[Federal Register Volume 66, Number 111 (Friday, June 8, 2001)]
[Rules and Regulations]
[Pages 30803-30805]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-14445]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 115

RIN 3245-AE74


Surety Bond Guarantee Program

AGENCY: Small Business Administration (SBA).

ACTION: Direct final rule.

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[[Page 30804]]

SUMMARY: SBA revises our Surety Bond Guarantee Program rules to conform 
them to two recently-enacted statutory changes. First, the law 
increases the eligible contract amount from $1.25 million to $2 
million. Second, the law extends the authorization period of the Pilot 
Preferred Surety Bond (PSB) Program from September 30, 2000 to 
September 30, 2003.

DATES: The rule will become effective on August 7, 2001. Unless adverse 
comment is received by July 9, 2001. If an adverse comment is received, 
SBA will publish a timely withdrawal of the rule in the Federal 
Register.

ADDRESSES: Send written comments to Barbara Brannan, Special Assistant, 
Office of Surety Guarantees, U.S. Small Business Administration, 409 
3rd Street, SW, Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT: Robert J. Moffitt, Associate 
Administrator, Office of Surety Guarantees, (202) 205-6540.

SUPPLEMENTARY INFORMATION: This direct final rule implements provisions 
of section 805 of the Small Business Reauthorization Act of 2000 (Act), 
Public Law 106-554, 114 Stat. 2763A-653 (December 21, 2000), relating 
to SBA's Surety Bond Guarantee (SBG) Program. The Act increases the 
contract amount eligible for SBA-guaranteed bonding from $1.25 million 
to $2 million. This rule revises section 115.12(e) ``Amount of 
contract'' to effect that change and makes the necessary conforming 
changes to other relevant sections of SBA's SBG Program rules.
    This Act also extends the duration of the Pilot Preferred Surety 
Bond (PSB) Program for an additional three years. The PSB Program is a 
pilot program in which SBA-selected sureties are authorized to issue, 
service and monitor surety bonds without SBA's prior approval. This 
rule revises section 115.61 to extend the duration of the Pilot PSB 
Program from September 30, 2000 to September 30, 2003.
    This rule makes no changes to the current regulations other than 
those necessary to conform to the statute. SBA is publishing this 
regulation as a direct final rule because SBA believes the rule is non-
controversial since it is merely conforming the rules to implement 
provisions of the Act that became effective on December 21, 2000. SBA 
believes that this rule will not elicit any significant adverse 
comments.

Compliance With Executive Orders 12866, 12988 and 13132, the 
Regulatory Flexibility Act (5 U.S.C. 601-612), and the Paperwork 
Reduction Act (44 U.S.C. CH. 35)

    OMB has determined that this final rule does not constitute a 
``significant regulatory action'' for purposes of Executive Order 
12866. ``Significant regulatory action'' means any regulatory action 
that is likely to result in a rule that may have an annual effect on 
the economy of $100 million or more; does not create a serious 
inconsistency or otherwise interfere with an action taken or planned by 
another agency; does not materially alter the budgetary impact of 
entitlements, grants, user fees or loan programs or the rights and 
obligations thereof; and does not raise any novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in Executive Order 12866. In fiscal year 1999, 
SBA guaranteed 2,399 final bonds valued at $426.1 million, with an 
average contract amount of $177,602. In fiscal year 2000, SBA 
guaranteed 1,795 final bonds valued at $328.9 million, with an average 
contract amount of $183,247. For fiscal years 1999 and 2000, SBA 
guaranteed an aggregate of only seven (7) surety bond contracts in the 
former statutory maximum amount of $1.25 million. Based upon SBA's 
experience with, and its understanding of, the surety industry, SBA 
projects the guarantee of no more than 10 surety bond contracts in the 
new statutory maximum amount of $2.0 million per year. At most, this 
projection would result in an aggregate increase in guaranteed amount 
of less than $7.5 million each year (10  x  $750,000 = $7.5 million). 
The extension of the PSB Program will result in no discernable effect 
on the economy. Neither of the statutory amendments implemented by this 
direct final rule raises any other significant regulatory action 
concerns.
    SBA has determined that this final rule will not have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612. This rule 
merely implements provisions of the Act increasing the maximum surety 
bond contract amount that can participate in the SBG Program and 
extending the authorization period of the PSB Program. This rule does 
not impose costs upon the businesses that might be affected by it. 
Therefore, it will not have an annual economic effect of $100 million 
or more, result in a major increase in costs or prices, or have a 
significant adverse effect on competition or the United States economy. 
Few of the small business contracting concerns participating in the SBG 
Program are projected to take advantage of the new statutory increase 
in the contract amount. This is a tiny fraction of the total of 13-16 
million small business concerns in the United States. The rule contains 
no new information collections, recordkeeping requirements, or changes 
in forms.
    For purposes of Executive Order 12988, SBA has determined that this 
final rule is drafted, to the extent practicable, in accordance with 
the standards set forth in Section 3 of the Order.
    For purposes of Executive Order 13132, SBA has determined that this 
final rule will have no federalism implications.
    For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA 
has determined that this final rule contains no new reporting or 
recordkeeping requirements.

List of Subjects in 13 CFR Part 115

    Claims, Reporting and recordkeeping requirements, Small businesses, 
Surety bond.


    For the reasons set forth above, part 115 of Title 13, Code of 
Federal Regulations (CFR) is amended as follows:

PART 115--SURETY BOND GUARANTEES

    1. The authority citation for Part 115 is revised to read as 
follows:

    Authority: 5 U.S.C. app 3; 15 U.S.C. 687b, 687c, 694a, 694b; 
694b note, Pub. L. 106-554, 114 Stat. 2763A-653.


Secs. 115.12, 115.19, 115.31, 115.60 and 115.68  [Amended]

    2. Amend Sections 115.12(e)(1); 115.12(e)(3); 115.19(a); 115.31(d); 
15.60(a)(1); and 115.68 by removing the ``$1,250,000'' each time it 
appears and inserting in its place ``$2,000,000''.


Sec. 115.31  [Amended]

    3. Revise the final sentence of section 115.31(d) to read ``For 
example if a Contract amount increases to $2,100,000, SBA's share of 
the Loss under an 80% guarantee is limited to 76.1% [2,000,000 / 
2,100,000 = 95.2%  x  80% = 76.1%].''


Sec. 115.61  [Amended]

    4. Amend section 115.61 by removing the year ``2000'' both times it 
appears and replacing it with the year ``2003'.


[[Page 30805]]


    Dated: May 24, 2001.
John Whitmore,
Acting Administrator.
[FR Doc. 01-14445 Filed 6-7-01; 8:45 am]
BILLING CODE 8025-01-U