November 2003
NASBP is pleased to offer its members a special rate on new subscriptions and renewals to MarshBerry.com and The Middleton Letter.
MarshBerry.com, an on-line agency management resource, can help NASBP members improve sales, boost employee performance and measure their value. Specifically, the on-line discussion groups provide an opportunity to solicit feedback from a large peer group who has experience solving the problems that a member may be currently facing. In addition, the web site provides a variety of financial, operational, sales, marketing and strategic information for agency operations.
MarshBerry.com annual subscription rate = $400; NASBP Member rate = $350
- Subscribe to MarshBerry.com – Use Promotional Code NASBPOFFERTake a Tour of MarshBerry.com
Frequently Asked Questions
NASBP members can also benefit from a subscription to The Middleton Letter, a monthly newsletter written by MarshBerry consultants, which provides discussions of timely issues related to the independent agency system. Three surveys are published in The Middleton Letter, providing another means for subscribers to benchmark their business activities.
The Middleton Letter annual subscription rate = $115; NASBP Member rate = $80
- Subscribe to The Middleton Letter– Use Promotional Code NASBPOFFERSample Middleton Letter
FASB Changes Course on Certain Parts of FAS 150 Decision
What’s The Change?
At a meeting on November 5, the Financial Accounting Standards Board (FASB) decided to “indefinitely defer” the application of key provisions of its previously announced FAS 150 accounting rule. FAS 150, as written, would require a non-public company to list “mandatorily redeemable” shares as a liability against the actual net worth of the company.
The final staff guidance, which is to be announced on FASB’s web site, defers indefinitely “the classification, measurement, and disclosure provisions of Statement 150” unless the shares are “redeemable on fixed dates for amounts that are fixed or determined by…another external index.”
There’s one hitch, however, about the “indefinite delay.” It only puts off implementation of these aspects of the new measure until the FASB can reconsider, rewrite, and reissue other rules.
What Influenced the Change?
Non-public, non-SEC registered companies and the trade associations representing them played a large role in FASB’s decision to call for an “indefinite delay.” NASBP was an active participant in a Washington, DC-based, AGC-led coalition of national associations that sent a letter to Members of Congress calling their attention to the consequences of FAS 150 on private businesses.
Private companies, especially food cooperatives, architectural, engineering, and construction companies wrote letters to FASB urging it to delay holding non-public companies to the same standards as private companies in regard to the treatment of “mandatorily redeemable” financial instruments. NASBP was one of many trade associations that wrote FASB urging the delay.
This announcement came one week after AGC’s Tax and Fiscal Affairs Committee went to Norwalk, CT, where FASB is based, to discuss the issue and the effects of the decision with FASB staff.
Senate Subcommittee Looks at FASB, As Well
The Senate Subcommittee on Securities and Investments, chaired by Sen. Michael Enzi (R-WY) convened a public hearing to discuss “The Financial Accounting Standards Board and Small Business Growth,” which took place on Wednesday, November 12.
Less than a week after FASB’s decision on FAS 150, the Subcommittee expanded the hearing agenda to include the issue of FAS 150 (in addition to FIN 46–regarding the consolidation of variable interest entities and FAS 123–regarding stock options). Although Sen. Enzi praised FASB for committing to an “indefinite delay” regarding the “mandatorily-redeemable shares” issue, he criticized the accounting standards board for not recognizing in advance the problems FAS 150 would have for contractors, in particular, in terms of interfering with their ability to obtain government contracts in which their net worth is a significant factor in the awarding of projects. He also urged FASB to make its “indefinite delay” more permanent and to increase their awareness of the effects of their decisions on the small business community and privately-held companies.
NASBP attended the hearing in which Richard E. Forrestel, Jr. CFO of the Cold Spring Construction Company in New York State provided compelling testimony on behalf of private construction companies and the AGC on the deleterious effects of FAS 150 as originally announced.
For More Information
Click on the following links to obtain more information about this issue:
Coalition letter to Members of Congress
AGC’s Press Release on FASB’s “indefinite delay” decision
The Senate Subcommittee Hearing
NASBP wants to commend the AGC on taking the lead on this issue and for urging the involvement of other trade associations in joining together to affect more satisfactory action by FASB.
President’s Message
Recharging the Batteries
Last month, I wrote about the value I place on the networking and fellowship opportunities available to each of us as NASBP members. But quite frankly, after the Regional Meetings and all the other activities that are involved with being a volunteer leader (not to mention regular work and family), I was starting to feel a little run down. You know it’s getting to you when you stop thinking, “What can I do to help the association and industry” and start looking at the calendar, wondering, “How much longer do I have to do this?”
It was time to recharge my batteries! I needed to get away and stop thinking about sponsors, speakers, and details for next year’s Annual Meeting (It’s in Marco Island on April 25-28, by the way). I needed to stop ruminating about the impending “1-1 renewals.” I kept telling myself, “If only I could get the Mid-Year Board of Directors Meeting behind me, all would be right with the world.”
As is often the case in this crazy thing we call life, we find little treasures where we least expect them. I was fully anticipating being able to “recharge’” after the Mid-Year Meeting. But, as it turned out, my batteries got their much-need “recharging” at the Mid-Year Meeting.
Our joint officers’ meeting with SAA prior to the kickoff of our committee and Board meetings was productive, informative, and cooperative. I’m not even sure that the great French Quarter food topped it!
But what really got me going was how well the Association committees, regional vice-presidents (RVPs), and directors functioned during the entire meeting schedule. Each committee clicked! In fact, the committee meetings, directors meeting, and RVP meeting all went so well, with so much participation and enthusiasm, the Board of Directors Meeting nearly felt anti-climatic.
A common theme surfaced, however. MEMBERSHIP. From finance to education, automation to government relations, RVPs to Directors, membership emerged as the key focus. From retention to recruitment, the Association leadership is thinking about membership. You’ll be seeing and hearing more about this soon.
At the dinner on Friday night, which happened to be Halloween, I was given a mask to wear. Not just any mask, but a full face and head cover, like a wrestling mask. Some said I looked like a “power ranger” (okay, a short, squatty one, but a power ranger, nonetheless). The mask is red, with silver trim, and has a gold ‘M’ in the middle of the forehead. By the end of the night, my new name was “‘Marco Man” to represent the site of our 2004 Annual Meeting (It’s taking place on April 25-28 at Marco Island, FL– in case you haven’t marked your calendar yet). Hopefully, you will never see a picture of “Marco Man” in costume!
It is during events such as this past Mid-Year Board of Directors Meeting that, once again, I see the true value of membership in NASBP. It was also a perfect opportunity to ”recharge’” my batteries by plugging into a bunch of great people. With the added power of “Marco Man’” behind me, I look forward to the second half of my term with renewed enthusiasm and energy. And, to see “Marco Man” in action, please plan to come to next year’s Annual Meeting. You know–it’s taking place on Marco Island, April 25-28!
Matthew K. “Matt” Cashion, Jr. is Secretary/Treasurer of The Cashion Company, Inc. in Little Rock, AR. He can be reached at Mattc@cashionco.com.
ERAB:
The Latest Industry Acronym Takes on Meaning for NASBP
The May issue of Pipeline introduced the latest industry acronym. ERAB, which stands for electronic reverse auction bidding, originally was designed to accommodate the procurement of construction goods. Now, however, it is being considered and, in some instances, used in the bidding for construction services.
