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Stronger SBA Bonding Regulations Take Effect

The Small Business Administration (SBA) final rule to conform the regulations governing the Surety Bond Guarantee Program to certain provisions of the National Defense Authorization Act for Fiscal Year 2013 (NDAA) took effect Feb. 12.The new rules, published in the Jan. 13, 2014 Federal Register, include provisions that:

  • increase the contract amounts for which SBA is authorized to guarantee bonds from $2 million to $6.5 million;
  • increase the maximum contract amount for which SBA can guarantee a bond to $10 million if a federal contracting officer certifies that the guarantee is necessary for the small business to obtain bonding;
  • grant SBA the authority to partially deny liability under its bond guarantee;
  • prohibit SBA from denying liability based on material information that was provided as part of the guarantee application in the Prior Approval Program;
  • make changes to the Quick Bond Guarantee Application and Agreement to allow it to be used on contracts with liquidated damages up to $1,000 per day and on contracts that include a warranty/maintenance period of up to two years or longer if approved in advance by SBA;
  • eliminate references to the provisions of the American Recovery and Reinvestment Act of 2009 (Recovery Act) that have expired; and
  • clarify the agency’s rule on guaranteeing bonds for prime by requiring a prime contractor receiving a guaranteed bond to “retain full responsibility for the oversight and management of the contract, including any work performed by a subcontractor, and may not subcontract the full scope of the statement of work.”

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