Almost all contractors understand that they have to obtain lien/claim waivers from the subcontractors, sub-subcontractors, and material suppliers on their jobs to limit the risk of payment bond claims. These waivers contain a statement that, through the date of the waiver, the entity providing the waiver has been paid in full for all labor and materials supplied to the project. The only obstacle for the contractor and its surety in this process is in making certain that all subcontractors, sub-subcontractors, and material suppliers on the project are identified so that a signed waiver is obtained from each of them with every payment.

Keeping track of the bulk of subcontractors, sub-subcontractors, and material suppliers on the site is a hassle, but it is manageable. Getting waivers from this group goes a long way toward limiting the risk of payment bond claims, but it does not solve every potential problem. One big potential problem is the risk of claims for unpaid labor expenses on the project. Most contractors assume that if the workers on the project continue to show up, their employers must be making payroll. Often, it is not that simple. Sometimes, unpaid labor claims can develop under the surface while the project continues uninterrupted.

Most state laws, and even more payment bond forms, provide claim rights to individual laborers if they are not paid their wages. Prevailing wage requirements can become a problem for the contractor and surety long after the project is done if the laborers find out that they were misclassified, i.e., they were paid at a laborer’s rate while doing plumber’s work and, thus, underpaid. The only way for a contractor to avoid this problem is to review the certified payrolls and laborer classifications and make certain that the laborers are properly classified and actually being paid the amount shown on the certified payrolls. The contractor has a strong incentive to do this because it and its surety may be liable for the underpayment and possible penalties, as well. Under some state laws, the penalty may be double the amount of the underpaid wages–plus attorney’s fees!

Another type of “hidden” labor claim may arise when a subcontractor is using an employee-leasing firm. These entities hire and pay a contractor’s employees and provide insurance for the workers. Although in some instances this is done to get better insurance rates, in other instances it is done because the subcontractor is financially weak and cannot cash flow payroll and meet insurance requirements. Under the “lease” agreement, the contractor reimburses the employee-leasing firm for the cost of the labor and insurance as it is paid on the project. The potential for a payment bond claim arises when the employee-leasing firm lets the subcontractor get behind a couple of months or more on its payments. All the while, the problem is disguised because the laborers are being paid, and there is nothing on the surface to indicate a problem. Employee-leasing firms have convinced several courts around the country that they provide “labor” as contemplated by payment bonds. Most general contractors would never think to ask whether their subcontractors are using such a service, much less request a waiver from these entities.

There also has been an upswing in payment bond claims asserted by union benefit funds to recover underpayments in fringe benefit contributions by contractors. These benefit funds argue that their required contributions are part of the cost of labor incurred on the project, and that these contributions are recoverable against the project’s payment bond. Many general contractors don’t even realize that they should be contacting their subcontractor’s union benefit funds during the project to confirm that the subcontractor is making all of its payments. Many general contractors are surprised to learn that there is a legal distinction between the “union” and the “union benefit fund;” consequently, it may not be sufficient to ask the union to confirm that all of the required payments have been made. The contractor may have to get a waiver from the benefit fund itself, no matter what the union says.

The severity of these risks varies from state to state and is often dependent on payment bond language. Surety bond producers have the opportunity, however, to raise these issues with their contractor clients so that steps may be taken to close all of the holes that could lead to an unanticipated payment bond claim.

NASBP’s General Counsel is Susan McGreevy of Husch & Eppenberger LC, Kansas City, MO.

At the mid-year meeting of its committees and Board of Directors, NASBP adopted its 2006 Government Relations Agenda. The Agenda, which is a prioritized list of the most critical legislative and regulatory issues facing NASBP this coming year, reflects where the Association will direct its time, energy, financial and personnel energies in the government relations arena. The Agenda pertains to issues at all levels of government: Federal, state, and local. To view this document, click here.

The William J. Angell Surety School – Levels I and II

REGISTER TODAY – SPACE IS LIMITED

The William J. Angell Surety School offers expert and comprehensive training for surety professionals with varying levels of knowledge and expertise. This prestigious education program provides an opportunity to establish professional relationships with Industry peers. The curriculum has been approved for continuing education (CE) credit and is divided into two levels of instruction.

• Level I is intended for the novice producer, in-house bond department support staff, and those new to the industry. The curriculum includes: an overview of the surety industry, surety credit information gathering techniques, financial statement analysis, submissions to surety companies, commercial surety and introduction to claims handling.

  Next Offering: January 29 – February 1, 2006 – Houston Renaissance Hotel, Houston, TX
   Course Curriculum  Register Online  Download FormFuture Dates: January 28 – 31, 2007 – Houston Renaissance Hotel, Houston, TX

• Level II is intended for the new in-the-field bond producer with one to six years of experience. The curriculum includes intensive training in: contractor profiling, financial analysis, concepts and effective practices of account activation and service, sales and marketing, claims handling, industry marketplace changes, and ethics.