Because of increased interest in this method of procurement, a subcommittee of NASBP’s Construction Industry Committee recently compiled information about ERAB and completed an analysis of various issues and concerns regarding its use, including those relating to surety. This information, which recently was presented at the 2003 Mid-Year Meeting of NASBP’s Board of Directors, is now available to NASBP members and affiliates, and others who may be interested in this subject or considering its use.
NASBP’s educational packet on ERAB is available on the Association’s website or by clicking on its individual documents: NASBP’s White Paper on The Use of Electronic Reverse Auction Bidding For Procuring Construction Services, an Executive Summary of the White Paper, Considerations About the Use of ERAB, and a list of References.
Questions or requests for additional information should be directed to Connie Lynch, Director, Government Relations, at clynch@nasbp.org.
Marco Island Marriott & Golf Club
Marco Island, FL
April 25 – 28, 2004
(941) 394-2511
Regions 1, 2 & 3 Annual Meeting
Hyatt Regency Lake Las Vegas
Henderson, NV
September 30 – October 2, 2004
(702) 567-1234
Regions 4, 5, 6 & 7 Annual Meeting
Royal Sonesta Hotel New Orleans
New Orleans, LA
In the French Quarter
October 14 – 17, 2004
(504) 586-0300
Regions 8, 9, 10 & 11 Annual Meeting
Hyatt Regency Newport
Newport, RI
July 22 – 25, 2004
(401) 851-1234
William J. Angell Surety School Level I
Renaissance Houston Hotel
Houston, TX
February 8 – 11, 2004
(713) 629-1200
Register Online
Download Brochure
William J. Angell Surety School Level I – Summer
Dallas Fairmont Hotel
Dallas, TX
August 11 – 14, 2004
(214) 720-2020
William J. Angell Surety School Level II
Renaissance Houston Hotel
Houston, TX
February 8 – 13, 2004
(713) 629-1200
Register Online
Download Brochure
William J. Angell Surety School Level III
Dallas Fairmont Hotel
Dallas, TX
November 10 – 13, 2004
(214) 720-2020
Sheraton Wild Horse Pass Resort
Phoenix, AZ
November 10 – 13, 2004
(214) 720-2020
NASBP Welcomes New Members
NASBP welcomes the following new members who have joined the Association since the last issue of Pipeline.
The Buckner Group 4424 South 700 East Suite 210 Salt Lake City, UT 84107 Key Contact: Terry H. Buckner |
Senn Dunn Marsh & Roland, LLC P.O. Box 9375 Greensboro, NC 27429-0375 Key Contact: Tim Templeton |
| Palmer and Cay 413 Northshore Drive, SW Knoxville, TN 37919 Key Contact: Thomas H.McCarley, III |
For more details on these new additions to NASBP, go to NASBP’s online membership directory, http://www.nasbp.org/bond.cfm.
NASBP Prepares for 2004 Government Relations Issues
The New Year is six weeks away, but NASBP already is preparing for the Government Relations (GR) issues that will face the Association and the industry in the coming year. At its mid-year meeting, NASBP’s Board of Directors approved the Government Relations Agenda for 2004. This document describes the Association’s Government Relations’ priorities relative to promoting the role and services of professional surety bond producers to policymakers at the federal, state, and local levels of government. It also provides a snap shot of the issues NASBP expects will be of importance to members and affiliated personnel.
The GR Agenda is predicated on the active involvement of members and affiliates who form NASBP’s grassroots network. To volunteer as a Government Affairs Representative, contact Colin Chiles at cchiles@nasbp.org. Members and affiliates who personally support or know Members of Congress are urged to contact Connie Lynch, at clynch@nasbp.org, with this information.
From NASBP’s General Counsel
Obligee’s Knowledge of Principal’s Disqualification
Makes Bond Unenforceable
A Florida court has recently considered a bond claim scenario that occurs infrequently but illustrates the need for thorough investigation of subcontractors prior to employing them on projects. The situation is: when a bonded subcontractor is defaulted for some illegality or other disqualifying fact, and it is proven that the obligee knew of the problem, can the surety lawfully refuse to honor the bond claim?
In the case of Kvaerner Construction, Inc. v. American Safety Casualty Insurance Company, 847 So. 2d 534 (Fl.App. 2003), a general contractor hired a subcontractor whom it knew was not licensed, because no one at any governmental office could figure out which license the subcontractor should have. There might have been no problem, except the public owner learned of it and halted all work. Based on a Florida statute that said that contracts with unlicensed firms are unenforceable, Kvaerner terminated the subcontractor for default. Kvaerner then made a claim against the subcontractor’s performance bond surety, which refused to pay.
A Florida court ruled in favor of the surety, and that decision was upheld on appeal. “Under the common law of suretyship, fraud or misrepresentations by the principal in inducing the surety to enter into the contract will not affect the liability of the surety unless there is knowledge or participation by the creditor. . . Here Kvaerner as the creditor, hired Steel Tec, subcontractor, knowing it had no license and allowed Steel Tec to work on the project without a license.” “As a matter of public policy,” Kvaerner should not be allowed to enforce the contract against the surety either. 847 So. at 539.
Shortly after this decision, the Florida statute was amended to say that even if a bonded contract is not enforceable, the bond nevertheless should still be enforceable (“it shall not be a defense to any claim on a bond . . . that the principal . . . is unlicensed” [489.532(3) (6/25/03)]. This amendment probably would not have changed the outcome of this case: if a claim results from facts involving fraud or misrepresentation, which the obligee knew about prior to accepting the bond, a court in most jurisdictions would not require the surety to honor the bond claim.
The lesson of this case is that obligees need to be aware that they shouldn’t count on payment from a surety if the reason for the principal’s default is a problem the obligee knew about prior to using the contractor. If the obligee was truly innocent, the loss by the surety and the indemnitors can be substantial for what could be merely a technical oversight that didn’t seem like a very big deal at the time.
NASBP’s General Counsel is Susan McGreevy of Husch & Eppenberger LC, Kansas City, MO.
Reauthorization of TEA-21: What’s Happening?
Short-term Extension
- Congress did not reauthorize TEA-21 by the September 30 deadline but, instead, passed legislation, signed by President Bush, which extends TEA-21 until 2/29/2003.
- This extension allows federal highway and transit programs to remain operational and provides Congress time to complete the reauthorization bill.
Senate
- On November 12, the Senate Environment and Public Works (EPW) Committee introduced and marked up its portion of the reauthorization bill.
- Although the bill provides for a $255 billion, six-year highway program, it does not include details on how to fund the federal surface transportation program; it is expected that these measures will be added early next year.
House
- On November 19, the House Transportation and Infrastructure (T&I) Committee introduced a six-year $375 billion highway and transit funding bill. This is equal to the amount the Department of Transportation says is necessary to begin improving the highway and transit network.
- Speaking in support of the newly introduced House bill, Stephen E. Sandherr, CEO of the Associated General Contractors of America (AGC) said, “As we face an economy that is without any significant job growth, it is important to provide the support necessary to keep the recovery on track. Jobs are still the missing link, and if Congress and the Administration are looking to create jobs, they need to look no further than this six-year transportation bill.”
Hollings’ Bill and Senate Look at
Federal Vs. State Regulation of Insurance
Senator Fritz Hollings (D-SC) has introduced S. 1373, The Insurance Consumers Protection Act of 2003, which would add a federal licensing systems for insurance. Interestingly, the bill specifies that it would not preempt any State law that regulates insurance producer licensure.
