Lamar Smith: “Today the House continues its effort to restore the financial security of our country with consideration of H.R. 3534…”

“Today the House continues its effort to restore the financial security of our country with consideration of H.R. 3534, the Security in Bonding Act of 2011. I thank Mr. Hanna for his sponsorship of this bill and Mr. Gowdy and Mr. Polis, both members of the Judiciary Committee, for their support as well. This bill protects the federal government from financial loss as it improves the effectiveness of surety bonds contractors must post when they perform construction projects for the United States. Also, this bill protects small business subcontractors and enhances the financial security of the United States. The bill amends federal acquisition law to requre individual sureties to post only low-risk collateral to back up their bonds. If the prime contractor defaults, the government and subcontractors will have recourse to real, stable, valuable assets to make them whole. The Miller Act, enacted in 1935, requires a contractor to obtain surety bonds in favor of the government when the contractor undertakes a construction job worth more than $150,000. These surety bonds protect not only the United States but also subcontractors whom the prime contractor hires. Unlike in the private sector, subcontractors on federal projects have no mechanic's lien rights; surety bonds are their sole protection. A bid bond assures the federal contracting officer that the contractor bids in good faith and will complete the job if it is the winning bidder.…”