  Next Offering: January 29-February 3, 2006 – Houston Renaissance Hotel, Houston, TX

NOTE: LEVEL II IS ALMOST AT CAPACITY – REGISTER TODAY TO SECURE YOUR SPOT
Course CurriculumRegister Online

Download Form
Future Dates: January 28-February 2, 2007 – Houston Renaissance Hotel, Houston, TX
For more information, please contact Charnita Sims at csims@nasbp.org or call (202) 686-3700.

The Court of Federal Claims recently decided the case of Aeroplate Corporation v. United States, 67 Fed. Cl. 4 (2005), involving a low bidder who was disqualified. The government said that its bid was not “responsive” because (1) the bidder’s corporate seal was missing, which ended up not being a true defect; and (2) the surety on the bid bond was questioning whether it would honor the bond since the bid submitted exceeded the authorized amount. Further, the surety told the government that it would not issue a payment or performance bond, and the contractor admitted that it didn’t have an acceptable alternate surety lined up for these final bonds. Based on all this, the government said that it was justified in throwing out the bid.

The Court disagreed. It said that as long as the bid bond was valid on its face, the government had no business questioning its enforceability. If the contractor could not produce final bonds, the remedy would be to call on the bid bond. If the surety on the bid bond refuses to honor it, the remedy would be to sue that surety.

The Court used sound, common sense logic: if after-the-fact comments from a surety could justify disqualification, the whole purpose of a bid bond could be lost.

“Were the court to rule that [the contract administrator] could avert further delay by taking preemptive action, the door would open for any surety after bid opening and upon further reflection to call in its disinclination not to make good on an otherwise valid, authorized guarantee. The certainty and predictability of reliance on surety guarantees would be hostage to the whims of the surety.”

In other words, what is to prevent a surety who sees that its principal’s bid is way too low from deciding that it won’t honor that bid bond after all? Where does that leave the government? And if the surety can back out for this reason, why can’t the bidder back out too?

For all these reasons, the court ordered the government to accept the bid bond and give the contractor the opportunity to prove that it could do the job, including finding a surety on its final bonds. If it can’t do so, my hunch is that the bid bond surety will not take the risk of refusing to honor the bid bond.

Susan McGreevy, NASBP’s General Counsel, wrote this article.

In June you received an e-mail unveiling the “Commercial Surety Online Reference Guide.” This added-value reference tool is available under the “Members and Affiliates Only” section of the NASBP website. The Commercial Surety Committee hopes you have found this Guide to be a user-friendly resource for serving your client and prospect needs.

We would appreciate feedback from you in order to maintain the Guide as a useful tool. Please e-mail Susan Ostrander at NASBP (sostrander@nasbp.org) with your suggestions or comments. The Commercial Surety Committee thanks you for helping us to keep this Guide timely and helpful to the association.

On November 14, 2005, the Small Business Administration (SBA) published an announcement in the Federal Register indicating its adoption of an interim final rule changing the size eligibility standards to qualify for a bond through its Surety Bond Guarantee Program (SBGP). The interim final rule applies only to construction (general or special trades) or service concerns performing contracts in the disaster zones, which resulted from the 2005 Hurricanes Katrina, Rita, and Wilma.

According to the announcement:

“This amendment to the SBGP will permit some business concerns to meet one of two criterion: either the size standard for the primary industry in which it, together with its affiliates, is engaged, or the current $6 million standard for the SBGP, whichever is higher.

SBA prepared this rule as an interim final rule because its immediate implementation will make available needed SBGP assistance to otherwise eligible small businesses and facilitate reconstruction and recovery of the Gulf Coast and Florida.”

In terms of determining eligibility, the announcement went on to say that surety companies participating in SBA’s Preferred Surety Bond Program would have the responsibility of determining eligibility under the new size standard.

By adopting an interim final rule, the regulation may become effective before the public comment period has taken place. In the case of this regulation, its effective date was November 14, 2005, and the SBA must receive public comments about it on or before December 14, 2005.

For more information on the interim final rule and/or the public comment period, please click here.

ANNOUNCEMENTS

Florida Surety Bonds Inc. has opened an office in Daytona Beach, FL.  Don Bramlage is the Vice President and can be reached at Don@FloridaSuretyBonds.com.

POSITIONS  The Chubb Corporation currently has the following opportunities:

Surety Underwriter:

3 Positions in its Warren, NJ office
1 Position in its Minneapolis, MN office
1 Position in its Los Angeles, CA office
1 Position in its Philadelphia, PA office

·       Responsibilities:  Underwrite and produce new business as well as underwrite renewals in accordance with established underwriting guidelines; make prompt and decisive recommendations regarding underwriting issues; collaborate with Home Office in providing prompt, reliable service to customers; maintain complete and well-documented account files; and travel the territory visiting agents and accounts to generate new business activity.