The bill was referred to the Senate Commerce Committee. If enacted, the bill would establish a five person Federal Insurance Corporation, an independent commission within the Commerce Department that would regulate all interstate lines of insurance except workers compensation and state residual workers compensation pools. Single-state insurers that only write in their state of domicile would also be exempted.
The bill would preempt the insurance industry’s limited antitrust exemption under the McCarran-Ferguson Act and give the new commission the power to “investigate the organization, business, conduct, practices and management of any person, partnership, or corporation in the insurance industry”, including insurance producers.
Trade Associations Respond to Hollings’ Bill and Federal-State Issues
Because of the magnitude of the issue, the Senate is examining state-based insurance regulation under the leadership of Sen. John McCain (R-AZ).
At an October 22nd hearing of the Senate Commerce Committee, the “Big I,” the Independent Insurance Agents and Brokers of America (IIABA), weighed in on its opposition to an optional federal regulatory system and more specifically, S. 1373. IIABA spokesman, Thomas B. Ahart, CPCU, AAI, past president and current chairman of its State Government Affairs Committee, reported, “We agree with our company partners that true reform of the regulatory system is needed. However, optional federal regulation creates some significant issues and problems. A new federal bureaucracy would add to the overall regulatory infrastructure—especially for agents and brokers selling on behalf of both state and federally regulated insurers and undermine sound aspects of the current regulatory structure.”
Instead, the IIABA supports “federal legislative action that would overcome the structural impediments to reform at the state level to improve, rather than replace, the current state-based system and in the process promote a more efficient and effective regulatory framework.” According to Ahart, IIABA has a developed a “middle-ground plan including its pragmatic solutions for product speed-to-market reforms; rate and form filing and review; producer licensing reciprocity; insurance company licensing reciprocity and market conduct examinations.”
Craig Berrington, Senior Vice President and General Council of the American Insurance Association (AIA) also testified but did not specifically address the Hollings’ bill. Instead, Berrington spoke generally on the topic of insurance regulatory reform and specifically on AIA’s position in favor of an optional federal charter. Berrington concluded, “AIA advocates a market-based approach to insurance regulation that does not rely on government review of prices or products, but permits competitive forces to respond to consumer demand. The state of the current regulatory environment makes comprehensive insurance regulatory reform imperative.”
Also providing testimony were Ernst Csiszar, South Carolina Department of Insurance and Vice Chairman, Executive Committee, National Association of Insurance Commissioners (NAIC) and J. Robert Hunter, Director of Insurance, Consumer Federation of America (CFA). Hunter was the only witness to provide testimony in support of the Hollings bill. According to Hunter, “S. 1373 is a good bill and should be the baseline for any debate on the subject before this committee.”
Although not a witness at the hearing, the National Association of Mutual Insurance Companies (NAMIC) also is critical of the Hollings’ bill. NAMIC points out that although the bill would leave the state system in place for single-state writers, it would create a new federal insurance bureaucracy to regulate insurance rates, market conduct and accounting practices for multi-state insurers. Also among the many concerns of NAMIC is that it would create a massive new federal database to include information on both federal and state regulated insurers.
February 8-13, 2004 Surety School
Marketing Brochure Mailing Coming Soon!
Website Posting Available Now!
Watch for the 2004 Wm. J. Angell Surety School marketing brochure in the mail to membership by the end of November. Online registration and the marketing brochure are available now on the NASBP website!
Mark your calendars now to hold FEBRUARY 8-13, 2004 for the Level I and Level II professional development Surety School to be held at the Renaissance Houston Hotel in Texas.
Space is limited, so plan to register EARLY!
SuretyPAC Coffers Grow Because of Members’ Contributions
SuretyPAC would like to express its appreciation to the additional members who graciously contributed to its coffers since the last edition of Pipeline. The contributions continue to strengthen SuretyPAC’s ability to support “surety-friendly” candidates for congressional seats. The $14,400+ collected to date will go to support worthy candidates in the upcoming 2004 Congressional elections and has already established a new record for the greatest amount contributed by NASBP members during the off year of an election cycle.
This year’s member contributions are helping SuretyPAC to grow stronger than it has ever been before. The 2004 Congressional elections will be critical and the contributions thus far are encouraging news for the future impact of SuretyPAC on Congress. If you have not contributed yet, please consider doing so. Contributions must be in the form of personal checks made out to SuretyPAC. Questions regarding SuretyPAC should be directed to Colin Chiles, Government Relations Coordinator, at cchiles@nasbp.org or (202) 464-1175.
Bill Maroney, SuretyPAC Chair, would like to recognize the following members for their contributions since the last publication of Pipeline, and, more importantly, the dedication to the surety industry these contributions represent:
New SuretyPAC Contributors 2003-2004 Election Cycle
$1000+ Agencies
Howard Cowan Bond Agency, Inc.
Lubbock, TX
Gold Club $500+
Howard Cowan
Howard Cowan Bond Agency, Inc.
Lubbock, TX
Craig Hansen
Holmes, Murphy & Associates, Inc.
Des Moines, IA
Marla Hill
Howard Cowan Bond Agency, Inc.
Lubbock, TX
- Spencer Miller
Schwartz Brothers Insurance Agency, Inc.
Chicago, IL
Julian D. Pace
M.J. Schuetz Agency
Indianapolis, IN
Silver Club $250-$499
Jeffrey Reich
Florida Surety Bonds, Inc.
Altamonte Springs, FL
Briefly Noted
POSITIONS
Lockton Companies is seeking a Surety Account Administrator for its Chicago, IL Office.
Responsibilities: Preparation of bid, final and miscellaneous bonds; process client billing statements; meet time sensitive deadlines; answer inquires from clients. Requirements: One or more year of surety experience at a company or agency; Detail orientated with organization and time management skills; excellent interpersonal and communication skills. Contact: Apply online at www.lockton.com, in the Careers Section, email: chicagocareers@lockton.com or fax 773-444-6039.
The Insco Dico Group is looking for a Senior Claims Examiner.Requirements: Minimum of 5 years experience in handling all phases of surety claims including contract, performance and payment, license and permit bonds; strong organizational, communication, analytical skills; experience with legal research/legal background and B.A. in business-related field are highly desirable; PC skills (MS Word/WordPerfect, etc.) are necessary. Contact
-
- : For immediate consideration, send resume
with salary requirementsto: The Insco/Dico Group, HR; P.O. Box 19725; Irvine, CA 92623; or fax to (949) 553-8973, or e-mail to: HR@inscodico.com. For more information, please visit the company’s website at www.inscodico.com. EOE
APPOINTMENT
-
- On October 13
th
-
- ,
Team Insurance Group, Inc.,
-
- formerly known as The Quarles Group, announced the addition of
Barry Herring
- as its new surety bond account executive. In his new position, Herring will be responsible for growing the agency’s surety bond division. Prior to this appointment, Herring worked as an underwriter for Granite Re, Inc., a surety bonding company in Oklahoma City, and as an underwriter for the National American Insurance Company located in Chandler, OK. In January 2003, Team Insurance Group was formed through the acquisition of The Quarles Group by TeamBank, N.A., a member bank of Team Financial, Inc., a financial services company headquartered within the Kansas City metropolitan area.
