[Federal Register Volume 83, Number 146 (Monday, July 30, 2018)]
[Pages 36658-36659]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16202]



[Docket No.: SBA-2018-0007]

Surety Bond Guarantee Program Fees

AGENCY: U.S. Small Business Administration.

ACTION: Notification of temporary initiative to test lower fees; 
request for public comments.


SUMMARY: This document announces a temporary decrease in the guarantee 
fees that the U.S. Small Business Administration (SBA) charges all 
Surety companies and Principals on each guaranteed bond (other than a 
bid bond) issued in SBA's Surety Bond Guarantee (SBG) Program.

    Applicability Date: The fee decreases described in this document 
will apply to all SBA surety bond guarantees approved during the one 
year period beginning October 1, 2018 and ending September 30, 2019.
    Comment Date: SBA must receive comments on or before August 29, 

ADDRESSES: You may submit comments, identified by Docket No. SBA-2018-
0007, by any of the following methods: (1) Federal eRulemaking Portal: 
http://www.regulations.gov, following the instructions for submitting 
comments; or (2) Mail/Hand Delivery/Courier: Jermanne Perry, Surety 
Bond Specialist, U.S. Small Business Administration, Office of Surety 
Guarantees, 409 Third Street SW, Suite 8600, Washington, DC 20416.
    SBA will post all comments on www.regulations.gov. If you wish to 
submit confidential business information (CBI) as defined in the User 
Notice at www.regulations.gov, you must submit such information to U.S. 
Small Business Administration, Jermanne Perry, Office of Surety 
Guarantees, 409 Third Street SW, Washington, DC 20416 or send an email 
to [email protected]. Highlight the information that you consider 
to be CBI and explain why you believe SBA should hold this information 
as confidential. SBA will review your information and determine whether 
it will make the information public.

Specialist, Office of Surety Guarantees, (202) 401-8275; 
[email protected].

SUPPLEMENTARY INFORMATION: Under its SBG Program, the SBA guarantees 
bid, payment and performance bonds for small and emerging contractors 
who cannot obtain surety bonds through regular commercial channels. 
SBA's guarantee gives Sureties an incentive to provide bonding for 
small businesses and, thereby, assists small businesses in obtaining 
greater access to contracting opportunities. SBA's guarantee is an 
agreement between a Surety and SBA that SBA will assume a certain 
percentage of the Surety's loss should a contractor default on the 
underlying contract. Pursuant to its statutory authority ``to establish 
such fee or fees for small business concerns and

[[Page 36659]]

premium or premiums for sureties as it deems reasonable and 
necessary,'' and to administer the SBG Program ``on a prudent and 
economically justifiable basis,'' 15 U.S.C. 694b(h), SBA assesses a 
guarantee fee against both the small business concern (the Principal) 
and the Surety and deposits these fees into a revolving fund to cover 
the program's liabilities and certain program expenses.
    SBA last changed the fees over 12 years ago when the fee charged to 
the Sureties was increased from 20% to 26% of the bond premium and the 
fee charged to Principals increased from $6.00 per thousand dollars of 
the contract amount to $7.29 per thousand dollars of the contract 
amount. Those fees have been in effect since April 3, 2006. At that 
time, SBA determined that the program's revolving fund was insufficient 
to cover projected, unfunded liabilities. See 71 FR 9632 (February 24, 
2006). SBA increased the guarantee fees to address the projected 
deficiency. Over the past 12 years, with the increased fee amounts, the 
revolving fund has accumulated sufficient funds to support the program.
    SBA's rules provide that the amount of the fees to be paid by the 
Surety and the Principal ``will be determined by SBA and published in 
Notices in the Federal Register from time to time.'' See 13 CFR 
115.32(b) and (c) and 115.66. The purpose of this document is to 
announce that, for the one year period beginning October 1, 2018, the 
Surety fee will decrease from 26% of the bond premium to 20% of the 
bond premium and the Principal fee will decrease from $7.29 per 
thousand dollars of the contract amount to $6 per thousand dollars of 
the contract amount.
    As indicated above, the decreases in the fees are temporary and 
will be in effect for guaranteed bonds approved during the one year 
period beginning October 1, 2018, and ending September 30, 2019. During 
the year, SBA will evaluate whether the lower fees will result in an 
increase in the bond activity level of the SBG Program and, if so, 
whether any such increased level of activity will generate sufficient 
revenues to offset the reduced fee amounts. After carefully reviewing 
program performance during the year, SBA will determine whether the 
guarantee fees should remain at these new amounts or if they should 
revert to the higher amounts or otherwise be changed.
    SBA invites public comments on the above stated fee decreases. 
Please clearly identify paper and electronic comments as ``Public 
Comments on Fee Decreases under the SBG Program Docket No. SBA-2018-
0007'' and submit them by one of the methods identified in the 
ADDRESSES section of this document. SBA will consider the comments and 
determine whether any revisions are necessary.

    Authority: 13 CFR 115.32(b) and (c) and 115.66.

    Dated: July 23, 2018.
William Manger,
Associate Administrator, Office of Capital Access.
[FR Doc. 2018-16202 Filed 7-27-18; 8:45 am]