Bill Text: PA HB2142 | 2009-2010 | Regular Session | Amended

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Bill Title: Providing for the establishment of the Surety Bond Guarantee Program; imposing duties on the Department of Community and Economic Development; establishing the Surety Bond Guarantee Fund; providing for contracts eligible for guarantee and for participation by disadvantaged businesses; and making an appropriation.

Spectrum: Moderate Partisan Bill (Democrat 18-4)

Status: (Introduced - Dead) 2010-09-14 - Re-committed to APPROPRIATIONS [HB2142 Detail]

Download: Pennsylvania-2009-HB2142-Amended.html

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PRIOR PRINTER'S NO. 3084 PRINTER'S NO. 3955
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2142 Session of2010
INTRODUCED BY THOMAS, WHEATLEY, MUSTIO, BUXTON, JOSEPHS, BEYER, SONNEY, BELFANTI, CALTAGIRONE, CREIGHTON, FRANKEL, HORNAMAN, McCALL, PARKER, PAYTON, PRESTON, ROEBUCK, SIPTROTH, STURLA, WATERS, YOUNGBLOOD AND BRADFORD, JANUARY 19, 2010
AS REPORTED FROM COMMITTEE ON STATE GOVERNMENT, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 22, 2010
AN ACT
Amending Title 62 (Procurement) of the Pennsylvania Consolidated <--
Statutes, in small and disadvantaged businesses, further
providing for bonding and progress payments; and making an
appropriation.
Providing for the establishment of the Surety Bond Guarantee <--
Program; imposing duties on the Department of Community and
Economic Development; establishing the Surety Bond Guarantee
Fund; providing for contracts eligible for guarantee and for
participation by disadvantaged businesses; and making an
appropriation.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 2105 of Title 62 of the Pennsylvania <--
Consolidated Statutes is amended by adding a subsection to read:
§ 2105. Bonding and progress payments.
* * *
(a.1) Statewide bonding program.--The department shall
establish the criteria and structure for a Statewide bonding
program based on best practices to enable small businesses and
disadvantaged businesses to build capacity and to competitively
bid on State and other public contracts.
* * *
Section 2. The sum of $5,000,000, or as much thereof as may
be necessary, is appropriated to the Department of General
Services for the fiscal year July 1, 2009, to June 30, 2010, to
carry out the purposes of 62 Pa.C.S. § 2105(a.1).
Section 3. This act shall take effect immediately.
Section 1. Short title. <--
This act shall be known and may be cited as the Surety Bond
Guarantee Fund Program Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Applicant." A disadvantaged business as defined in this
act.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Disadvantaged business." A small business which is owned or
controlled by a majority of persons, not limited to members of
minority groups, who have been deprived of the opportunity to
develop and maintain a competitive position in the economy
because of social disadvantages.
"Fund." The Surety Bond Guarantee Fund established in
section 4.
"Program." The Surety Bond Guarantee Fund Program
established in this act.
"Secretary." The secretary of Community and Economic
Development of the Commonwealth.
"Small business." A business in the United States which is
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independently owned, is not dominant in its field of operation
and employs 250 or fewer employees.
"Surety bond." A guarantee in which the surety guarantees
that the contractor or principal in the bond will perform the
obligation stated in the bond. The term shall include the
following types of bonds:
(1) Bid bonds that guarantee the bidder will enter into
a contract and furnish the required payment and performance
bonds.
(2) Payment bonds that guarantee payment from the
contractor to parties who furnish labor, materials, equipment
and supplies.
(3) Performance bonds that guarantee the contractor will
fulfill the contract in accordance with terms and conditions.
(4) Ancillary bonds which may be incidental and
essential to the performance of the contract.
Section 3. Establishment of program.
The Surety Bond Guarantee Fund Program is established in the
department. The purpose of the program is to assist
disadvantaged businesses to competitively bid for governmental
contracts.
Section 4. Surety Bond Guarantee Fund.
(a) Fund established.--There is established the Surety Bond
Guarantee Fund within the State Treasury for the purpose of
assisting disadvantaged businesses to competitively bid for
certain Commonwealth contracts.
(b) Fund administration.--The fund shall be administered by
the department. All moneys in the fund shall be used to finance
guarantees to bonding companies against percentages of losses
sustained as a result of defaults by qualified disadvantaged
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businesses on a contract or project.
(c) Payments from fund.--Surety bond guarantees made with
payments from the fund under the program shall not exceed the
sum of $1,000,000 for any one disadvantaged business.
Section 5. Contract eligible for guarantee.
(a) Eligibility.--A bond guaranteeing the performance of a
contract shall be qualified and eligible for a surety bond
guarantee under the program if:
(1) The bond is listed in the contract bonds section of
the Surety Association of America's "Manual of Rules,
Procedures and Classifications."
(2) The bond is required by the contract, invitation for
bid or request for proposal.
(3) The bond is executed by a surety company that is
acceptable to the Treasury Department and qualified by the
department.
(4) The bond meets any other requirements established by
the department.
(b) Required provision; notice of cancellation.--No bond
shall qualify or be eligible for a guarantee under the program
unless it contains a provision affirming that the bond shall not
be canceled for any cause unless notice of intention to cancel
is given to the department at least 30 days before the day upon
which cancellation shall take effect. Cancellation of the bond
shall not invalidate the bond regarding the period of time it
was in effect.
Section 6. Disadvantaged business participation.
(a) Application process.--A disadvantaged business shall
apply to participate in the program by filing an application
with the department. The department shall review the application
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to determine if the applicant is eligible to participate in the
program within 30 days of receipt of the completed application.
The department may extend the review period for an additional 30
days if it determines that additional time is needed to complete
