SBA Amends Surety Bond Guarantee Regulations

The Small Business Administration has finalized, without change, a proposed rule ( ¶70,425.504) revising its Surety Bond Guarantee Program regulations. The rule conforms the regulations to certain provisions of the National Defense Authorization Act for Fiscal Year 2013 (PL 112-239), including those that increase the contract amounts for which SBA is authorized to guarantee bonds, grant SBA the authority to partially deny liability under its bond guarantee, and prohibit SBA from denying liability based on material information that was provided as part of the guarantee application in the Prior Approval Program. Further, the rule changes the Quick Bond Guarantee Application and Agreement, the timeframes for taking certain actions related to claims, and the dollar threshold for determining when a change in the contract or bond amounts meets certain criteria or requires certain action. SBA guarantees bid, payment, and performance bonds for small and emerging contractors who cannot obtain surety bonds through regular commercial channels. SBA’s guarantee gives sureties an incentive to provide bonding for small businesses, which affords small businesses greater access to contracting opportunities. The guarantee is an agreement between a surety and SBA that SBA will assume a certain percentage of the surety’s loss should a contractor default on the underlying contract. A complete listing of the affected regulations appears in the table below. The rule goes into effect on February 12, 2014. For the text of the rule, see ¶70,425.517.