includes Illinois, Indiana, Michigan, Ohio, and Wisconsin. Kevin D. Kalish, Bond Manager of the Schifman, Remley & Associates in Mission, KS, Region 4 that includes Kansas, Missouri, and Nebraska. Michael J. Regan, Senior Vice President of USI New England in Woburn, MA, Region 11 that includes Connecticut, Maine, Massachusetts, New Hampshire, Vermont, Rhode Island, and Quebec. Regional Vice Presidents are elected for a one-year term. See below for a complete list of NASBP Regional Vice Presidents. REGION 1-Alaska, Idaho, Montana, Oregon, Washington, British Columbia, Alberta, Saskatchewan REGION 2-Arizona, California, Hawaii, Nevada, Mexico, Guam REGION 3-Colorado, New Mexico, Utah, Wyoming REGION 4-Kansas, Missouri, Nebraska REGION 5-Iowa, Minnesota, North Dakota, South Dakota REGION 6-Arkansas, Louisiana, Oklahoma, Texas REGION 7-Illinois, Indiana, Michigan, Ohio, Wisconsin REGION 8-Alabama, Florida, Georgia, Kentucky, Mississippi, Tennessee REGION 9-District of Columbia, Maryland, North Carolina, South Carolina, Virginia, West Virginia REGION 10-Delaware, New Jersey, New York, Pennsylvania, Ontario, United Kingdom REGION 11-Connecticut, Maine, Massachusetts, New Hampshire, Vermont, Rhode Island, Quebec REGION 12-Puerto Rico, South America |
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| NASBP Annual Meeting Programs Focus on Experiences of Surety Professionals and Their Clients and the Ways Both are Preparing for the Future |
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Presentations At the NASBP Annual Meeting in Palm Springs, California, surety professionals and their clients shared what they have experienced in today’s surety market and how they are preparing for the future. One of the presentations held during the NASBP meeting provided a panel of officers from four construction associations who described their constituents’ experiences in seeking and obtaining surety bonds as principals and claimants in today’s economy. This industry panel included: Ted Aadland, President and CEO of Aadland Evans Constructors Inc. and Vice President of the Associated General Contractors of America (AGC); Dave Bradbury, Vice President of Precision Concrete Constructions and Past President of the American Subcontractors Association, Inc. (ASA); William Fairchild, President of R.W. Murray Co., and Immediate Past Chair of Associated Builders and Contractors (ABC); and Frederick S. Oyer, Vice President and co-founder of International Piping Systems, Inc. and future Associated Specialty Contractors, Inc. (ASC) President.
The meeting also furnished a panel of experts on “The Value of Surety Protection—The Success Stories.” The panelists were John M. Cave, II, Sr. Assistant Counsel at the Missouri Department of Transportation; Daniel Stratton, Partner of Stratton Hogg & Maddox; and Marcia Haber Kamine, Attorney with Los Angeles Department of Water and Power. This panel, organized to attest to the value of surety bonds to obligees, examined the performance of the surety product and discussed success stories describing the response of the surety product to successfully resolve claims.
State of the Industry Richard A. Foss, Executive Vice President of NASBP, presented a summary of affiliates’ and members’ assessment of the current market and outlook for 2010 and beyond for the surety industry in his presentation titled, “State of the Industry.”
The following concurrent sessions were scheduled twice during the Annual Meeting to enable attendees to go to both sessions. Concurrent Session 1–”The Credit Crisis: Financing the Future of Construction” The session was moderated by NASBP Past President Curtis Roberts. The three panelists, from the banking industry, addressed the impact of the credit crisis on the construction industry from municipalities and developers being unable to secure financing for new projects to contractors having the lines of credit they depend on for day-to-day operations being decreased or going away altogether. They provided insight on how banks are changing the way they make credit decisions in this environment, what successful strategies are being employed by those seeking credit today, and what the future of construction financing may look like. To view the PowerPoint presentation from this Concurrent Session, click here.
Concurrent Session II–“Fidelity and Crime Risk” The second Concurrent Session, moderated by Tom Padilla, was titled “Fidelity and Crime Risk,” and presented by Stephen L. Yesko, ARM, Senior Sales Executive with Lowers & Associates, an international firm that provides risk management and loss prevention services. Yesko explained how fraudulent activity is expected to increase in the current economic climate. Yesko provided a statistical analysis of fraud and a review of practical tools for identifying various types of fraud. He also described methods for managing risk, best practices in loss prevention, tips for whistle-blowing programs, as well as, pointers for recognizing the fraudster and the warning signs of fraud activity. To view the PowerPoint from Yesko’s presentation, click here.
