Bill Text: IL HR0234 | 2011-2012 | 97th General Assembly | Introduced

---

Bill Title: Urges the Department of Commerce and Economic Opportunity to consider whether a surety program should be administered to provide a financial guarantee to bonding companies for projects conducted by minority-owned and women-owned small businesses. Urges the Department of Insurance to find ways to help identify and encourage bond companies to participate in a program for minority-owned and women-owned small business construction firms. Urges the Department of Transportation and the Capital Development Board to review their bonding requirements for minority-owned and women-owned small business participants in light of the number of defaults by those companies over the last 5 years to determine whether their requirements are more stringent than necessary. Urges the Department of Commerce and Economic Opportunity, the Department of Insurance, the Department of Transportation, and the Capital Development Board to report to the General Assembly with recommendations to reform bonding requirements for minority-owned and women-owned small business firms in public construction projects.

Spectrum: Partisan Bill (Democrat 7-0)

Status: (Failed) 2013-01-08 - Session Sine Die [HR0234 Detail]

Download: Illinois-2011-HR0234-Introduced.html

---

HR0234 LRB097 11386 PJG 53682 r
HOUSE RESOLUTION
WHEREAS, Small business growth is at the heart of any
economic recovery as most new jobs are created by small
businesses; and
WHEREAS, Minority-owned and women-owned small businesses
(M/WBEs) are particularly important drivers of job growth for
African-Americans and Latinos who experience
disproportionately high unemployment rates; and
WHEREAS, It has long been a strategic objective of the
State of Illinois to support the development of minority-owned
and women-owned businesses through the M/WBE programs for State
procurement, particularly in construction; and
WHEREAS, During the recent credit crunch, one of the single
largest barriers to growth for women-owned and minority-owned
construction businesses has been bonding requirements and the
very stringent financial terms imposed upon M/WBE businesses by
the bonding companies; and
WHEREAS, It is not uncommon for a bonding company to
require a construction company to deposit half the amount of
the total value of a construction contract in an escrow account
in order for the bonding company to sell to the construction

HR0234 - 2 - LRB097 11386 PJG 53682 r
company a performance bond for the project; and
WHEREAS, As M/WBE construction firms tend not to be heavily
capitalized, the rates charged to the M/WBE firms by the
bonding companies tend to be far higher than the rates charged
to large legacy firms; and
WHEREAS, The purpose of a bond requirement is to
financially reimburse the State in the event of default by the
construction company, not to suppress competition or enrich
bond companies; and
WHEREAS, There may be more efficient alternative methods to
protect the State from any financial loss in the event of lack
of performance by M/WBE firms on a construction project; and
WHEREAS, The members of the Federation of Women Contractors
believe that the current state of the bond market and the bond
requirements are among very significant impediments to growth;
therefore, be it
RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE
NINETY-SEVENTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that
the Department of Commerce and Economic Opportunity consider
whether a surety program successfully administered years ago be
resurrected in order to provide a financial guarantee to

HR0234 - 3 - LRB097 11386 PJG 53682 r
bonding companies for projects conducted by M/WBE firms in
order to lower the costs to M/WBE firms and increase their
access to capital; and be it further
RESOLVED, That the Department of Insurance, which
regulates bond issuing companies, consider how it can help
identify and encourage bond companies to participate in a
program for M/WBE construction firms; and be it further
RESOLVED, That the Department of Transportation and the
Capital Development Board review their bonding requirements
for M/WBE participants in light of the actual number of
defaults by M/WBE companies over the last 5 years to determine
whether the bonding requirements are more stringent than
necessary to protect against risk; and be it further
RESOLVED, That the Department of Commerce and Economic
Opportunity, the Department of Insurance, the Department of
Transportation, and the Capital Development Board report to the
General Assembly with recommendations to reform bonding
requirements for M/WBE firms in public construction projects by
January 15, 2012.