Subcontractors suffer when surety delivers insufficient assets

SMACNA lobbies to change federal procurement policy

Unfortunately, all too often unscrupulous sureties pledge assets that provide insufficient protection to subcontractors. The results can be catastrophic. Bankruptcy often follows.

To improve the situation, SMACNA has joined with seven other industry associations forming a coalition to improve this situation.

The coalition noted that the current coverage of the Government-wide Federal Acquisition Regulation (FAR) Subpart 28.2 (Sureties and Other Security for Bonds) provides the contracting officer guidance, but implementation can be compromised by the severe challenges faced by even the most seasoned construction contracting officer.

The coalition’s proposed solution is to modify FAR Part 28.203.2 (Acceptability of Assets) so that it conforms to the existing standards of FAR Part 28.204. The contracting officer would then know that the assets pledged by an individual surety in support of its bonds are real, sufficient in amount, readily available and in the care and custody of the U.S. Government. Subcontractors and suppliers would know that the payment bond provides practical payment protections of last resort for work performed or supplies furnished, as intended by the Miller Act.

To learn more, read the coalition press release on SMACNA’s Press Release Web page.