In a significant move for the broadband industry, the National Association of Surety Bond Producers (NASBP) and The Surety & Fidelity Association of America (SFAA) have jointly released a Broadband Equity, Access, and Deployment (BEAD) Program Surety Bond Information Kit. This comprehensive resource comes in response to the National Telecommunications & Information Administration’s (NTIA) recent decision to accept surety bonds as an alternative form of security for the BEAD Program, previously limited to letters of credit (LOCs).
The information kit, a first of its kind, includes bond forms specifically designed to address the NTIA’s announcement. It provides crucial guidance for state broadband offices and internet service providers (ISPs) participating in the BEAD Program, which aims to expand broadband access across the United States.
Following the NTIA’s programmatic waiver in November 2023, which modified the security requirements for BEAD grant recipients, NASBP and SFAA formed a dedicated surety working group. This group developed two performance bond forms, model language for state broadband offices to incorporate into award agreements, and a sample letter template. These resources are intended to streamline the process of using surety bonds to meet BEAD Program security requirements.
The two bond forms cater to different scenarios: one for ISPs capable of qualifying for bonding directly with state broadband offices, and another for situations where the ISP’s construction contractor is better positioned to qualify for bonding. This flexibility addresses the varied needs of different entities involved in broadband infrastructure projects.
NASBP CEO Mark McCallum emphasized the importance of this development, stating, ‘Broadband access is so crucial for communities to gain connections, information, and opportunities, especially in rural or underserved areas.’ He added that the use of surety bonds would help ensure the realization of vital broadband systems.
The introduction of surety bonds as an alternative to LOCs is expected to have a significant impact on the industry. Julie Alleyne, SFAA Vice President of Policy & General Counsel, highlighted the benefits for small ISPs, who often struggle to secure LOCs. Moreover, she pointed out the added protection for state broadband offices and taxpayers, as surety companies only provide bonds to entities they believe can successfully complete the work based on a thorough prequalification process.
This move aligns with the established practice in public procurement, where surety bonds are widely accepted as performance security. The new option provides qualified companies receiving federal grant monies for broadband infrastructure development with a viable alternative to bank LOCs.
The BEAD Program Surety Bond Information Kit is now available for download from the SFAA website (https://surety.org/suretyprotects/). This resource is expected to play a crucial role in facilitating the expansion of broadband infrastructure across the United States, particularly in underserved areas.
As the broadband industry continues to evolve and expand, the introduction of surety bonds as a security option for the BEAD Program marks a significant step towards more flexible and inclusive funding mechanisms. This development has the potential to accelerate broadband deployment, ultimately benefiting communities across the nation by improving access to essential digital infrastructure.
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