Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bonding needs.
Benefits Expected from the Infrastructure Investment and Jobs Act
People throughout the country are looking forward with high hopes to realizing the promise of the $1.2 trillion Infrastructure Investment and Jobs Act signed into law in November 2021. With $550 billion earmarked for new spending on a wide range of infrastructure projects over the next few years, the construction industry is predicted to boom, adding millions of good, high-paying jobs in the building trades and related industries. Additionally, the Inflation Reduction Act signed in August 2022 added another $369 billion to the total funds allocated for infrastructure-related projects.
The manufacturing sector, in particular, is expected to see substantial benefits from the investment in infrastructure. Not only will the demand for building materials and structural components increase, so will the need for buses, trains, and other vehicles and the parts to build and maintain them. The creation of a nationwide network of electric vehicle charging stations, coupled with legislative actions at the state level to move away from fossil fuels, will drive demand for electric vehicles of all types. And all of this manufacturing activity will require the construction of new manufacturing facilities.
Cities and rural areas alike should see growth and economic progress as a result of the upgrades to the nation’s roads and bridges, transit systems, electric grid, and broadband internet. Individuals and families can look forward to a quality of life enhanced by easier commutes, better access to the internet, increased employment opportunities, clean drinking water, and much more. And as a nation, the U.S. is poised to become more competitive in the global economy as a result of more efficient transportation of goods and materials.
Bonding Challenges for the Construction Industry
Of course, these benefits are not going to materialize out of thin air. Contractors who want to participate will need to position themselves accordingly. Not all builders have experience working on government-funded projects or are familiar with government procurement policies and contracting procedures. Those that have worked on government-funded projects in the past should be aware of the bonding requirements mandated by the federal Miller Act of 1935 or any of the “Little Miller Acts” that serve a similar purpose at the state level.
The Miller Act requires contractors on projects funded by the federal government to meet specific bonding requirements for jobs valued in excess of $100,000. However, that amount was amended to $150,000 by the Federal Acquisition Regulations (FAR), which establish uniform policies and procedures for federal procurement. These procurement regulations take precedence over the contract amounts specified in the Miller Act. Most states, however, have Little Miller Acts that require bonding for state-funded projects valued at more than $100,000.
The challenge for many construction companies, particularly smaller or newer ones, is that they may lack bonding experience and bonding capacity if their work has been primarily in the private sector. Private construction project owners historically have tended not to require bonding of contractors except on very large projects. But one feature of the Infrastructure Investment and Jobs Act is changing that situation. The Infrastructure Investment and Jobs Act and many state governments encourage public-private partnerships. Commonly referred to as P3s, these are projects jointly funded by a government entity and a private sponsor. The Infrastructure Investment and Jobs Act mandates payment and performance bonds for all federally funded infrastructure projects, including those with a private-sector co-sponsor.
The Infrastructure Investment and Jobs Act also made some changes to the Transportation Infrastructure Finance and Innovation Act (TIFIA), which helps qualified state and local governments, transit authorities, transportation companies and other private sector companies obtain financing for infrastructure projects. Public and private sector projects financed through TIFIA now are subject to payment and performance bonding.
What Are Payment and Performance Bonds?
The purpose of payment bonds is to ensure that contractors pay their subcontractors, employees, and suppliers according to the terms of the construction contract to avoid the possibility of liens being placed on the property for nonpayment. Performance bonds protect project owners against monetary damages caused by a contractor’s failure to complete a job as contracted. In both cases, the bond ensures that funds will be available to remediate the problem without the project owner paying out-of-pocket. Find out more about payment and performance bonds here.
Other Construction Bonding Requirements
Depending on the size and nature of the job, other construction surety bonds also may be required for infrastructure projects, such as a bid bond, supply bond, subdivision bond, timber sale bond, or maintenance bond. Construction companies hoping to become involved in the work to be funded through the Infrastructure Investment and Jobs Act should waste no time in establishing a relationship with a reliable surety bond provider. See more on types of construction bonds here.
Our surety bond professionals will get you the construction bonds you need at a competitive rate.