·         Requirements:  4-year college degree preferred or equivalent years of experience; 3+ years of surety underwriting experience or working experience in the commercial credit industry (surety training will be provided); strong written, oral, and interpersonal skills; demonstrated ability to build relationships, work in a team environment, and make sound judgments and decisions.    

·     Contact:  Rick Stephens, Sr. Recruiter, via e-mail at rick.stephens@acs-inc.com, or fax resume to 972-992-3901.  Visit www.chubbsurety.com for more company information and to apply online. EOE

The Hartford currently has Commercial Surety Underwriter positions open in the following locations: Texas, Denver and Kansas City.

Irvine, CA, Home Office Underwriter

·       Responsibilities:  Develop new and foster existing agency relationships; market and service our commercial surety products to agents as well as analyze underwriting information and assess risk.

·         Requirements: At least three years of surety and sales experience; an interest in sales and marketing; a self-starter.  

·     Contact:  Email resume and cover letter to Pam D’Amico at pam.damico@thehartford.com or fax to 860-547-2162.

The Insco/Dico Group is seeking to fill the following positions in its respective offices:

Irvine, CA, Home Office Underwriter

·       Responsibilities:  Assist Underwriting Vice Presidents and advise the Home Office Service Department; develop and implement good Home Office file control; and work with Branch Offices on bond submissions and related underwriting requirements.

·         Requirements:  Bachelors Degree in business administration, finance, or a related field; minimum of 2-3 years of related underwriting experience in the financial industry, preferably in surety; detailed oriented, organized, and possess strong analytical and interpersonal skills.    

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Glendale, CA, Branch Manager

·       Responsibilities:  Provide leadership in directing Branch activities; market, underwrite, price, and service surety bond products within the territory served by the Branch Office; demonstrate effective management and supervision of Branch Office personnel and expenses; ability to effectively lead, train, and work with others.

·         Requirements:  Excellent oral and written communication skills; Bachelors Degree in business administration, finance, or related field; minimum of 10 years experience in the surety underwriting or related business experience; and strong analytical and management skills.    

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Glendale, CA, Assistant Branch Manager

·       Responsibilities:  Assist the Branch Manager in managing Branch and field operations; assist in underwriting and servicing assigned agents and/or accounts as well as day-to-day administration and supervision of underwriters and office personnel; and assist in preparing and implementing the annual production and expense budgets.

·         Requirements:  Minimum of 5-7 years of surety underwriting or related business experience; detail-oriented and possess strong analytical, managerial, organizational, and communication skills; possess a Bachelors Degree in business administration, finance, or related field.    

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Glendale, CA, Senior Underwriter

·       Responsibilities:  Underwrite and service complex surety bonds, and develop business through marketing calls and participation in industry associations and functions.

·         Requirements:  Minimum of 4-5 years of surety underwriting experience; strong analytical, organizational, and communication skills; Bachelors Degree in business administration, finance or related field.   

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Glendale, CA, Underwriter

·       Responsibilities:  Underwrite and service complex surety bonds, and develop business through marketing calls and participation in industry associations and functions.

·         Requirements:  Minimum of 2-3 years of surety underwriting experience; strong analytical, organizational, and communication skills; Bachelors Degree in business administration, finance, or related field.   

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Portland, OR, Senior Underwriter

·       Responsibilities:  Underwrite and service complex surety bonds, and develop business through marketing calls and participation in industry associations and functions.

·         Requirements:  Minimum of 4-5 years of surety underwriting experience; strong analytical, organizational, and communication skills; Bachelors Degree in business administration, finance or related field.   

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Sacramento, CA, Underwriter

·       Responsibilities:  Underwrite and service complex surety bonds, and develop business through marketing calls and participation in industry associations and functions.

·         Requirements:  Minimum of 2-3 years of surety underwriting experience; strong analytical, organizational, and communication skills; Bachelors Degree in business administration, finance, or related field.   

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Tempe, AZ, Branch Manager

·       Responsibilities:  Provide leadership in directing Branch activities; market, underwrite, price, and service surety bond products within the territory served by the Branch Office; demonstrate effective management and supervision of Branch Office personnel and expenses; ability to effectively lead, train, and work with others.

·         Requirements:  Excellent oral and written communication skills; Bachelors Degree in business administration, finance, or related field; minimum of 10 years experience in the surety underwriting or related business experience; and strong analytical and management skills.    

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Walnut Creek, CA, Underwriter Trainee

·       Responsibilities:  With close supervision, on-the-job-training, and monitored self-study, train and learn to become an underwriter and work with agents and Branch and Home Office underwriting personnel; develop and implement good relationships with agents and accounts; maintain detailed and well organized files in accordance with Company’s underwriting standards; and work with underwriters on bond submissions and related underwriting requirements.

