2. Surety Bonds Performance Bond Payment Bond

3. Benefits Of Bonding Subs Prequalified subs Risk Transfer Improves contractor’s credit standing

4. Business Operations Financial Strength Experience Sub Documents Exposure & Progress Size & Location Ability To Perform Prequalification Process

5. Indemnification Corporate & personal assets on the line Incentive for sub to complete bonded work

6. Availability of Surety Traditional sureties Specialized sureties SBA program

7. Confirm Ability To Provide Bonds

8. Limited Surety Capacity Labor-only contract Phased contract

9. Qualify The Subcontractor’s Surety A.M. Best Companywww.ambest.comwww.ambest.com Dun & Bradstreetwww.dnb.com/uswww.dnb.com/us Standard & Poor’swww.standardandpoors.comwww.standardandpoors.com Moody’swww.moodys.comwww.moodys.com Treasury Dept. www.fms.treas.gov/c570/c570.htmlwww.fms.treas.gov/c570/c570.html State Insurance Dept.www.naic.org/state_web_map.htmwww.naic.org/state_web_map.htm

10. Surety Rates Bid Bond Usually no or minimal charge Performance Bond ½ - 2% of contract price Payment Bond Usually included with Performance Bond)

11. Surety Communications Job status reports Provide early warnings of serious problems

12. Dispute vs. Default Performance obligations defined in subcontract Notify surety of problems Formal written declaration of default

13. Why Subcontractors Fail Accounting Issues Management Issues Personnel Issues Performance Issues Unrealistic Growth Failure

14. If Default Occurs Acknowledge claim Investigate claim Determine obligations Fulfill obligations Surety

15. Surety’s Options Assist subcontractor to completion Bring in replacement Negotiate financial settlement Surety

16. Establishing A Bonding Policy Establish thresholds Articulate exceptions Notify subcontractors & surety Contractor

17. For More Information Surety Information Office www.sio.org | sio@sio.org SIO is a joint initiative of The National Association of Surety Bond Producers (NASBP) and Surety & Fidelity Association of America (SFAA).