[Federal Register Volume 78, Number 148 (Thursday, August 1, 2013)]
[Proposed Rules]
[Pages 46528-46532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18530]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 78, No. 148 / Thursday, August 1, 2013 /
Proposed Rules
[[Page 46528]]
SMALL BUSINESS ADMINISTRATION
13 CFR Part 115
RIN 3245-AG56
Surety Bond Guarantee Program
AGENCY: U.S. Small Business Administration.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would conform the regulations governing the
Surety Bond Guarantee Program to certain provisions of the National
Defense Authorization Act for Fiscal Year 2013 (NDAA), including the
provisions that increase the contract amounts for which SBA is
authorized to guarantee bonds, grant SBA the authority to partially
deny liability under its bond guarantee, and prohibit SBA from denying
liability based on material information that was provided as part of
the guarantee application in the Prior Approval Program. In addition,
changes are proposed with respect to the Quick Bond Guarantee
Application and Agreement, the timeframes for taking certain actions
related to claims, the dollar threshold for determining when a change
in the Contract or bond amounts meets certain criteria or requires
certain action, and the elimination of references to the provisions of
the American Recovery and Reinvestment Act of 2009 (Recovery Act) that
have expired.
DATES: Comments must be received on or before September 30, 2013.
ADDRESSES: You may submit comments, identified by RIN 3245-AG56, by any
of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Office of Surety Guarantees, Suite 8600, 409 Third
Street SW., Washington, DC 20416.
Hand Delivery/Courier: Office of Surety Guarantees, 409
Third Street SW., Washington, DC 20416.
SBA will post all comments on www.regulations.gov. If you wish to
submit confidential business information (CBI) as defined in the User
Notice at www.regulations.gov, please submit the information to Office
of Surety Guarantees, 409 Third Street SW., Washington, DC 20416 or
send an email to the Office of Surety Guarantees. Highlight the
information that you consider to be CBI and explain why you believe SBA
should hold this information as confidential. SBA will review the
information and make the final determination whether it will publish
the information.
FOR FURTHER INFORMATION CONTACT: Barbara J. Brannan, Office of Surety
Guarantees, 202-205-6545, email: [email protected].
SUPPLEMENTARY INFORMATION:
I. Background Information
The U.S. Small Business Administration (SBA) guarantees bid,
payment and performance bonds for small and emerging contractors who
cannot obtain surety bonds through regular commercial channels. SBA's
guarantee gives Sureties an incentive to provide bonding for small
businesses and, thereby, assists small businesses in obtaining greater
access to contracting opportunities. SBA's guarantee is an agreement
between a Surety and SBA that SBA will assume a certain percentage of
the Surety's loss should a contractor default on the underlying
contract. This proposed rule would make the following changes to the
program:
A. Conform Regulations to NDAA
This proposed rule would conform the regulations governing the
Surety Bond Guarantee Program to the following changes enacted by the
National Defense Authorization Act for Fiscal Year 2013, Public Law
112-239, 126 Stat. 1632:
(1) Increasing the contract amount for which SBA is authorized to
guarantee bonds from $2 million to $6.5 million (as adjusted for
inflation in accordance with 41 U.S.C. 1908);
(2) increasing the contract amount for which SBA is authorized to
guarantee bonds to $10 million with a Federal contracting officer's
certification that the guarantee is necessary for the small business to
obtain bonding;
(3) authorizing SBA to deny liability under its bond guarantee in
whole or in part within its discretion; and
(4) prohibiting SBA from denying liability based on material
information that was provided as part of the guarantee application in
the Prior Approval Program.
B. Partial Subcontract
The existing regulation, 13 CFR 115.13(a)(5), states that SBA will
not guarantee bonds for Principals ``who are primarily brokers or who
have effectively transferred control over the project to one or more
subcontractors.'' Surety companies and agents have questioned the
meaning of the phrase ``effectively transferred control over the
project'', and SBA agrees that clearer guidance is needed to determine
when the use of subcontractors becomes objectionable. SBA recognizes
that many small general contractors may subcontract a high percentage
of the work under a contract, and this is not necessarily
objectionable. However, SBA does not want the subcontracting to result
in the Principal--the Person primarily liable to complete the
Contract--losing control over the project. In the most egregious cases,
the Principal may be acting as a front for the subcontractor. This
objectionable activity may not be discernible solely from the
percentage of work subcontracted on a project. Although that is often a
good indicator, SBA believes that control is also a function of who has
responsibility for overseeing and managing the work performed under the
Contract. Accordingly, SBA is proposing to revise the second sentence
of this provision to clarify that, to be eligible for a bond guaranteed
by SBA, the Principal must retain full responsibility for the oversight
and management of the Contract, including any work performed by any
subcontractor, and may not subcontract the full scope of the statement
of work.