·         Requirements:  Bachelors Degree with emphasis in business administration, finance, or related field; two to three years prior work experience, particularly in a related field; detail oriented, organized, and possess strong analytical and interpersonal skills.   

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

NAS Surety Group is seeking a Regional Surety Manager for its Commercial Surety Division located in Itasca, IL.

·       Responsibilities:  Underwrite and manage an assigned region within the Continental US; manage agency relationships; market new business; and through the use of financial and qualitative analysis, achieve minimum loss ratio and maximum profitability for the Division.

·         Requirements: Bachelor’s Degree in business-related field with an emphasis in Finance or Accounting or equivalent work experience; minimum of seven years surety underwriting experience; strong competency in quantitative and financial analysis along with a proven ability to market for and obtain new business; excellent interpersonal, written, and verbal communication skills; manage up to 40% travel; and proficiency in Excel and Word.  

·     Contact:  Judith Gazaway, HR Consultant, at 630-227-4704 or by email at judith_gazaway@nassurety.com. Visit the company’s website at   www.nassurety.com.

CNA SURETY CORPORATION, one of the largest U.S. surety companies, currently has Underwriting opportunities in the following locations:

        Charlotte, NC – Underwriting Specialist
Charlotte, NC – Underwriting Assistant
Phoenix, AZ – Underwriting Consultant
Quincy, MA – Underwriting Assistant (P/T)

·     Contact:  Lisa Young, Human Resources Coordinator, via e-mail lisa.young@cnasurety.com, or fax resume to 312-817-1759. Visit www.cnasurety.com for more company information. EOE

SIO’s special 48-page surety section has been published in the November 2005 edition of the Associated Builders and Contractors’ Construction Executive magazine.

Downloadable from the SIO Web site, this year’s surety section examines the state of the surety market and provides valuable strategies for 114,000 key contracting decision-makers. Stories focus on:

• How the current economic climate affects surety bonding;
• Executives’ perspectives on the industry;
• Bonding mega projects;
• What bonding companies look for in a “bond-worthy” contractor;
• Contractors’ frequently asked questions;
• What contractors should ask their bond producer; and
• Tips to prevent or avoid a claim.

Free printed copies also are available through SIO’s online store or by contacting SIO at 202-686-7463 or sio@sio.org.

SIO extends a special thanks to the surety companies and producers who advertised and shared their time for interviews. This year’s surety issue is the largest yet, and it would not have been possible without advertising support and editorial contributions.

SIO Awards Nominations Due in February

With all the holiday traveling, parties, company events, cooking, and shopping and planning over the next few months, life can get a little (or lot) out of control, work can be rushed, and deadlines can be missed.

Mark your calendars and set your reminder systems today to submit your nominations for SIO’s Awards for Excellence in Surety Bond Promotion and Tiger Trust Awards by February 10, 2006.

Allow yourself enough time to reflect on all your efforts to promote contract surety bonds throughout the year and apply online by clicking on the appropriate category at the bottom of the Web page.

The Silver and Gold Awards for Excellence in Surety Bond Promotion recognize local surety associations (LSAs) that have conducted at least five or 10 relevant public relations activities respectively in a calendar year to promote the value and benefits of contract surety bonds. The Platinum Award recognizes an individual member of NASBP or the Surety Association of America (SAA) who has undertaken special initiatives to promote contract surety bonds. The Platinum Award is not based simply on the volume of activities, but takes into account the impact of the member’s actions in promoting the value and benefits of contract surety bonds.

The Tiger Trust was formed in 1984 to recognize NASBP or SAA members who have demonstrated an extraordinary commitment to the principles of suretyship and have achieved individual distinction by convincing private owners to require a contract surety bond. The private sector offers the greatest potential for contract surety growth. Winners will be inducted to the elite Tiger Trust and receive the plaque and pin at the NASBP or SAA annual meetings.

For details about rules and criteria and to apply for these prestigious awards, visit SIO’s Web site, fill out the nomination form, and submit the required documentation no later than February 10, 2006. For questions or more information, contact Marla McIntyre, Executive Director, or Marc Ramsey, Communications Manager, at 202-686-7463 or via email at mmcintyre@sio.org or mramsey@sio.org.

SIO provides letters to winners’ supervisors and press releases to send to local media, and publishes articles about award winners in SIO, NASBP, and SAA newsletters.

Of course, if you need help promoting surety bonds, SIO offers a wide variety of free educational materials, CDs, and PowerPoint® presentations to assist you. Simply place your order through SIO’s online store!

