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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: June 8, 2001

SUBJECT: Small Business Administration; Surety Bond Guarantee Program

SOURCE: Federal Register, June 8, 2001, Vol. 66, No. 111, page 30803

AGENCIES: Small Business Administration (SBA)

ACTION: Direct Final Rule

SYNOPSIS: SBA is revising Surety Bond Guarantee Program regulations to conform to two statutory changes in Section 805 of the Small Business Reauthorization Act of 2000 (Public Law 106-554): (1) the eligible contract amount is increased from $1.25 million to $2 million; and (2) the authorization period of the Pilot Preferred Surety Bond (PSB) Program is extended from September 30, 2000, to September 30, 2003.

EDITOR'S NOTE: SBA's regulations are in Title 13 of the Code of Federal Regulations, Business Credit and Assistance, Chapter 1, Small Business Administration. The regulations affected by this are in Part 115, Surety Bond Guarantee, paragraph (e) of Section 115.12, General Program Policies and Provisions, and Section 115.61, Duration of PSB program.

For more on the increase in the maximum size of surety bonds, see the February 19, 2001, FEDERAL CONTRACTS DISPATCH "Small Business Administration; Surety Bond Maximum Increased to $2,000,000."

This rule is being published as a "direct final rule," which SBA reserves for rules it believes are noncontroversial. SBA believes this rule is noncontroversial because it is merely implements provisions of Public Law 106-554 and, therefore, will elicit no significant adverse comment. However, if SBA receives any adverse comments, it will withdraw the rule, consider the comments, then possibly publish a proposed rule in a future edition of the Federal Register.

DATES: This rule will become effective on August 7, 2001, without further notice, unless SBA receives adverse comments by July 9, 2001.

ADDRESSES: Send written comments to Barbara Brannan, Special Assistant, Office of Surety Guarantees, U.S. Small Business Administration, 409 3rd Street, SW, Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT: Robert J. Moffitt, Associate Administrator, Office of Surety Guarantees, 202-205-6540.

SUPPLEMENTAL INFORMATION: Under the Surety Bond Guarantee Program, SBA guarantees from 70% to 90% of losses incurred by surety companies in the event of a contractor's default on contracts not exceeding $2 million. Contractors served by the Surety Bond Guarantee Program typically lack the required combination of experience and financial strength needed to secure bonds through regular surety channels. By making surety bonds available to qualified and deserving companies, the program ensures competitiveness and fairness in the construction industry.

This direct final rule implements Section 805 of Public Law 106-554 relating to SBA's Surety Bond Guarantee Program. Public Law 106-554 increases the contract amount eligible for SBA-guaranteed bonding from $1.25 million to $2 million. This rule revises Section 115.12(e) to reflect that change and makes the necessary conforming changes to other relevant sections of SBA's Surety Bond Guarantee Program regulations.

In addition, the law extends the duration of the Pilot PSB Program for an additional three years. The Pilot PSB Program authorizes SBA-selected sureties to issue, service, and monitor surety bonds without SBA's prior approval. This rule revises Section 115.61 to extend the duration of the Pilot PSB Program from September 30, 2000, to September 30, 2003.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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