Richard L. Hanna: “I introduced H.R. 3534 with my colleague, Mr. Mulvaney from South Carolina, to address an issue in the construction…”

“I introduced H.R. 3534 with my colleague, Mr. Mulvaney from South Carolina, to address an issue in the construction industry I know all too well: surety bonding. Bonding is not something most people think about, but it was a daily reality in my business. The concept is simple. Contractors on a Federal construction project are required to post assets prior to entering a contract to prove that they are capable of paying their subcontractors and downstream paying their suppliers for work. It indicates that a contractor is capable of successfully completing a project and is supposed to protect taxpayers and small businesses downstream in the event of failure or nonpayment. The business of bonding is predicted on a zero failure rate. The assets pledged to back a project must be real, easily convertible to cash, and held by the contracting officer for the duration of the project--and most are. Unfortunately, a loophole in these laws has been exploited. It has resulted in a number of cases where assets pledged to back a bond issued by an individual surety have been insufficient or illusory. This has left small businesses and taxpayers without sufficient payment remedies, and in the case of one Colorado woman, nearly put her out of business. A single stock or private residence, which is subject to huge changes in value or may have an existing first mortgage, are quite simply not acceptable assets to back multimillion-dollar projects.…”