To view more photos from the 2009 Annual Meeting, Click here. |
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| Cashion and Cowan Receive NASBP President’s Award For Exemplary Service |
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During the Annual Meeting in Palm Springs, President William F. Maroney presented Matthew K. Cashion Jr., Secretary and Treasurer of The Cashion Company, Inc. in Little Rock, Arkansas, and A. Howard Cowan, President of Howard Cowan Bond Agency, Inc. of Lubbock, Texas, with the prestigious John ‘Jack’ J. Curtin, Jr. President’s Award.Maroney lauded Cashion for his esteemed work as a longtime faculty member of the Association’s William J. Angell Surety School and an advocate for the professional development of surety professionals. “Matt has worked diligently to ensure that NASBP’s educational programs emphasize the positive role of the bond producer and the value bonds bring to principals and obligees,” Maroney said.
Maroney presented Cowan the award after describing Cowan’s commitment to advancing the interests of NASBP and the surety industry with his work on the association’s Finance Committee and Industry Relations Committee. “Howard has worked diligently to maximize the return on the association’s investment portfolio and to educate industry associations and federal policymakers about the operation and the value of the surety product,” Maroney related. The award, named the “John ‘Jack’ J. Curtin, Jr. President’s Award,” honors an individual who is chosen by the NASBP President for his or her outstanding service contributions to the Association and to the surety industry. The award was first presented in 2007 to John ‘Jack’ J. Curtin, Jr., for whom the award is named. Curtin, a past NASBP President, passed away in 2008, and had been a faculty member of NASBP’s acclaimed William J. Angell Surety School for 30 years and had served as a member volunteer in NASBP at all levels, including Director, Regional Vice President, as well as, Chair of several NASBP committees. “Matt and Howard continue the wonderful legacy of service and activism set by Jack Curtin; they are exemplars for all surety professionals to emulate,” added Maroney. Cashion and Cowan each received a framed certificate personally inscribed in two-toned color calligraphy highlighted in gold and signed by Maroney, as well as, a specifically minted NASBP President’s medallion customized with the NASBP logo and made of 2-troy oz. .999 fine silver.
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| Sponsors and Expo Exhibitors Help Make the NASBP 2009 Annual Meeting A Success |
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NASBP thanks the generous sponsors of the NASBP 2009 Annual Meeting for their tremendous support. These include:
NASBP also thanks the exhibiting companies for their participation at the Annual Meeting and for making the Expo a success. These include:
For additional information about the NASBP 2009 exhibitors, visit the 2009 NASBP Annual Meeting Online Expo by clicking here. |
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| Reviewing Construction Contracts—Never Forget to Address the Issue of Builders Risk |
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We have entered one of the most uncertain economic climates in history. As professional surety agents we have an obligation to advise our clients who participate in both public and private construction projects regarding the insurance requirements contained in the contract. There is a considerable effort by awarding authorities and owners to shift more and more of the responsibility to the general contractor for virtually anything that could go wrong.In 2004 through 2006, one of more remarkable examples of a construction failure was directly related to the omission of a proper builders risk policy. The situation involved an $8 million addition and rehabilitation of an existing Middle School. The awarding authority is one of the most difficult to deal with in the State and the architect did not create the best set of plans. With that as a backdrop, I think we can all benefit from learning what transpired.
