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ASA Supports Bonding in USDA’s Broadband ReConnect Program

Recently, the U.S. Department of Agriculture’s (USDA) Secretary, Tom Vilsack, announced an additional $1 billion in funding for the expansion of access to high-speed internet, health care and educational services for millions of rural Americans nationwide. This is an addition to the proposed funding in President Biden’s Build Back Better for the development of high-speed broadband internet service access to all Americans

ASA members recognize the need for significant investment in the nation’s infrastructure, which includes the development of a reliable and comprehensive rural broadband network. 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. However, ASA supports the use of performance bonds to ensure that the successful carrier is qualified to perform the obligations in the award, as the surety evaluates the carrier’s qualifications 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.

Surety bonds have long-protected U.S. taxpayers, procuring agencies, subcontractors, and workers, and they are security products that should be an important component of the ReConnect program going forward. We respectfully requested the Department’s consideration of surety bonds as acceptable security to guarantee the performance obligations of ISPs and consideration of a bond requirement placed on recipients of loans and grants intended for construction of rural broadband infrastructure to protect taxpayer funds and to ensure completion of such needed projects.