Schubert also urged that federal procurement rules be changed to allow small businesses to perform the work that they can on federal construction project. Small veteran-owned contractors should be permitted to joint venture with larger contractors, using the larger contractor's surety bond relationship to obtain the bonds for the project and develop an independent relationship with the surety for future projects. Under current regulations, small contractors lose their status as a small contractor and are no longer qualified for projects designated for small business participation.
The Subcommittee on Economic Opportunity of the House Committee on Veterans' Affairs invited SFAA to testify on the legislation to provide its assessment of how and to what extent the bill's surety bond provisions would achieve the legislation's objective of promoting small veteran-owned business, to offer guidance on how performance and payment bonds are underwritten and to provide solutions for enhancing the bonding of small veteran-owned and controlled contractors.
SFAA is a licensed rating or advisory organization in all states including the District of Columbia and Puerto Rico and has been designated by state insurance departments as a statistical agent for the reporting of fidelity and surety experience. SFAA plays an active role in development and diversity nationwide by assisting in educating small and emerging contractors on how to become bondable or increase their bonding capacity and by providing technical assistance and program resources to state and local governments in the areas of contractor development and bonding support. This training is a crucial element that helps these contractors qualify for surety bonding, which is required on federal, state and other public works projects to protect taxpayers, public entities and certain subcontractors and suppliers from the risks of additional costs and delays associated with contractor failure. In the unforeseen event that a contractor defaults on a bonded contract, the surety fulfills the contract up to the bond amount.