Description:
As ordered reported by the House Committee on the Judiciary on March 20, 2012
H.R. 3534 would amend federal law regarding the use of certain surety bonds by the private sector for work on federal construction projects. Specifically, the legislation would strengthen the collateral requirements for individual sureties. H.R. 3534 also would require a report by
the Government Accountability Office (GAO) on the use of surety bonds by federal contractors over the past 10 years.
CBO estimates that implementing H.R. 3534 would cost less than $500,000 a year, subject to the availability of appropriated funds for GAO to produce the required report. Enacting the bill would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply.
Under current law and regulation, contractors on federal projects are required to insure their performance to subcontractors and the federal government in connection with federal construction projects using surety bonds. Surety bonds provide financial guarantees that contracts will be completed according to mutual terms; if a contract is not completed, the bonds are available to cover the losses. Based on information from the General Services Administration, private contractors, and bond providers, CBO expects that agencies would continue to receive contracts at the lowest price available and the proposed changes to some collateral requirements under H.R. 3534 would not affect the cost of procuring construction services.
H.R. 3534 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would not affect the budgets of state, local, or tribal governments.