The project was bid in early March of 2004. All of the bids were in line and the bonds were provided by a Class A Surety. For purposes of this illustration we will not utilize the names of three contractors involved, two of which are no longer in business as a direct result of what occurred. Contractor One had been in business for over 15 years and focused primarily on public construction. They were awarded the project and proceeded to begin renovations to the existing building and prepare the site work for the new addition. Approximately four months into the project, Contractor One commenced the erection of steel at a critical point where the new building joined the existing building. While installing the roof joist a welder apparently generated slag, which caused a fire to start in the interior wall of the existing building even though there was a fire watch in place. Despite the best efforts of the local fire department, the building was significantly damaged. It is important to note that this project had a very difficult construction schedule and the school committee of the local town was actively involved in decisions related to completion of the facility. Initially Contractor One notified his insurance carrier who immediately began an investigation of the claim. As it turned out, the builders risk which was purchased by the contractor specifically excluded renovations to existing buildings and only provided coverage for new construction. Counsel for Contractor One requested if the town had made arrangements to schedule the existing building on their policy. As it turns out, their carrier also discovered that the existing building was not covered. The town immediately notified Contractor One and its surety that they demanded the project continue due to the tight schedule. They also expected Contractor One to immediately proceed with repairs to the damaged building. After advice from counsel they decided to comply with the request under protest while attempting to negotiate reimbursement for their cost. After struggling for two and one half months to bring the project under control, Contractor One notified the surety and the awarding authority that they were unable to complete this project, along with several others, and they discontinued operations. Since the project was well along, the surety elected to negotiate with one of their preferred clients in order to complete the school as expeditiously as possible. Enter Contractor Two. This company had been in business for nearly 100 years and enjoyed an impeccable reputation. Although Contractor Two had vast experience in all types of construction, they were a relatively new entrant to the public school market. Since time was of the essence they signed a lump sum contract with the surety and ratified almost all of the subcontractors on the project. Contractor Two apparently did not realize that the completion contract, which they signed, did have a pay when paid clause. At this point, the project had been floundering for several weeks and the owner was not happy. Contractor Two put its best resources on the project in an attempt to make up the schedule. The most critical aspect of the project, at this point in time, was repairing what was left of the fire damage and completing the rehabilitation of the existing building. This is when they encountered major problem number two. The electrical sub on the project certified that they had completed 75 percent of the contract for the entire project. As Contractor Two began the demo and rehab on the existing building they discovered, among other things, that the electrical contract was only 25 percent complete. Contractor Two approached the surety and the town in an attempt to negotiate change orders for the additional work and were flatly denied. At the same time they were informed that the three requisitions that were pending in excess of $1 million would not be paid until they completed the repair work. The surety informed Contractor Two that they had signed a completion contract with a pay when paid clause; therefore, they would be forced to complete the school with their own resources and negotiate for payment at a later date. Shortly after receiving this decision, Contractor Two advised the surety that they would be unable to continue their operation without payment and were forced to cease operations. The town was infuriated by this development and everyone started to speak through lawyers. Needless to say, this project was generating a tremendous amount of publicity, including negative publicity for the surety industry. Enter Contract Number Three. The surety decided that it was in their best interest to negotiate with a completion contractor who they did not represent but was able to provide a bond for the roughly $2 million of work yet to be completed. A deal was worked out in four days. Contractor Three refused to sign the completion contract rendered by the surety. After eliminating all of the onerous conditions including the pay when paid clause they stepped in and completed the project within ten weeks. The post mortem on this little project involved substantial litigation and the demise of two very capable contractors. An intelligent decision was made by someone in the mix as the entire matter involving the dispute between the owner, the surety, and both contractors, who defaulted, was settled before it was fully adjudicated. This case illustrates what can happen if the insurance requirements, particularly when dealing with the renovation and addition to an existing building are not properly addressed. Not only do we have to be cognizant of who is responsible for providing builders risk, we must be clear on the exposure and make certain that the coverage complies. This is indeed a challenge because there are so many manuscript forms being utilized by carriers whose coverage can be substantially different depending on the carrier. To view a form Durkin & DeVries Insurance Agency uses to help identify exposure associated with builders risk, visit the NASBP Risk Management & Insurance Committees resource web page by clicking here. This is the fifth in a series of articles on Risk Management and Insurance coordinated by the NASBP Risk Management and Insurance Committee. The author of this article is Risk Management and Insurance Committee Member Thomas P. Durkin who is Managing Partner of Durkin & DeVries Insurance Agency of Burlington, Massachusetts. The views expressed in this article are those of the author and are not necessarily those of the NASBP or of its policies or positions. |
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| NASBP Supports Construction Financial Management Association Comments on FASB Issue |
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In December 2008, the International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) issued a discussion paper “Preliminary Views on Revenue Recognition in Contracts with Customers” (File Reference Number 1660-100), for the purpose of soliciting public comments on changes in revenue recognition requirements being proposed in furtherance of the development of a common standard to replace the various standards currently in use, including those that are industry-specific. To that end, FASB is proposing that a company should recognize revenue when it satisfies a performance obligation in the contract. FASB recognized that such a common standard might change how specific industries address revenue recognition and sought feedback on which contracts should be excluded from the scope of the proposed standard. The deadline for comments on the discussion paper was June 19, 2009.On behalf of construction industry interests, the Construction Financial Management Association (CFMA) examined the discussion paper and developed detailed comments and concerns. CFMA shared a draft of its comments and concerns with NASBP and requested NASBP support. Upon review, on June 19, NASBP sent a letter to the Technical Director of FASB supporting the comments and concerns of CFMA and requesting that construction industry contracts be excluded from the scope of the proposed standard on revenue recognition. Please click here to read the extensive written comments issued by CFMA. Click here to read the NASBP letter in support of the CFMA comments.
