NASBP and SFAA Release Bond Information Kit for BEAD Program Participants

The National Association of Surety Bond Producers (NASBP) and The Surety & Fidelity Association of America (SFAA) have announced the publication of a groundbreaking Broadband Equity, Access, and Deployment (BEAD) Program Surety Bond Information Kit. This initiative addresses the National Telecommunications & Information Administration (NTIA) of the U.S. Department of Commerce's recent decision to accept surety bonds as an additional form of security in lieu of letters of credit (LOCs) for the BEAD Program.

In November 2023, NTIA issued a waiver to modify the LOC requirement, allowing surety bonds as an alternative security measure to ensure the performance of recipients of BEAD grant funds for constructing broadband infrastructure. Following this waiver, NASBP and SFAA formed a surety working group to create performance bond forms and model language that facilitate the use of surety bonds to meet BEAD Program security requirements.

The working group developed two performance bond forms. One form is for situations where the ISP can qualify for bonding and provides the bond directly to the state broadband office. The second form is for cases where the ISP’s contractor, who is building the broadband system, is better suited to qualify for bonding. The kit also includes model language for state broadband offices to insert into award agreements and a sample letter template to confirm the bond amount for which an ISP or its construction contractor initially qualifies.

NASBP CEO Mark McCallum emphasized the importance of broadband access for community connectivity, particularly in rural or underserved areas. He noted that allowing the use of surety bonds to protect federal and state investments in broadband infrastructure will ensure that these essential systems are constructed effectively. Larry LeClair, NASBP Director of Government Relations, added that NASBP and SFAA have long informed federal agencies about the benefits of surety bonds in safeguarding broadband investments. LeClair highlighted that, after NTIA allowed ISPs to use surety bonds instead of LOCs, NASBP and SFAA actively educated the ISP community on the advantages of surety bonds.

SFAA Vice President of Policy & General Counsel Julie Alleyne pointed out that the new security option will benefit small ISPs that previously struggled to secure LOCs. She noted that surety companies will only issue bonds to those they believe can successfully complete the work, based on a thorough prequalification process. In contrast, LOCs issued by banks do not evaluate a contractor’s ability to perform the work.

Surety bonds are a hallmark of public procurement and are widely accepted forms of performance security. They offer a viable option for qualified companies receiving federal grant money for broadband infrastructure development and seeking an alternative to bank LOCs.

The BEAD Program Surety Bond Information Kit is available for download here.