NASBP Focal Point - February 27, 2018

February 27, 2018

Legislative, Regulatory and Other News at a Glance for Grassroots Action

Currently forty-three legislatures are in session: Alabama, Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Federal, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Hampshire, New Jersey, New York, Ohio, Oregon, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming.

In This Issue:

Federal Report
State Report (See Updates)
- DC Regs/Partial Bonds/LOCs
- Public-Private Partnerships
- SDI/State Guarantee Fund

Federal Report

Federal Infrastructure Spending

Last week, it was reported that House Transportation and Infrastructure Committee Chairman, Bill Shuster (R-PA-9th) and Ranking Member Pete DeFazio (D-OR-4th) are working together on a bill based on conversations with the White House. According to Chairman Shuster, an infrastructure bill could be ready “closer to the summer.” However, as reported in today’s The Bond Buyer, the likelihood that Congress will be able to enact some kind of infrastructure legislation this year is “slim to none.” It is highly likely that legislation will be introduced, and hearings will be held (Senate Environment and Public Works Committee is scheduled to conduct a hearing on Thursday, March 1), but unless Congress reaches an agreement on funding there may not be much legislative movement. Moreover, there are vast differences as to what an infrastructure package should contain. The President’s plan calls for states, localities and private investments to assume much of the funding. The President, who was once a strong supporter of P3s, has now raised concerns with this procurement method, which runs counter to the President’s Special Assistant on Infrastructure Policy, D. J. Gribbin. The major business groups in Washington, such as the U.S. Chamber support an increase to the gas tax to fund the Highway Trust Fund, but the Republican Congressional Leadership opposes such a tax increase on consumers. The Democrats support direct federal spending, while Senate/House Republican Leadership are unwilling to add more debt after the recent passage of a major tax reform package. Congress must still reauthorize the Federal Aviation Administration (FAA) and the Water Resources Development Act (WRDA). Last year, Congress failed to reauthorize the FAA due to a highly contested issue concerning the privatization of federal air traffic controllers. Congress has precious little time to waste in order to enact a major infrastructure bill in addition to reauthorizing the FAA and WRDA before the November mid-term elections.

State Report

Partials Bonds–Proposed Regulations

DC Office of Procurement

New: NASBP
submitted comments to the Chief Procurement Officer of the District of Columbia concerning proposed regulatory changes to Title 27 (Contracts/Procurement). NASBP’s comments focused on Sections 2703.3, 2703.6 and 2703.12. (Performance and Payment Security). The proposed changes in Sections 2703.3 and 2703.6 allows for the reduction of payment and performance security to 50% of the original contract amount. While Section 2703.12 allows the contracting officer to accept a letter of credit (LOC) in amount equal to 10% of the portion of the contract price instead of a surety bond. Even though the intent of the proposed regulations is to align them with existing DC statutes, NASBP believes it is necessary to voice our concerns regarding partial bonds and LOCs.

Public-Private Partnerships

Indiana House Bill 1301

Update: IN HB 1301 (Carbaugh) would have amended three current P3 statutes to require a performance bond in an amount equal to 50% of the cost to design and construct the public facility; and provide for the payment of contractors and subcontractors under IC 4-13.6-7, IC 5-16-5, or IC 36-1-12, whichever is applicable. NASBP sent a letter of support for the bill as originally introduced. HB 1301 was amended in the House to require performance bonds at 25%. The language addressing the payment bond was left unchanged. Last week, the Senate Committee on Insurance & Financial Institutions agreed with the House language. HB 1301 is on second reading in the Senate.

Vermont H. 841

New: VT H. 841 (Harrison) Authorizes an executive agency (department, or office of the State under the Office of the Governor.) to create a public-private partnership that allows for private sector participation in the financing, development, operation, management, ownership, including transportation facilities, buildings, or other improvements. H 841 requires that any contractor performing construction must furnish performance and payment bonds or irrevocable letters of credit in an amount equal to the cost of the construction work. The bill was referred to the House Commerce and Economic Development Committee.

Subcontractor Default Insurance (SDI) & State Guarantee Fund

Update: MA HB 1702/02(Rogers) Amends the Massachusetts Little Miller Act to allow Subcontractor Default Insurance in lieu of performance and payment bonds. Subcontractors must submit payment and performance bonds to the CMAR at no additional cost to the firm or awarding agency. On February 6, the bill was moved to a study committee. NASBP’s retained lobbyist will continue to monitor the legislation throughout the remainder of the legislative session to ensure the bill is not amended to another legislative vehicle.

Update: MA HB H 1656 (Cariddi) Creates a state guarantee fund for default on public construction surety bond payments. On February 6, the bill was moved to a study committee. As noted above, NASBP’s retained lobbyist will monitor this bill throughout the reminder of the session.

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Focal Point is an e-bulletin sent to members and friends of the National Association of Surety Bond Producers when most state legislatures are in session and as needed thereafter. To obtain copies of Bills or other materials discussed above, contact advocacy@nasbp.org. Copyright © 2015. NASBP. All rights reserved.