The CFMA comments that are linked in this article are provided with the permission of the Construction Financial Management Association, Princeton, NJ. |
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| NASBP Providing Multiple Ways to Learn About the New ConsensusDOCS Federal Subcontract 752 |
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The ConsensusDOCS Document 752, a newly revised standard subcontract agreement between a general contractor and a subcontractor for use on federal government construction projects, is a document that NASBP believes will be helpful to both contractors and subcontractors who are seeking work on federal government projects. The document includes provisions that address compliance with the new requirements of the Federal Acquisition Regulation (“FAR”).NASBP is providing four resources to help members and affiliates become familiar with this new ConsensusDOCS Federal Subcontract.
1) Written Editorial from the Chair of the ConsensusDOCS Task Force that Drafted the Document Thomas J. Kelleher, Jr., a senior partner at Smith, Currie & Hancock LLP in Atlanta, GA stated in a Constructor magazine editorial about the 752, “It will likely be recognized throughout the industry as the first and only standard document addressing federal subcontracting, even if contractors have not been able to switch to ConsensusDOCS in their private work.” To read more of Kelleher’s editorial from Constructor Magazine, click here. 2) Free 4-Minute Audio Broadcast of the 752 In this audio broadcast, Kelleher describes in four minutes and 13 seconds the highlights of the new document. To listen to the audio broadcast, click here. To access the script of the audio broadcast, click here. 3) NASBP-Supported ConsensusDOCS Web Seminar July 9, 2009 NASBP is encouraging members and affiliates to register for the web seminar titled, The web seminar will review how the new document addresses the most recent FAR updates on E-Verify, ethics compliance, Federal Prompt Pay Act, and flow-down of responsibility to the subcontractor tier. Speakers for this web seminar include Thomas J. Kelleher, Jr., Esq., Senior Partner of Smith Currie & Hancock LLP; Carole L. Bionda, Esq., Vice President and General Counsel of the Nova Group Inc.; and Daniel J. Donohue, Esq., Shareholder of Akerman Senterfitt LLP. NASBP members and affiliates receive a discounted registration fee of $99.00. Each time an NASBP member or affiliate registers for a ConsensusDOCS web seminar, NASBP receives a portion of the registration fee. To register using fax or mail, click here for a pdf of the registration form and a description of the ConsensusDOCS Federal Subcontract web seminar. The deadline to register is July 8, 2009. 4) ConsensusDOCS Press Release on the 752 To review the ConsensusDOCS press release on the 752, click here. To Purchase ConsensusDOCS Documents To purchase the 752 and other ConsensusDocs documents, visit http://www.consensusdocs.org For instructions how to receive the NASBP discount of up to 20 percent off your purchase, visit the NASBP ConsensusDOCS web page by clicking here. Other new documents released along with the 752 are listed below. ConsensusDOCS released the new Federal Subcontract with 10 other new documents on June 10. Also, in direct response to customer feedback, the new release also incorporates a software feature allowing users to choose whether to print the ConsensusDOCS logo box on their contracts. ConsensusDOCS 725 – Standard Agreement Between Subcontractor and Subsubcontractor Standard agreement between Subcontractor and Subsubcontractor. This five-page agreement covers essential contract agreement terms. ConsensusDOCS 235 – Standard Short Form Agreement Between Owner and Contractor (Where the Basis of Payment is the Cost of the Work) Short agreement between and Owner and General Contractor where the basis of payment is cost of the work plus a fixed fee. ConsensusDOCS 781 – Certificate of Substantial Completion for a Subcontract Used by the Contractor and Subcontractor to establish substantial completion of a subcontract. ConsensusDOCS 782 – Certificate of Final Completion for a Subcontract Used by the Contractor and Subcontractor to establish final completion of a subcontract. ConsensusDOCS 812 – Trade Contract Interim Directed Change (Where a Construction Manager Acting as an Agent Has Been Retained by the Owner) Used by the Owner and Trade Contractor as a unilateral order issued by the Trade Contractor in absence of agreement on price and time for changes in the Trade Contractor’s work, where a Construction Manager acts as an Agent for the Owner. ConsensusDOCS 813 – Trade Contract Change Order (Where a Construction Manager Acting as an Agent Has Been Retained by the Owner) Used by the Owner and Trade Contractor to formalize changes in the work and make adjustments to trade contract time and price, where a Construction Manager acts as an Agent for the Owner. ConsensusDOCS 814 – Certificate of Substantial Completion