On Aug. 1, the U.S. Small Business Administration proposed a rule to further strengthen its Surety Bond Guarantee Program, which encourages surety companies to bond small businesses that have difficulty obtaining bonding through the traditional bonding process on their own. The proposed rule would implement provisions in the National Defense Authorization Act for Fiscal Year 2013 by:
- Increasing the maximum contract amount for which SBA can guarantee a bond from $2 million to $6.5 million (which will be adjusted for inflation).
- Increasing the maximum contract amount for which SBA can guarantee a bond to $10 million if a federal contracting officer certifies that the guarantee is necessary for the small business to obtain bonding.
The proposed rule would also revise SBA’s Quick Bond Application and Agreement (SBA Form 990a) to allow it to be used on contracts with liquidated damages up to $1,000 per day (currently $250 per day) and on contracts that include a warranty/maintenance period of up to two years or longer if approved in advance by SBA. In addition, the proposed rule would clarify the agency’s rule on guaranteeing bonds for prime contractors that are merely “fronts,” by requiring a prime contractor receiving a guaranteed bond to “retain full responsibility for the oversight and management of the contract, including any work performed by a subcontractor, and may not subcontract the full scope of the statement of work.” “SBA’s Surety Bond Guarantee Program not only helps small business ontractors obtain bonding, it also assures that such contractors provide payment assurances to
their subcontractors and suppliers,” said ASA Chief Advocacy Officer E. Colette Nelson. Public comments on the proposed rule are due by Sept. 30, 2013.