bookmark_borderSBA Implements Temporary Decrease in Surety Bond Guarantee Program Fees

SBA Implements Temporary Decrease in Surety Bond Guarantee Program Fees

The U.S. Small Business Administration (SBA) has issued a notice that it is decreasing its fees for the Surety Bond Guarantee Program (BGP) on a temporary basis. Beginning October 1, 2018, the fee charged to sureties will decrease from 26% of the bond premium to 20% of the bond premium and the fee charged to the bond principal will decrease from $7.29 per thousand dollars of the contract amount to $6 per thousand dollars of the contract amount. The decrease in the fees will expire on September 30, 2019. This change reverses an increase in the fees that SBA issued 12 years ago to address a deficiency in the revolving fund for the BGP. SBA believes that the revolving fund now has sufficient funds so that the fees can be decreased on a temporary basis. SBA will review the program during this one-year period to determine if the fees are sufficient and whether the change increases participation in the BGP.

Members should visit Advocacy / What’s New for more information.


bookmark_borderCovington to Lead The Surety & Fidelity Association of America

FOR IMMEDIATE RELEASE
Contact: Larry Taylor, Chair SFAA Board of Directors
Phone: (515) 243-8171
E-mail: [email protected]

Contact: Bryan Surcouf, Communications Manager
Phone: (202) 778-3629
E-mail: [email protected]

Covington to Lead The Surety & Fidelity Association of America
Association Salutes Retiring President and Welcomes New Leader

JULY 19, 2018, Washington, D.C. – The Surety & Fidelity Association of America?s (SFAA) board of directors is delighted to announce that J. Lee Covington II will become the trade association?s President on October 1, 2018. Covington will take the place of retiring President Lynn Schubert who has led the SFAA for more than two decades. Schubert will become President Emeritus until her retirement on December 31, 2018.

?In the past 22 years, Lynn Schubert has transformed the SFAA into the thought leader and trusted adviser for the surety and fidelity industry, as well as for government agencies and legislators,? said Board Chair Larry Taylor. ?Now the industry marks the beginning of a new era with Lee Covington.?

The SFAA works every day to educate lawmakers and stakeholders about the benefits of surety and fidelity bonding and the critical role it plays to protect public and private interests. In 2017 alone, the surety industry provided over $600 billion in protection to consumers, taxpayers and businesses. The organization represents more than 425 property and casualty insurance companies providing public policy advocacy and education, as well as statistical and actuarial services and information. SFAA members write over 97 percent of the surety and fidelity premium in the United States.

?It is an honor to become President of the SFAA and I welcome the opportunity to lead the organization as it continues to achieve its mission and seize new opportunities to expand the use of the valuable products and services offered by the association?s members,? said Covington.

Covington currently is the Senior Vice President, Governmental Affairs and General Counsel for the Insured Retirement Institute, a position he held since 2009, leading its legislative and regulatory initiatives at both the federal and state levels. His focus on insurance law began in 1993 in Little Rock, Arkansas where he rose to become the deputy commissioner of the Arkansas Insurance Department. Covington honed his leadership skills as the Director of the Ohio Department of Insurance from 1999 to 2002, where he served on the Executive Committee of National Association of Insurance Commissioners, and then moved to positions of influence on the national stage in Washington D.C.

?It has been my honor to serve the SFAA,? said President Lynn Schubert, ?and I am thrilled to turn over the reins to such a capable leader who will take our vibrant organization of experienced staff and active member company representatives and enhance it for the membership and the entire industry.?

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The Surety & Fidelity Association of America (SFAA) is a trade association of more than 425 insurance companies that write the vast majority of surety and fidelity bonds in the U.S. SFAA is licensed as a rating or advisory organization in all states and it has been designated by state insurance departments as a statistical agent for the reporting of fidelity and surety experience.


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bookmark_borderNew Bonding Opportunities posted for Members

New bonding opportunities enacted in the state legislature that may be
of interest to SFAA members has been posted. The report is divided by
line of business: contract surety, commercial surety, and fidelity bonds.
For your reference, we have included the date of enactment for each
bill. SFAA updates this list periodically as new bonding opportunities
are enacted. 

Access the New Bonding Opportunities now


bookmark_borderAmicus Brief posted for Members, Claims Advisors and Case Summary Subscribers

  

New Amicus Brief for Ohio has been posted for Members, Claims Advisors and Case Summary Subscribers.  Navigate to Member Services / Claims / Amicus Briefs.