State Agencies Consider and Adopt
Surety and Construction-Related State Regulations
Although Massachusetts and Michigan are the only states whose Legislatures are still in session, the work of state regulatory agencies in promulgating rules and regulations continues. The following is a brief report of recent activity on the state regulatory front. As bills for next year begin to be filed, Pipeline will report on the introduction of industry-related legislation.
Adopted State Regulations
KY 15523 2003 Reclamation Bond
Establishes provisions concerning when a bond is required, the bond amount and how it is to be paid, and bond forfeiture for non-coal mineral operations. Requires a surety bond of $3000 per acre with a $10,000 minimum bond for the entire permit area. Adopted: 9/12/2003
NJ 15831 2003 Goods and Services Contracts for Small Businesses
Relates to the requirement that the Division of Purchase and Property establish a set-aside program that requires state agencies with contracting authority to make good faith efforts to award 15% of state contracts to eligible small businesses, 7% to minority businesses and 3% to female businesses. Adopted: 9/8/2003
NJ 15832 2003 Construction Contracts for Small Businesses
Relates to the requirement that the Division of Purchase and Property establish a set-aside program that requires state agencies with contracting authority to make good faith efforts to award 15% of state construction contracts to eligible small businesses, 7% to minority businesses, and 3% to female businesses. Adopted: 9/8/2003
OR 24729 2003 Sub-Contractor Disclosure on Public Improvement Project
Establishes temporary rules relating to modifications to the requirements for sub-contractor disclosure of public improvement projects under the Department of Transportation. Requires the bidder to submit to the public contracting agency the first tier subcontractor disclosure form two working hours after the date and time of the deadline. Adopted: 7/21/2003
Proposed State Regulations
CO 7490 2003 Procurement
Adds competitive reverse auctions and competitive negotiation to the allowable means for awarding goods and service contracts. Proposed: 9/18/2003
NJ 15933 2003 Submission of Electronic Proposals for Sale of Bonds
Establishes rules regarding submission of electronic proposals for sale of bonds. Allows use of surety bonds in electronic bond sale auctions to serve as bid deposits, in lieu of a certified check, cashier’s check or treasurer’s check. Proposed: 10/6/2003
OH 10975 2003 Bonds, Certificates of Deposits, Letters of Credit
Requires career colleges and schools to provide surety bonds to indemnify against prepaid tuition loss as the result of a school closure, program termination or other acts or omissions resulting in the cancellation, revocation, or expiration of a certificate of registration or program authorization. Proposed: 10/16/2003
TX 90068 2003 Highway Improvement Contracts
Amends rules regarding highway improvement contracts. Provides that maintenance contracts estimated at less than $15,000 may be awarded as a purchase of service under the Purchasing Act if the project does not require detailed specifications, there is a need to expedite the project, or it would be otherwise impractical to use the letting procedures. On Department of Transportation routine maintenance contracts in which the contractor assumes responsibility for maintaining a portion of a highway facility for a set period of time, DOT may require a surety bond equal to the greatest annual amount paid under the contract and to remain in effect for one year from the date work is resumed after any default by the contractor, or equal to the amount paid the contractor during the term of the bond and for a term of two years, renewable annually in two-year increments. Proposed: 9/26/2003
For additional information, contact Colin Chiles, Government Relations Coordinator at cchiles@nasbp.org.
PENNDOT Solicits Business Partner Registrations
for New Electronic Contract Administration System
NASBP and The Surety Association of America (SAA) participated in PENNDOT’s user acceptance testing of the ECMS system.
Pictured left to right are:
Doug Tobin, Acting Division Chief, PENNDOT, Engineering Computing Management Division
Becki Mescher-Vuxta, Manager, PENNDOT, Contract Awards
Section, Contract Management Division, Bureau of Design
James C. Byerly, President, Byerly Insurance Agents & Brokers, Inc., Lemoyne, PA
Susan A. DeCourcey, Director of Technology, NASBP
Robert C. Duke, Director of Underwriting, SAA
The Pennsylvania Department of Transportation, PENNDOT, has developed an electronic contract administration system called Engineering and Construction Management System (ECMS). The system may be accessed at: http://www.dot2.state.pa.us
Included in the system’s capabilities are electronic performance and payment bond execution. PENNDOT has advised NASBP and SAA that at some point in the future, all bonds must be executed and submitted through ECMS. PENNDOT currently estimates that transition date to be in six months.
More details regarding the execution process will be forthcoming. At a high level, the bond execution process within ECMS will include the following steps:
q The surety company and the agency must register as business partners in ECMS. As a result of this registration process, the surety and producer are assigned passwords and user names.
q The agency sets up individual producers as users of ECMS. Upon login and the completion of the bond form, the individual producer’s user ID and password will function as their signature.
q The surety logs into the system and navigates to a maintenance screen where it selects all individual producers that are its attorney in fact. This process will be repeated for updates and changes to the surety’s attorneys in fact.
q When a contractor requires performance and payment bonds, it logs into the system and selects the producer that they wish to use.
q The producer then logs in and navigates to the bond screen that the prime has created and chooses an entry from a list of sureties for whom he or she is an attorney in fact.
q The agent completes the information on the bond form and signs it by clicking a “sign” button. By logging on with the password assigned to the agent, the agent has signed the bond.
NASBP, SAA and PENNDOT are coordinating efforts to disseminate information concerning the registration process. Attached is a copy of the business partner agreement, which must be signed and submitted before registration can proceed. The agreement states that the business partner will use reasonable care to prevent the introduction of viruses to ECMS by the business partner system. In addition to the agreement, an on-line registration process must also be completed using the website address above before the registration process can be completed. The business partner is responsible for the security of the user names and passwords. Each business partner, including each writing company, must execute the agreement as a condition of participation.
NASBP and SAA will announce additional information as it becomes available. The system is currently available to begin the registration process and PENNDOT is encouraging users to register now so that users are registered in the system for the contractors to select when the electronic performance and payment bonds portion of the system is activated. Users should first access the Business Partner link at ECMS to begin the registration process.
For more information or for assistance with the registration process, contact PENNDOT’s Help Desk at 717-783-7711.
Take Advantage of SIO’s Latest Resources |
|
| SIO’s Updated Brochures – Helping You Spread the Word | |
Either of these free brochures can be ordered at www.sio.org/fstore.html or by contacting SIO at sio@sio.org; 202-686-7463. |
|
| New PowerPoint Explains the Market | |
| SIO has just released an all-new PowerPoint presentation, Contract Surety Bonds: Understanding Today’s Market. The presentation comes complete with speaker’s notes.
Use this up-to-date information to explain the current market to any audience with ease. To download a zipped version, click here. Contract Surety Bonds: Understanding Today’s Market is also available on CD or color overheads by contacting SIO at sio@sio.org; 202-686-7463. |
|
| ABC Explores 123s of Surety Industry | |
The November issue of Associated Builders and Contractors’ (ABC) Construction Executive magazine features a special surety section with articles on:
This special section of Construction Executive will help contractors gain important insight and understanding of the surety industry. For a copy, please contact SIO at sio@sio.org; 202-686-7463. |
|
Recent Changes to the T-List
The Finance and Management Services Branch, U.S. Department of the Treasury, has announced the following changes:
Removed from the Admitted Reinsurers List (Effective 9/30/2003)
-
- Trenwick America Reinsurance Corp.