the review process. The department shall notify the applicant in
writing of the extended period, including the date it will reach
its final decision.
(b) Investigation.--Upon receipt of a completed application,
the department may conduct an investigation of the applicant,
including an investigation of its owners, officers, directors,
principals or agents, in order to determine whether the
applicant is eligible to participate in the program. If the
investigation finds and the department determines that an
applicant is not eligible to participate in the program, it
shall notify the applicant in writing that the applicant will
not be approved for program participation. The notification of
ineligibility shall include the reason the application was not
approved and that the applicant has the right to appeal the
department's determination to the secretary within 30 days of
the date of the notice.
(c) Criteria for determining eligibility.--An applicant
shall be deemed eligible to participate in the program if the
department determines that an applicant meets all of the
following qualifications:
(1) The applicant is a disadvantaged business certified
by the department.
(2) The applicant's business is in the construction or
building trade industry.
(3) The applicant has been actively operating its
business for at least one year prior to the application date.
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(4) The applicant has the experience and financial
fitness appropriate to a qualified contract.
(5) The applicant has agreed to subcontract no more than
75% of the work to be performed under a qualified contract.
(6) The applicant has demonstrated an inability to
secure bonding under normal market conditions.
(7) The applicant or one of its owners, officers,
directors, principals or agents has not committed or been
convicted of any of the activities set forth in section 7.
(8) The business meets any other program requirements
that establish criteria for eligibility that the department
shall adopt by regulation within 180 days of the effective
date of this act.
Section 7. Criteria for denying program participation.
The department may not approve or may deny an application for
program participation if it determines that the applicant or one
of its owners, officers, directors, principals or agents
committed or has been convicted of the following:
(1) Made a material misstatement in the application or
any other document required to be submitted by the department
or under a provision of this act.
(2) Failed to comply with or violated any provision of
this act or any regulation, order or statement of policy
issued by the department under this act.
(3) Engaged in unfair or unethical conduct in connection
with the construction or building trade industry or in
violation of 62 Pa.C.S. Ch. 23 (relating to ethics in public
contracting).
(4) Does not possess the financial fitness, character,
reputation, integrity and general fitness sufficient to
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warrant reasonable belief that the applicant's business will
be conducted lawfully, honestly and in the public interest.
(5) Notwithstanding any other provision of law to the
contrary, been convicted of or pleaded guilty or nolo
contendere to a crime of moral turpitude or to an offense
graded as a felony.
(6) Been enjoined by a court of competent jurisdiction
from engaging in the construction or building trade industry.
(7) Has had a license issued by the department or any
other Federal, state or local agency denied, not renewed,
suspended or revoked.
(8) Became the subject of a United States Postal Service
fraud order.
(9) Demonstrated negligence or incompetence in
performing an act for which the applicant is required to hold
a license under an act enacted by this Commonwealth.
(10) Has an outstanding debt to the Federal Government,
the Commonwealth or any Federal or Commonwealth agency or a
political subdivision of the Commonwealth or agency of a
political subdivision.
(11) Became insolvent at any time prior to the
application date, meaning that the liabilities of the
applicant exceeded the assets of the applicant or that the
applicant could not meet the obligations of the applicant as
they matured or was in such financial condition that the
applicant could not continue in business without jeopardizing
the health, safety and welfare of its customers.
(12) At any time prior to application, has failed to
disburse payments to subcontractors in a timely manner as
agreed to under a contract for any reason other than the
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owner's failure to make the agreed-to payments to the
applicant or because such disbursement would constitute a
violation of applicable law or an order issued by a court or
administrative body of competent jurisdiction.
Section 8. Duties of department.
(a) Technical assistance.--The department shall provide
technical assistance to enable disadvantaged businesses to
competitively bid on State and other governmental contracts.
Technical assistance shall include, but not be limited to,
assisting disadvantaged businesses in responding to bid
requests, strengthening financial condition and addressing other
concerns raised or likely to be raised by a bonding company.
(b) Monitoring program.--The department shall establish a
monitoring program to monitor the activities of disadvantaged
businesses participating in the program. The monitoring program
shall include inspections of projects approved for bond
guarantees to minimize the risk of calls on the fund. The
department shall promptly advise the disadvantaged business of
any deficiencies identified during an inspection. In the event
the deficiencies noted in the report are not promptly addressed
by the disadvantaged business to the satisfaction of the
department, the department may give the disadvantaged business a
reasonable period to correct the deficiencies or may report such
deficiencies to the issuing bond company.
Section 9. Regulations.
The department shall administer and enforce the provisions of
this act and shall adopt and promulgate regulations, guidelines
or policy statements necessary to carry out the provisions of
this act.
Section 10. Appropriation.
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The sum of $5,000,000, or as much as may be necessary, is
hereby appropriated to the Department of Community and Economic
Development for deposit into the fund for the operation of the
program. The department is authorized to expend up to 10% of the
moneys so appropriated for administrative costs.
Section 11. Effective date.
This act shall take effect immediately.
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