Another Go at Pro-Supplier, Pro-Subcontractor Federal Legislation Due This Summer

Even as the Senate stripped out surety protections that were tacked onto a bigger legislative effort—one passed by the House with those measures still in—just days ago, the fight against the inadequacy of current federal surety laws isn’t going away so easily.

Jim Wise, NACM’s lobbyist with the firm PACE LLP, warned weeks ago that the Senate, like in past years, could pose an obstacle for those pushing for surety reform. Since the latest defeat, Wise said new legislation with such protections has been slated for consideration in the Senate’s Homeland Security Committee in late July. Among other issues, Senate lawmakers expressed frustration with attempts to tuck in unrelated provisions within a massive defense spending measure, as was the case earlier this month.

The American Subcontractors Association, which has been rallying consistency for improvements to federal surety mandates, said that legislation, S. 1526 (Construction Consensus Procurement Improvement Act of 2015), would include the following:

  • Prohibit the use of reverse auctions for awarding contracts for federal construction and design services to help maintain the integrity of the bidding process for construction.
  • Curb use of fraudulent individual surety bonds on federal construction by using an existing standard in the Miller Act to ensure performance and payment bonds issued by a non-corporate surety are backed by assets that are real, adequate and readily available.
  • Expand opportunities for small firms in the federal construction market by increasing the guarantee of Small Business Association

The Senate passed the National Defense Authorization Act for Fiscal Year 2016 last week, but not before stripping out legislation included to improve individual surety protections. The legislation was designed to establish clearer standards for assets pledged by an individual surety on federal construction projects included statutory language designed to require an individual surety to solely pledge assets currently allowed by law directly to the government and place those assets in the care and custody of a federal entity. It also sought to increase the amount of surety bond guarantees from the Small Business Administration from 70% to 90%.

- Brian Shappell, CBA, CICP, NACM managing editor

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