DASNY Launches Statewide Surety Bond/Capital Access Program

ALBANY, (06/24/2009)(readMedia)-- The Dormitory Authority of the State of New York (DASNY) today launched an innovative program to create access to surety bonds and capital by construction contracting companies owned by minority members and women (MWBE). Governor Paterson has made the development and inclusion of MWBE firms a major priority for New York State economic development.

"This Surety Bond / Capital Access program is an excellent example of how a government agency can innovatively create opportunities for private sector companies to grow, create jobs and generate opportunity," said Paul T. Williams, Jr., Executive Director of the Dormitory Authority. "The lack of available surety bond capacity for MWBE firms is a major barrier to their development and with this program we are building business skills and access to bonding and capital that will help firms compete successfully for public and private work."

The DASNY Surety Bond / Capital Access program is strategically designed to help MWBE firms acquire the surety bonding and working capital needed to enable them to successfully make the transition from subcontractors to prime contractors or to increase their prime contract capacity on construction projects. Development and growth of this sector of the construction industry will create jobs, increase the number and scope of MWBE prime contractors competing for work on state construction projects, and help ensure high quality competitive bidding on state jobs.

Surety bonds, sometimes referred to as performance and payment bonds, are a guarantee that a contractor working on a project will complete the contract for the bid price and all subcontractors and suppliers will be paid. New York law requires surety bonds for construction contracts of $100,000 or more.

The Dormitory Authority Board approved the allocation of up to $3 million for the program, which will begin with an initial group of 20-25 MWBE contracting firms working on DASNY projects. Over time, $2 million of the money will be used to leverage approximately $20 million in surety bonding for the MWBE contractors. The remaining $1 million will be used to facilitate MWBE firms acquire bank-issued short-term bridge loans to enable them to fund their up-front costs of beginning work on a project, including purchasing equipment, supplies and payroll.

The Dormitory Authority has contracted with the Cayemitte Group, one of the nation's leading insurance and bonding consulting firms to manage the Surety Bond program on a day-to-day basis. The Cayemitte Group has designed a program to assess MWBE firms' technical and financial capacities and provide them with the training and skills to pre-qualify for surety bonds in the private surety marketplace. The Dormitory Authority's financial commitment will provide a partial guarantee to the surety bonding companies' insurance policies for participating firms working on DASNY projects.

"Once firms are issued surety bonds and demonstrate successful completion of multiple projects, they will have established a track record that will establish lasting relationships with bonding companies that can yield surety bonds on both public and private projects," said Michael Clay, Director Opportunity Programs Group at the Dormitory Authority. "There are many growing MWBE firms that can do quality work for the state and are primed to take the next step in their corporate development that are being stymied by lack of access to bonding. Despite the challenging economy, we at the Dormitory Authority are making an investment into a statewide program designed to make positive change to benefit New York."

Participating firms must be registered and certified MWBE companies to qualify for the program. Firms with a minimum of two to five years of experience and a growing project track record will be considered.

Once in the program, MWBE firms will have full access to a range of professional development services offered by the Dormitory Authority, including:

• The Cayemitte Group and its consulting team will provide one-on-one firm analysis and a two-year technical training program to increase business and financial skill enhancements to demonstrate "bondability" to private surety companies.
• Consultation with the Dormitory Authority's technical assistance providers to help firms improve their bidding and construction project skills.
• Dormitory Authority's project managers on the specific projects with MWBE Surety Bond participants will proactively review and manage the construction, monitoring progress of the firms and advise when additional technical assistance is required.
• Program participants may have access to the Capital Access component of the program. DASNY will work with banking partners to develop relationships and facilitate working capital loans for the MWBE firms.

The goal of the Surety Bond/Capital Access Program is to enable MWBE firms to secure the bonding needed to compete for work on DASNY contracts. Ultimately, it is envisioned that the firms, as a result of participating in the program, will be able to establish positive bonding and capital access experience that that will allow them to bid and perform prime contracts on all public and private construction opportunities.

This program to build MWBE contractor capacity is a natural extension of the Dormitory Authority's Opportunity Program Group's MWBE construction goals. DASNY has a goal of 20 percent MWBE inclusion in its construction-related expenditures, and has met that goal each year.

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The Dormitory Authority, founded in 1944, is the largest higher education, health care and public-purpose bonding and construction authority in the nation. The Dormitory Authority has a construction pipeline of 716 projects valued at $7.3 billion. The Authority has an outstanding bond portfolio of more than $38 billion.