of the Trade Contract Work (Where a Construction Manager Acting as an Agent Has Been Retained by the Owner) Used by the Owner and Trade Contractor to establish substantial completion of the trade contract work, where a Construction Manager acts as an Agent for the Owner. ConsensusDOCS 815 – Certificate of Final Completion of the Trade Contract Work (Where a Construction Manager Acting as an Agent Has Been Retained by the Owner) Used by the Owner and Trade Contractor to establish final completion of the trade contract work, where a Construction Manager acts as an Agent for the Owner. ConsensusDOCS 481 – Certificate of Substantial Completion for Design-Build Work Used by the Owner and Designer-Builder to establish substantial completion of design-build work. ConsensusDOCS 482 – Certificate of Final Completion for Design-Build Work Used by the Owner and Designer-Builder to establish final completion of design-build work. NASBP is an endorsing organization of the ConsensusDOCS coalition, an unprecedented effort by more than 20 other industry organizations to identify industry best practices and to incorporate such practices in a new generation of consensus industry standard form documents. |
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| NASBP Calls Ohio Members to Take Action on Ohio Bill HB 1 |
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On Tuesday, June 9, NASBP sent an action alert to members in Ohio requesting that they send a “Take Action Now Letter” to members of the Ohio House and two select Senators, Senator Shirley Smith (D) from Cleveland and Senator Bill Seitz (R) from Cincinnati by voicing their opposition to a Senate Amendment to HB 1, the state’s budget bill, that allows the Director of Development to waive the protections of bonding for minority construction contractors for the first five public projects that a minority contractor is awarded.
HB 1 provides that, upon the successful completion of a $25,000 construction project without bonding, the contractor can obtain a $50,000 contract without providing the bonds required by law. The third contract, at $100,000, doubles the amount from the second project without bonding. The fourth contract triples the amount of work that can be done without bonding to $300,000 and the fifth public project doubles that amount to permit a $600,000 project to go forward without the protections for workers and state taxpayers that bonding provides. On Tuesday, June 16, a member of NASBP along with representatives from The Surety & Fidelity Association of America, the American Insurance Association, and other interested parties met with Senators Smith and Seitz, the sponsors of the Senate Amendment, to voice their concerns and to offer alternative language. Unfortunately, it appears that the two senators are reticent to change their position. If the House does not concur with the Senate Amendment(s), which may be unlikely in the absence of significant opposition, HB 1 will be sent to conference committee. It is unclear which version (the Senate or House version) of the Bill will be focused on by the conferees. More importantly, Ohio legislators need to understand that, especially in light of the current budget crisis, waiving surety bonds absolutely makes no sense. Bonds ensure that qualified contractors bid on public projects, that taxpayer funds will be preserved in the event of contractor default, and that subcontractors and suppliers will have a payment remedy in the event of contractor bankruptcy or nonpayment. If you are a NASBP member from Ohio, and you have not voiced your concerns about the Senate Amendment to HB 1, please take immediate action and send a letter to members of the Ohio Senate and House. Please click here to access the Take Action Now Letter. |
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| SBA Issues Policy Notice Addressing Restricted Uses of Funds Approved by Economic Stimulus Package |
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The U.S. Small Business Administration (SBA) recently issued an internal policy notice providing guidance on the restrictions found in Section 1604 of the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) (hereafter “Recovery Act”) on the use of recovery funds. These restrictions apply to 7(a) and 504 loans with reduced or eliminated fees, 7(a) loans with the Recovery Act’s increased guaranty percentage, and surety bond guarantees on contracts exceeding $2 million.The May 22, 2009 Notice (Control No. 5000-1105) explains that, according to Section 1604 of the Recovery Act, none of the funds appropriated or otherwise made available in the Recovery Act may be used by any State or local government, or any private entity, for any casino or other gambling establishment, aquarium, zoo, golf course, or swimming pool. However, these kinds of businesses and activities still may be eligible for SBA financial or guarantee assistance under the Small Business Act and Small Business Investment Act.