C. Quick Bond
The proposed rule would revise the regulations governing the Quick
Bond Guarantee Application and Agreement. Under 13 CFR
115.30(d)(2)(ii)(C), the Quick Bond Application and Agreement (SBA Form
990A) may not be used for any contract that includes a warranty/
maintenance period exceeding 12 months. However, the definition of
Contract in 13 CFR 115.10 allows for the Contract to include a
maintenance agreement of 2 years or less (for
[[Page 46529]]
defective workmanship or materials only), and also allows, with SBA's
written approval, for longer maintenance agreements and broader
coverage. SBA has reassessed the need for this exclusion, and is
proposing to delete the 12 month warranty/maintenance exclusion from 13
CFR 115.30(d)(2)(ii)(C).
In addition, under 13 CFR 115.30(d)(2)(ii)(D), SBA Form 990A may
not be used if the contract includes a provision for liquidated damages
that exceed $250 per day. The proposed rule would increase to $1,000
per day the amount of liquidated damages subject to the exclusion. SBA
received suggestions from the surety industry for this increase, which
is consistent with industry standards for a streamlined application
process.
By making the above changes, the Agency hopes to encourage greater
use of the Quick Bond Guarantee Application and Agreement.
D. Increasing Certain Dollar Thresholds
The rule proposes to amend the following provisions to change the
dollar threshold for determining when a change in the Contract or bond
amounts may result in denial of liability or requires certain action.
Currently, these provisions provide that the thresholds are met when
the Contract or bond amount changes by 25% or $50,000, whichever is
less. This formula means that the $50,000 threshold is always the
lesser amount for contracts that are greater than $200,000, and the
average amount of a Contract is now approximately twice this amount, or
$400,000. In addition, for some of the provisions, the $50,000
threshold has not changed since 1989. Further, SBA would expect the
average contract amount to increase with the recent increase in the
maximum contract amount to $6.5 million. Thus, SBA is proposing to
update the dollar threshold to $100,000 for the following provisions:
(1) Under 13 CFR 115.19(c)(1), SBA is relieved of liability if the
Surety has committed a material breach of one or more terms or
conditions of its agreement with SBA. A material breach is considered
to have occurred if such breach (or such breaches in the aggregate)
causes an increase in the Contract amount or in the bond amount of at
least 25% or $50,000. The proposed rule would increase the dollar
threshold to $100,000.
(2) Under 13 CFR 115.19(d), SBA is relieved of liability if the
Surety has committed a substantial violation of SBA regulations, which
is defined in part as a violation which causes an increase in the bond
amount of at least 25% or $50,000 in the aggregate. The proposed rule
would increase the dollar threshold to $100,000.
(3) Under 13 CFR 115.19(e)(2), SBA is relieved of liability if the
Surety agrees to or acquiesces in any material alteration in the terms,
conditions, or provisions of the bond. For a Prior Approval Surety,
such alteration includes any increase in the bond amount of at least
25% or $50,000. The proposed rule would increase the dollar threshold
to $100,000.
(4) Under 13 CFR 115.32(d), a Prior Approval Surety must notify SBA
of any increases or decreases in the Contract or bond amount that
aggregate 25% or $50,000 as soon as the Surety acquires knowledge of
the change, and also must obtain SBA's prior written approval of an
increase in the original bond amount as a result of a single change
order of at least 25% or $50,000. The proposed rule would increase
these dollar thresholds to $100,000.
(5) Under 13 CFR 115.67(a), a PSB Surety must pay the additional
fees due from the Principal and the Surety on increases aggregating 25%
of the contract or bond amount or $50,000. The proposed rule would
increase the dollar threshold to $100,000.
