[Federal Register Volume 88, Number 77 (Friday, April 21, 2023)]
[Rules and Regulations]
[Pages 24471-24474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08458]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 115

RIN 3245-AH96


Surety Bond Guarantee Program: Removing Obsolete Forms

AGENCY: U.S. Small Business Administration.

ACTION: Direct final rule.

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SUMMARY: The Small Business Administration (SBA) is issuing this direct 
final rule to remove references to SBA Form 990A in the regulations of 
the Surety Bond Guarantee (SBG) Program. SBA Form 990A is obsolete and 
has been discontinued.

[[Page 24472]]


DATES: This rule is effective June 20, 2023, without further action, 
unless significant adverse comment is received by May 22, 2023. If 
significant adverse comment is received, SBA will publish a timely 
withdrawal of the Rule in the Federal Register.

ADDRESSES: You may submit comments, identified by RIN 3245-AH96, using 
any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Search for the rule by RIN number 3245-AH08 and follow the instructions 
for submitting comments.
     Mail: Jermaine Perry, Management Analyst, Office of Surety 
Guarantees, U.S. Small Business Administration, 409 3rd Street SW, 8th 
Floor, Washington, DC 20416.
     SBA will post all comments on http://www.regulations.gov. 
If you wish to submit confidential business information (CBI) as 
defined in the User Notice at http://www.regulations.gov, please submit 
the information to Jermaine Perry, Management Analyst, Office of Surety 
Guarantees, U.S. Small Business Administration, 409 3rd Street SW, 8th 
Floor, Washington, DC 20416. Highlight the information that you 
consider to be CBI and explain why you believe this information should 
be held confidential. SBA will review the information and make the 
final determination as to whether to publish the information.

FOR FURTHER INFORMATION CONTACT: Jermaine Perry, Director of Surety 
Guarantees at (202) 401-8275 or [email protected].

SUPPLEMENTARY INFORMATION:

A. General Information

    The U.S. Small Business Administration (SBA) amending its Surety 
Bond Guaranty (SGB) rules to remove references to Quick Bond Guarantee 
Application and Agreement (SBA Form 990A). Form 990A was integrated 
with the current version of Form 990 and therefore discontinued. SBA 
guarantees bid, payment, and performance bonds for small and emerging 
contractors who cannot obtain surety bonds through regular commercial 
channels. SBA's guarantee authorized pursuant to part B of title IV of 
the Small Business Investment Act of 1958, 15 U.S.C. 694a et seq., 
gives an authorized surety company (``Surety'') an incentive to provide 
bonding for small businesses; thereby assisting small businesses in 
obtaining access to more contracting opportunities. SBA's guarantee is 
an agreement between SBA and a Surety that SBA will assume a certain 
percentage of the Surety's loss should a contractor default on the 
underlying contract. SBA is authorized to guarantee a Surety for a 
contract up to $6.5 million and, with the certification of a 
contracting officer of a federal agency, up to $10 million. For more 
information about SBA's Surety Bond Guarantee Program, see https://www.sba.gov/funding-programs/surety-bonds.
    SBA issued a Final Rule on Streamlining the Surety Bond Guarantee 
Program to address regulations that were obsolete, unnecessary, 
ineffective, or burdensome. That final rule was published in the 
Federal Register on August 8, 2022 (87 FR 48080). SBA also received 
approval from Office of Management and Budget (OMB) to revise the 
information collections language in the SBG Program's various forms, 
which were revised in accordance with that Final Rule, and are set to 
expire November 25, 2022.

B. Section-by-Section Analysis

    Section 115.10. The definition of ``Prior Approval Agreement'' is 
being revised because Form 990A is being discontinued. The information 
collected on Form 990A has been integrated into current Form 990. SBA 
is removing the phrase ``or Quick Bond Guarantee Application and 
Agreement (SBA Form 990A)'' from the definition of ``Prior Approval 
Agreement.''
    Section 115.30. SBA is removing references to the Quick Bond 
Guarantee Application and Agreement (SBA Form 990A), which is now 
discontinued. SBA is amending the remainder of paragraph (d) to remove 
the references to a choice of form.
    Section 115.32. SBA is making a technical amendment to paragraph 
(b) to remove cross references to Sec.  115.30(d)(1) and (2) because 
they are redundant.
    SBA is amending paragraph (d)(1) to state that SBA Form 990 must be 
submitted to SBA when a surety notifies SBA of any increase or decrease 
in the contract or bond amount, even if the original application was on 
a Form 990A, Quick Bond Guaranty Application and Agreement form.