The policy notice explains that a surety bond guarantee may not be issued on a contract or subcontract greater than $2 million if the statement of work involves the construction, operation or renovation of a casino or other gambling establishment, aquarium, zoo, golf course or swimming pool. However, surety bond guarantees may be issued on contracts involving Recovery Act restrictions if the contract amount is no greater than $2 million. The Policy Notice relates that the Surety Bond Guarantee Application Form 990 will be amended to include an additional statement that clarifies prohibited uses for bonds for contracts greater than $2 million that are guaranteed under the Recovery Act. Surety companies also will be required to certify compliance with all Recovery Act provisions: Prior Approval Sureties will certify on Form 990, while Preferred Sureties will certify on the monthly Fee Bordereau Submission. SBA groups businesses into industries based on the activities in which they are primarily engaged using the standards defined by the North American Industry Classification System (NAICS). The associated NAICS codes for restricted businesses and activities are as follows: Casinos: 713210 (“Casinos (Except Casino Hotels)) The SBA indicates that it will review applications that fall under the Fitness and Recreational Sports Centers category (713940) to determine if the application is for a swimming pool, which would not be eligible for assistance under the Recovery Act, or if the application is for another type of fitness and recreational center that may be eligible for assistance under the Act. The policy notice expires on May 1, 2010. For more information about the policy notice or about the implications of Recovery Act restrictions on the SBA bond guarantee program, contact the SBA Office Surety Bond Guarantees by clicking here. |
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| NASBP “IT Show and Tell” List Features 25 Technology Resources to Help Conduct Business More Efficiently |
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NASBP’s Automation and Technology Committee members recently compiled a list of the latest information technology tools, applications, and services to help surety professionals save time and money.Randy Moon, Area Vice President of Arthur J. Gallagher Risk Management Services, Inc. and Chair of the Committee said, “The list titled, ‘IT Show and Tell,’ provides explanations and web site links to tools and services that can help surety professionals make their agencies and personal lives more efficient.
Members and affiliates can access the NASBP “IT Show and Tell” document by clicking here The document breaks down the list into four categories: 1) Web Services, 2) Tools, 3) Portable Devices, and 4) Hardware and Software. A sampling of the benefits in using some of these is as follows:
To learn more about NASBP’s Automation and Technology Committee, click here. For more information on “IT Show and Tell” list or if you have an Information Technology resource you would like to share with the committee, please contact Dave Golden at dgolden@nasbp.org. Reference to products and services contained in the IT Show and Tell document is solely provided for description and informational purposes only and does not constitute or imply endorsement or recommendation by NASBP. NASBP makes no representations, warranties or guarantees as to, and assumes no responsibility for, the use of these products or services. NASBP expressly disclaims all liability for damages of any kind arising out of the use or performance of, reference to, or reliance on these products or services. Should you have any questions regarding the use of these products or services, please contact the businesses directly. |
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| Professional Development Opportunities |
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Member and Affiliate Participation in NASBP Virtual Seminars GrowsParticipation in NASBP Virtual Seminars has increased as members and affiliates take advantage of this cost-effective and convenient method of bringing live, telephone briefings on current industry topics to their staff without them having to leave the office.
Below are the upcoming NASBP Virtual Seminars provided by industry experts.
Click here to register for these and for more information about these and other NASBP Virtual Seminars scheduled for this year. NASBP William J. Angell Surety School Meets in Indianapolis at the end of July, 2009 Both levels of the William J. Angell Surety School will be held at the University Place Conference Center and Hotel in Indianapolis, Indiana on July 26, 2009. Level I runs through July 29 and Level II through July 31. To view a new brochure outlining the curriculum and listing the core faculty, click here. To register for the July School, click here. Registration for Two NASBP Regional Meetings Now Open Regions 4, 5, 6, 7 Timely and substantive agendas are planned for Regional Meetings this year. The The Regions 4, 5, 6, 7 annual meeting schedule includes a roundtable panel presentation on the Small Business Administration Bonding Program, titled “Creating Opportunities for Emerging and Disadvantaged Contractors.” The panel will focus on the enhancements being made to the SBA Bonding Program and how more agencies and sureties can better serve their clients by participating in the Program. Another presentation is scheduled and titled “The Future is Now–Green/LEED Construction.” A pioneering and award winning construction firm in the area of sustainable and green construction, Hunzinger Construction of Milwaukee, WI, will present this informative session on the direction of LEED building. Hunzinger will address what Green/LEED means for surety professionals’ customers and what the implications are for the surety industry. Also scheduled is a program titled, “Economic Update – Forecast for the Construction Industry” that will provide an economist’s perspective on current economic conditions