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Legislation Watch: House Passes Key Federal Surety Bill to Help Small Business Contractors




When you’re working in construction, it’s pretty easy to keep track of the things that directly impact you. A supplier is late? You know what that means and what to do. Storm coming? It’s time to cover up the project and make sure your workers are safe. There are always unexpected things happening on any job site, but you know what you’re doing. You can see the things that are going to affect your job, and your performance. Most of the time, anyway. Sometimes there are things so distant, that you might not recognize them until they have passed. This is usually the case with legislation.

This month, Congress is voting on a bill that has buried within it key amendments that can open up federal contracts to companies that might have had difficulties prior. Inside a key defense bill is an amendment that will have a huge impact on small business contractors looking to get work and who have difficulty getting bonded. Understanding the how and why of it, and why this makes it easier to get bonded, means looking closely at legislation — which, like sausage, tends to be less inspiring the more you understand the process.

US Congress small business contractors

Congress is in the process of passing a bill that will help small contracting businesses get federal work.
Image Source: Wikimedia Commons

Understanding the NDAA and the Amendment Process

The National Defense Authorization Act is one of the biggest pieces of legislation passed each year. It basically authorizes all the spending that will happen on national security. It’s an enormous beast — think of everything it encompasses. It doesn’t just include soldier pay, guns, and other equipment. It directs how money can be spent, which has a huge impact on policy. It’s food contracts and supply agreements. It pays the people who cut the lawn at bases around the world. It’s literally everything that is associated with National Defense, even if that association is far removed from primary purposes.

Because this is so wide-ranging, and because nobody wants to vote against national defense, it is a bill that has the longest and often the most complicated amendment process. People try to put all kinds of things into it. The amendment process for NDAA 2016 took a brutal 19 hours. It finally passed the House Committee on Armed Services, and then passed the House itself. It’s awaiting approval by the Senate and the President.

Inside the text is a mammoth list of amendments. What concerns us the most is 838 and 839, both of which have passed the process. They concern small businesses and the work they do for the government, particularly defense. Contractors build, repair, and maintain facilities and equipment, filling a vital role. Unfortunately, small businesses sometimes have trouble getting the work. That’s where this bill and the US Small Business Administration come in to help.

The SBA, Federal Surety, and Your Business

Federal work requires a performance bond, and if it is over $100,000, a payment bond as well (this is known as the Miller Act). There are some trustworthy surety companies that help out small business with bonds, but they can often be difficult to obtain. This makes it harder for the field to be leveled and for good companies to get their foot in the door. However, the US Small Business Administration helps encourage surety companies to back small businesses by backing the security. This way, a surety company isn’t taking such a risk on an inexperienced company — they have protection of their own, opening up the process to a lot more companies. Right now, they are backed up to 70%.

In Amendment 839 to the 2016 NDAA, however, it is increased up to 90%. This could have a potentially huge impact on small and new businesses. They will be able to do more federal work because it will be far easier for them to get bonded. The ripple effect throughout the industry could be huge. Once a company proves that it can do good work, especially at the federal level, it stands to follow that it will become easier for them to get more business and the grow. The main thing is getting a chance. This legislation can help them do so.

There is still a way to go. The Senate can change some of the amendments, though as of right now this is not one of the controversial ones. It is almost guaranteed that the President will sign it without sending it back. Passing the HCAS was the biggest step, and because of that small contracting firms have a greater chance to get bonded, to come to the service of the country, and to help themselves grow.

Getting the contract requires the backing of a strong Surety company with a reputation you can depend on. Contact Surety1 today for a quick and fair bonding process that’ll get you to work.

 




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