NASBP Members Converse with Key U.S. Senate Offices
Recently NASBP members, John Bustard of King & Neel, Inc. in Honolulu, HI and Stuart O’Farrell of Arthur J. Gallagher in Seattle, WA, had the opportunity to discuss the merits of H.R. 776 with Senator Maize Hirono’s (D-HI) Counsel and Senator Mark Begich (D-AK), respectively. While traveling to the east coast, Bustard met with Senator Hirono’s Counsel to raise the importance of including H.R. 776 in the Senate version of the 2015 National Defense Authorization Act (NDAA). Although H.R. 776 already is included in the House NDAA, Bustard asked if Senator Hirono would consider offering an amendment to the Senate NDAA that would help ensure the provision remains in the final bill. NASBP has visited Senator Hirono’s office on several occasions, making similar requests, as she serves on the Senate Armed Services Committee. Messages from a constituent who has taken time to meet with Senators are particularly effective. O’Farrell made a similar request to Senator Mark Begich during a phone conversation. The Senator had originally planned to meet with O’Farrell at the Gallagher office, but, due to travel delays, those plans changed. Although Senator Begich does not serve on the Senate Armed Services Committee, he does serve on the Homeland Security and Governmental Affairs Committee, which has jurisdiction over the individual surety issue. Furthermore, as a former mayor of Anchorage, Senator Begich understands the importance of valid bonds backed with legitimate, verifiable assets. When Congress returns to work after the November Mid-term elections, NASBP will continue its efforts to ensure that the Senate NDAA includes H.R. 776.
SuretyPAC Contributors Recommend Disbursements for Mid-Term Elections
In September, NASBP surveyed its SuretyPAC contributors, asking them to identify those candidates seeking Congressional office who they believe merit a SuretyPAC contribution. To qualify, those candidates need to be familiar with and support the surety and construction industries and/or serve on a federal committee with jurisdiction over issues of concern to NASBP. All recommendations were subject to the approval of the NASBP SuretyPAC Officers. SuretyPAC is the oldest federal PAC focused solely on the surety industry, and NASBP uses it as a critical tool to advance its federal legislative agenda. SuretyPAC contributions were made to the following candidates:
- U.S. House of Representative Michelle Lujan Grisham (D-NM-1st) who is seeking her second term and serves on the House Oversight and Government Reform, Budget, and Agriculture Committees and supported NASBP efforts on two fronts: 1) as a co-sponsor to H.R. 776 and 2) authoring a letter to the General Service Administration (GSA) at the request of NASBP to address an issue with GSA Standard Forms. Pictured below, Congresswoman Lujan Grisham is pictured center with, from left, NASBP member Mike Byrd and NASBP President Thomas Padilla;
- U.S. House of Representative Duncan Hunter (R-CA-50th), an incumbent seeking re-election to his fourth term who serves on the Armed Services, Education & the Workforce, and Transportation & Infrastructure Committees, key committee assignments which NASBP highly values. Pictured below from left is Congressman Duncan and NASBP Past President Lawrence McMahon;
- U.S. House of Representative Chris Gibson (R-NY-19th) an incumbent running for his third term who serves on the Armed Services and Agriculture Committees, who is a recipient of previous SuretyPAC contributions for his commitment to the industry. Below Congressman Gibson is pictured center with his wife along with NASBP Members Kevin Garrity, far left, and Chris Leach, far right;
- U.S. House of Representative Mike Coffman (R-CO-6th), running for his fourth term, who serves on the House Small Business and Veterans’ Affairs Committees, who is a recipient of previous SuretyPAC contributions for his commitment to the industry;
- U.S. House of Representative Chris Van Hollen (D-MD-8th) a pro-business Democrat who serves as Ranking Member on the House Budget Committee, which NASBP enjoys a close working relationship with his staff;
- U.S. Senate Candidate Mike Rounds (R-SD), a popular former Governor, and former owner of an insurance and real estate agency. Pictured below, from left, is NASBP Member Jason Gusso and Rounds;
- Illinois House Candidate Bob Dold, a Republican, is seeking to unseat incumbent Brad Schneider (D-IL-10). Pictured below is NASBP Past President Carl Dohn with Dold.
