[Federal Register Volume 76, Number 36 (Wednesday, February 23, 2011)]
[Rules and Regulations]
[Pages 9962-9963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-4010]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 115
RIN 3245-AG14
Surety Bond Guarantee Program; Timber Sales
AGENCY: U.S. Small Business Administration.
ACTION: Final rule.
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SUMMARY: The Small Business Administration (SBA) is issuing this final
rule to amend its Surety Bond Guarantee Program rules to guarantee bid
and performance bonds for timber sale contracts awarded by the Federal
Government or other public and private landowners.
DATES: This rule is effective on March 25, 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 for small contractors
who cannot obtain surety bonds through the traditional commercial
market. SBA's guarantee provides surety companies with the incentive to
bond these contractors, enabling them to bid on and be awarded more
contracts. The Surety Bond Guarantee (SBG) Program consists of the
Prior Approval Program and the Preferred Surety Bond (PSB) Program. In
the Prior Approval Program, each bond guarantee application must be
submitted to SBA individually for approval, while PSB sureties have the
delegated authority to issue, monitor, and service bonds without SBA's
prior approval.
The Forest Service of the U.S. Department of Agriculture (USDA),
and other public and private entities that manage forests, may permit
the harvesting of timber in exchange for the payment of an agreed upon
sum of money. To bid on these timber sale contracts, the USDA and these
other public and private entities may require the bidder to obtain a
bond to ensure satisfactory compliance with the contract terms and
conditions associated with forest management, such as the protection of
natural resources, soil, water, erosion control and road maintenance.
Unlike the typical contract for supplies or services where the Obligee
pays the Principal for providing supplies or rendering services, the
Principal in the timber sale contract (the harvester of the timber)
pays the Obligee (e.g. the Federal Government) for the right to cut the
designated trees. However, under the current definition of ``Contract''
in 13 CFR 115.10, a contract for which SBA may issue a Surety Bond
Guarantee cannot include a contract requiring any payment by the
Principal to the Obligee. This final rule amends the definition of
``Contract'' to permit SBA to issue bid or performance bond guarantees
for contracts that require the Principal to pay the Obligee for
harvesting timber or other forest products, such as biomass. This
change applies to contracts involving forests managed by the U.S.
Forest Service as well as other public and private entities.
Discussion of Public Comments
On October 15, 2010, SBA published the notice of proposed
rulemaking with request for comments on this change to the SBG Program
in the Federal Register. See 75 FR 63419. SBA received comments from
four submitters before the comment period ended on November 15, 2010
and from two submitters after the comment period ended. SBA has
considered all of the comments received.
Three submitters stated that small businesses have difficulty or
are unable to obtain bonding to bid on timber sale contracts. They
expressed support for the proposed rule because it will enable small
contractors to obtain bonding more easily, making it possible for them
to bid against larger companies and compete for timber sale contracts.
One submitter expressed concern that the fee assessed by SBA on the
Principal for the bond may make it difficult or economically unfeasible
for them to obtain timber sale contracts. SBA periodically reviews the
program fees charged, which are established in the amounts SBA deems
reasonable and necessary, in accordance with Sec. 411(h) of the Small
Business Investment Act of 1958.
One submitter suggested that SBA paperwork requirements,
specifically the submission of SBA Form 990, Surety Bond Guarantee
Agreement, with each bond could be cumbersome for timber sale bonds.
However, SBA is not requiring any additional paperwork for timber sale
bonds, and electronic application submission and processing is
available in the Prior Approval Program. In addition, PSB sureties do
not have to submit SBA Form 990 for any bond. The same submitter
suggested that there is limited access to participating sureties in
rural areas. SBA admitted six new sureties to the program in fiscal
year 2010 and is working to expand access to the program.
Lastly, one submitter suggested that SBA clarify its intent to
exclude payment bonds from eligibility by changing the definition of
Payment Bond. SBA agrees that payment bonds in connection with timber
sale contracts should be excluded, as the guarantee on payment bonds
under the SBG Program was not intended to reimburse the Obligee for
amounts owed the Obligee by the Principal, but to cover the claims
caused by the Principal's failure to pay others furnishing supplies and
materials for use in the performance of the Contract. SBA has added
language to the rule to make it clear that the exception for timber
sale contracts applies only to bid and performance bonds. Bid bonds are
included because a small contractor may be required to submit a bid
bond with its bid for the timber sale contract.
[[Page 9963]]
The two comments that were received after the deadline have also
been considered by SBA. Both submitters suggested that the regulation
be amended to include contracts for the sale of biomass products to
increase the number of contracts for which small businesses could
obtain bonding. SBA agrees and has modified the definition of
``Contract'' in this final rule to clarify that this change applies to
contracts for the sale of timber as well as other forest products,
including biomass.
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 seventeen Sureties that participate in the SBA program, and
no part of this final rule would impose any significant additional cost
or burden on them.
List of Subjects in 13 CFR Part 115
Claims, 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 continues to read as follows:
Authority: 5 U.S.C. app. 3, 15 U.S.C. 687b, 687c, 694b, 694b
note, Pub. L. 106-554; and Pub. L. 108-447, Div. K, Sec. 203.
0
2. Amend Sec. 115.10 by revising the third sentence of the definition
of ``Contract'' to read as follows.
Sec. 115.10 Definitions.
* * * * *
Contract * * * A contract does not include a permit, subdivision
contract, lease, land contract, evidence of debt, financial guarantee
(e.g., a contract requiring any payment by the Principal to the
Obligee, except for contracts in connection with bid and performance
bonds for the sale of timber and/or other forest products, such as
biomass, that require the Principal to pay the Obligee), warranty of
performance or efficiency, warranty of fidelity, or release of lien
(other than for claims under a guaranteed bond). * * *
* * * * *
Karen G. Mills,
Administrator.
[FR Doc. 2011-4010 Filed 2-22-11; 8:45 am]
BILLING CODE 8025-01-P