E. Reducing Certain Timeframes
With the wide-spread use of electronic processing of claims and
payments, SBA believes that the timeframes for taking the following
actions could be reduced:
(1) Under 13 CFR 115.17(b), the Surety is required to pursue all
possible sources of salvage and recovery, and SBA is entitled to its
guaranteed percentage of all salvage and recovery. Currently, 13 CFR
115.17(b)(2) requires the Surety to reimburse or credit SBA with its
share within 90 days of receipt of any recovery by the Surety; the
proposed rule would reduce this timeframe to 45 days. Similarly, the
proposed rule would reduce the timeframe for the Surety to pay SBA its
share of any settlement amount under 13 CFR 115.36(a)(3) from 90 days
to 45 days.
(2) Under 13 CFR 115.35(c)(4) and 115.70(a), SBA pays its share of
the loss to both the Prior Approval Surety and the PSB Surety within 90
days of receipt of the requisite information. The proposed rule would
reduce this timeframe to 45 days.
In addition, under 13 CFR 115.35(c)(1) and 115.70(a), both the
Prior Approval Surety and the PSB Surety must submit to SBA a claim for
reimbursement for losses paid by the Surety within 1 year from the time
of each disbursement. The proposed rule would reduce this timeframe to
90 days. This reduction would facilitate SBA's ability to review and
verify the claim without unnecessary delay.
II. Section-by-Section Analysis
Section 115.10. SBA is proposing to revise the definition of
``Applicable Statutory Limit'' to include the maximum amounts of any
Contract or Order for which SBA is authorized by the NDAA to guarantee,
or commit to guarantee, a Bid Bond, Payment Bond, Performance Bond, or
Ancillary Bond. The statutory limits set by the NDAA are: (1) $6.5
million (as adjusted for inflation in accordance with 41 U.S.C. 1908);
and (2) $10 million if a contracting officer of a Federal agency
certifies that such guarantee is necessary. In addition, SBA is
proposing to include a reference in the definition to the maximum
amounts of any Contract or Order when SBA guarantees the bond in
connection with a procurement related to a major disaster pursuant to
section 12079 of Public Law 110-246. Under this provision, which was
enacted on June 18, 2008, the maximum amounts are (1) $5 million, and
(2) $10 million on Federal Contracts or Orders at the request of the
Head of any Federal agency involved in reconstruction efforts in
response to a major disaster. The authority to guarantee bonds under
this provision is 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 does not expect this
authority to be often used, given NDAA's increase in the maximum
amounts for any Contract or Order up to $6.5 million (and $10 million
if a Federal contracting officer certifies that such guarantee is
necessary) and the requirement that funds be appropriated in advance
specifically for guaranteeing bonds related to a major disaster.
Section 115.12(b). SBA is proposing to delete the reference to the
``Contract Bonds'' section of the current ``Manual of Rules, Procedures
and Classifications of the Surety Association of America'', and to
replace this reference with two specific types of bonds, Commercial and
Fidelity bonds, that are not eligible for an SBA guarantee.
Section 115.12(e)(3). SBA is proposing to delete this provision in
its entirety, as it relates to requirements imposed by the Recovery Act
that expired on September 30, 2010.
Section 115.12(e)(4). SBA is proposing to renumber this provision
as (e)(3), and to revise this provision to reflect the authority to
guarantee bonds on Federal Contracts or Orders greater
[[Page 46530]]
than $6.5 million, but not exceeding $10 million, upon a signed
certification of a Federal contracting officer.
Section 115.12(e)(5). SBA is proposing to renumber this provision
as (e)(4), to revise the introductory paragraph to clarify that this
paragraph implements an alternative statutory authority for
guaranteeing bonds for procurements related to a major disaster, and to
delete paragraph (B)(iii) of this provision, as it relates to
requirements imposed by the Recovery Act that expired on September 30,
2010.
Section 115.13(a)(5). SBA is proposing to revise this provision to
clarify that, to be eligible for a bond guaranteed by SBA, the
Principal must retain full responsibility for the oversight and
management of the Contract, including any work performed by any
subcontractor, and may not subcontract the full scope of the statement
of work.
Section 115.17(b)(2). SBA is proposing to reduce the time frame
allowed for a Surety to reimburse or credit SBA for salvage and
recovery from 90 days to 45 days after the Surety receives any salvage
and recovery.
