News from Capitol Hill
Currently, the U.S. House of Representatives is currently in recess; however, Senate Majority Leader Mitch McConnell (R-KY) held firm on his commitment to cut the Senate’s August recess in half. Majority Leader McConnell had an aggressive legislative agenda for the Senate to consider, including confirming a pair of federal appeals court judges and advancing the Senate’s 2019 fiscal year spending package. Additionally, in the Transportation, Housing and Urban Development appropriation’s spending bill is a $10 billion overall increase for infrastructure dedicated to rural areas. Thus far, the Senate has passed seven of the 12 annual appropriation spending bills; the House, however, has passed only six spending bills. Of those of six spending bills, the House passed the Financial Services and General Government (FSGG) Appropriations Act which included a provision to defund the Federal Election Commission’s enforcement for violation of the prior written authorization requirement. Meanwhile, the Senate’s FSGG Bill, as introduced, does not include the FEC provision. NASBP is a member of the Prior Approval Reform Coalition (PARC), and NASBP will continue to engage congressional offices on the importance of this issue. Additionally, Senate Judiciary Chairman, Chuck Grassley (R-IA) plans to begin hearings on the confirmation of Supreme Court Nominee Brett Kavanaugh beginning September 4. Leader McConnell’s goal is to have Nominee Kavanaugh confirmed by the November mid-term elections.
U.S.C. Title 41-Exempting the Federal Miller Act from threshold increases
NASBP recently learned that language included in the House Fiscal Year 2019 National Defense Authorization Act (NDAA), to remove the Miller Act from threshold increases based on inflation, was not included in the final NDAA Conference Report. Based on NASBP/Surety & Fidelity Association of America's (SFAA) conversation with Senate staff, the Senate Armed Services Committee (SASC) contacted the Department of Defense (DoD) to inquire if the agency had a position concerning this language. DoD raised concerns that, if federal procurement thresholds under U.S.C. Title 41 are not escalated for inflation, then over time DoD would require payment protections on more contracts that are worth relatively less value today than in the future. Therefore, in the opinion of DoD, the risk associated with the lower dollar values may not warrant the administrative cost of requiring certain payment protections, an opinion that NASBP will continue to challenge.
As NASBP has explained during the NASBP Legislative Fly-in, the Miller Act was enacted as a remedial protective statute to ensure subcontractors and suppliers payment for their work in the event of contract default by the prime contractor and to protect U.S. taxpayer funds. Furthermore, if federal lawmakers would like to debate the merits of the Miller Act, this should occur during a deliberative legislative process. Currently, NASBP and SFAA are seeking a Republican cosponsor along with Senators Hirono (D-HI) and Menendez (D-NJ), who have agreed to introduce a bipartisan stand-alone bill this session or in 2019. NASBP and SFAA are meeting with those Republican offices who serve on the Senate Committee on Homeland Security and Governmental Affairs, which has jurisdiction, the Senate Small Business Committee, and SASC.
U.S. Small Business Administration’s Office of Surety Guarantees seeks to temporarily lower its fees
The U.S. Small Business Administration (SBA) requested public comments concerning a temporary decrease in the guarantee fees that the SBA charges to sureties and to contractors who receive bonds issued through the SBA Surety Bond Guarantee (SBG) Program. The reduction in fees applies to all SBA surety bond guarantees approved during the one-year period beginning October 1, 2018, and ending September 30, 2019. NASBP submitted comments in support of the proposed temporary reduction in fees, which NASBP believes will likely stimulate greater corporate surety and surety bond producer participation while providing further access to the corporate surety markets to small businesses that otherwise would not qualify for surety credit in the standard market. NASBP has also requested that the reduction in fees be made permanent. NASBP will keep you apprised of the outcome. See the article in this issue on the fourth bonding educational program of 2018 that NASBP and the SBA delivered.