Older Amicus Briefs have been posted for the following locations:

  • Alabama
  • Arkansas
  • Arizona
  • California
  • Connecticut
  • District of Columbia
  • Federal
  • Florida
  • Georgia
  • Illinois
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Nevada
  • New Hampshire
  • New Jersey
  • New York
  • North Carolina
  • Ohio
  • Oregon
  • Pennsylvania
  • South Carolina
  • Texas
  • Utah
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming

These Briefs are specific to the cases in which they were filed and are not a substitute for legal advice.


bookmark_borderDraft Infrastructure Bill Circulated in the U.S. House

Draft Infrastructure Bill Circulated in the U.S. House

Chairman of the House Transportation and Infrastructure Committee, Bill Shuster (R-PA) circulated a draft bill that would, among other things, tackle the funding issue for the Highway Trust Fund (HTF). The bill may be a catalyst for discussion on transportation issues, but no action is expected anytime soon.

The bill would increase the gas tax by 15 cents and by 20 cents for diesel fuel until 2028. Consistent with a goal to make all users of the transportation system pay for the system, the bill imposes a 10 percent tax on the wholesale price of electronic batteries for vehicles and bicycle tires and eliminates the reduced user fees on fuels for intercity and local public buses and certain passenger trains. Other highway taxes also are extended to 2028. A Highway Trust Fund Commission would be created to find a long-term solution to the solvency issues of the HTF. A voluntary pilot program would test whether a per-mile user fee could fund the HTF.

The bill also contains a pilot program for the General Services Administration to complete three to five federal building projects as a public-private partnership (P3) under the current Office of Management and Budget (OMB) scoring rules. Long term P3s do not score well under current OMB rules. When a federal agency leases office space under a ten-year lease, the OMB rules provide that this is an operating lease that requires the agency to include only the next year?s lease payments, plus any fee to break the lease, to be included in the following FY budget. If a federal agency enters into a P3 agreement under which a private partner finances the construction or rehabilitation of a building for which the federal agency would rent the space for 20 years, after which the agency would either take ownership or otherwise pay back the private partner for the financing, the OMB rules consider that a capital lease. The federal agency would have to budget the present value of the entire 20-year lease in the next FY budget. If this provision is enacted, it would test P3s and how they can operate under current OMB rules.

The bill also addresses accelerating project delivery by requiring the federal transit agencies to make a decision on a permit within two years and creating a pilot program to test innovative approaches to environmental permits.

The bill authorizes $3 billion over the next five years for a new National Infrastructure Investment Program to make grants for transportation projects, 30 percent of which must be in rural areas. There will be incentive grants to applicants that have leased an infrastructure asset to the private sector if the applicant certifies that the proceeds from that lease will be used to make other infrastructure investments. The proposal also contemplates a $10 billion revolving fund to construct and renovate federal buildings. There no funding mechanism for these new programs.

Members should visit Advocacy / General Info (Members) for more information.


bookmark_borderAmendment on the Miller Act Not Included in Final NDAA Report

Amendment on the Miller Act Not Included in Final NDAA Report

The final conference report on the FY 2019 National Defense Authorization Act (NDAA) does not contain the amendment that SFAA and NASBP sought to exempt the federal Miller Act bond threshold from indexing for inflation. Our bill, H.R. 4486, was included in the House version of the NDAA, but was not in the Senate version when the NDAA went to conference. The Department of Defense (DOD) expressed concern about our amendment. Assuming continuing inflation, the DOD noted that over time a $150,000 contract will have less value than it does today. Hence, the DOD would be required to bond projects that are worth less than they are now at the $150,000 bond threshold. The DOD concluded that the risk of default/loss at these lower dollar values does not warrant the protection of bonds.

This June, the DOD, GSA, and NASA published a notice they will release a proposed regulation in December 2018 that would amend the Federal Acquisition Regulation (FAR) to make inflation adjustments of statutory acquisition-related thresholds that are due for consideration in 2020. The $150,000 Miller Act performance bond threshold is one of the thresholds to be considered in 2020. If the Miller Act bond threshold were increased from $150,000 to $200,000 in 2020, according to SFAA?s data, the federal government?s exposure to loss would increase $300 million annually.

The change order bill that the federal Construction Industry Procurement Coalition supported was included in the NDAA report, which will go to the President for signature soon. H.R. 4754 requires that for every solicitation for a contract to be awarded to a small business, the prospective bidders must be provided with the agency?s policies or practices for compliance with the FAR on Requests for an Equitable Adjustment (REAs) when a change order is issued. The FAR already requires the agencies to respond to REAs in ?the shortest practicable time.? If an agency does not have a policy or information on its past practices regarding on REAs, H.R. 4754 would require the agency to start collecting that information for a three-year period. The agency must collect data on whether they responded to a REA within 30, 60, 90, 180, or 360 days from receipt of the REA or whether the agency responds to REAs after the completion of the contract. This is a first step to gather information on the agency practices and to address compliance with the FAR. H.R. 4754 was included in the House NDAA but not in the Senate version. The bill also passed the House as a standalone bill on the suspension calendar.

The House plans to vote on the conference report soon. The Senate vote will be shortly thereafter.

Members should visit Advocacy / General Info (Members) for more information.