Section 115.19. SBA is proposing to revise the introductory
paragraph of this provision to conform it to current law by deleting
the time frame reference required by the Recovery Act, which has
expired, and by inserting the relevant requirements of the NDAA,
including the authority of SBA to deny liability, in whole or in part,
within its discretion if any of the circumstances in paragraphs (a)
through (h) of this section exist, and the prohibition on denying
liability based on material information that was provided as part of
the guarantee application in the Prior Approval Program. SBA is also
proposing to amend section 115.19(c)(1) by increasing the dollar
threshold for determining whether the Surety has committed a material
breach of one or more terms or conditions of its Prior Approval or PSB
Agreement from $50,000 to $100,000. In addition, SBA is proposing to
amend section 115.19(d) by increasing the dollar threshold for
determining whether the Surety has committed a substantial violation of
SBA regulations from $50,000 to $100,000, and proposing to amend
section 115.19(e)(2) by increasing the dollar threshold for determining
whether a Prior Approval Surety has agreed to or acquiesced in any
material alternation in the terms, conditions, or provisions of the
bond from $50,000 to $100,000. In each of these sections, the phrase
``whichever is less'' is being added after the $100,000 to clarify the
meaning of this requirement.
Section 115.30(d)(2). Under the current 13 CFR 115.30(d)(2)(ii)(C),
the Quick Bond Application and Agreement (SBA Form 990A) may not be
used for any contract where the time for completion of the Contract or
the warranty/maintenance period exceeds 12 months. SBA is proposing to
delete the phrase ``or the warranty/maintenance period'' from this
provision. In addition, under current 115.30(d)(2)(ii)(D), SBA Form
990A may not be used for any contract that includes a provision for
liquidated damages that exceed $250 per day. SBA is proposing to
increase the allowable liquidated damages provision from $250.00 per
day to $1,000.00 per day.
Section 115.31(d). SBA is proposing to revise the final sentence of
this provision by basing the example on the current statutory limit of
$6.5 million.
Section 115.32(d). SBA is proposing to amend this provision by
changing the dollar threshold for determining when the Prior Approval
Surety must notify SBA of the change and/or obtain SBA's approval from
at least $50,000 to $100,000. The phrase ``whichever is less'' is being
added to clarify the meaning of this requirement.
Section 115.35(c)(1). SBA is proposing to reduce the time frame
allowed for a Prior Approval Surety to submit a claim to SBA from one
year to 90 days after the Surety pays the claim. In addition, the title
of the SBA Form 994H, ``Default Report, Claim for Reimbursement and
Record of Administrative Action,'' is being changed to ``Default
Report, Claim for Reimbursement and Report of Recoveries,'' to reflect
the current version of the form. This form is used to process
recoveries, and adding ``Recoveries'' to the title of the form promotes
its proper use.
Section 115.35(c)(4). SBA is proposing to reduce the time frame for
SBA to pay a claim submitted by a Surety in the Prior Approval Program
from 90 days to 45 days after receipt of the requisite information.
Section 115.36(a)(3). SBA is proposing to reduce the time frame
allowed for a Surety to reimburse SBA its share of a settlement from 90
days to 45 days after receipt.
Section 115.67(a). SBA is proposing to increase the dollar
threshold for determining when a PSB Surety must present checks for
additional fees due from the Principal and the Surety from $50,000 to
$100,000. The phrase ``whichever is less'' is being added to clarify
the meaning of this requirement.
Section 115.69. This provision currently provides that SBA will
reimburse a PSB Surety for the guaranteed portion of payments the
Surety makes to avoid or attempt to avoid an Imminent Breach of the
terms of a Contract, and that the PSB Surety does not need SBA approval
to make Imminent Breach payments. It also provides that the aggregate
of the payments by SBA cannot exceed 10% of the Contract amount, unless
SBA finds that a greater payment is necessary and reasonable. For
payments that exceed 10% of the Contract amount, SBA is proposing to
revise this provision to give the PSB Surety the opportunity to request
SBA to approve the amount prior to the Surety making the Imminent
Breach payment. SBA will approve such payment if SBA finds that the
payment is necessary and reasonable. If the Surety does not request
prior SBA approval for such payments, SBA may refuse to reimburse the
Surety if SBA finds that the payment that exceeds 10% of the Contract
amount was not necessary and reasonable.