and the implications for the construction industry over the next 18 months. This presentation will address how the economic stimulus programs affect the short and long-term recovery of the construction industry and what regions of the country will see recovery sooner and why. To access additional information about the Regions 4,5,6,7 Annual Meeting including schedule, hotel, and registration, click here. Regions 1, 2, 3 The Regions 1, 2, 3 Annual Meeting is under the direction of Regional Vice Presidents Philip Forker, James Schabarum, and Don Appleby and will be held August 27–29, 2009 at Coeur D’Alene Resort in Coeur D’Alene, Idaho. The Regions 1, 2, 3 annual meeting schedule includes a program titled, “Federal Contracting Opportunities-What Surety Professionals Need to Know!” For this presentation, panelists will weigh in on this growing market sector and present government, underwriting, construction and legal perspectives. Attendees will learn the contracting mechanisms, acronyms, affiliations, teaming options, and underwriting approaches to this multi-billion dollar industry. Another presentation will provide an economic update, titled “2008-2009 A Game Changing Cycle.” John W. Mitchell, President of M & H Economic Consultants. Mitchell, a noted economist for the western region of the United States and former US Bancorp Chief Economist, will share his insights into the industry’s current business climate and what is ahead on the road to recovery. The Keynote Session will be John A. Jenson making a presentation, titled “Your Professional Best,” which has been designed to inspire participants to become more intentional in the way they interact with clients and to ensure positive business outcomes. Jenson will describe ways to put people in a position to receive you, your ideas, and your initiatives. He will also reveal ways to encourage others to lean in your direction and eliminate any resistance they may have, as well as, ways to present yourself and represent your organization at a level that becomes compelling, credible, and memorable. Jenson, for the past 14 years, has been studying professionals to find what it is that allows them to perform at their very best. To access additional information about the Regions 1, 2, 3 Annual Meeting including schedule, hotel, and registration, click here. |
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| NASBP Continues Cosponsorship of the Insurance Education and Training Provider that Manages AFSB Designation |
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For over twenty years, the National Association of Surety Bond Producers (NASBP) and The Surety & Fidelity Association of America (SFAA) have had a relationship with the American Institute for CPCU (AICPCU) and the Insurance Institute of America (IIA), jointly referred to as the Institutes. Today, the NASBP and SFAA continue that support by cosponsoring the Distinguished Graduate Award of the Associate in Fidelity and Surety Bonding (AFSB) Program. Lowell S. Young, Director of Content Development for the American Institute for CPCU (AICPCU) and the Insurance Institute of America (IIA), stated, “We appreciate how the fine working relationship we have with the NASBP and SFAA helps increase the expertise of fidelity and surety professionals in the industry.”
“In his first Pipeline column as NASBP President, William F. Maroney, challenged all NASBP members to ‘Mentor those we interact with daily,’” Young said. “I can think of no better way to mentor someone, especially those relatively new to the surety business, than to encourage them to pursue the AFSB designation.” Lowell S. Young During the mid- to late 1980s, delegations from the NASBP and SFAA visited the Institutes to encourage them to develop a professional designation in fidelity and surety bonding. As a result, the Institutes approved the development of such a designation. NASBP and SFAA members collaborated with the Institutes as authors and reviewers to ensure the relevance of the AFSB program to the educational needs of the industry. Exams were initially given in May 1992, and the first program completers received their AFSB designations in 1993. Since 1993, over 1,300 students have received the AFSB designation. To find out who is the winner of the 2009 Distinguished Graduate Award of the Associate in Fidelity and Surety Bonding (AFSB) Program, click here. To Obtain the AFSB Designation The AFSB curriculum is broad-based and practical, addressing both contract and noncontract surety, as well as crime insurance. To earn the AFSB designation, a student must pass five examinations:
The Institutes suggests that students take AFSB 151 first and that they take CPCU 540 before AFSB 152. Also, students may take only AFSB 151 and 152 or AFSB 151 and 153 if specializing would better meet their career needs. However, this option does not earn the AFSB designation. The AFSB 151/152/153 exam has 85 computer-administered, objective (multiple-choice) questions. Two hours are allotted to complete this exam. The CPCU 530/540 exam is a computer-administered essay. Three hours are allotted to complete this exam. Those uncertain as to whether this program is right for them, can access online advising |
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| NASBP Congratulates Winner of Academic Achievement Award of Renowned Insurance Education and Training Provider |
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NASBP recently congratulated Mr. Kristopher Tinker, AFSB, Training Manager of Travelers Companies, Inc., in Fort Wayne, Indiana, for his achievement in receiving the Associate in Fidelity and Surety Bonding (AFSB) Distinguished Graduate Award of which NASBP is a cosponsor. The Award is given by the American Institute for Chartered Property Casualty Underwriter (AICPCU) and the Insurance Institute of America (IIA) jointly known as the Institutes, that provides insurance education and training for property-casualty insurance and risk management including the AFSB curriculum.