C. Compliance With Executive Orders 12866, 12988, 13132, and 13563, the 
Congressional Review Act (5 U.S.C. 801-808), the Paperwork Reduction 
Act (44 U.S.C., Ch. 35), and the Regulatory Flexibility Act (5 U.S.C. 
601-612)

Executive Order 12866

    The Office of Management and Budget has determined that this rule 
is not a ``significant regulatory action'' under Executive Order 12866.

Executive Order 12988

    This direct final rule meets applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice 
Reform, to minimize litigation, eliminate ambiguity, and reduce burden. 
This action does not have preemptive effect or retroactive effect.

Executive Order 13132

    This rule does not have federalism implications as defined in 
Executive Order 13132. It will not have substantial direct effects on 
the States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in the Executive Order. As 
such it does not warrant the preparation of a Federalism assessment.

Executive Order 13563

    Executive Order 13563, Improving Regulation and Regulatory Review 
(January 18, 2011), requires agencies to adopt regulations through a 
process that involves public participation, and to the extent feasible, 
base regulations on the open exchange of information and perspectives 
from affected stakeholders and the public as a whole. SBA has developed 
this rule in a manner consistent with these requirements.
    Previously, SBA engaged the public in rulemaking to revise, 
streamline, and modernize the Surety Bond Guaranty program. That final 
rule published in the Federal Register on August 8, 2022 (87 FR 48080). 
While developing that rule, SBA responded to specific inquiries from 
government officials and the public regarding changes in response to 
the notice of proposed rulemaking published in the Federal Register on 
September 23, 2021 (86 FR 52844).
    This direct final rule revises some information collection language 
in SBG Program forms that conformed with the final rule published on 
August 8, 2022; that is set to expire November 30, 2025.

Congressional Review Act, 5 U.S.C. 801-808

    The Office of Management and Budget has determined that this is not 
a major rule under 5 U.S.C. 804(2).

Paperwork Reduction Act, 44 U.S.C., Ch. 35

    SBA has determined that this proposed rule would not impose new 
reporting or recordkeeping requirements under the Paperwork Reduction 
Act. The rule aligns the regulations with the discontinuation of SBA 
Form 990A, Quick Bond Application and

[[Page 24473]]

Agreement, currently approved under OMB Control Number 3245-0378.

Regulatory Flexibility Act, 5 U.S.C. 601-612

    When an agency issues a proposed rule, the Regulatory Flexibility 
Act (RFA) requires the agency to ``prepare and make available for 
public comment an initial regulatory flexibility analysis'' which will 
``describe the impact of the proposed rule on small entities.'' (5 
U.S.C. 603(a)). However, section 605 of the RFA allows an agency to 
certify a rule, in lieu of preparing an analysis, if the proposed 
rulemaking is not expected to have a significant economic impact on a 
substantial number of small entities.
    This direct final rule only removes references to SBA Form 990A in 
the regulations of the Surety Bond Guarantee (SBG) Program, as SBA Form 
990A is obsolete and has been discontinued. Accordingly, the 
Administrator of the SBA hereby certifies that this proposed rule would 
not have a significant economic impact on a substantial number of small 
entities.

Justification for Direct Final Rule--Administrative Procedures Act

    In general, SBA publishes a rule for public comment before issuing 
a final rule, in accordance with the Administrative Procedure Act. 5 
U.S.C. 553. The Administrative Procedure Act provides an exception to 
this standard rulemaking process, however, where an agency finds good 
cause to adopt a rule without prior public participation. 5 U.S.C. 
553(b)(3)(B). The good cause requirement is satisfied when prior public 
participation is impracticable, unnecessary, or contrary to the public 
interest.
    SBA is publishing this rule as a direct final rule because public 
participation is unnecessary. SBA views this as a non-controversial 
administrative action because it merely removes references to SBA Form 
990A in the regulations of the Surety Bond Guarantee (SBG) Program; as 
SBA Form 990A is obsolete and has been discontinued. This rule will be 
effective on the date shown in the DATES section unless SBA receives 
significant adverse comment on or before the deadline for comments. 
Significant adverse comments are comments that provide strong 
justifications why the rule should not be adopted or for changing the 
rule. SBA does not expect to receive any significant adverse comments 
because removes references to a discontinued form, with no extraneous 
interpretation or other expanded text.
    If SBA receives significant adverse comment, SBA will publish a 
notice in the Federal Register withdrawing this rule before the 
effective date. If SBA receives no significant adverse comments, the 
rule will be effective 60 days after publication without further 
notice.

