NASBP Focal Point - October 23, 2020

Legislative News at a Glance

Five state legislatures and U.S. Congress are currently in session: Louisiana, Massachusetts, Michigan, New Jersey, and Pennsylvania. Also meeting is the District of Columbia.

Territories: Guam.

*Click here for a complete 2020 calendar of the states’ original legislative session dates.

In This Issue

Federal Report
COVID Relief
Update: FAR Comment Letter from CIPC
State Update
PA HB885

Federal Report

COVID Relief Bill — As we go to press, Speaker Pelosi and the White House continue to discuss the parameters for a comprehensive stimulus package. As reported, progress has been made with the hope of reaching a deal before the election, but that prospect is looking less likely by the day. Senate Republicans remain the ultimate roadblock to enacting a roughly $2 trillion deal. Moreover, Leader McConnell has made no promises on when or if the Senate might take up any compromise agreement. Meanwhile, the Senate could not reach an agreement on Wednesday to advance a $500 million COVID relief standalone bill. The Democrats opposed the bill as they support a COVID relief package which is nearly four times larger. The bill addressed the following: providing unemployment compensation of $300.00 per week through Dec. 27; shielding businesses, schools, and other establishments from liability related to coronavirus exposure; allowing the U.S. Postal Service to receive as much as $10 billion in forgivable aid; providing emergency funding for health, child care, education, and farm programs; establishing new tax credits and grants for education expenses that could be used to support students who are in private school or homeschooled; and rescinding about $200 billion in unused funds from Federal Reserve programs (under the CARES Act) that were established to assist businesses and state and local governments affected by the pandemic.

UPDATE—FAR Comment Letter from Construction Industry Procurement Coalition (CIPC)

As reported in the September 17 edition of Focal Point, CIPC submitted a comment letter to the federal agencies that comprise the Federal Acquisition Regulation Council (GSA, DoD, and NASA), concerning FAR case 2019-013, “Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related Threshold.” The proposed FAR change called for increasing the payment bond threshold for federal construction contracts from $35,000 to $40,000, i.e. contracts that do not meet the Miller Act bond threshold of $150,000. As prescribed in FAR 28.102-1(b)(1), the federal contracting officer is given discretion when determining the type of security for these types of contracts which includes bonds, irrevocable letters of credit or escrow agreements for contracts from $35,000 up to $150,000. The FAR Council determined that that the payment bond threshold should not be raised to $40,000 because it “did not reach the statutory calculation formula amount .“ The FAR Council disagreed that the Miller Act is not an acquisition threshold, however. NASBP has always advocated that the Miller Act is a protective statute and should be treated as such and not be subjected to indexing based upon the consumer price index. Decoupling the Miller Act from indexing will be a top federal legislative priority for NASBP in 2021.

State Report

Pennsylvania House Bill 885

UPDATE HB 885 (Gaydos) In 2019, legislation was introduced in both chambers to amend P.L.382 (No.164), known as the “Municipality Authorities Act of 1945,” to increase the bond threshold from $10,000 and up to $500,000 for local public contracts. The legislative intent of both bills (SB207 and HB885) was to eliminate the local contracting authority’s discretion to accept other financial securities (such as letters of credit and escrow arrangements) in lieu of performance and payment bonds in response to the City of Harrisburg’s failure to secure adequate security on the construction of a new incinerator. Earlier this summer, the House passed HB 885 by a vote of 198-3, and earlier this week, the Senate passed HB 885 by a vote of 48-0. HB885 has been sent to the governor for his signature. As passed by the legislature, the bond threshold for local contracts remains at $10,000. However, the legislation amends the “Municipality Authorities Act of 1945” to include performance and payment bonds as an additional form of security for local construction contracts. The local contracting community spearheaded the effort to keep the bond threshold at $10,000, while advocating that bonds should be included as additional forms of security to protect the payment remedies of their members.

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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 © 2020. NASBP. All rights reserved.