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Contractors seeking to challenge a termination for default may first have to file a claim with the contracting officer. The Government can terminate a contract for default if the contractor fails to timely perform or falls so far behind that the Government believes that the contractor will not finish on time. Often the reason that the contractor falls behind in the schedule is that there were delays on the contract. Sometimes these delays are excusable (i.e., not the contractor’s fault and beyond its control) but the contractor has not received a time extension for these excusable delays. Alternatively, there may have been constructive changes to the contract ...
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5 Tips from the NFL to Strengthen Your Surety Game September is one of my favorite months of the year—it signals the start of the National Football League (NFL) season. My dad first bought season tickets when I was 5 years old, and I’ve been obsessed with the game ever since. Like the construction industry, the NFL is competitive. And every company is looking to grow and win work in the face of that tough competition. The following are a few lessons I’ve learned from the league and how contractors can apply them to maximize bond programs and ensure long-term success. 1. Remember: Bad Deals Equal Dead Money The NFL has what is referred to as a “hard salary ...
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“Read and follow instructions.” What is good advice in grade school also rings true for maintaining and preserving surety benefits for multi-million dollar construction projects. Raziye “Raz” Andican , an attorney in the Tysons, VA office of Smith Currie & Hancock , said the best way for contractors to enforce their rights under a surety bond is to read and understand it. Then, once they have read the bond, the next step is to follow the guidelines “to a T,” Andican said. Surety bonds serve as powerful backstops when things go wrong during construction. While they place financial obligations on a surety to complete a project if the unexpected happens, ...
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By Don Appleby and Andy Tokasz   Sharing news, gossip, or rumors in the workplace happens anytime people get together. It’s human nature. But this behavior is potentially damaging in our industry. Access to our clients’ private business practices and financials, combined with turnover among surety producers and underwriters, makes for a potentially leaky combination. During the informative National Association of Surety Bond Producers (NASBP) Sales Workshop, Larry McMahon, Executive Vice President and Surety Manager at Alliant Insurance Services, and consultant Jonathon Paul explain how, “information is currency.” They are talking about working hard ...
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David Pesce, Senior Vice President of Surety at Hartford Bond, is a 33-year veteran surety underwriter who has advice for bond producers and underwriters who want to advance their career in contract surety: obtain the Certified Construction Industry Financial Professional (CCIFP®)  certification. The CCIFP certification, administered through the Institute for Certified Construction Industry Financial Professionals (ICCIFP), focuses specifically on the management of finances in the construction industry. It is the only certification of its kind that demonstrates competency in construction finance. The CCIFP can stand on its own, or add more credibility to ...
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The following  Peckar & Abramson, P.C. Client Alert by Warren E. Friedman is reprinted with permission.  Florida contractors will soon have a level playing field, at least related to the right to recovery of attorney fees in certain circumstances. Effective October 1, 2019, the Florida statute by which legal fees may be recovered from insurers and sureties was amended to expressly afford that right to contractors. Florida’s Insurance statute, Chapter 627, affords a right to recovery of attorney fees when a judgment is obtained against an insurer and in favor of any insured pursuant to a policy or contract executed by the insurer. See Fla. Stat. ...
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Performance bonds help guarantee that a project owner has financial peace of mind, a successful project, and an enhanced reputation. These are outcomes that any project owner would be proud of. All an owner has to do to have such a “best friend” is to specify bonds in the bid documents.  Construction is a risky business with a high rate of default on project completion. Before issuing bonds, surety companies vet construction contractors through a rigorous prequalification process so that only those with the right experience, equipment, and know-how can furnish bonds to owners. As part of the process, the surety does an in-depth financial review of the contractor’s ...
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A bid bond provides financial protection to an owner if a bidder is awarded a contract but fails to sign the contract or fails to provide the required performance and payment bonds. The bid bond also helps screen out unqualified bidders, as a surety company will not issue a bid bond on behalf of a contractor that it believes cannot perform the contract obligation. Before issuing a bid bond, the surety company prequalifies the contractor, by thoroughly investigating the contractor and determining that the contractor has the ability to carry out the work under the construction contract. It is like a surety seal of approval. The surety’s specific obligation ...
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Accountant Joe Molloy has eight brothers and sisters, and he prepares taxes for all of them. It’s not as much work as it sounds, he says. He need not apply the full arsenal of tax rules and loopholes to his siblings’ tax returns because none of them operates complex business enterprises. This is not the case for clients at his day job. Molloy is the Principal of Construction Taxation at Grassi & Co., a New York City accounting firm . He oversees the preparation and review of tax returns for Grassi’s construction industry clients. Molloy jokes that he only talks to his siblings during tax season. But if you are one of his construction contracting ...
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Owners and subcontractors take note: Private construction project owners are not required to provide copies of payment bonds to potential claimants, although some standardized contract agreements include the right of subcontractors to request copies. Most public owners, however, have obligations to provide such bonds upon request.  Indeed, the Federal Acquisition Regulations (FAR) provide authority for subcontractors and suppliers AND prospective subcontractors and suppliers on federal projects to request and obtain copies of payment bonds from the contracting officer. FAR 28.106.6(d) provides as follows:  Upon the written or oral request of a subcontractor/supplier, ...
