[Federal Register Volume 76, Number 10 (Friday, January 14, 2011)]
[Rules and Regulations]
[Pages 2571-2572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-652]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 76, No. 10 / Friday, January 14, 2011 / Rules
and Regulations
[[Page 2571]]
SMALL BUSINESS ADMINISTRATION
13 CFR Part 115
RIN 3245-AF77
Surety Bond Guarantee Program; Disaster and Miscellaneous
Amendments
AGENCY: Small Business Administration.
ACTION: Final rule.
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SUMMARY: The U.S. Small Business Administration (SBA) is issuing this
final rule to implement the authority provided by the Small Business
Disaster Response and Loan Improvements Act of 2008, for issuing surety
bond guarantees for contracts and orders related to a major disaster.
The rule also clarifies that the SBA does not cover any costs related
to any insurance or indemnification requirements in the bonded
contract.
DATES: This rule is effective on February 14, 2011.
FOR FURTHER INFORMATION CONTACT: Ms. Barbara J. Brannan, Office of
Surety Guarantees, 202-205-6545, e-mail: [email protected].
SUPPLEMENTARY INFORMATION: SBA guarantees bonds on contracts up to $2
million for small and emerging contractors who cannot obtain surety
bonds through regular commercial channels. SBA's guarantee provides
sureties with the incentive to provide bonding for these contractors,
strengthening their ability to obtain bonding and to access greater
contracting opportunities.
This rule implements the authority granted to the Agency in
Sec.12079 of subtitle B of title XII of Public Law 110-246, which
establishes the bonding thresholds for any procurement related to a
major disaster. It adds a new provision to SBA regulations that
authorizes SBA to approve, under certain conditions, an SBA bond
guarantee on an individual Contract or Order up to $5,000,000 at the
time of bond execution. For products or services procured under non-
Federal Contracts or Orders up to $5,000,000, SBA may issue a bond
guarantee if the products will be manufactured or the services will be
performed in a major disaster area identified in the Federal Emergency
Management Agency (FEMA) Web site. For products or services procured
under Federal Contracts or Orders up to $5,000,000, SBA may issue a
bond guarantee if: (a) The products will be manufactured or the
services will be performed in the major disaster area identified in the
FEMA Web site; or (2) the products will be manufactured or the services
will be performed outside the major disaster area and the products or
services will directly assist in the recovery efforts in the major
disaster area. SBA may issue a bond guarantee on a Federal Contract or
Order up to $10,000,000 if it meets one of the conditions above and is
requested by the Head of the Agency involved in disaster reconstruction
efforts.
Additionally, this final rule provides that SBA's authority to
guarantee bonds in the amounts authorized by Public Law 110-246 for a
specific disaster would apply only during the 12 month period following
the disaster declaration unless SBA extends, in its discretion, the
authority for such disaster. SBA will publish any notices of extension
in the Federal Register.
Lastly, this final rule clarifies that SBA does not cover any costs
related to any insurance or indemnification requirements in the bonded
contract.
Discussion of Public Comments
On April 26, 2010, SBA published the notice of proposed rulemaking
with request for comment on these changes to the surety bond program in
the Federal Register at 75 FR 21521. The comment period ended on May
26, 2010. SBA did not receive any public comments.
Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork
Reduction Act (44 U.S.C. Ch. 35) and the Regulatory Flexibility Act (5
U.S.C. 601-612)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
rule does not constitute a significant regulatory action under
Executive Order 12866. This rule is also not a major rule under the
Congressional Review Act.
Executive Order 12988
This action meets applicable standards set forth in Sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have retroactive or preemptive effect.
Executive Order 13132
For purposes of Executive Order 13132, SBA has determined that this
final rule will not have substantial, direct effects on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government. Therefore, for the purpose of Executive Order 13132,
Federalism, SBA has determined that this final rule has no federalism
implications warranting preparation of a federalism assessment.
Paperwork Reduction Act, 44 U.S.C., Ch. 35
SBA has determined that this final rule does not impose additional
reporting or recordkeeping requirements under the Paperwork Reduction
Act, 44 U.S.C., Chapter 35.
Regulatory Flexibility Act, 5 U.S.C. 601-612
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires
administrative agencies to consider the effect of their actions on
small entities, small non-profit enterprises, and small local
governments. Pursuant to the RFA, when an agency issues a rulemaking,
the agency must prepare a regulatory flexibility analysis which
describes the impact of the rule on small entities. However, section
605 of the RFA allows an agency to certify a rule, in lieu of preparing
an analysis, if the rulemaking is not expected to have a significant
economic impact on a substantial number of small entities. Within the
meaning of RFA, SBA certifies that this rule will not have a
significant economic impact on a substantial number of small entities.