Almost all contractors understand that they have to obtain lien/claim waivers from the subcontractors, sub-subcontractors, and material suppliers on their jobs to limit the risk of payment bond claims. These waivers contain a statement that, through the date of the waiver, the entity providing the waiver has been paid in full for all labor and materials supplied to the project. The only obstacle for the contractor and its surety in this process is in making certain that all subcontractors, sub-subcontractors, and material suppliers on the project are identified so that a signed waiver is obtained from each of them with every payment.

Keeping track of the bulk of subcontractors, sub-subcontractors, and material suppliers on the site is a hassle, but it is manageable. Getting waivers from this group goes a long way toward limiting the risk of payment bond claims, but it does not solve every potential problem. One big potential problem is the risk of claims for unpaid labor expenses on the project. Most contractors assume that if the workers on the project continue to show up, their employers must be making payroll. Often, it is not that simple. Sometimes, unpaid labor claims can develop under the surface while the project continues uninterrupted.

Most state laws, and even more payment bond forms, provide claim rights to individual laborers if they are not paid their wages. Prevailing wage requirements can become a problem for the contractor and surety long after the project is done if the laborers find out that they were misclassified, i.e., they were paid at a laborer’s rate while doing plumber’s work and, thus, underpaid. The only way for a contractor to avoid this problem is to review the certified payrolls and laborer classifications and make certain that the laborers are properly classified and actually being paid the amount shown on the certified payrolls. The contractor has a strong incentive to do this because it and its surety may be liable for the underpayment and possible penalties, as well. Under some state laws, the penalty may be double the amount of the underpaid wages–plus attorney’s fees!

Another type of “hidden” labor claim may arise when a subcontractor is using an employee-leasing firm. These entities hire and pay a contractor’s employees and provide insurance for the workers. Although in some instances this is done to get better insurance rates, in other instances it is done because the subcontractor is financially weak and cannot cash flow payroll and meet insurance requirements. Under the “lease” agreement, the contractor reimburses the employee-leasing firm for the cost of the labor and insurance as it is paid on the project. The potential for a payment bond claim arises when the employee-leasing firm lets the subcontractor get behind a couple of months or more on its payments. All the while, the problem is disguised because the laborers are being paid, and there is nothing on the surface to indicate a problem. Employee-leasing firms have convinced several courts around the country that they provide “labor” as contemplated by payment bonds. Most general contractors would never think to ask whether their subcontractors are using such a service, much less request a waiver from these entities.

There also has been an upswing in payment bond claims asserted by union benefit funds to recover underpayments in fringe benefit contributions by contractors. These benefit funds argue that their required contributions are part of the cost of labor incurred on the project, and that these contributions are recoverable against the project’s payment bond. Many general contractors don’t even realize that they should be contacting their subcontractor’s union benefit funds during the project to confirm that the subcontractor is making all of its payments. Many general contractors are surprised to learn that there is a legal distinction between the “union” and the “union benefit fund;” consequently, it may not be sufficient to ask the union to confirm that all of the required payments have been made. The contractor may have to get a waiver from the benefit fund itself, no matter what the union says.

The severity of these risks varies from state to state and is often dependent on payment bond language. Surety bond producers have the opportunity, however, to raise these issues with their contractor clients so that steps may be taken to close all of the holes that could lead to an unanticipated payment bond claim.

NASBP’s General Counsel is Susan McGreevy of Husch & Eppenberger LC, Kansas City, MO.

At the mid-year meeting of its committees and Board of Directors, NASBP adopted its 2006 Government Relations Agenda. The Agenda, which is a prioritized list of the most critical legislative and regulatory issues facing NASBP this coming year, reflects where the Association will direct its time, energy, financial and personnel energies in the government relations arena. The Agenda pertains to issues at all levels of government: Federal, state, and local. To view this document, click here.

The William J. Angell Surety School – Levels I and II

REGISTER TODAY – SPACE IS LIMITED

The William J. Angell Surety School offers expert and comprehensive training for surety professionals with varying levels of knowledge and expertise. This prestigious education program provides an opportunity to establish professional relationships with Industry peers. The curriculum has been approved for continuing education (CE) credit and is divided into two levels of instruction.

• Level I is intended for the novice producer, in-house bond department support staff, and those new to the industry. The curriculum includes: an overview of the surety industry, surety credit information gathering techniques, financial statement analysis, submissions to surety companies, commercial surety and introduction to claims handling.

  Next Offering: January 29 – February 1, 2006 – Houston Renaissance Hotel, Houston, TX
   Course Curriculum  Register Online  Download FormFuture Dates: January 28 – 31, 2007 – Houston Renaissance Hotel, Houston, TX

• Level II is intended for the new in-the-field bond producer with one to six years of experience. The curriculum includes intensive training in: contractor profiling, financial analysis, concepts and effective practices of account activation and service, sales and marketing, claims handling, industry marketplace changes, and ethics.

