NASBP Focal Point – August 11, 2022

On August 9 President Biden signed the CHIPS and Science Act, a bipartisan bill (passed Senate 64-33/House 243-187), which authorizes nearly $250 billion in spending over the next five years — the largest five-year research and development budget in U.S. history. The CHIPS and Science Act calls for investment in technology areas critical to maintaining the nation’s global technological and economic leadership, including artificial intelligence, advanced manufacturing, next-generation wireless, composites, and advanced energy and disaster prevention solutions related to climate change.

The SBA Office of Surety Guarantees released its final rule to streamline and modernize the SBA Bond Guarantee Program (BGP) which takes effect on September 7, 2022. Among the key revisions are: increasing the Quick Bond Guarantee Application from $400,000 to $500,000; clarifying the definition of ancillary maintenance agreements and expanding the definition of “Contract” to include stand-alone maintenance agreements; modifying a requirement for federal contracting officers (COs) to certify and to include a statement that the small business is experiencing difficulty obtaining bonds for guarantees greater than $6.5 million (and up to $10 million) to simply require the CO to certify that the guarantee is necessary; increasing/modernizing the claim reserve from at least $1,000 to at least $10,000, and clarifying the definition of “commencement of work” to mean, “work under a contract is considered to have begun or commenced when the contractor takes any action related to the contract or bond that would have exposed its Surety to liability under applicable law had a bond been executed (or approved, if the Surety is legally bound by such approval) at the time. The work would not have to occur ‘at the job site’ to find that work has begun or commenced under the contract.” The Rule may be viewed here. A copy of NASBP’s comment letter from November 2021 supporting the adopted key revisions, may be viewed here.

NASBP recently submitted a letter to the AR Broadband Office which seeks comments concerning federal funding for the Arkansas Rural Connect Broadband Grant Program. NASBP requested that bonds be considered as an alternative form of security to Letters of Credit (LOCs), especially for small business internet service providers (ISPs), so they are able to retain cash-liquidity in their businesses.

In June legislation (HB 4600) was signed into law amending the Civil Administrative Code (20 ILCS 2705/2705-620) and creating the “Bond Reform in Construction Industry Task Force.” The Task Force shall “study innovative ways to reduce the cost of insurance in the private and public construction industry while protecting owners from risk of nonperformance.” The Task Force “shall consider options that include, but are not limited to, owner-financed insurance instead of contractor-financed insurance and alternative ways to manage risk other than bonds or other insurance products.” Members of the Task Force will be appointed by Governor Pritzker (D) and include the following: a designee from the office of the Governor, Treasurer, and Director of Insurance, two members appointed by the Speaker and the House Minority Leader, two members appointed by the Senate Majority and Minority Leader and seven members representing the construction industry appointed by the Governor. NASBP submitted letters to Governor Pritzker’s Chief of Staff and the Secretary of the IL DOT requesting representation from an IL NASBP bond producer. If you are interested in serving on the Task Force please contact lleclair@nasbp.org. Should the Governor’s office request an NASBP member to serve on the Task Force, I will pass along your name.

NASBP and nearly 30 NY organizations representing construction, businesses, local/state procurement officers and elected officials voiced opposition to Governor Hochul’s (D) office regarding legislation which would create a duplicate, burdensome, unnecessary, and costly registration system for contractors and subcontractors bidding on NY state public work. At the request of the NY contractor community, NASBP’s submitted a letter to Governor Hochul asking for her to veto this nonsensical legislation.