Section 115.70(a). SBA is proposing to reduce the time frame
allowed for a PSB Surety to submit a claim to SBA from one year to 90
days after the Surety pays the claim. SBA is also proposing to reduce
the time frame for SBA to pay a claim submitted by a Surety in the PSB
Program from 90 days to 45 days after receipt of the requisite
information. 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
proposed rule does not constitute a significant regulatory action under
Executive Order 12866.
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 the
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 determines that this proposed rule has no federalism
[[Page 46531]]
implications warranting preparation of a federalism assessment.
Paperwork Reduction Act, 44 U.S.C. Ch. 35
SBA has determined that this proposed rule imposes no 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. There are
approximately one dozen Sureties that participate in the SBA program,
and no part of this proposed rule would impose any significant
additional cost or burden on them. Consequently, this rule does not
meet the substantial number of small businesses criterion anticipated
by the Regulatory Flexibility Act.
List of Subjects in 13 CFR Part 115
Claims, Reporting and recordkeeping requirements, Small businesses,
Surety bonds.
For the reasons cited above, the Small Business Administration
proposes to amend 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; and Pub. L. 110-246, Sec. 12079, 122 Stat. 1651.
0
2. In Sec. 115.10, revise the definition of ``Applicable Statutory
Limit'' to read as follows:
Sec. 115.10 Definitions.
* * * * *
Applicable Statutory Limit means the maximum amount, set forth
below, of any Contract or Order for which SBA is authorized to
guarantee, or commit to guarantee, a Bid Bond, Payment Bond,
Performance Bond, or Ancillary Bond:
(1) $6.5 million (as adjusted for inflation in accordance with 41
U.S.C. 1908);
(2) $10 million if a contracting officer of a Federal agency
certifies, in accordance with section 115.12(e)(3), that such guarantee
is necessary; or
(3) if SBA is guaranteeing the bond in connection with a
procurement related to a major disaster pursuant to section 12079 of
Public Law 110-246, see section 115.12(e)(4).
* * * * *
0
3. Amend Sec. 115.12 as follows:
0
(a) Revise paragraph (b) to read as set forth below;
0
(b) Remove paragraph (e)(3);
0
(c) Redesignate paragraph (e)(4) as paragraph (e)(3);
0
(d) In redesignated paragraph (e)(3), revise the heading and first
sentence as set forth below;
(e) Redesignate paragraph (e)(5) as paragraph (e)(4) and revise the
heading and introductory paragraph as set forth below;
(f) In redesignated paragraph (e)(4), remove paragraph (B)(iii) and
redesignate paragraph (B)(iv) as paragraph (B)(iii).
The additions and revisions read as follows:
Sec. 115.12 General program policies and provisions.
* * * * *
(b) Eligibility of bonds. Bid Bonds and Final Bonds are eligible
for an SBA guarantee if they are executed in connection with an
eligible Contract, as defined in Sec. 115.10, Definitions. Commercial
and Fidelity bonds are not eligible for SBA guarantees. Ancillary Bonds
may also be eligible for SBA's guarantee. A performance bond must not
prohibit a Surety from performing the Contract upon default of the
Principal. * * *
* * * * *
(e) * * *
(3) Federal Contracts or Orders in excess of $6,500,000 (as
adjusted for inflation in accordance with section 1908 of title 41,
United States Code). SBA is authorized to guarantee bonds on Federal
Contracts or Orders greater than $6,500,000 (as adjusted for inflation
in accordance with 41 U.S.C. 1908), but not exceeding $10,000,000, upon
a signed certification of a Federal contracting officer. * * *
* * * * *
(4) Alternative authority to guarantee bonds 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, as an alternative to the authority otherwise set
forth in this Part, guarantee bonds on any Contract or Order under the
following terms and conditions:
* * * * *
0
4. Amend Sec. 115.13 paragraph (a)(5) by revising the second sentence
and adding a third sentence to read as follows:
Sec. 115.13 Eligibility of Principal
(a) * * *
(5) * * * SBA will not guarantee bonds for Principals who are
primarily brokers. In addition, the Principal must retain full
responsibility for the oversight and management of the Contract,
including any work performed by any subcontractor, and may not
subcontract the full scope of the statement of work.