Of the more than 11,000 people who earned an AICPCU/IIA designation last year, Tinker is one of 40 being recognized for exceptional academic achievement. Tinker obtained the highest cumulative grade average on the AFSB degree’s exams. He will receive a plaque and a monetary award from the cosponsors of the award, NASBP and The Surety & Fidelity Association of America. NASBP is proud to recognize Tinker’s outstanding achievement and to support the Institutes’ important educational programs. NASBP support of the Program has continued over more than two decades. Click here for more information about NASBP’s involvement with the Institutes. The AICPCU/IIA established the National Honors Program over forty years ago to recognize the outstanding academic achievement of students in the designation programs and General Insurance (INS) certificate program. New Programs Offered by the Institutes The Institutes are offering the following two new Programs. First, the Institutes have developed a program, titled “Insurance Financial Dynamics.” This new online learning solution, powered by an interactive learning tool to stimulate learning titled Comet, is a 3-course program designed for insurance professionals (including managers and other operational decision-makers in areas other than finance). Each interactive application-based online course walks the student through a series of business issues that most professionals commonly face. This interactive learning tool presents a problem and teaches the student how to analyze the situation, and then shows the impact of the student’s decisions. Another new program that will be offered soon is titled, “Enterprise-Wide Risk Management: Developing and Implementing.” The Institutes and Risk and Insurance Management Society (RIMS) jointly developed this new course that addresses Enterprise-Wide Risk Management versus the traditional model. This advanced course offers self-study with intensive seminar and in-class options hosted by RIMS. Students can earn an industry credential. For more information about these and other educational programs offered by the Institutes click here or contact Customer Service at customerservice@cpcuiia.org. |
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| Welcome New NASBP Members and Affiliate |
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NASBP welcomes the following new members and the affiliate who have joined the Association since the last issue of Pipeline.New Members
Alliant Insurance Services, Inc Ballew Insurance Agency, Inc. Blaise Group Brown & Brown of Washington Buschmann, Buschmann & Laux Surety Insurance Services, LLC Dwight Andrus Insurance Company Stevens Insurance Associates The Horton Group Thomas Rutherfoord, Inc. New Affiliate Moylan’s Insurance Und., Inc. |
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| Treasury Announces Changes to the T-List |
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The Department of the Treasury’s Listing of Approved Sureties (Department Circular 570) as of July 1, 2008 has been updated to reflect:
For a complete listing of all states where these companies are licensed to transact surety business, please refer to the Circular 570 and its supplements at: http://fms.treas.gov/c570/c570.html and |
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| SIO Inducts Minard into Tiger Trust; Presents Awards to 11 LSAs |
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 Steven E. Minard, Minard-Ames Insurance Services LLC, was inducted into the Surety Information Office’s Tiger Trust, and 11 local surety associations (LSAs) were presented with the 2008 Silver and Gold Awards for Excellence in Surety Bond Promotion at NASBP’s annual meeting in April.
The Tiger Trust recognizes members of NASBP and The Surety & Fidelity Association of America (SFAA) who persuade a private construction project owner or lender to require surety bonds on a project. Minard persuaded the Independent Insurance Agents and Brokers of Arizona Inc. not to forgo a surety bond on the construction of its $220,000 commercial parking lot. Silver The Silver award is given to LSAs that conduct at least five activities in a calendar year to promote the value and benefits of contract surety bonds. This award recognizes LSAs for their efforts and calls attention to the opportunity to expand promotional initiatives. Two LSAs won the Silver award: Gold The Gold award is given to LSAs that conduct at least 10 activities. This award recognizes LSAs for their outstanding efforts and highlights their leadership in their communities. Eight LSAs won the Gold award:
Platinum SIO offers a Platinum award for individual NASBP and SFAA members whose efforts to promote contract surety bonds have had a significant impact on the construction industry. No Platinum awards were given for 2008. The awards and Tiger Trust are judged by the SIO Policy Board, which is composed of NASBP and SFAA executive committee members. NASBP representatives are J. Spencer Miller, Carl E. Dohn Jr., Stephen A. Spencer, and Richard Foss. SFAA representatives are Tim Mikolajewski, Roland Richter, David “Dusty” Rhodes, and Lynn Schubert. SIO also presented the Tiger Trust and award winners at SFAA’s annual meeting in May. |
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