NASBP will keep the NASBP membership apprised of the election results for these and other Mid-term elections of importance to NASBP.
NASBP Member Testified Nov 29, 2012 before U.S. Senate Committee
NASBP Member Joshua Etemadi (center panelist pictured above) of Construction Bonds, Inc.--A Division of Murray Securus testified on behalf of NASBP, November 29, before the U.S. Senate Committee on Small Businesses & Entrepreneurship. Etemadi, who is Chair of the NASBP Small & Emerging Business Committee, underscored the importance of the U.S. SBA Surety Bond Guarantee (SBG) Program and the Senate Committee’s legislative efforts to enhance its reach. He also testified on additional SBG Program enhancements sought by NASBP. View the hearing from the C-SPAN web site, by clicking here or visit the C-SPAN web site video library at Congressional Committee, Job Creation Efforts, Senate Committee. Nov 29, 2012.
NASBP Testimony February 9, 2012 Before the Subcommittee of the U.S. House of Representatives’ Committee on Small Business
On February 9, the U.S. House Small Business Subcommittee on Contracting and Workforce conducted a hearing titled; “Construction Contracting: Barriers for Small Business Contractors.” The hearing focused on the following areas that often limit small businesses from effectively competing on construction projects at the federal level which include: surety bond issues; contract bundling; retention; subcontractor payments; and subcontracting credit allowance.
Testifying before Chairman Mick Mulvaney (R-NC) from the private sector were: NASBP CEO Mark McCallum, Dirk Haire, representing the Associated General Contractors of America (AGC), Rosie Privitera Biondo, representing the Women Construction Owners and Executives (WCOE), and Miguel Galarza, representing Yerba Buena Engineering & Construction of San Francisco, CA. Testifying on behalf of the public sector were the following federal agencies: the U.S. Small Business Administration (SBA), the U.S. Army Corps of Engineers, and the General Services Administration (GSA). For a copy of NASBP’s testimony, please click here. For a copy of all the testimonies presented, please click here.
NASBP was given the opportunity to testify before Chairman Mulvanvey’s subcommittee after developing a strong and trusting relationship with his office. For those of you who attended the 2011 NASBP Legislative Fly-in, Mr. Mulvaney and Representative Richard Hanna (R-NY) addressed the participants that morning. Since that time, Representatives Hanna and Mulvaney have co-sponsored legislation, H.R. 3534, the “Security in Bonding Act of 2011,” to require individual sureties posting bonds on federal construction projects to back those bonds with public debt instruments of the U.S. Government, which are turned over to the custody and control of a U.S. federal depository.
Testifying on behalf of the surety industry, NASBP CEO Mark McCallum addressed several important issues during his five minute oral testimony. Mark began his testimony addressing the importance of the surety bond product and the protection it offers to downstream parties who are often small business owners. He expressed NASBP’s commitment to the SBA Surety Bond Guarantee Program and the changes that were recently adopted to streamline line the application and claims process. Mark noted that the Program has helped thousands of small construction firms over the years, but it could be helping even more by adopting additional enhancements such as increasing the guarantee provided to sureties and the contract size limit from $2 to $5 million, enhancements long supported and advocated for by the industry. The final portion of NASBP’s testimony addressed H.R. 3534, the Security in Bonding Act. To view Mark’s opening testimony, click here.
NASBP valued this opportunity to speak before members of the House Small Business Subcommittee on Contracting and Workforce and to acquaint them with the important issues facing the surety industry. NASBP continues to make friends on Capitol Hill, which further bolsters our effectiveness and advocacy efforts.