There are sixteen Sureties that participate in the SBA program, and no
part of this final rule would impose any significant additional cost or
burden on them.
[[Page 2572]]
List of Subjects in 13 CFR Part 115
Claims, Reporting and recordkeeping requirements, Small businesses,
Surety bonds.
For the reasons stated in the preamble, the Small Business
Administration amends 13 CFR Part 115 as follows:
PART 115--SURETY BOND GUARANTEE
0
1. The authority citation for part 115 is revised to read as follows:
Authority: 5 U.S.C. app. 3; 15 U.S.C. 687b, 687c, 694a, 694b
note, Pub. L. 106-554; Pub. L. 108-447, Div K, Sec. 203; Pub. L.
110-246, Sec. 12079, 122 Stat. 1651; and Pub. L. 111-5, 123
Stat.115.
0
2. In Sec. 115.10, revise the definition of ``Applicable Statutory
Limit'' and add a definition of ``Head of Agency'' in alphabetical
order to read as follows:
Sec. 115.10 Definitions.
* * * * *
Applicable Statutory Limit means the maximum amount of any Contract
or Order for which section 411(a) of the Small Business Investment Act,
as amended from time to time, or other law, authorizes SBA to
guarantee, or commit to guarantee, a Bid Bond, Payment Bond,
Performance Bond, or Ancillary Bond.
* * * * *
Head of Agency means in the case of a cabinet department, the
Secretary; and in the case of an independent commission, board, or
agency, the Chair or Administrator; or any person to whom the
Secretary, Chair, or Administrator has directly delegated the authority
to request SBA to guarantee bonds on Contracts or Orders in excess of
$5,000,000.
* * * * *
0
3. In Sec. 115.12, add paragraph (e)(5) to read as follows:
Sec. 115.12 General program policies and provisions.
* * * * *
(e) * * *
(5) Guarantee authority for Contracts and Orders related to a major
disaster area. Subject to the availability of funds appropriated in
advance specifically for the purpose of guaranteeing bonds for any
Contract or Order related to a major disaster, SBA may guarantee bonds
on any Contract or Order under the following terms and conditions:
(i) The Contract or Order does not exceed $5,000,000 at the time of
bond execution, and:
(A) For products or services procured under a Federal Contract or
Order, the products will be manufactured or the services will be
performed in the major disaster area identified in the Federal
Emergency Management Agency (FEMA) Web site at http://www.fema.gov, or
the products will be manufactured or the services will be performed
outside the major disaster area and the products or services will
directly assist in the recovery efforts in the major disaster area; or
(B) For products or services procured under any other Contract or
Order, the products will be manufactured or the services will be
performed in the major disaster area identified in the FEMA Web site at
http://www.fema.gov;
(ii) At the request of the Head of the Agency involved in
reconstruction efforts in response to a major disaster, SBA may
guarantee bonds on Federal Contracts or Orders in excess of $5,000,000,
but not more than $10,000,000;
(iii) The restrictions set forth in paragraph (e)(3) of this
section do not apply to the guarantees issued under this paragraph
(e)(5); and
(iv) A guarantee may be issued under this paragraph (e)(5) for any
Contract or Order for which an offer is submitted or an award is made
within 12 months from the date an area is designated a major disaster
area in the Federal Register. SBA may, at its discretion, extend this
time period for any particular disaster, and will publish a notice of
the extension in the Federal Register.
* * * * *
0
4. Amend Sec. 115.16 as follows:
0
a. Remove the word ``and'' at the end of paragraph (f)(3);
0
b. Remove the punctuation ``.'' at the end of paragraph (f)(4) and add
``; and'' in its place; and
0
c. Add paragraph (f)(5) to read as follows:
Sec. 115.16 Determination of Surety's Loss.
* * * * *
(f) * * *
(5) Any costs that arise from the Principal's failure to secure and
maintain insurance coverage required by the Contract or Order, or any
costs that result from any claims or judgments that exceed the amount
of any insurance coverage required by the Contract or Order, as well as
any costs that arise as a result of any agreement by the Principal in
the Contract or Order to indemnify the Obligee or any other Persons.
Dated: January 6, 2011.
Karen G. Mills,
Administrator.
[FR Doc. 2011-652 Filed 1-13-11; 8:45 am]
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