The Surety and Fidelity Association of America (SFAA) BONDING ASSISTANCE FOR SMALL AND MINORITY CONTRACTORS “New Opportunities in the Gulf: Creating Business to Business Linkages” Forum sponsored by U.S. Department of Commerce, MBDA Detroit, MI December 21, 2011

Background Prior efforts of SAA, NASBP and NAMC Current surety bonding environment Proactive vs. Reactive SAA Support of Contractor Development Initiatives

SFAA and MBDA MEMORANDUM OF UNDERSTANDING (MOU) The objective of the MOU is for SFAA to share its resources (both educational and referral sources) with MBDA for the benefit of minority-owned firms to enhance their access to bonding and/or to educate them on how to become bondable or increase their bonding capacity.

What is SFAA SFAA is a voluntary, non-profit trade association that performs a leadership role in promoting and preserving the use of fidelity and surety bonds to protect public and private interests Founded in 1908, SFAA has grown to over 650 surety companies, including a number of foreign affiliates SFAA members are insurance and reinsurance companies that specialize in fidelity and surety bonding Surety companies are those companies that underwrite bonds – i.e., they take financial risk

SFAA Services  Provides a forum for discussion of problems common to the industry  Offers educational sessions on topics relevant to the surety and fidelity industries  Establishes positions and policy on fidelity and surety issues  Represents the position of its members to government agencies, legislatures and other trade associations  Provides outreach, program development, technical assistance and advocacy for the surety, fidelity and construction industries

SAA Outreach Activities Outreach to public officials, trade associations and professional organizations Assistance in informing and mobilizing minority and women contractor community around surety bond issues and availability Work with local surety associations (LSAs) and other organizations and jurisdictions in planning and implementing contractor development programs

Barriers to Emerging Contractors Entry and Growth Contracting Opportunity Information and Management Expertise Trained and Reliable Workforce Capability and Capacity Performance Issues and Dispute Resolution Bonding and Financing

How Contractors Have Addressed Barriers to Bonding Only bidding work where bonding is not required Bidding under prime contractor’s bond Advocating for bond waivers Advocating for alternative insurance/guarantee products Obtaining First Bond or Increasing Bonding Capacity

Why Minority and Women Contractors are an Emerging Market for Surety Bonding Demographic imperative Customer requirements Increasingly cost-effective Excellent pool of quality minority and women contractors Historically under-serviced by surety and financial industries

Resources DOT Bonding Support Program SBA Surety Guarantee Program State and Local Programs Project-Specific Surety Support Programs SFAA Model Contractor Development Program

Program Objectives Educating small and disadvantaged contractors about surety bonds and assisting them in becoming bondable Identifying resources available to small and disadvantaged contractors in obtaining their first bond, including the SBA Bond Guarantee Program, as well as similar state and local programs in their area Providing assistance and referrals to small and disadvantaged contractors in obtaining appropriate accounting, project management and financing expertise Assisting small and disadvantaged bondable contractors in increasing their bonding capacity

SFAA Model Contractor Development Program Seeks to Improve Bondability through Assisting Contractors in Better Addressing the 3 Cs – Elements of Surety Bonding Prequalification Capital Financial Strength Capacity Ability to Perform Character References and Reputation

Reaching Out to the Contractor Community Involvement in Local Contractor Organizations Information Dissemination, including Utilization of Websites

Contractor Development Program Activities Networking Promoting local surety representation in small, minority and women business organizations Sponsoring regular networking sessions

Contractor Development Program Activities (cont’d) Workshops and Seminars Surety 101: Bonding for New and Emerging Contractors (SAA) Construction Accounting for Contractors (CFMA) Business and Project Management for New and Emerging Contractors (ABC) “Why Contractors Fail” – Pitfalls to Avoid and Ways to Avoid Them (SAA)

Contractor Development Program Activities (cont’d) Resource Identification and Referral– Establishing a Resource Clearinghouse Federal, state and local bonding assistance programs Financing, training and technical assistance support (project management, job costing, legal assistance, finance and accounting) Linkages with potential mentors

Contractor Development Program Activities (cont’d) Assistance in the Bonding Process Diagnosis – Identification of Needs Prescription – Technical Assistance and Referral Monitoring and Reporting Bonding/Financing Applications

Contractor Development Program Activities (cont’d) Advocacy and Policy Development Supporting legislation that enhances bonding to small, minority and women contractors Technical input to lawmakers and jurisdictions related to surety issues and programs Tailoring bonding programs for specific contracting opportunities

Current MCDP Initiatives New Jersey School Construction Program US DOT Bond Guarantee Program State of Ohio Bond Guarantee Program Hillsborough County (Tampa), FL Bonding Support Program Prince George’s County, MD Small Business Initiative North Carolina DOT Bonding Support Program Veteran’s Corporation MOU Brooklyn, NY Chamber of Commerce/NYSAMC MOU MBDA MOU

For More Information Contact: The Surety & Fidelity Association of America Sam Carradine, Director of Development and Diversity 1101 Connecticut Avenue, NW, Suite 800 Washington, DC Tel: (202) ; Fax: (202)

Local Contact Dana Cleveland Trinity Insurance Agency