NASBP Testimony March 5, 2012 Before Subcommittee of the U.S. House of Representatives’ Committee on the Judiciary
On March 5, 2012, NASBP testified before the Subcommittee on Courts, Commercial and Administrative Law of the U.S. House of Representatives’ Committee on the Judiciary. McCallum, called for Congress’ support of H.R. 3534, the “Security in Bonding Act of 2011”, introduced by U.S. Representative Richard Hanna (NY-24th District) and co-sponsored by U.S. Representatives Mick Mulvaney (SC-5th District), Trey Gowdy (SC-4th District), and Jared Polis (CO-2nd District), as a critical means to protect small construction businesses and to assure the integrity of surety bonds on federal contracts when issued by individuals using a pledge of assets.
Noting that there have been recent problems associated with individual surety bonds on federal projects, Mr. McCallum informed Congress that a statutory solution was needed. “NASBP believes that the current regulations pertaining to use of individual sureties on federal construction projects are fundamentally flawed, allowing gamesmanship by unlicensed persons acting as sureties,” McCallum said, adding, “Such existing requirements need to be superseded by the statutory approach delineated in H.R. 3534.”
H.R. 3534 requires individual sureties to pledge assets that are public debt obligations that are unconditionally guaranteed by the U.S. Government and to provide those assets to the federal contracting authority, ensuring that pledged assets are sufficient, readily convertible to cash, and in the physical custody and control of the federal government. “Subcontractors and suppliers furnishing labor and materials on federal construction projects need to know that their payment bond remedies are secure and have confidence that the assets backing those bonds will be sufficient to pay them should they go unpaid for their efforts,” remarked McCallum.
Janette Wellers, President and CFO of JBlanco Enterprises, Inc., Sheridan, Colo., testified that small businesses like hers performing as subcontractors on federal construction projects rely on the integrity of the payment bond to ensure that they have a means of recovering monies when they go unpaid. Wellers said in her testimony, “I nearly lost my business as a result of a deficient individual surety bond placed on a federal project that later proved to have no assets behind it.” She explained that the prime contractor had secured a bond from an unlicensed individual surety, not from a certified corporate surety approved and listed on U.S. Department of the Treasury Circular 570. She stated that the assets pledged to back the payment bond apparently did not exist. “The inability to recover our payment bond claim was a severe financial hardship for JBlanco Enterprises, endangering our business viability,” Wellers said.
Robert E. Little, Jr., an attorney, who had spent many years in government service addressing procurement matters, described how Congress’ support of H.R. 3534 would provide much needed certainty to a very contentious area of federal construction contracts—the acceptability of bid, performance, and payment bonds issued by individual sureties. “Since December of 2004 when this problem first came to my attention, I have reviewed and provided opinions on more than several dozen assets pledges by individual sureties,” Little said. “I have not seen a valid asset.”
Kristen McDonough, Director of Legislative Affairs of the National Electrical Contractors Association (NECA), said, "The testimonies of Mr. McCallum, Ms. Wellers, and Mr. Little yesterday underscore how H.R. 3534, the ‘Security in Bonding Act of 2011,’ is good common sense, and Congress passing this bill will help to protect the funds of taxpayers and small businesses’ owners, like NECA contractors.”
H.R. 3534 is supported by the following national organizations: American Insurance Association (AIA), American Subcontractors Association, Inc. (ASA), Associated Builders & Contractors, Inc. (ABC), Associated General Contractors of America (AGC), Mechanical Contractors Association of America (MCAA), National Association of Minority Contractors (NAMC), National Association of Surety Bond Producers (NASBP), National Electrical Contractors Association (NECA), Property Casualty Insurers Association of America (PCI), Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA), and Surety & Fidelity Association of America (SFAA).
For additional testimony from this March 5, 2012 hearing, click here.
In May 2013, NASBP Testified in Support of SBA Bond Guarantee Program and Challenges Posed by Individual Surety Bond Fraud
In May 2013, Chairman Hanna of the Small Business Subcommittee on Contracting and Workforce of the U.S. House Small Business Committee invited NASBP’s Mark McCallum to testify before his Subcommittee on “Building America: Challenges for Small Construction Contractors.” McCallum offered testimony in support of the SBA Bond Guarantee Program and on the challenges posed by individual surety bond fraud problems.