* * * * *
0
5. Amend Sec. 115.17 paragraph (b)(2) by removing ``90 days'' and
adding ``45 days'' in its place.
0
6. Amend Sec. 115.19 as follows:
0
(a) Revise the introductory paragraph as set forth below;
0
(b) Remove ``$50,000'' wherever it appears in paragraphs (c)(1), (d),
and (e)(2) and add in its place ``$100,000, whichever is less.''
Sec. 115.19 Denial of liability.
In addition to equitable and legal defenses and remedies under
contract law, the Act, and the regulations in this part, SBA is
relieved of liability in whole or in part within its discretion if any
of the circumstances in paragraphs (a) through (h) of this section
exist, except that SBA shall not deny liability on Prior Approval bonds
based solely upon material information that was provided as part of the
guarantee application.
* * * * *
0
7. Amend Sec. 115.30 as follows:
0
(a) In paragraph (d)(2)(ii)(C), remove the phrase ``or the warranty/
maintenance period'';
0
(b) In paragraph (d)(2)(ii)(D), remove ``$250'' and add ``$1,000'' in
its place.
0
8. Amend Sec. 115.31 by revising the final sentence of paragraph (d)
to read as follows:
Sec. 115.31 Guarantee Percentage.
* * * * *
(d) * * * For example, if a contract amount increases to
$6,800,000, SBA's share of the loss under an 80% guarantee is limited
to 76.5% [6,500,000/6,800,000 = 95.6% x 80% = 76.5%].
* * * * *
0
9. Amend Sec. 115.32 paragraph (d) by removing ``$50,000'' and adding
``$100,000, whichever is less'' in its place.
[[Page 46532]]
0
10. Amend Sec. 115.35 as follows:
0
(a) Revise paragraph (c)(1) as set forth below;
0
(b) In paragraph (c)(4), remove ``90 days'' and add ``45 days'' in its
place.
Sec. 115.35 Claims for reimbursement of Losses.
* * * * *
(c) Claim reimbursement requests. (1) Claims for reimbursement for
Losses which the Surety has paid must be submitted (together with a
copy of the bond, the bonded Contract, and any indemnity agreements)
with the initial claim to OSG on a ``Default Report, Claim for
Reimbursement and Report of Recoveries'' (SBA Form 994H), within 90
days from the time of each disbursement. Claims submitted after 90 days
must be accompanied by substantiation satisfactory to SBA. The date of
the claim for reimbursement is the date of receipt of the claim by SBA,
or such later date as additional information requested by SBA is
received.
* * * * *
0
11. Amend Sec. 115.36 paragraph (a)(3) by removing ``90 days'' and
adding ``45 days'' in its place.
0
12. Amend Sec. 115.67 paragraph (a) by removing ``$50,000'' and adding
``$100,000, whichever is less'' in its place.
0
13. Revise Sec. 115.69 to read as follows:
Sec. 115.69 Imminent Breach.
(a) No Prior Approval Requirement. SBA will reimburse a PSB Surety
for the guaranteed portion of payments the Surety makes to avoid or
attempt to avoid an Imminent Breach of the terms of a Contract covered
by an SBA guaranteed bond. The aggregate of the payments by SBA under
this section cannot exceed 10% of the Contract amount, unless the
Administrator finds that a greater payment (not to exceed the
guaranteed portion of the bond penalty) is necessary and reasonable.
The PSB Surety does not need to obtain prior SBA approval to make
Imminent Breach payments, except that the PSB Surety may request SBA to
approve payments that exceed 10% of the Contract amount prior to the
Surety making the payment. In no event will SBA make any duplicate
payment under any provision of these regulations in this part.
(b) Recordkeeping Requirement. The PSB Surety must keep records of
payments made to avoid Imminent Breach.
0
14. Amend Sec. 115.70 paragraph (a) as follows:
0
(a) Remove the term ``1 year'' in the first sentence and add the term
``90 days'' in its place; and
0
(b) Remove the term ``90 days'' in the third sentence and add ``45
days'' in its place.
Dated: July 26, 2013.
Karen G. Mills,
Administrator.
[FR Doc. 2013-18530 Filed 7-31-13; 8:45 am]
BILLING CODE 8025-01-P