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This year at the 2019 NASBP Annual Meeting, attendees who have the earned the Associate in Fidelity and Surety Bonding (AFSB®) and Chartered Property Casualty Underwriter (CPCU®) designations will be able to display a sticker on their name badge, indicating that they have obtained these prestigious designations. These designations, typically obtained by surety professionals, are professional credential programs that help an individual increase his or her knowledge of risk management, surety, and insurance and demonstrate to clients, employers, and colleagues that they have obtained that expertise. The Institutes’ offers these as well as entry-level certificate ...
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Surety bonds guarantee capital, of course; but they also bring with them the expertise of the surety and reputational benefits to the contractors and construction projects that use them. But contractors who benefit from surety bonds should keep in mind they are subject to indemnity agreements that will bite if they fail to fulfill their end of the contract by failing to pay bond premiums and subcontractors or by not completing the project. By entering into a general agreement of indemnity, contractors are placing their cash and real and personal property at risk in the event of a bond default—and even that of their spouse, children, other relatives or business ...
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The end of winter marks the beginning of the push for some known scam techniques, but there are also some new ones on the scene. Scammers are targeting organizations large and small, as well as individuals, attempting to steal money and/or information. Below are some of the more common scams that are being reported around the world. At the time of year when W-2's are being issued to employees, a common scam method is to impersonate the CEO or other executive leader, requesting documentation on all employees to compare records. The targeted individuals at organizations would be staff level members associated with the HR and finance departments. The request often ...
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Today’s technology is disrupting the world’s oldest industry, construction, according to James Benham, CEO of JBKnowledge, Inc., a construction and insurance technology solutions company based in Bryan, Texas. For Benham, technology is a means, and the end is improved construction productivity. Benham is adamant that, because construction is a low-margin, low-productivity business and its productivity is lagging behind other industries, the construction industry must embrace technology now. What do construction firms have to fear if they don’t get on the technology bandwagon? According to Benham, they risk being left out of a phenomenon that some call ...
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​ This is the third blog in a three-part series on how NASBP bond producers are uniquely situated to ensure success and growth for small contractors.   NASBP bond producers are uniquely qualified to help small contractors learn about financial management and to increase the level of financial literacy in their communities.   NASBP members typically seek to develop expertise in construction financial management and use that expertise to become effective business advisors as a means to differentiate themselves from the general population of agents who can provide surety bonds for contractors. Pictured here is Joshua Etemadi ...
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Jeanne Harrison, an associate with the Atlanta office of the construction law firm Smith Currie, has a message for the construction industry: Don’t underestimate the coming wave of respirable crystalline silica lawsuits. Harrison, pictured, believes exposure to crystalline silica, the characteristic dust generated by drilling stone and brick, will be the source of innumerable lawsuits by victims of silicosis, a lung disease caused by breathing in silica. Harrison explains the ins and outs of silica regulations to construction industry owner-operators. She predicts that silica-related silicosis claims will be her generation’s version of the asbestos-spawned ...
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According to W. Barron A. Avery and William "Liam" B. O'Reilly, "Contractors cannot always trust that government contracting officials have used the correct forms, or cited the correct clauses, when soliciting goods and services. As a consequence, contractors should maintain constant vigilance for potential government errors or omissions in solicitations that could impact contractors’ ability to perform. Failure to do so could result in substantial unexpected costs down the road, rendering contracts difficult – or even impossible – to perform." Read Barron’s and Liam’s alert published by BakerHostetler LLP and titled “FAR Clauses Are in the Contract Whether ...
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As of November 5, 2018, the population of the United States was more than 328 million, based on projections from the U.S. Census Bureau. And there’s no sign that growth will stop anytime soon. After all, when factoring in the various components of population change—births, deaths, and migrations—there’s a net gain of one person every 14 seconds  in our country. As the U.S. population booms, housing supply must keep pace. Faced with increased development, some local governments are requiring subdivision bonds to guarantee contractors meet their performance obligations. “Subdivision bonds generally guarantee public or private work improvements to a city ...
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Read about the impact of the Narula reverse False Claims Act decision on bonding set-aside contracts in the Surety Claims Institute newsletter article by Armen Shahinian of Chiesa Shahinian & Giantomasi PC , who serves on the NASBP Attorney Advisory Council .   Armen Shahinian, Esq. Chiesa Shahinian & Giantomasi PC One Boland Drive West Orange, NJ 07052 973.530.2002 (NYC phone: 212.973.0572) ashahinian@csglaw.c
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The Executive Director of CICPAC , Kathleen J. Baldwin, CPA, CCIFP, has described CICPAC's  “Revenue Recognition Implementation Guide -- Guidance for CPAs and Construction Companies, " for NASBP and its membership. NASBP: When did CICPAC release the Guide? Baldwin: CICPAC released the Guide on March 28, 2018. NASBP: Why did CICPAC create this Guide?   Baldwin: At the time of the Guide’s release, most articles and material published to date focused solely on the definition of the new FASB revenue recognition standard. CICPAC wanted to compile a document focused on the aspects of the new standard that were most pressing to the construction industry. ...
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