President Obama Signs Two Surety Provisions into Law
Monday, November 30, 2015
Over the Thanksgiving holiday the President signed the National Defense Authorization Act (NDAA)—the annual defense policy legislation—with two key provisions for the surety industry included in the final and enacted bill. These were the only provisions from the federal Construction Coalition’s procurement reform legislation that made it into the final version of the NDAA. One provision increases the SBA’s bond guarantee to sureties in its Preferred Surety bond guarantee program from 70% to 90%. The second provision requires individual sureties to play by the same rules as any other person or entity that provides collateral to the federal government. Individual sureties now are required to pledge known and reliable assets to back their bonds, and to relinquish control of those pledged assets to the federal contracting officer, who would deposit them in the Federal Reserve System.
These surety provisions were part of S. 1526, a larger Construction Industry Procurement Coalition bill that the entire construction industry supported. SFAA is a member of the Coalition.
The NDAA delays the effective date of both surety provisions to one year after the date of enactment so that the necessary regulations can be developed to implement both provisions. Provisions that would have required a General Accounting Office study of the impact of the changes to the requirements for individual sureties on the corporate and individual surety markets were not included in the final bill.
View PDF version