AXA Corporate Solutions Reinsurance Company
AXA RE Property & Casualty Insurance Company
The Insurance Corporation of New York
Security National Insurance Company
Trinity Universal Insurance Company of Kansas, Inc.
The Travelers Insurance Company
For more information: http://fms.treas.gov/c570/adreinsure.html http://fms.treas.gov/c570/adreinsure-updates.html
Addition to the Listing of Approved Sureties
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- Capital City Insurance Company, Inc (Effective 10/14/2003)
Continental Heritage Insurance Company (Effective 11/14/2003)
Name Change in the Listing of Approved Sureties
-
- Northbrook Property And Casualty Insurance Company changed to
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- St. Paul Protective Insurance Company (Effective 10/29/2003)
Planet Indemnity Company changed to RLI Indemnity Company (Effective 11/12/2003)
Liquidation Of A Formerly-Certified Company
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- The Home Insurance Company (New Hampshire)
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- NH Commissioner of Insurance appointed as Liquidator
All claims must be filed by 6/13/2004
For more information:
http://fms.treas.gov/c570/c570.html
http://fms.treas.gov/c570/supplements.html
International News
From ICISA: Credit And Surety Underwriters
Report Improved Results
Insured Business Growth Flat, Claims Down
Under the umbrella of the International Credit Insurance & Surety Association (ICISA), the world’s leading credit insurance companies and surety insurers met in Amsterdam on October 23-24, 2003. Approximately 30 companies conducting business in practically every country in the world attended the meeting.
A review of the year to date indicated that the industry saw a growth in premium income, mostly as a result of premium rate increases. As most markets are experiencing slow or no growth, insured business has hardly grown. A positive sign was that claims figures continued to improve. The trend towards more profitable business results, identified earlier in the year, continues. It confirms the earlier assumption that the sector has left its recent loss-making years behind.
Driven by the requirement to allocate adequate capital for underwritten risks, an industry-wide project was undertaken to determine the so-called probable maximum loss (PML). ICISA had been invited to join this initiative of the Pan-American Surety Association (PASA). The aim of this project is to demonstrate objectively what the maximum potential loss is for a particular underwritten risk, and what capital should subsequently be allocated for that risk. The interim results of this study were shared at the meeting. The final results will help to educate rating agencies and others in understanding the risk management capability of the industry. It aims to assist in setting realistic capital allocation requirements. These again play an important role in the rating given to credit insurers, surety companies and their reinsurers.
An area of concern was the fact that legislation in some countries still discriminates against insurance companies. In spite of many improvements towards a level playing field in most markets, it was noted that this is not the case in all countries. Greece was identified as the only EU country that does not allow insurance companies to issue contract bonds. ICISA will enter talks with the Greek authorities on behalf of its members to address the issue.
Members of ICISA agreed that the association will work closely with the International Institute for Practitioners in Credit Insurance and Surety (IPCIS) in organizing training seminars for the industry, which will also be aimed at related sectors like the banking and broker communities.
The industry is set to meet again in June 2004 in San Francisco.
For more information visit www.icisa.org, or e-mail secretariat@icisa.org
Pipeline is produced monthly by the National Association of Surety Bond Producers, 1828 L Street, NW, Suite 720, Washington, DC 20015-2014, 202/686-3700, Fax: 202/686-3656, www.nasbp.org, Internet e-mail address: info@nasbp.org
Disclaimer: This information is provided for educational and informational purposes only and is not intended to serve as legal advice. Readers are cautioned to consult their legal counsel on any specific matters.
December 2003
Individual Sureties: State DOIs Take Action
What You Can Do About it
At the Beginning…
Everyone involved in surety is familiar with its history – dating back to the time when personal, or “individual” suretyship was the common practice, and friends or relatives guaranteed the obligation of others. Indeed, to this day, Lloyds of London operates using the credit of individuals to back obligations.
Individual suretyship, however, was fraught with many problems. Some individuals providing the guarantees overestimated their financial strength, or their personal worth was gone by the time a claim was made. Although they didn’t totally disappear, individual sureties were mostly replaced by corporate surety companies, preferred by obligees, which could better take on the financial obligations necessary in the surety process.
Individual sureties were not common but still freely allowed through the 1980s, when amendments to the Federal Acquisition Regulations (FAR) were promulgated to strengthen the Federal government’s ability to combat abuses in their practices. NASBP, SAA, and their construction partners were active players in bringing this problem to the attention of the Federal government. The regulations, which took effect in February 1990, required individual sureties to meet new and stiffer standards of financial responsibility and permitted contracting officers to determine the acceptability of individual sureties and make a determination of whether the pledged assets were sufficient to cover bond obligations.
In addition to new FAR regulations, states and local jurisdictions have tightened their standards for the use of individual sureties. Texas and New Mexico, for example, require individual sureties to be authorized to do business in their jurisdictions as is required of corporate sureties. Some jurisdictions will not accept certain kinds of bonds from individual sureties, and others will not accept individual sureties to provide bonds for publicly funded projects. Some have special financial requirements on bonds provided by individual sureties, such as requiring that the bond be endorsed by two or more individuals who each file an affidavit confirming that they are residents of the state and own property within the state. Another frequent requirement is that the individual(s) demonstrate that their personal worth, excluding debts and liabilities, can cover the penal sum of the bond–at a minimum.
Because of these increased financial requirements and other restrictions on their practice, many of us have thought that the concept of individual suretyship was a thing of the past.
So Why Are We Talking About Individual Sureties NOW?
Because—a small number of individual or personal sureties are back on the scene. Firms that are marketing supposedly “individual” surety products say that they fill a gap created by a tightening bond market, where small and/or emerging firms have a harder time obtaining conventional surety credit. Because the firms offering these products are not generally subject to the very strict control of state insurance commissioners, there is still a lot of risk associated with the use of such bonds – both from the standpoint of the principal/indemnitor and the obligee.
As evidence of the reemergence of at least one known individual surety, the insurance commissioners of both Georgia and Nevada earlier this month released statements indicating they had issued cease and desist orders for Globing Bonding Company, previously known as Millennium Bonding and Rock Enterprises, and its president, Robert Joe Hanson. In addition to Hanson, Global employees in Georgia and Nevada also were cited in the respective orders, both of which were released on December 9, 2003. For more information: go to: http://www.gainsurance.org/ANNOUNCEMENTS/g.pdf and http://doi.state.nv.us/Press-UnauthorizedGlobal-12-4-03.pdf.
What Should I Know About Individual Sureties?
NASBP members are often asked to review bonds provided to their contractor clients. When advising them about bonds furnished by individual sureties, some additional questions may be in order:
History of the Individual Surety, i.e., Firm
- How long has the firm been in business? Who are the people in charge and what is their expertise and experience?
- Does the firm have a website? What information is available?
- Where is the firm located? Does it have a physical office and how long has it been there?
- Are there any lawsuits and/or complaints against the firm? The secretary of state, state department of insurance, the clerk of the court where the company is located, or the Better Business Bureau may assist you with this inquiry.
Regulatory Authority
- Is the surety on the Department of the Treasury’s List of Approved Sureties (T-List)?
- If a reinsurance company is named in the supporting documents, is the company listed on the Department of the Treasury’s approved list of reinsurers?
- Is the surety authorized to do business in the state? Some states require an individual surety to be authorized, but some do not.
