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Proposed House Bill Looks to Reduce Risk For Small Construction Firms That Participate in Federal Contracts

  • Bipartisan proposal in House Small Business Committee seeks to add protections and reduce risk for small subcontractors on federal projects
  • Smaller firms often find that subcontracting with a prime contractor is the easiest way to access federal work
  • Bill would exempt surety bond requirements from inflation adjustments

Summary by Dirk Langeveld

A bipartisan proposal introduced in the House Small Business Committee aims to provide additional protections and reduce the risk for small construction firms working as subcontractors on federal projects.

The legislation introduced by Committee Chairwoman Nydia M. Velázquez and Rep. Byron Donalds would “exclude the threshold for construction contracts that must be bonded under the Miller Act from periodic inflation adjustments, ensuring that more projects are covered under federal bonding requirements.”

  • Smaller firms often find that subcontracting is the best opportunity to take advantage of federal contracting opportunities
  • The Miller Act requires that prime contractors issue payment or performance surety bonds to ensure that subcontractors are paid if the prime contractor defaults
  • The act’s threshold currently increases every five years, reducing protections for small subcontractors and increasing their risk
  • The committee bill would exempt surety bond requirements from inflation adjustments to strengthen protections

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