CEO Comments











NASBP Produces New White Papers to Correct Misinformation

Every day NASBP staff responds to requests and queries from Members, Affiliates, and Associates, on a wide variety of matters, including advocacy and comment letters, explanations of surety concepts, “intelligence” on emerging issues, status of legislation and regulation, registration for meetings and seminars, membership, and publications. That rapid response to membership needs is a singular hallmark of NASBP’s value. In addition to a specific response from NASBP to a Member’s request, often these requests and queries jump-start a NASBP project to educate and inform a much broader audience. 

Two such projects were generated from recent requests from Members, which culminated in the creation of two short NASBP “white papers,” which I am pleased to include in this issue of Pipeline. The first white paper is Managing Subcontractor Risks of Non-Performance and Financial Failure: A Flash Guide to Subcontractor Bonds and Subcontractor Default Insurance, and the second white paper is Understanding the Differences between Performance and Payment Bonds and Project Completion Services Agreements. Each is two pages, and each was drafted for use by Members, Affiliates, and Associates to educate industry stakeholders on important issues that often confuse various stakeholders.

For years there has been misinformation and misdirection floating around about the differences between performance and payment bonds and subcontractor default insurance (SDI). NASBP has written several articles on this topic. But when a Member this fall asked NASBP for a short document to educate an owner who wanted to mandate its general contractor use SDI on a project, it was timely to create an updated, easy-to-understand document on the differences between contract bonds and SDI, for use by the inquiring Member--and all other Members. Click here to read the full NASBP white paper Managing Subcontractor Risks of Non-Performance and Financial Failure: A Flash Guide to Subcontract Bonds and Subcontractor Default Insurance. The first page is an overall explanation, and the second page contains a comparison chart. 

Industry stakeholders are not just confused by the differences between contract bonds and SDI. There is also misinformation and misdirection floating around about the differences between contract bonds and project completion services agreements (PCSAs). A Member contacted NASBP this fall seeking some advice about what to tell a bank financing a private project that had been persuaded by a construction consultant to forego performance and payment bonds in favor of a PCSA. The consultant had convinced the bank that the PCSA was more valuable than the contract bonds and even represented on its website that the SBA would accept the PCSA in lieu of bonds. (NASBP alerted the SBA Surety Bond Guarantee Program, which asked the consultant to immediately remove that misrepresentation from its website, which it did.) 

Again, as in the first case, I thought this was a terrific opportunity to assist a Member with a specific matter and create a document that could be used by all Members for educational purposes. Click here to read the full NASBP white paper Understanding the Differences between Performance and Payment Bonds and Project Completion Services Agreements.

I hope that you will find these two white papers useful in your educational and advocacy efforts. I thank those two NASBP Members for bringing these matters to NASBP’s attention, and I look forward to receiving your further requests and queries in 2016.