The American Subcontractors Association (ASA), in collaboration with the National Association of Surety Bond Producers (NASBP) and The Surety & Fidelity Association of America (SFAA), published the 2015 edition of “Public-Private Partnership Laws in the States, Including Surety Bond Requirements.”
The three organizations reviewed the state laws authorizing construction projects to be financed by P3s and determined which programs provide payment assurances for construction subcontractors and suppliers through payment bonds. The revised guide will help subcontractors determine whether they have payment protections before they bid on a P3 project.
During 2015, the District of Columbia and Georgia enacted new laws authorizing public-private partnerships; both laws mandate that P3 agreements include requirements for surety bonding. Ohio clarified its 2014 law to assure that its director of transportation will require a performance and payment bond on the construction portions of the project.
The chart also adds entries for a new Alabama law expanding the authorization of P3s for transportation projects; a new Arkansas law that authorizes the use of P3s for unpaved state roads; a clarification of a 2014 Maryland law; a Virginia law that authorizes P3s for solar energy projects; and another Virginia law that authorizes the use of P3s in an interstate transportation compact for Interstate 73.
In a letter to the Federal Highway Administration (FHWA), ASA, SFAA and NASBP recommended that the U.S. Department of Transportation (DOT) include performance and payment bonds on public-private partnerships. “There are sound, well-recognized public policy reasons for requiring performance and payment security for P3s and the FHWA’s guide should reflect that,” the associations wrote. “The payment protection available for subcontractors, suppliers, and workers and the contract completion protection for public entities should not be compromised and reduced because some financiers and concessionaires are comfortable with less security.”
The three associations supported the DOT’s effort to provide technical assistance tools, including model contract provisions, to state and local governments undertaking P3 projects. FHWA is developing the tools as part of its Build American Transportation Investment Center (BATIC), a one-stop-shop for state and local governments, public and private developers and investors seeking to utilize innovative financing and P3s to deliver transportation projects. BATIC was authorized via presidential memorandum in July 2014.
Additional resources include:
- SFAA and the American Insurance Association Bonding P3 Projects;
- NASBP’s Always Verify Your Bond!; and
- ASA’s Subcontractor Payment Assurance on Public-Private Partnerships in Your State: A Legislative Work Kit.