The National Association of Surety Bond Producers (NASBP) and The Surety & Fidelity Association of America (SFAA) have introduced the first-ever Broadband Equity, Access, and Deployment (BEAD) Program Surety Bond Information Kit. This initiative comes in response to the National Telecommunications & Information Administration (NTIA) of the U.S. Department of Commerce's decision to accept surety bonds as an alternative form of security to letters of credit (LOCs) for the BEAD Program.
In November 2023, the NTIA issued a waiver to modify the requirement for LOCs as the sole form of security for securing the performance of recipients of BEAD grant funds aimed at constructing broadband infrastructure. Following this announcement, NASBP and SFAA formed a surety working group to develop performance bond forms and model language to facilitate the use of surety bonds in meeting BEAD Program security requirements. The working group created two performance bond forms, model language for state broadband offices to include in award agreements, and a sample letter template to confirm the bond amount for which an internet service provider (ISP) or its construction contractor initially qualifies.
Among the two bond forms, one is designed for situations where the ISP can qualify for bonding and furnish the bond directly to the state broadband office. The other form is tailored for scenarios where the contractor building the broadband system is better suited to qualify for bonding.
NASBP CEO Mark McCallum emphasized the significance of broadband access for communities, especially in rural or underserved areas, stating, "Permitting the use of surety bonds to protect federal and state funding and investment in broadband infrastructure will ensure that these vital systems will be constructed and realized." NASBP Director of Government Relations Larry LeClair added that NASBP and SFAA have long informed federal agencies about the benefits of surety bonds in safeguarding broadband investments and played an active role in educating the ISP community about this alternative security option.
Julie Alleyne, SFAA Vice President of Policy & General Counsel, noted the advantages of the new security option for small ISPs who had difficulty securing LOCs. She highlighted that surety bonds provide added protection for state broadband offices and taxpayers because the surety company only furnishes a bond to those it believes can successfully complete the work based on a prequalification process. In contrast, LOCs issued by banks do not evaluate the contractor’s ability to perform the work.
Surety bonds, as a hallmark of public procurement, are widely accepted forms of performance security. They offer viable options for qualified companies receiving federal grant monies for broadband infrastructure development, providing an alternative to bank LOCs.
The BEAD Program Surety Bond Information Kit is available for download here.
