Surety & Fidelity Association and Coalition of Partners Encourage Lawmakers to Require Essential Surety Bonding Protections on All Federally-Financed Projects Receiving WIFIA Funds
The co-signers are
"As the
Over 95% of all public projects require bonding under the Federal Miller Acts and state "Little Miller Acts" in every state. However, these bonding requirements are many times not clear on public-private partnerships (P3s) and P3s often do not maintain the same level of protection that have been required on all other public infrastructure projects. This loophole leaves workers, subcontractors, small business and taxpayers exposed to unnecessary risks. Without these protections, in the event of a contractor default, the project is halted, and can be terminated, leaving subcontractors, including small, minority, and women owned construction subcontractors, and workers without pay. Additionally, states and taxpayers then are forced to absorb additional costs of rebidding and completing the project.
This same loophole was identified in the Transportation Infrastructure Finance and Innovation Act (TIFIA) program and in 2021,
"Construction is a risky business, and for over 80 years, the federal and state Miller Acts have protected against the risk of loss by requiring payment and performance bonds," continued Covington. "SFAA looks forward to working with Congressional leaders, on a bipartisan basis, to ensure WIFIA-funded projects have appropriate payment and performance security protections by requiring a surety bond."
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To: The Honorable
Re: Protections for Workers, Small Business Subcontractors, and Taxpayers on Federally-Financed Water Infrastructure Projects--Providing Parity with TIFIA-Financed Projects.
As the
For over 80 years, surety bonds have played a vital role in ensuring subcontractors and workers on public works projects receive compensation and projects are completed within budget and on time if the lead contractor encounters financial distress. Over 95% or more of all public projects require bonding under the Federal Miller Acts and state "Little Miller Acts" in every state. However, these bonding requirements are many times not clear on public-private partnerships (P3s), a relatively new construction delivery method, and therefore, P3s often do not maintain the same level of protection that have been required on all other public infrastructure projects over the past century. This loophole/gap leaves workers, subcontractors, small business and taxpayers exposed to unnecessary risks. Without these protections, in the event of a contractor default, the project is halted, and can be terminated, leaving subcontractors, including small, minority and women owned construction subcontractors, and workers without pay. Additionally, states and taxpayers then are forced to absorb additional costs of rebidding and completing the project.
To address this shortcoming, we are advocating for legislation to amend the WIFIA program to ensure WIFIA-financed P3 infrastructure projects have adequate protections for workers, subcontractors, suppliers, and taxpayers. This same loophole was identified in the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which was the model for the WIFIA program.
In summary, our proposed solution would have the Secretary of the Army or the
As the EPW Committee continues to address our nation's water infrastructure needs, we urge the Committee to pursue this policy fix to maintain program parity with TIFIA and provide these vital protections to for small businesses and workers who build the nation's vital infrastructure.
Best regards,
Finishing Contractors Association International
The Construction Employers of America
Women Construction Owners and Executives
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