March 4, 2014

Chairman Sam Graves Ranking Member Nydia Velazquez

House Committee on Small Business House Committee on Small Business
2361 Rayburn House Office Building B343 Rayburn House Office Building
Washington, D.C. 20515 Washington, D.C. 20515

Dear Chairman Graves and Ranking Member Velazquez:

We, the undersigned construction industry trade and professional organizations representing tens of
thousands of firms and individuals engaged in architecture, engineering, prime contracting,
subcontracting, specialty trade contracting, supplying, and surety and bond producing, thank you for
scheduling tomorrows markup on a series of bills that effectively address issues with federal
construction procurement. We collectively support your efforts to move legislation that prohibits
reverse auction procurement of construction services and helps prevent surety bond fraud. In
addition, though not a bill for the markup, we urge you to continue your efforts to advance
legislation to reform design-build procurement.

The first bill we mention for the markup is the Common Sense Construction Contracting Act of
2013, H.R. 2751, which would prohibit federal agencies from procuring small business construction
services through reverse auctions. While reverse auction procurement may make sense for simple
commodities, like pens and other off-the-shelf items, it does not make sense for complex and
variable construction services projects. Many qualified construction firms do not participate in
federal reverse auctions because the process moves too quickly for offerors to accurately reassess
their costs, and could put construction firms, their subcontractors, suppliers and ultimately projects
at risk of default. By prohibiting reverse auctions for construction services, H.R. 2751 will help
encourage more small business competition, enhance project safety and performance and lower
costs to taxpayers.

We also bring your attention to H.R. 776, the Security in Bonding Act, scheduled for markup,
which increases the bond guarantee to 90 percent in the SBA Surety Bond Guarantee Program. This
provision will permit the SBA to assist more contractors in obtaining bonding and likely will
stimulate greater corporate surety and bond producer participation, providing access to more
regulated surety markets to small businesses that otherwise do not qualify for surety credit in the
standard market. Such small businesses are most susceptible to individual sureties that seek
vulnerable businesses, offering surety credit to anyone at rates many times higher than corporate
surety markets. While not part of the mark up, the individual surety provisions of H.R. 776 are
needed to stem fraud and provide financial certainty to the assets that support individual surety
bonds to ensure those assets pledged are real, sufficient and easily convertible to pay valid claims
and to protect the federal government and small businesses working as subcontractors and suppliers
on federal construction projects.

Lastly, though not a bill for consideration tomorrow, we strongly urge you and members of the
Committee to advance and support the Design-Build Efficiency and Jobs Act, H.R. 2750, which
would reasonably limit both single-step design-build procurements and the second-step of two-step
design-build to three to five teams. As it stands, federal agencies continue to overuse one-step
design-build procurements and go beyond five finalists in the second-step of two-step design-build
competitions without written justification or the potential for meaningful congressional oversight.
Absent any degree of certainty as to how many teams will participate in these design-build
competitions, many qualified design-build teams cannot risk the high cost of producing complete
design and engineering technical proposals and, consequently, do not to compete. H.R. 2750 will
help address these issues and allow for greater competition from the most qualified teams.

Thank you again for scheduling this markup on and your consideration of these important bills.

Sincerely,

American Council of Engineering Companies

American Institute of Architects
American Subcontractors Association
Associated General Contractors of America
Council on Federal Procurement of Architectural & Engineering Services
Design-Build Institute of America
Independent Electrical Contractors Association
National Association of Surety Bond Producers
National Electrical Contractors Association
Surety & Fidelity Association of America
Women Construction Owners and Executives, USA

cc: House Committee on Small Business