- If providing bonds directly, are the surety’s personnel licensed as producers/agents?
Underwriting Criteria
- What are the individual surety’s prequalification requirements for providing bonds?
- What are the number and amounts of other bonds upon which a proposed individual surety is bound? What is the status of the contracts on which such bonds were furnished?
- Is the bond backed up by immediately negotiable instruments in the full penal sum of the bond? If not, how is the bond collateralized?
- Is the premium charged for the bond out of line with current rates?
- What is the subcontractor’s bonding history? Is the individual surety the surety of last resort because the subcontractor can’t obtain bonds from a corporate surety?
- Will the contractor’s surety accept the bond?
State DOIs look to licensed producers/agents and other regulated individuals to help them identify and investigate unauthorized business that puts the public at risk. Therefore, NASBP members are encouraged to express their concerns about the possibility of unauthorized practice to state DOIs. Links to each DOI are available at the following location: http://www.naic.org/state_contacts/sid_websites.htm.
SBA Reauthorization and Miller Act Bond Waiver Delayed Until 2004
Reauthorization of the Small Business Act and its programs, including the surety bond guaranty program, was due for reauthorization by September 30th of this year. Congress failed to meet the deadline, but a series of short extensions has kept the SBA operating. With the departure of Congress until next year, legislation passed to extend SBA authority until March 15, 2004.
The House version, H.R. 2802, is a complete rewrite of the Small Business Act, line by line, and resurrects a provision waiving bonds for 8(a) contractors under defined, specific circumstances, including the inability to obtain bonds from the SBA’s Surety Bond Guaranty Program. On Friday, September 26th the Senate version, S. 1375, passed by unanimous consent. S. 1375 does not contain the waiver language.
Currently the House version of the bill is stalled and still being negotiated. NASBP has actively opposed the bond waiver provision. Please feel free to contact your Senators or Representative to express opposition to the bond waiver that currently appears in the House version of the SBA Reauthorization bill. A good time to get the attention of Members of Congress is when they are in their home districts for the holiday recess.
Senators can be thanked for passing their waiver-free bill, and Representatives should be asked to support removing the waiver provision from H.R. 2802. For your convenience, NASBP prepared “Talking Points,” which can be accessed by Clicking Here. Contact information for your Senators or Representative is available by visiting the following Websites: http://www.senate.gov and http://www.house.gov. If you contact the Members of Congress who represent you, please call Colin Chiles, Government Relations Coordinator, at 202/686-3700, ext. 1305 or email him at cchiles@nasbp.org
President’s Message
It ‘s Not About the Gifts Anymore
“So, this is Christmas . . . .” Shopping, crowds, decorations, food, purchases, wrapping presents, parties, food, family visits, gift returns, more crowds, more food, after-Christmas sales, year end planning, some more food, New Year’s resolutions, more parties, bowl games, credit card bills, and even more food.
As a whole, we Americans overeat. I can safely say this to each of you because I resemble this remark. This time of year is especially dangerous. Holiday snacks are everywhere. The only time I exhibit superhuman will power is in the presence of the dreaded fruitcake. Everything else is fair game.
Everything becomes a little crazy this time of year. We hurry up to check-off our Christmas lists. We drag the decorations out of the attic (for some this includes a pre-lit tree, which I have to inform you, ain’t really a Christmas tree) and put everything up (including outside lighting that we would otherwise never consider owning much less adorning one of our largest assets with), in hopes that someone, anyone, will notice and arrive at the conclusion, “Those folks have got the Christmas spirit!”
Why is it during this time of year, when so much emphasis is placed on family, our social calendars become so full that one of our biggest worries is finding baby sitters or looking forward to the time when we will no longer need one?
We search for the perfect gift for our friends and family, on sale of course, collecting “gift receipts” with every purchase. I’m always amazed at what I’ll buy and the money I’ll spend this time of year just to get a name marked off the list. “Sure, Dad wants another belt!” “I just know my brother-in-law will love the electronic stud finder with electric wire detector built-in, wouldn’t you?”
The hardest part of this season, for me at least, is answering the question, “What do you want for Christmas?” I can honestly say that there is not one material item that I have a burning desire to receive as a gift (that’s within the budget of anyone I know!).
Don’t get me wrong. I’m not a “Bah, Humbug” sort of guy. As I’ve aged, and hopefully matured, I’ve just decided to resist the commercialization of Christmas. What I want this year is a good and true Christmas. “Good” in the essence of spending time with family and friends and investing myself in them. Everyone gives gifts when what is most appreciated is giving more of ourselves. When we give more of ourselves to those around us, no gift receipts are necessary. I want to celebrate a “true” Christmas by focusing on the reason I celebrate the holiday in the first place.
No matter your religious beliefs, I hope this holiday season and the New Year bring you closer to family, friends, and faith. My holiday wish for you is simple: I hope people will say you’ve “got that Christmas spirit” simply by looking at you (and not your decorations).
Matthew K. “Matt” Cashion, Jr. is Secretary/Treasurer of The Cashion Company, Inc. in Little Rock, AR. He can be reached at Mattc@cashionco.com.
City in Kentucky Rejects All Bids Submitted Using ERAB
An article in the November 4, 2003 issue of The Kentucky Post reported that a recent project let by the city of Newport using electronic reverse auction bidding (ERAB) resulted in the city’s commissioners rejecting all four bids submitted. The bids for the project, a public services building, all came in higher than the estimated cost of $2.7 million. Contractors bidding on the project submitted bids ranging from $3.656 million to $3.7 million.
Bruce Brandstetter of the architectural/engineering firm Brandstetter Carroll speculated that two factors may have contributed to the higher-than-anticipated bids: the complexity of having to use cranes so close to the Licking Valley Girl Scouts Bridge, and the use of a new ERAB procurement method supported by the Kentucky League of Cities. The Newport project was the largest in Kentucky to use the League of Cities’ method.
Brandstetter indicated that to avoid problems with the cranes, bids would be sought for conventional masonry wall construction using the conventional paper bidding method.
The Associated General Contractors of Kentucky, a contractor, and NASBP member and Region 9 Regional Vice President, John S. Meehan, met with a Newport representative and Branstetter prior to the bidding to explain that the ERAB method of procurement could reduce competition and increase cost. See the November issue of Pipeline for more information about ERAB and the possible consequences of its use.
From NASBP’s General Counsel
An Update On Recent Decisions Effecting Surety
The Brave New World of Electronic Bid Submission – Don’t Be Late
Many in the surety industry have long expected owners to use computer technology in the bid process. The federal government has finally jumped into this arena by utilizing electronic bid submission (via e-mail) on some projects. A few bid protest cases concerning the timeliness of electronic bids have recently filtered through the General Accounting Office (GAO). These decisions give us some guidance as to how the GAO will apply the government’s strict rules concerning timely bid submission to electronic bids. These recent decisions illustrate that the burden is still on the contractor to make sure its bid gets there on time.
- To be considered timely, the electronic bid must reach the e-mail address, not just the agency’s initial electronic point of entry. In the Matter of Sea Box, Inc., No. B-291056 (2002), a bidder sent seven e-mail messages comprising its entire proposal 11 minutes before the bid deadline. While it was clear that all seven messages made it to the agency’s initial electronic point of entry before the deadline, the e-mail messages were held at this point and then sent to a virus scanning server before making it to the specified e-mail address after the deadline. Because the proposal arrived at the bid evaluator’s e-mail account late, it was rejected and the contracting officer’s decision was challenged.
