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ASA Supports Exemption Legislation for Increasing Bond Thresholds

ASA, along with the Surety & Fidelity Association of America (SFAA) and the National Association of Bond Producers (NASBP), commend Chairwoman Velazquez (D-NY) and Rep. Donalds (R-FL) for the introduction of H.R. 2949. This legislation will ensure essential payment protections for subcontractors, suppliers, and workers and ensure performance protections for taxpayers will remain in place on federal construction contracts of $150,000 and more. The bill will exempt the Miller Act bond threshold from periodic and arbitrary increases currently required under a broad indexing law. The Miller Act provides essential remedial protections for many small businesses which furnish labor and materials on public work. If the bond threshold is raised, thousands of federal projects will no longer be protected by payment and performance bonds, leaving downstream parties exposed to significant risk of nonpayment if the contractor fails to pay them or goes out of business.  If the federal bond threshold increases from $150,000 to $200,000, the result is an estimated 1,700 unbonded federal contracts annually worth approximately $300M worth of taxpayer dollars potentially exposed to unprotected loss. It is for these policy reasons that ASA, NASBP, SFAA, and the 15 association members of the Construction Industry Procurement Coalition strongly support H.R. 2949.