So far this year, NASBP has reviewed over 500 pieces of legislation through the NASBP online tracking service to determine their relevance to the NASBP membership and tracked 50 separate pieces of legislation affecting the surety profession. Public-private partnerships (P3s), bond threshold increases, and bond waivers have been issues in nearly all regions of the country. In addition, subcontractor default insurance (SDI) was addressed during the Massachusetts legislative session.
Public-private partnerships
According to the National Council for Public-Private Partnerships, P3s are authorized in 36 states. They are used to procure mostly transportation projects but offer an alternative project delivery method for any type of infrastructure project. To date this year, NASBP has tracked 23 pieces of legislation in 14 states that would allow state or local governments to partner with a private entity to provide essential infrastructure projects. A number of bills introduced this session in several states did not specifically reference their state Little Miller Acts to require bonds on P3 agreements. In Maryland, legislation was enacted to create P3s for the Prince George’s County school system, but it was unclear if the legislation required bonding. However, after NASBP retained a contract lobbyist and NASBP met with the bill sponsor, it was understood that, although bonds were not explicitly required in the bill, the intent, according to the bill sponsor, is to follow Maryland law on P3 agreements, which requires bonding.
In Colorado, the Rocky Mountain Surety Association (RMSA) actively pursued legislation, HB 1383, to amend the Colorado Little Miller Acts to require bonds on P3s. While HB 1383 passed the House, the bill failed in the Senate Finance Committee. Moving forward in 2019, RMSA will build upon the foundation established in 2018 and continue to cultivate relationships with other stakeholder groups while NASBP will serve as a resource to RMSA.
Bonding Threshold Increases and Bond Waivers
NASBP also advocated this year to stop the increase of state bond thresholds. In Rhode Island, legislation was introduced both in the House and Senate (HB 7809/S 2513) to increase the bonding requirement from $50,000 to $100,000, while waiving bonding requirements up to $250,000. Both bills are being held for further study. Additionally, in Vermont, HB 917 was introduced to increase the bond threshold amount from $100,000 to $1 million. NASBP members were actively engaged on this legislation and aided the surety industry, Vermont state chapter of the Associated General Contractors, and Vermont Agency of Transportation (VTrans), that testified in opposition to the bill. Based on information provided by NASBP, the bill was amended with a provision provided by the Senate to remove the increase to the bond threshold. As introduced, the bill would have also provided a pilot program to enable VTrans to enter into P3s for transportation infrastructure projects without the necessary P3 or bonding procurement requirements. The program would expire on July 1, 2023.
Subcontractor Default Insurance
SDI has been on the NASBP radar over the past two legislative sessions in Massachusetts. NASBP Director-At-Large Mike Regan of Regan Cleary Insurance LLC, Boston, MA, has done yeomen’s work on behalf of NASBP with regard to Massachusetts legislation on SDI. The bill, HB 1702, was introduced to amend the Massachusetts Little Miller Act to allow SDIs in lieu of required subcontract performance and payment bonds. Regan, along with a Boston-area insurance lobbyist retained by NASBP, developed a strategy to address this legislation while meeting with influential members of the Massachusetts state legislature. The legislation was eventually placed in a study committee; however, NASBP continues to monitor the bill as, according to the lobbyist retained by NASBP, the bill could be amended to another legislative vehicle.
To request a copy of NASBP’s state legislative tracking document, email Chastity Murphy, Advocacy Specialist for NASBP Government Relations, at cmurphy@nasbp.org.