List of Subjects in 13 CFR Part 115

    Claims, Reporting and recordkeeping requirements, small businesses, 
Surety bonds.

    For the reasons stated in the preamble, SBA amends 13 CFR part 115 
as follows:

PART 115--SURETY BOND GUARANTEE

Subpart A--Provisions for All Surety Bond Guarantees

0
1. The authority citation for part 115 continues to read as follows:

    Authority:  5 U.S.C. app 3; 15 U.S.C. 687b, 687c, 694a, 694b 
note; and Pub. L. 110-246, Sec. 12079, 122 Stat. 1651.

0
2. Amend Sec.  115.10 by revising the definition of ``Prior Approval 
Agreement'' to read as follows:


Sec.  115.10   Definitions.

* * * * *
    Prior Approval Agreement means the Surety Bond Guarantee Agreement 
(SBA Form 990) entered into between a Prior Approval Surety and SBA 
under which SBA agrees to guarantee a specific bond.
* * * * *

0
3. Amend Sec.  115.30 by revising paragraph (d) to read as follows.


Sec.  115.30   Submission of Surety's guarantee application.

* * * * *
    (d) Prior Approval Agreement. To apply for a bond guarantee, a 
Prior Approval Surety must submit a Surety Bond Guarantee Agreement 
(SBA Form 990) and select one of the following application types:
    (1) Regular. A Prior Approval Surety may complete and submit a 
Surety Bond Guarantee Agreement (SBA Form 990) indicating a Regular 
application type to SBA for each Bid Bond or Final Bond. This Form must 
be approved by SBA prior to the Surety's Execution of the bond. The 
guarantee fees owed in connection with Final Bonds must be paid in 
accordance with Sec.  115.32.
    (2) Quick Bond Agreement--(i) General procedures. Except as 
provided in paragraph (d)(2)(ii) of this section, a Prior Approval 
Surety may complete and submit a SBA Form 990 indicating a Quick Bond 
Agreement application type for each Bid Bond or Final Bond. This form 
must be approved by SBA prior to the Surety's Execution of the bond. 
The Quick Bond application type is used only for contract amounts that 
do not exceed $500,000 at the time of application. The guarantee fees 
owed in connection with Final Bonds must be paid in accordance with 
Sec.  115.32.
    (ii) Exclusions. The Quick Bond application type may not be used 
under the following circumstances:
    (A) The Principal has previously defaulted on any contract or has 
had any claims or complaints filed against it with any court or 
administrative agency;
    (B) Work on the Contract commenced before a bond was Executed;
    (C) The time for completion of the Contract exceeds 12 months;
    (D) The Contract includes a provision for liquidated damages that 
exceed $2,500 per day;
    (E) The Contract involves asbestos abatement, hazardous waste 
removal, or timber sales; or
    (F) The bond would be issued under a surety bonding line approved 
under Sec.  115.33.

0
4. Amend Sec.  115.32 by revising paragraphs (b) and (d)(1) to read as 
follows:


Sec.  115.32   Fees and Premiums.

* * * * *
    (b) SBA charge to Principal. SBA does not charge Principals 
application or Bid Bond guarantee fees. If SBA guarantees a Final Bond, 
the Principal must pay a guarantee fee equal to a certain percentage of 
the Contract amount. The percentage is determined by SBA and is 
published in Notices in the Federal Register from time to time. The 
Principal's fee is rounded to the nearest dollar and is to be remitted 
to SBA with the form submitted under Sec.  115.30(d). See paragraph (d) 
of this section for additional requirements when the Contract amount 
changes.
* * * * *
    (d) * * *
    (1) Notification and approval. The Prior Approval Surety must 
notify SBA of any increases or decreases in the Contract or bond amount 
that aggregate 25% or $500,000 of the original contract or bond amount, 
whichever is less, as soon as the Surety acquires knowledge of the 
change. Whenever the original bond amount increases as a result of a 
single change order of at least 25% or $500,000 of the original 
contract or bond amount, whichever is less, the prior written approval 
of such increase by SBA is required on a supplemental Prior Approval 
Agreement and is conditioned upon payment by the Surety of the increase 
in the Principal's

[[Page 24474]]

guarantee fee as set forth in paragraph (d)(2) of this section. In 
notifying SBA of any increase or decrease in the Contract or bond 
amount, the Prior Approval Surety must use SBA Form 990 and select the 
application type that it used in applying for the original bond 
guarantee.
* * * * *

Isabella Casillas Guzman,
Administrator.
[FR Doc. 2023-08458 Filed 4-20-23; 8:45 am]
BILLING CODE 8026-09-P