The Surety Bond Improvements Act of 2006
On August 4, 2006 Senator Olympia J. Snowe, a Republican from Maine, introduced legislation that is designed to reform the Small Business Administration Surety Bond Guarantee (abbreviated SBG). The “Surety Bond Improvements Act of 2006” aims to increase the number of surety companies that underwrite the bonds, while also increasing the number of small businesses that receive bonds through the program.The aim of the bill is to:•Increase the principal guarantee which is caped at 2 million dollars in the current SBG program, to a new 3 million dollar cap.•Remove rate requirement and price controls from the Preferred Surety Bond Program.•Require the Small Business Administration (SBA) to make public any study used to justify a fee increase.•Require the SBA to make public all fees taking in by the program and any and all expenses associated with eh program.•Prevent the SBA from rejecting a claim on a bond after it has been approved through the previous approval program.A Surety Bond binds a contractor to comply with the full terms and conditions of a contract, should these conditions not be met, the surety assumes the responsibility.The Senator pointed out that most surety bonds are used on large contract that require the work and coordination of several subcontractors. The principal contractor will require that each subcontractor obtain a surety bond that guarantees the subcontractor will finish the job while meeting the contractors time and quality requirements. If a claim were to occur, the surety company is responsible for any monetary damages that occur do to the subcontractor breach of agreement. It should be noted that the majority of the time all contract obligations are fulfilled making claims infrequent.Upon introducing the legislations Senator Snowe was quoted as saying “(Her) legislation will help ensure that small businesses are able to obtain the surety bonds they need to compete for government contracts and create jobs. The necessary program changes will help revitalize the SBG program and make it easier for small business to fulfill their contractual obligations”.For more information on this and other bills please visit http://sbc.senate.gov/For more information on Surety Bonds, including frequently asked questions please visit http://www.bryantsuretybonds.com/faq.htmSenator Snowe was first elected to senate in 1994 becoming only the second women Senator elected represent Maine. In 2000 she won re-election with 69 percent of the vote. In 2001 she became the first Republican women ever to secure a full-term seat on the Senate Finance Committee. Along with this honor Senator Snowe also occupies a seat on the Senate Select Committee on Intelligence, The Senate Committee on Commerce, Science and Transportation, and serves as chair of the Senate Committee on Small Business and Entrepreneurship. Senator Snowe is married to former Maine Governor John R. McKernan Jr.
About the Author
Todd Bryantis President of Bryant Surety Bonds, Inc.Bryant Surety Bonds Visit their website at: http://www.bryantsuretybonds.com
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