The GAO rejected the protest. FAR §52.215-1 allows for “late” electronic bids to be considered only if the bid “was transmitted through an electronic commerce method authorized by the solicitation, and was received at the initial point of entry to the Government infrastructure not later than 5:00 p.m. one working day prior to the date specified for receipt of proposals.” Because the e-mails were not received by 5:00 p.m. the day before bid opening, the contractor is responsible for the risk that the bid may not arrive on time.
- The bidder is responsible for timely filing an electronic bid even if errors occur in the agency’s system. In the Matter of PMTech, Inc., B-291082 (2002), a late bid was rejected as untimely when the complete proposal was not received by the agency by the RFP deadline. The bidder sent its proposal via e-mail 13 minutes before the deadline. A series of errors within the agency’s electronic bidding system delayed the arrival of the bid. GAO determined that it was the bidder’s responsibility to deliver its proposal to the proper place at the proper time, including transmitting the proposal sufficiently in advance of the deadline to account for errors in the agency’s system. The GAO found that the cause of bidder’s late delivery was the delayed attempt to transmit the proposal until 13 minutes before the deadline and that a bidder “accepts the risk of late receipt and rejection of a proposal where it delays transmitting its proposal until the last few minutes before the time set for receipt of proposals.”
The lesson of these cases is that e-mails are not instantaneous as some believe. It is also clear that the FAR and GAO are not sympathetic to those who wait until the last minute to submit an electronic bid. While there is no way to guarantee that a bid, paper or electronic, will be submitted in a timely manner, when dealing with government computers, a prudent producer can make certain that his or her clients know about the FAR’s safe harbor for those bidders that get their e-mail proposals to the government before 5:00 p.m. on the working day prior to the bid deadline.
NASBP’s General Counsel is Susan McGreevy of Husch & Eppenberger LC, Kansas City, MO.
Wm. J. Angell Surety School Level III: A Huge Success!
Level III of the Wm. J. Angell Surety School, which took place in Houston in November, provided a professional development opportunity to industry leaders from across the nation. Robert C. Gebhardt, Selective Insurance Company of America, was chosen by the Class of 2003 to receive the “Outstanding Student” designation.
The Level III curriculum included a review of contract conditions/elements that transfer construction risk to the contractor, in addition to experiencing an execution of the contract bid process and proposal submission.
Special thanks to the outstanding faculty: Brian Wasserman and Michael Riker of Leading Change; Leslie Shiner, Shiner Financial Services; Craig Hansen, Holmes Murphy & Associates, Inc., and Tom Padilla of Manuel Lujan Insurance, Inc.
The next Level III program will be offered at The Fairmont Hotel in Dallas, Texas, from November 11–13, 2004. In addition to being an excellent source for advanced education, the program provides participants several opportunities for networking with colleagues. Mark your calendars now for the 2004 program!
NASBP Welcomes New Members
NASBP welcomes the following new members who have joined the Association since the last issue of Pipeline.
| C&D Bonding & Insurance Services, Inc. 1800 E. Lambert Road, Suite 210 Brea, CA 92021 Key Contact: Philip Vega |
Nielson & Company, Inc. 5979 NW 151 Street, Suite 105 Miami Lakes, FL 33014 Key Contact: David Hoover www.nielsonbonds.com |
For more details on these new additions to NASBP, go to NASBP’s online membership directory, http://www.nasbp.org/bond.cfm.
State Budgets: Fiscal Crisis Shows Signs of Subsiding
Construction in Most States Took Fewer Hits Than Expected
According to a new report by the National Conference of State Legislatures (NCSL), fewer states are reporting budget gaps compared to this time last year. According to the survey, the number of states facing budget gaps dropped from 31 in FY 2003 to 10 in FY 2004. Also, more states see revenues outperforming original forecasts and half say the revenue outlook for the remainder of the fiscal year is stable.
Number of States with… By FY 2004 By FY 2003
| Budget Gaps | 10 | 31 |
| Revenue above forecast | 21 | 3 |
| Revenue on target | 13 | 10 |
| Revenue below forecast | 16 | 37 |
| Stable revenue outlook | 24 | 8 |
| Cumulative budget gap | $2.8 bill. | 17.5 bill. |
Source: National Conference of State Legislatures, November 2003
Maintaining balanced budgets was not easy. Lawmakers were cautious in their spending, appropriating 0.2 percent less than they spent in FY 2003, even though revenues are expected to grow 1.8 percent. To bridge budget gaps last year, states took different approaches including trimming expenses (health care, education, public safety) and raising taxes. According to the December 2003 edition of Governing, 31 states instituted tax increases for FY 2004.
California, still struggling with one of the worst budget deficits and new leadership is looking at massive cuts in transportation funding as part of its FY 2004 budget. Governor Schwarzenegger proposed cutting $5.4 billion in highway and transit projects and shifting $1 billion in transportation money to the general fund. The plan would withdraw money from 141 projects.
On a positive note for construction, only seven states reported delaying capital projects, while four reported shifting pay-as-you-go capital projects to debt for their FY 2004 budgets. Much of this may be due to the drastic measures taken to balance FY 2003 budgets. For example, the Arizona DOT was forced to cut 155 maintenance and administrative positions and cut $10 million from its operating budget last year. Although AZ bridged the fiscal gap for FY 2004, there is no expectation that ADOT will be able to increase its budget or expand programs.
The current recovery is finally translating into increased revenue for states, but it appears states will continue to be cautious in their spending. According to NCSL President Marty Stephens, Speaker of the Utah House, “It’s too early to pull out the sunglasses, but the fiscal storm we’ve endured may be breaking up.”
Subcontractors Take Legal Action to Preserve Lien Rights
The American Subcontractors Association (ASA) and its state chapter in Rhode Island filed a motion on September 3, 2003, to intervene as amici curiae, or “friends of the court,” in a case that could weaken the protections provided under mechanics liens. Earlier this year a Rhode Island trial judge ruled that mechanics’ liens are unconstitutional under the due process clauses of the U.S. and Rhode Island Constitutions. The ruling was appealed to the Rhode Island Supreme Court, which is reviewing the case, and its decision could have wide-spread national implications. According to an ASA News Release, “If the high court were to decide that due process requires a pre-lien hearing, the usefulness of mechanics liens throughout the country would be diminished, and liens currently on record would be invalidated.”
The dispute emanated from a lien enforcement lawsuit, Gem Plumbing v. Rossi, in which the trial court dismissed Gem Plumbing’s lien enforcement action on Federal and state constitutional grounds. According to ASA, “The trial judge reasoned that the law failed to provide enough ‘process’ to protect the property owner against the contractor’s lien claim because, ‘[t]here is no provision in the statute for a hearing to determine the validity of the lien or the claim underlying the lien until some point after the filing of the petition to enforce the mechanics’ lien’”
Subsequent to the court decision, the Rhode Island Subcontractors’ Association (RISA) had legislation introduced permitting an owner to demand an immediate, post-lien claim hearing to determine whether the claim is invalid for failure to comply with the mechanics’ lien statute. The legislation, RI SB462, was enacted on July 17, 2003.
