Pursuant to our previous blog post, Chairman of the Contracting and Workforce Subcommittee, U.S. Representative Richard Hanna introduced legislation to help ensure subcontractors and suppliers who provide services to the federal government will be paid for their work. The bill will tighten the requirements for assets used to back bonds issued by personal sureties. If the assets behind the bond are worthless, the sub contractors and suppliers that are depending on that bond for payment should the general contractor fail, would be left with little to no recourse.
While corporate sureties do, on occasion fail, the general contractor can replace that failed surety bond with another corporate surety bond. As personal sureties are usually the surety company of last resort, chances that a replacement performance and payment bond could be found are marginal at best.
To assist the small contractors, the bill increases the amount of bonding that can be backed through the SBA Surety Bond Guarantee program.
Read the article here