Subcontractor Equal Access to Bonding Act

May 10, 2013 - Annapolis, MD

Maryland Legislature Unanimously Passes Subcontractor Equal Access to Bonding Act

The Coalition for Contracting Fairness, formed in 2013 with vast amount of members from the small business and minority contracting community, rallied together to support the proposed legislation it initiated along with the lobbying efforts of Gil Genn of Capitol Hill Strategic Advocates.

Gil suggested to the Coalition to name the legislation the Subcontractors Equal Access to Bonding Act.  Delegate Kirill Reznik (D-Montgomery) and EHEA Chair, Senator Joan Carter-Conway (D-Baltimore City) were the chief sponsors of HB 585 and SB 599, respectively.  The bill was passed unanimously in the House and Senate its first time in session.  Minor concessions were made to accommodate the opposition; but, overall it was a big win for small business contractors.

The legislation, supported by the Governor’s Office of Minority Affairs (GOMA) and the Maryland Department of Transportation, Office of Minority Business Enterprise will soon be signed into law by Governor Martin O’Malley.  Once law, subcontractors who are required to bond back to the prime contractor awarded state funded projects will no longer be denied their work based on the subcontractor’s surety company.  If the surety company is approved by the Maryland Insurance Administration (MIA), the surety cannot be denied as long as the surety provided a bond that is within the surety’s approved limits by MIA. Also, if bonds are provided by the Maryland Small Business Development Financing Authority through MMG in Baltimore, a state funded bond program for small business bonds up to $2 million, those bonds must be accepted by the primes, as well.

All too often subcontractors found that after working hard on their proposal that a bond would be required by them by the prime.  Obtaining surety credit can be an arduous task.  After hard work to secure a bond, the subcontractor’s surety company may not be accepted.  Often various ratings and financial requirements of the surety are mandated by prime contractors.  And, often primes will limit what the approved project limits of the surety are as approved by the MIA.  Not having your surety accepted for arbitrary reasons is a barrier for small business.  This legislation will make such practices unlawful.

In addition to our sponsors, Chair Joan Carter Conway and Delegate Kirill Reznik, we extend a special thank you to Delegate Dan Morhaim (D-D11), Chair of the Government Operations Subcommittee and member of the Health and Government Operations Committee for his support of the bill and increasing the opportunities for small businesses to bond.

This Coalition will not go away and will remain vigilant for the interests of small businesses and minority contractors. The law will become effective July 1, 2012.

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