  Next Offering: January 29-February 3, 2006 – Houston Renaissance Hotel, Houston, TX

NOTE: LEVEL II IS ALMOST AT CAPACITY – REGISTER TODAY TO SECURE YOUR SPOT
Course CurriculumRegister Online

Download Form
Future Dates: January 28-February 2, 2007 – Houston Renaissance Hotel, Houston, TX
For more information, please contact Charnita Sims at csims@nasbp.org or call (202) 686-3700.

The Court of Federal Claims recently decided the case of Aeroplate Corporation v. United States, 67 Fed. Cl. 4 (2005), involving a low bidder who was disqualified. The government said that its bid was not “responsive” because (1) the bidder’s corporate seal was missing, which ended up not being a true defect; and (2) the surety on the bid bond was questioning whether it would honor the bond since the bid submitted exceeded the authorized amount. Further, the surety told the government that it would not issue a payment or performance bond, and the contractor admitted that it didn’t have an acceptable alternate surety lined up for these final bonds. Based on all this, the government said that it was justified in throwing out the bid.

The Court disagreed. It said that as long as the bid bond was valid on its face, the government had no business questioning its enforceability. If the contractor could not produce final bonds, the remedy would be to call on the bid bond. If the surety on the bid bond refuses to honor it, the remedy would be to sue that surety.

The Court used sound, common sense logic: if after-the-fact comments from a surety could justify disqualification, the whole purpose of a bid bond could be lost.

“Were the court to rule that [the contract administrator] could avert further delay by taking preemptive action, the door would open for any surety after bid opening and upon further reflection to call in its disinclination not to make good on an otherwise valid, authorized guarantee. The certainty and predictability of reliance on surety guarantees would be hostage to the whims of the surety.”

In other words, what is to prevent a surety who sees that its principal’s bid is way too low from deciding that it won’t honor that bid bond after all? Where does that leave the government? And if the surety can back out for this reason, why can’t the bidder back out too?

For all these reasons, the court ordered the government to accept the bid bond and give the contractor the opportunity to prove that it could do the job, including finding a surety on its final bonds. If it can’t do so, my hunch is that the bid bond surety will not take the risk of refusing to honor the bid bond.

Susan McGreevy, NASBP’s General Counsel, wrote this article.

In June you received an e-mail unveiling the “Commercial Surety Online Reference Guide.” This added-value reference tool is available under the “Members and Affiliates Only” section of the NASBP website. The Commercial Surety Committee hopes you have found this Guide to be a user-friendly resource for serving your client and prospect needs.

We would appreciate feedback from you in order to maintain the Guide as a useful tool. Please e-mail Susan Ostrander at NASBP (sostrander@nasbp.org) with your suggestions or comments. The Commercial Surety Committee thanks you for helping us to keep this Guide timely and helpful to the association.

On November 14, 2005, the Small Business Administration (SBA) published an announcement in the Federal Register indicating its adoption of an interim final rule changing the size eligibility standards to qualify for a bond through its Surety Bond Guarantee Program (SBGP). The interim final rule applies only to construction (general or special trades) or service concerns performing contracts in the disaster zones, which resulted from the 2005 Hurricanes Katrina, Rita, and Wilma.

According to the announcement:

“This amendment to the SBGP will permit some business concerns to meet one of two criterion: either the size standard for the primary industry in which it, together with its affiliates, is engaged, or the current $6 million standard for the SBGP, whichever is higher.

SBA prepared this rule as an interim final rule because its immediate implementation will make available needed SBGP assistance to otherwise eligible small businesses and facilitate reconstruction and recovery of the Gulf Coast and Florida.”

In terms of determining eligibility, the announcement went on to say that surety companies participating in SBA’s Preferred Surety Bond Program would have the responsibility of determining eligibility under the new size standard.

By adopting an interim final rule, the regulation may become effective before the public comment period has taken place. In the case of this regulation, its effective date was November 14, 2005, and the SBA must receive public comments about it on or before December 14, 2005.

For more information on the interim final rule and/or the public comment period, please click here.

ANNOUNCEMENTS

Florida Surety Bonds Inc. has opened an office in Daytona Beach, FL.  Don Bramlage is the Vice President and can be reached at Don@FloridaSuretyBonds.com.

POSITIONS  The Chubb Corporation currently has the following opportunities:

Surety Underwriter:

3 Positions in its Warren, NJ office
1 Position in its Minneapolis, MN office
1 Position in its Los Angeles, CA office
1 Position in its Philadelphia, PA office

·       Responsibilities:  Underwrite and produce new business as well as underwrite renewals in accordance with established underwriting guidelines; make prompt and decisive recommendations regarding underwriting issues; collaborate with Home Office in providing prompt, reliable service to customers; maintain complete and well-documented account files; and travel the territory visiting agents and accounts to generate new business activity.

