Minority-Owned Firms' Access to Surety Bonds
RCED-95-244R: Published: Jul 14, 1995. Publicly Released: Jul 14, 1995.
- Full Report:
Pursuant to a congressional request, GAO reviewed minority-owned firms' access to surety bonds. GAO noted that: (1) about half of the minority-owned construction firms surveyed never obtained a surety bond, either because they had not been asked to provide one or did not bid on projects that required bonds; (2) of the firms that had obtained bonds between 1990 and 1993, more than 1 out of 4 had been denied a bond at least once during that time; (3) the average bond obtained by firms in 1993 was between $250,000 and $500,000, although up to 42 percent of firms obtained bonds of $1 million or more; (4) up to 15 percent of the bonded firms derived their 1993 construction revenues from jobs for which they had obtained bonds; (5) barriers to applying for and obtaining bonds include long waiting periods, insufficient information from surety agents regarding denials or requirements changes, large financial commitments, extraneous paperwork, and unaffordable bond fees; and (6) firms can improve their access to bonds by requesting a bonding line, getting better information about requirements and fees, and using government bonding assistance programs or alternatives to bonds.