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ASA Supports Bonding in USDA Broadband Opportunities

ASA, along with the National Association of Surety Board Producers (NASBP) and the Construction Industry Procurement Coalition (CIPC), sent a letter to the United States Department of Agriculture (USDA) Under Secretary for Rural Development Small recognizing the need for significant investment in the nation’s infrastructure, which includes the development of a reliable and comprehensive rural broadband network. Per the letter, “access to broadband is critical to rural communities for expanding commerce, access to telemedicine, and for long-distance learning. As such, we commend the Department for offering loan and grant opportunities to internet service providers (ISPs) who otherwise may not have the financial wherewithal to take on these contracts.”

Per the letter, “a performance bond assures that the successful carrier is qualified to perform the obligations in the award, as the surety evaluates the carrier’s qualifications in order to merit surety credit. Second, the bond serves as a valuable third-party guarantee in the event the carrier fails in its performance. The first form of protection, prequalification, is the result of the surety’s review of the financial strength, experience, equipment, and capabilities of the carrier in determining whether to provide a bond. A surety provides a bond only to those carriers that it believes can perform the entire obligation. Thus, the Agency would benefit from this thorough prequalification.”

Finally, USDA already recognized the usefulness of a surety bond requirement as a condition of receiving loans and grants in its Water and Waste Disposal Loan and Grant Program. In Section 1780.75, which dictates specific contract provisions that any recipient of Agency funds must include, surety bonds are specifically noted: “In all contracts for construction or facility improvements exceeding the Simplified Acquisition Threshold, the owner shall require bonds or cash deposit in escrow assuring performance and payment each in the amount of 100 percent of the contract cost. The surety will be in the form of performance bonds and payment bonds.”