·         Requirements:  4-year college degree preferred or equivalent years of experience; 3+ years of surety underwriting experience or working experience in the commercial credit industry (surety training will be provided); strong written, oral, and interpersonal skills; demonstrated ability to build relationships, work in a team environment, and make sound judgments and decisions.    

·     Contact:  Rick Stephens, Sr. Recruiter, via e-mail at rick.stephens@acs-inc.com, or fax resume to 972-992-3901.  Visit www.chubbsurety.com for more company information and to apply online. EOE

The Hartford currently has Commercial Surety Underwriter positions open in the following locations: Texas, Denver and Kansas City.

Irvine, CA, Home Office Underwriter

·       Responsibilities:  Develop new and foster existing agency relationships; market and service our commercial surety products to agents as well as analyze underwriting information and assess risk.

·         Requirements: At least three years of surety and sales experience; an interest in sales and marketing; a self-starter.  

·     Contact:  Email resume and cover letter to Pam D’Amico at pam.damico@thehartford.com or fax to 860-547-2162.

The Insco/Dico Group is seeking to fill the following positions in its respective offices:

Irvine, CA, Home Office Underwriter

·       Responsibilities:  Assist Underwriting Vice Presidents and advise the Home Office Service Department; develop and implement good Home Office file control; and work with Branch Offices on bond submissions and related underwriting requirements.

·         Requirements:  Bachelors Degree in business administration, finance, or a related field; minimum of 2-3 years of related underwriting experience in the financial industry, preferably in surety; detailed oriented, organized, and possess strong analytical and interpersonal skills.    

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Glendale, CA, Branch Manager

·       Responsibilities:  Provide leadership in directing Branch activities; market, underwrite, price, and service surety bond products within the territory served by the Branch Office; demonstrate effective management and supervision of Branch Office personnel and expenses; ability to effectively lead, train, and work with others.

·         Requirements:  Excellent oral and written communication skills; Bachelors Degree in business administration, finance, or related field; minimum of 10 years experience in the surety underwriting or related business experience; and strong analytical and management skills.    

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Glendale, CA, Assistant Branch Manager

·       Responsibilities:  Assist the Branch Manager in managing Branch and field operations; assist in underwriting and servicing assigned agents and/or accounts as well as day-to-day administration and supervision of underwriters and office personnel; and assist in preparing and implementing the annual production and expense budgets.

·         Requirements:  Minimum of 5-7 years of surety underwriting or related business experience; detail-oriented and possess strong analytical, managerial, organizational, and communication skills; possess a Bachelors Degree in business administration, finance, or related field.    

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Glendale, CA, Senior Underwriter

·       Responsibilities:  Underwrite and service complex surety bonds, and develop business through marketing calls and participation in industry associations and functions.

·         Requirements:  Minimum of 4-5 years of surety underwriting experience; strong analytical, organizational, and communication skills; Bachelors Degree in business administration, finance or related field.   

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Glendale, CA, Underwriter

·       Responsibilities:  Underwrite and service complex surety bonds, and develop business through marketing calls and participation in industry associations and functions.

·         Requirements:  Minimum of 2-3 years of surety underwriting experience; strong analytical, organizational, and communication skills; Bachelors Degree in business administration, finance, or related field.   

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Portland, OR, Senior Underwriter

·       Responsibilities:  Underwrite and service complex surety bonds, and develop business through marketing calls and participation in industry associations and functions.

·         Requirements:  Minimum of 4-5 years of surety underwriting experience; strong analytical, organizational, and communication skills; Bachelors Degree in business administration, finance or related field.   

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Sacramento, CA, Underwriter

·       Responsibilities:  Underwrite and service complex surety bonds, and develop business through marketing calls and participation in industry associations and functions.

·         Requirements:  Minimum of 2-3 years of surety underwriting experience; strong analytical, organizational, and communication skills; Bachelors Degree in business administration, finance, or related field.   

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Tempe, AZ, Branch Manager

·       Responsibilities:  Provide leadership in directing Branch activities; market, underwrite, price, and service surety bond products within the territory served by the Branch Office; demonstrate effective management and supervision of Branch Office personnel and expenses; ability to effectively lead, train, and work with others.

·         Requirements:  Excellent oral and written communication skills; Bachelors Degree in business administration, finance, or related field; minimum of 10 years experience in the surety underwriting or related business experience; and strong analytical and management skills.    

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

Walnut Creek, CA, Underwriter Trainee

·       Responsibilities:  With close supervision, on-the-job-training, and monitored self-study, train and learn to become an underwriter and work with agents and Branch and Home Office underwriting personnel; develop and implement good relationships with agents and accounts; maintain detailed and well organized files in accordance with Company’s underwriting standards; and work with underwriters on bond submissions and related underwriting requirements.

