NASBP Focal Point – April 21, 2021

The White House continues to host bipartisan meetings in the hopes of securing support from key Republican lawmakers. Meanwhile, Senate Republicans are close to unveiling their counterproposal, which calls for $600-$800 billion in spending. The package will be paid for with user fees that would extend to electric and hydrogen-powered cars, but it will not include raising the gas tax. In addition, public-private partnerships might also be included in the counterproposal.

Yesterday, the House Agriculture Committee conducted a hearing titled “Rural Broadband – Examining Internet Connectivity Needs and Opportunities in Rural America.” During his opening statement, Chairman David Scott (D-GA-13^th) noted that “rural broadband is critical for the growth and development of our rural communities.” The Chairman added, “It’s essential we act to finally close the digital divide that has kept so many of our rural communities from reaching their full potential.” The witnesses raised such issues as expanding, maintaining, and constructing broadband networks in rural areas and improving current broadband programs, such as the U.S. Department of Agriculture’s (USDA) ReConnect Program. The ReConnect Program furnishes loans and grants for costs associated with construction, improvement, or acquisition of facilities and equipment needed to provide rural communities with access to broadband.

Earlier this year, USDA issued a notice for comments on a final rule to expand broadband service in rural areas by simplifying program requirements to make more companies eligible to participate in the ReConnect Program. NASBP issued a comment letter requesting that surety bonds be considered as an alternative to Letters of Credit to protect taxpayer funds when loans and/or grants are furnished for construction.

NASBP and the members of the Construction Industry Procurement Coalition are delighted to announce the official unveiling of the Construction Procurement Caucus (CPC), co-chaired by Representatives Scott Peters (D-CA-52) and Pete Stauber (R-MN-8). The CPC is dedicated to promoting commonsense design and construction procurement reforms that benefit the government, taxpayers, and those businesses interested in pursuing federal contracting opportunities.

Oklahoma House Bill 2861

Maryland Senate Bill 372

UPDATE (in bold) MD S.372 (Reilly) Amends the Courts and Judicial Proceedings and Insurance Articles to allow obligees to recover against the surety for failing to act in good faith to pay and/or settle valid claims. Should the fact finder discover that the surety failed to act in good faith, the obligee may recover additional expenses, such as interest on actual damages and reasonable attorneys’ fees. SB 801 broadly defines the word “obligee” as “a person who is the recipient of an obligation under a surety insurance policy.” As the Maryland legislature has adjourned for the year, this bill failed.

Texas House Bill 2051

Maryland Senate Bill 361

The language in this proposed legislation seems at odds with the current law (Md. Code State Fin. & Proc. §§ 10A101 to 401) enacted in 2013, stating that performance and payment bonds must be provided by the private partner in the P3 agreement. This law didn’t address alternate forms of security for P3 agreements, such as letters of credit or parent company guarantees. As the Maryland legislature has adjourned for the year, this bill failed.

Minnesota Senate Bill 2421

MN S.2421 (Senjem) Authorizes P3s for infrastructure projects, including but not limited to public transportation infrastructure, roads, highways, bridges, waste water transportation and waste water treatment facilities, water treatment and water transportation facilities, rail facilities, soil and water conservation facilities, land and ecology conservation facilities, education facilities, governmental facilities, public works, oil and gas pipeline, medical facilities, port facilities, cultural facilities, technology infrastructure and facilities, public housing, or other public infrastructure. Requires the successful proposer to furnish bid bond, performance bonds, and payment bonds as a condition of entering into the comprehensive agreement. This bill was referred to the Senate Committee on State Government Finance and Policy and Elections.

Ohio Senate Bill 8

UPDATE (in bold) OH S.8/H.2 (McColley/Carfagna) Establishes the Ohio residential broadband grant program for the expansion of broadband, which may require a broadband provider that is awarded a program grant to provide a performance bond, letter of credit, or other financial assurance acceptable to the authority prior to the commencement of construction. The bond, letter of credit, or assurance shall be in the sum, and with the sureties, that the state prescribes and shall be payable to the state, as applicable. The bond, letter of credit, or assurance may include the condition that the broadband provider will faithfully execute and complete the project.