(C) Daily Kos
This story was originally published by Daily Kos and is unaltered.
 . . . . . . . . . .



Next Step to Protect America's Infrastructure [1]

['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.', 'Backgroundurl Avatar_Large', 'Nickname', 'Joined', 'Created_At', 'Story Count', 'N_Stories', 'Comment Count', 'N_Comments', 'Popular Tags']

Date: 2023-04-14  

The historic investment in our Nation’s infrastructure through the trillion-dollar Infrastructure Investment and Jobs Act (IIJA) provided our country with a great opportunity to improve the nation’s infrastructure for future generations by providing funding to address long-standing needs of vital infrastructure. But securing funding is only a first step in a successful project – and critical questions remain.

How can state and local leaders help ensure projects are finished on schedule and on budget? How can taxpayers be protected against expensive, burdensome delays? How can small businesses – the subcontractors and suppliers that drive every project – be guaranteed they will get paid for their work if the project runs into trouble?

The answer to these and other challenges that inevitably arise in significant projects is surety bonds—a three-party contract by which one party guarantees the borrower’s performance or obligations. For nearly 100 years, surety bonds have played a critical role in mitigating risk on public and private construction projects. They help ensure general contractors have the experience, financial strength, and track record of getting projects done on time and on budget. Most importantly, surety bonds support local small business owners and workers. If a general contractor defaults, subcontractors, suppliers and their employees are assured they will get paid for the work they have performed.

In addition, a recent study by Ernst and Young (EY), The Economic Value of Surety Bonds, quantified the benefits surety bonding generates throughout the lifecycle of infrastructure projects. The findings of the study include, among others, unbonded construction projects are more likely to default than bonded projects — by as much as 10 times; bonded projects cost less than unbonded projects, and the cost savings cover the cost of the bonds themselves; and nearly five times as many construction leaders report bonded projects are more likely to be completed on time or ahead of schedule, and contractors prioritize bonded projects more than unbonded projects.

The EY study shows unbonded projects will increase costs for state and local governments, and ultimately taxpayers, because of contractor defaults on infrastructure projects, as well as the unrealized cost savings bonded projects provide. The study further found, in the event of default, unbonded projects cost 85% more upon default and take at least 2 times longer to complete. A P3 highway project showcased this shortcoming. In this instance, the state where the project was located had to assume control of the project after the original contractor/developer was terminated. Although bonding was utilized for the job, the unusually low bonds required for the project impaired the state’s ability to re-let the work, which led to a two-year delay in project completion and also impacted the ability of subcontractors, suppliers and the sureties to quickly resolve payment claims. The total cost of completing the job grew from the originally planned $369 million to over $556 million.

Without these “surety bonds” thousands of workers and small business subcontractors and suppliers would be left with no protections in the case of a prime contractor default or non-payment. It could also slow down the advancement of essential construction in cities and towns across the state.

Notably, minority-owned contracting businesses have benefited significantly from the current payment and performance security attached to public infrastructure projects. Many minority-owned contracting businesses often serve as subcontractors on multi-million-dollar public construction projects and benefit from existing protections. Now, as they take risks to deliver much needed infrastructure improvement, they need continued protection.

There are plenty of less fortunate subcontractors, workers, and taxpayers who have suffered the consequences of inadequate protections. While bonding protections are required on traditional procurement methods, some laws and regulations on bonding can be vague, or absent, on newer forms of procurement, such as public-private partnerships (P3s). Policy makers have taken notice of this shortfall and have been proactive to ensure P3s utilize the same bonding protections used on traditionally procured infrastructure projects.

IIJA contained a policy to ensure essential protections are used on transportation projects, including P3s, to benefit workers, Disadvantaged Business Enterprise Program Supportive Services Program participants, and small business contractors, so that they can continue rebuilding our communities. This policy was widely supported as shown by the unanimous 97- 0 Senate vote in support of this policy. Now Congress should extend this popular policy and apply the same protections for water infrastructure projects.

Thankfully, lawmakers recognize this industry as one that’s deserving of more safeguards, and they are working on implementing solutions. Rep. Mike Bost (R-IL), Rep. Chris Pappas, Rep. Stephen Lynch (D-MA) and Rep. Troy Balderson (R-OH) proposed a solution, H.R. 1740, to ensure the same protections are in place for water infrastructure projects. This bill will significantly benefit localities of all shapes and sizes. It is a commonsense solution to a complex problem.

While passing this legislation will help tremendously in protecting infrastructure in U.S. towns and cities in this time of great need, it alone will not be enough to resolve all local concerns. Citizens must also remain involved with local leaders, such as mayors, city council members, and congressional representatives, to ensure that their communities’ individual needs are included in the appropriations to protect America’s infrastructure.

For the sake of helping our economy and protecting workers and taxpayers—including many minority-owned contractors—this is a clear policy that every congressional member should sup- port. The National Association of Minority Contractors (NAMC) urges you to ask government representatives how they will ensure that their rebuilding plans work for and benefit small businesses and local communities.

Wendell Stemley is the National President of the National Association of Minority Contractors

[END]
---
[1] Url: https://www.dailykos.com/stories/2023/4/14/2163902/-Next-Step-to-Protect-America-s-Infrastructure

Published and (C) by Daily Kos
Content appears here under this condition or license: Site content may be used for any purpose without permission unless otherwise specified.

via Magical.Fish Gopher News Feeds:
gopher://magical.fish/1/feeds/news/dailykos/