II 110th CONGRESS 1st Session S. 1960 IN THE SENATE OF THE UNITED STATES August 2, 2007 Ms. Snowe (for herself and Mr. Kerry) introduced the following bill; which was read twice and referred to the Committee on Small Business and Entrepreneurship A BILL To amend the Small Business Investment Act of 1958 to improve surety bond guarantees, and for other purposes.

1.

Short title

This Act may be cited as the Surety Bond Improvement Act of 2007.

2.

Definitions

In this Act, the terms Administrator and Administration mean the Small Business Administration and the Administrator thereof, respectively.

3.

Surety Bonds

(a)

Rates

Section 411(a) of the Small Business Investment Act of 1958 (15 U.S.C. 694b(a)) is amended— (1)in paragraph (1), by striking $2,000,000 and inserting $3,000,000; and (2)by adding at the end the following: (6)The Administrator shall authorize a surety that issues, monitors, or services bonds under paragraph (3) to use rates approved by the insurance commissioner in the State in which such contract will be performed. . (b)

Payment of guarantees

Section 411(b) of the Small Business Investment Act of 1958 (15 U.S.C. 694b(b)) is amended— (1)by redesignating paragraphs (1) through (3) as subparagraphs (A) through (C), respectively, and adjusting the margins accordingly; (2)by striking Subject to the provisions and inserting the following: “Indemnification.— (1)

In general

Subject to the provisions ; (3)by striking : Provided, however and inserting .(2)

Conditions

For a guarantee under this subsection— ; (4)by striking In no event shall and inserting the following: (3)

Maximum amount

In no event shall ; and (5)by adding at the end the following: (4)

Payment of guarantees

The Administrator may not refuse to make payment on a guarantee under this subsection based on facts, circumstances, or defects that the Administrator reasonably should have identified during the process of making the guarantee. . (c)

Reports to Congress

(1)

In general

On the date on which the Administrator provides notice of a proposed change in fees under section 411(h) of the Small Business Investment Act of 1958 (15 U.S.C. 694b(h)), the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives, and make publically available, a report regarding the basis for the change in fees. (2)

Contents

Each report submitted under paragraph (1) shall include— (A)the contents of any study used by the Administrator in determining whether to change fees under section 411(h) of the Small Business Investment Act of 1958; and (B)the total amount of fees received under such section 411(h) and the total cost of the program under part B of title IV of the Small Business Investment Act of 1958 (15 U.S.C. 694a et seq.)— (i)for the first report submitted under paragraph (1), during the 3-year period ending on the date of the submission of the report; and (ii)for each subsequent report, during the period beginning on the date of the submission of the prior report submitted under paragraph (1) and ending on the date of submission of such subsequent report. (d)

Sense of Congress

It is the sense of Congress that the program under part B of title IV of the Small Business Investment Act of 1958 (15 U.S.C. 694a et seq.) is not required to be self-funding and, therefore, the program may at times operate at a loss.

4.

Mediation

(a)

In general

Not later than 180 days after the date of enactment of this Act, and in accordance with subchapter IV of chapter 5 of title 5, United States Code, the Administrator shall promulgate regulations establishing a nonbinding, neutral, third party alternative dispute resolution procedure for mediating an issue in controversy between a participating surety and the Administration. (b)

Contents

The regulations promulgated under subsection (a) shall— (1)permit either a participating surety or the Administration to request alternative dispute resolution proceedings; and (2)establish— (A)a process for selecting a neutral, third party mediator; (B)a reasonable time frame for the conclusion of any mediation under this section; and (C)a method for sharing the costs of any mediation under this section between a participating surety and the Administration. (c)

Definitions

In this section— (1)the term issue in controversy has the meaning given that term in section 571 of title 5, United States Code; (2)the term participating surety means a surety participating in a program under part B of title IV of the Small Business Investment Act of 1958 (15 U.S.C. 694a et seq.); and (3)the term surety has the meaning given that term in section 410 of the Small Business Investment Act of 1958 (15 U.S.C. 694a).