·         Requirements:  Bachelors Degree with emphasis in business administration, finance, or related field; two to three years prior work experience, particularly in a related field; detail oriented, organized, and possess strong analytical and interpersonal skills.   

·     Contact:  Visit the company’s Website at www.inscodico.com.  Go to the employment page and contact HumanResources@InscoDico.com for instructions.

NAS Surety Group is seeking a Regional Surety Manager for its Commercial Surety Division located in Itasca, IL.

·       Responsibilities:  Underwrite and manage an assigned region within the Continental US; manage agency relationships; market new business; and through the use of financial and qualitative analysis, achieve minimum loss ratio and maximum profitability for the Division.

·         Requirements: Bachelor’s Degree in business-related field with an emphasis in Finance or Accounting or equivalent work experience; minimum of seven years surety underwriting experience; strong competency in quantitative and financial analysis along with a proven ability to market for and obtain new business; excellent interpersonal, written, and verbal communication skills; manage up to 40% travel; and proficiency in Excel and Word.  

·     Contact:  Judith Gazaway, HR Consultant, at 630-227-4704 or by email at judith_gazaway@nassurety.com. Visit the company’s website at   www.nassurety.com.

CNA SURETY CORPORATION, one of the largest U.S. surety companies, currently has Underwriting opportunities in the following locations:

        Charlotte, NC – Underwriting Specialist
Charlotte, NC – Underwriting Assistant
Phoenix, AZ – Underwriting Consultant
Quincy, MA – Underwriting Assistant (P/T)

·     Contact:  Lisa Young, Human Resources Coordinator, via e-mail lisa.young@cnasurety.com, or fax resume to 312-817-1759. Visit www.cnasurety.com for more company information. EOE

SIO’s special 48-page surety section has been published in the November 2005 edition of the Associated Builders and Contractors’ Construction Executive magazine.

Downloadable from the SIO Web site, this year’s surety section examines the state of the surety market and provides valuable strategies for 114,000 key contracting decision-makers. Stories focus on:

• How the current economic climate affects surety bonding;
• Executives’ perspectives on the industry;
• Bonding mega projects;
• What bonding companies look for in a “bond-worthy” contractor;
• Contractors’ frequently asked questions;
• What contractors should ask their bond producer; and
• Tips to prevent or avoid a claim.

Free printed copies also are available through SIO’s online store or by contacting SIO at 202-686-7463 or sio@sio.org.

SIO extends a special thanks to the surety companies and producers who advertised and shared their time for interviews. This year’s surety issue is the largest yet, and it would not have been possible without advertising support and editorial contributions.

SIO Awards Nominations Due in February

With all the holiday traveling, parties, company events, cooking, and shopping and planning over the next few months, life can get a little (or lot) out of control, work can be rushed, and deadlines can be missed.

Mark your calendars and set your reminder systems today to submit your nominations for SIO’s Awards for Excellence in Surety Bond Promotion and Tiger Trust Awards by February 10, 2006.

Allow yourself enough time to reflect on all your efforts to promote contract surety bonds throughout the year and apply online by clicking on the appropriate category at the bottom of the Web page.

The Silver and Gold Awards for Excellence in Surety Bond Promotion recognize local surety associations (LSAs) that have conducted at least five or 10 relevant public relations activities respectively in a calendar year to promote the value and benefits of contract surety bonds. The Platinum Award recognizes an individual member of NASBP or the Surety Association of America (SAA) who has undertaken special initiatives to promote contract surety bonds. The Platinum Award is not based simply on the volume of activities, but takes into account the impact of the member’s actions in promoting the value and benefits of contract surety bonds.

The Tiger Trust was formed in 1984 to recognize NASBP or SAA members who have demonstrated an extraordinary commitment to the principles of suretyship and have achieved individual distinction by convincing private owners to require a contract surety bond. The private sector offers the greatest potential for contract surety growth. Winners will be inducted to the elite Tiger Trust and receive the plaque and pin at the NASBP or SAA annual meetings.

For details about rules and criteria and to apply for these prestigious awards, visit SIO’s Web site, fill out the nomination form, and submit the required documentation no later than February 10, 2006. For questions or more information, contact Marla McIntyre, Executive Director, or Marc Ramsey, Communications Manager, at 202-686-7463 or via email at mmcintyre@sio.org or mramsey@sio.org.

SIO provides letters to winners’ supervisors and press releases to send to local media, and publishes articles about award winners in SIO, NASBP, and SAA newsletters.

Of course, if you need help promoting surety bonds, SIO offers a wide variety of free educational materials, CDs, and PowerPoint® presentations to assist you. Simply place your order through SIO’s online store!