ASA and RISA are basing their amici curiae brief on the grounds that “contractors have an actual, vested interested in the property which exists before the filing of a lien claim…and that the Mechanics’ Lien Law was designed to prevent unjust enrichment of one person at the expense of another.”
For more information, contact David Mendes at ASA by phone at 703/684-3450, ext. 1335, or by email at dmendes@asa-hq.com.
Keeping Track of 2004 State Legislation
Most state legislative sessions will kick-off in January. To obtain a calendar outlining all of the 2004 state legislative sessions, please Click Here.
As bills for next year begin to be filed, Pipeline will report on the introduction of industry-related legislation. NASBP members and affiliates can access updates on 2004 legislative activity by visiting the “Member and Affiliates Only” section of the NASBP Web site at http://www.nasbp.org/membersonly_files/memlogin.cfm. Login and click on “Government Relations” and then “Bill Tracking 2004.” When asked for your User ID and Password, simply enter the same information used to access the “Member and Affiliates Only” section. Instructions on how to use the service are provided on the Web page. Also, a cumulative list of the bills tracked during 2003 is available by following the instructions above and then clicking on “Bill Tracking 2003.”
Briefly Noted
POSITION
Old Republic Surety Company has a new opportunity for a strong, self-starting Surety Underwriter for its Chicago office.
Responsibilities: Analyze both non-contract and contract bond renewals and submissions and underwriter business for the greater Chicago market.
Requirements: Several years of experience underwriting all types of surety bonds, strong communication skills, and knowledge of the business climate within the greater Chicago area.
Contact: Call Janell Manson, H.R. Director, at 262/797-2643, e-mail manson@orsurety.com, or fax resume to 262/797-8874. Visit www.orsurety.com for more company information. EOE
Marco Island Marriott & Golf Club
-
- Marco Island, FL
-
- April 25 – 28, 2004
- (941) 394-2511
Regions 1, 2 & 3 Annual Meeting
Hyatt Regency Lake Las Vegas
Henderson, NV
September 30 – October 2, 2004
(702) 567-1234
Regions 4, 5, 6 & 7 Annual Meeting
Royal Sonesta Hotel New Orleans
New Orleans, LA
In the French Quarter
October 14 – 17, 2004
(504) 586-0300
Regions 8, 9, 10 & 11 Annual Meeting
Hyatt Regency Newport
Newport, RI
July 22 – 25, 2004
(401) 851-1234
William J. Angell Surety School Level I
Renaissance Houston Hotel
Houston, TX
February 8 – 11, 2004
(713) 629-1200
Register Online
Download Brochure
William J. Angell Surety School Level I – Summer
Dallas Fairmont Hotel
Dallas, TX
August 11 – 14, 2004
(214) 720-2020
William J. Angell Surety School Level II
Renaissance Houston Hotel
Houston, TX
February 8 – 13, 2004
(713) 629-1200
Register Online
Download Brochure
William J. Angell Surety School Level III
Dallas Fairmont Hotel
Dallas, TX
November 10 – 13, 2004
(214) 720-2020
Sheraton Wild Horse Pass Resort
Phoenix, AZ
November 10 – 13, 2004
(214) 720-2020
GA, KY, and MS Consider and Adopt
Surety and Construction Related Regulations
Indiana, Massachusetts and Michigan are the only states with Legislatures in session, but the work of state regulatory agencies in promulgating rules and regulations continues. The following is a brief report of recent activity on the state regulatory front.
Adopted State Regulations
GA 4045 2003 Design-Build & Public School Construction
Sets requirements for use for design-build in school construction. Defines design-build as a construction delivery method that uses competitive bidding among general contractors, with performance /payment bonds, liquidated damages, and various other statutory requirements to protect the owner’s investments. Adopted: 11/13/2003
GA 4046 2003 Design-Build & Public School Construction
Sets bidding requirements for state-funded school construction projects. Defines design-build as a construction delivery method that uses competitive bidding among general contractors, with performance /payment bonds, liquidated damages, and various other statutory requirements to protect the owner’s investments. Adopted: 11/13/2003
Proposed State Regulations
KY 15807 2003 Performance Bonds/Forms
Changes the wording of the regulations that require the Secretary of the Finance and Administration Cabinet to establish the bond forms required by code. Does not change the bond requirements, but does attempt to clarify the difference between forms for construction contracts and other potential procurement contracts. Proposed: 11/14/2003
KY 15808 2003 Competitive Sealed Bidding
Changes references from “invitation for bid” to “solicitation” and allows solicitations to be posted to the Finance and Administration Cabinet’s website to satisfy the public notice requirement. Does not change the competitive sealed bidding process. Proposed: 11/14/2003
KY 15813 2003 Termination of Contracts
Establishes rules regarding termination of contracts for the procurement of supplies or services. Does not change language referring to bond and the responsibility of the contractor and surety in the case of a default. Adds procedures by which a contract may be terminated by the Commonwealth. Proposed: 11/14/2003
MS 8988 2003 Performance Bond
Establishes the required bond form for the Mississippi Department of Transportation. Proposed: 11/6/2003
For additional information, contact Colin Chiles, Government Relations Coordinator at cchiles@nasbp.org.
| 2003 SIO Awards – Recognizing Your Efforts
You’ve been active throughout the year creating a positive image of the contract surety industry. You and your peers have given presentations, you’ve had articles published, or maybe you’ve even convinced a private owner to bond a project. The Surety Information Office (SIO) wants to acknowledge and reward the individuals and local surety associations (LSAs) who went the extra mile to promote the value and ensure the use of contract surety bonds. Every year, the best and brightest are spotlighted for their hard work and dedication to the industry with an SIO Award for Excellence in Surety Bond Promotion or Tiger Trust award. The SIO Awards for Excellence in Surety Bond Promotion are given in three categories:
These awards recognize volunteer efforts to promote the surety industry to contractors, private owners, public owners, design professionals, students, CPAs, and the many other participants in the construction process. View the detailed criteria, including specific examples of public relations promotional activities, for the SIO Awards for Excellence in Surety Bond Promotion and submit an online nomination for yourself or peers here. Members of SAA and NASBP who have convinced a private owner to bond a project may be eligible for induction into the Tiger Trust. The members of this elite group of 201 surety professionals have all made gains in reaching out to this relatively untapped part of the contract surety market. Learn more about the criteria for the Tiger Trust and complete the online nomination form for yourself or a colleague here. For more information on the 2003 SIO awards, contact Tiffany Cureton, Information Manager, at 202-686-7463; tcureton@sio.org. |
HAPPY HOLIDAYS FROM NASBP!
President Matt Cashion and First Vice President Craig Hansen join NASBP staff for a holiday party.
From left to write, bottom row: Susan DeCourcey, Connie Lynch, Koula Korson, and Matt Cashion; top row: Craig Hansen, Charnita Sims, Dick Foss, Patrick McGraw, Susan Ostrander, Jennifer Aversano, and Colin Chiles
Pipeline is produced monthly by the National Association of Surety Bond Producers, 1828 L Street, NW, Suite 720, Washington, DC 20036-5104-2014, 202/686-3700, Fax: 202/686-3656, www.nasbp.org, Internet e-mail address: info@nasbp.org
To read the online version of Pipeline, please go to http://www.nasbp.org/pipeline_12_03/text.html
Disclaimer: This information is provided for educational and informational purposes only and is not intended to serve as legal advice. Readers are cautioned to consult their legal counsel on any specific matters.
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