AP Blog

By Jason Wissmiller, 08/11/2020
We often receive phone calls from clients and prospects asking for a general liability policy to satisfy an insurance requirement in a contract, such as an airport lease. Like most insurance products, clients buy an aviation general liability policy with little knowledge of what the policy actually covers. In...
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By Mark Holt, 08/03/2020
N-95 masks have been the subject of increased focus by OSHA. These masks were originally designed for industrial use in sectors such as mining, construction, painting and manufacturing. Designed to filter out airborne particulates, they have a logical place in the healthcare setting to control airborne diseases...
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By Trevor Gilstrap, 07/29/2020
Fracking is a method that has been in use for decades but has become the hot buzz word in recent years, and is the alleged cause of everything from tainted water to silicosis. Regardless of your opinion on these growing allegations, these types of lawsuits from upset citizens are increasing throughout the...
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By Chris Pavone, 07/28/2020
Trucking’s role in keeping goods, materials and the economy rolling during the global pandemic has been nothing short of phenomenal and will certainly play a role in re-establishing “normal” supply lines depleted by hoarding households and profiteering resellers. Hopefully, everyone in the...
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Growing rates of healthcare workers are experiencing physical and psychological injury as a result of workplace violence related to resident care. A staggering 95% of healthcare workers have reported exposure to aggression. However, research has found that workplace violence is underreported, signifying that...
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07/15/2020
When setting up a flying club, or managing an existing flying club, there are several things you can do to make yourself more attractive to an underwriter. By making yourself more desirable to an underwriter, you can maximize your coverage and minimize the premiums you pay. Here are our Top 10 Flying Club...
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By Nathanael Alexander, Esq., 07/14/2020
On July 8, 2020, by a vote of 7-2, the Supreme Court of the United States (SCOTUS) in their Little Sisters of the Poor decision upheld Trump administration rules permitting employers to decline contraceptive coverage (including preventative health services, birth control pills, IUDs, etc.) on the basis of...
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By Nathanael Alexander, Esq., 07/08/2020
On June 15, 2020, the Supreme Court of the United States (SCOTUS) held in Bostock v. Clayton County, Georgia that Title VII of the Civil Rights Act of 1964 bars an employer from firing an individual merely for being gay or transgender. In its ruling, the Court noted that it is “impossible to discriminate...
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By Gina Ekstam, 07/08/2020
Agribusiness worksites, shared worker housing, and shared worker vehicles present unique challenges for preventing and controlling the spread of COVID-19. Joint guidance by the CDC and DOL provides a template that employers can adapt to protect their workers. Through thoughtful planning, it is possible to...
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By Nathanael Alexander, Esq., 07/02/2020
Due to the COVID-19 pandemic, countless employees with young children have opted to utilize the time off provisions of the Families First Coronavirus Response Act (FFCRA) in order to provide care to their children in lieu of school and day care center closures nationwide. Now that schools are closed and a vast...
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Bonding for Federal Construction Projects
06/02/2020

Let’s assume you’re a federal contractor and you’ve found the perfect job to bid. You’re capable and competitive so it should be a cake walk. Not so much. The only issue is that the solicitation says that performance and payment bonds will be required. If you’ve never been bonded before, or if the job is larger than your current bonding program allows, this could be a problem that prevents you from going after this opportunity. Now what?

This is where AssuredPartners Government Contracting Solutions comes in. We find bonding solutions to take your company to the next level. We never want you to miss on an opportunity and will work to establish a true surety partnership.

What is a bond?

Simply put, a bond is a guarantee. A performance bond, also known as construction bond, provides the government with a guarantee that their construction project will be completed per the terms of the contract. The payment bond guarantees that all the subcontractors and suppliers on the job will be paid. A bid bond, or bid guarantee, provides assurance that payment and performance bonds can be obtained if the job is awarded.

Who needs bonding?

If you’re a construction company who is considering doing work for the government, you’re going to need bonding. The Federal Acquisition Regulation (FAR) Part 28 requires performance bonds on construction contracts that exceed $150,000. Payment bonds are required on jobs valued over $35,000, with few exceptions. Each solicitation should be reviewed for the exact requirements, but these are the guidelines that usually apply.

Is bonding difficult?

This really depends on the size of the bond program needed. There are a few sureties that will approve bonds up to $500,000 for single contracts and $1,000,000 aggregate based on your credit score. It’s as simple as a two-page application, and if the credit scores are sufficient and the job meets the criteria, it will be approved. The rate is usually around 3% of the contract amount for these type programs. The SBA has a similar QuickApp program that goes up to $400,000 per contract for contractors with lower credit scores.

If you need more than $1,000,000 in bond capacity, you should be prepared to share company financials, personal financials of the owners, bank loan documents, job schedules and references. The more information you can provide, the better chance you’ll have of maximizing your capacity and lowering your rate.  At AssuredPartners, we take your information and find the best surety partner for you among the 30+ companies we represent.

Why do they need so much information?

What would you do if a stranger came up to you and said, “Hey, I’ve got this great construction job for $2,000,000 that I just got awarded. Would you mind telling the owner that if I don’t finish it and if I don’t pay all the subs and suppliers that you’ll take care of it?  And for a small fee, could you put that in writing and put your bank account up as collateral?” Essentially, this is what you’re asking the surety to do when you request a bond. It’s a big ask so they’ll naturally want to get enough information to evaluate the risk.

What determines my bond capacity?

There are many factors that underwriters will look at, but they can generally be summarized as The Three C’s:

  • CAPITAL – they want to see sufficient working capital in the company. Most jobs don’t fail because contractors can’t do the work.  The problems generally arise due to a lack of liquidity and cash flow issues.
  • CAPACITY – what is the largest single job completed and how much backlog has the company historically been able to manage?  These are the questions the surety will be asking, and they’ll want to make sure the company has the equipment, personnel and experience to handle whatever work is added.  Excessive backlog is the number one reason contractors fail.
  • CHARACTER – this could be harder to quantify but is extremely important. The surety will review references, check credit and meet with the owners as part of the character evaluation. They want to see that bills are paid, jobs are completed on time and the contractor generally keeps its word.

Professional consulting for your bond program

You can contact AssuredPartners Government Contracting team to talk to one of our surety bond professionals. The first thing we’ll do is evaluate what your bonds needs are so we can get you on the right path.  Our goal will be to set you up with a long-term surety partner so you can continue to grow your company.  To learn more, visit AssuredPartners Government Contracting Solutions.