With Surety Bonds, the State's Contract Language Is Crucial

The Mississippi Broadband Association, the Letter of Credit Coalition (headed by Gigi Sohn, Philip Macres, and Connect Humanity) and the National Association Surety Bond Producers have helped pave the way for the states to include surety bonds as an alternate for Letter of Credit requirements for the Broadband Equity, Access and Deployment program.

Since the Summer of 2023, The Letter of Credit Coalition (in which the Mississippi Broadband Association was a member) has been working to ensure ISPs of all sizes and leadership models were able to financially participate in the BEAD program.

The Letter of Credit requirement for small to medium (and some larger) providers was just too big of a hurdle to cross thus excluding lots of local and regional providers from participating in the program.

The coalition met with NTIA leadership in the fall of 2023 and not only did they listen intently but they responded decisively with alternatives to the LOC that included surety bonds. Alan Davidson and his staff commitment to getting it “Right” was evident and appreciated by all that attended the meeting with NTIA in Washington, D.C.

Surety Bond Kit presented to NTIA in May 2024

Fast forward to Spring of 2024, The National Association of Surety Bond Providers (NASBP) started working on a Surety Bond Kit that was presented to NTIA in May 2024. The comprehensive kit can be reviewed via the link provided below as a tool for all broadband offices to include in their BEAD contracts. In conversations with leadership within NASBP, the states have to include the proper language within their respective contracts in order for surety bonds to be utilized as a guarantee of the network construction process.

NASBP has created two bonding options for the networks, one in the case where the ISP is constructing the network and another in which a subcontractor is constructing the network for the ISP. The two options ensure that those that are actually building the networks are vetted and that NTIA/States are protected if the network isn’t actually built out. The surety bond option ensures that networks are built out in cases where defaults happen verse 25% of the granted funds being sent back to the federal government.

The states now bear the burden of the next steps as NTIA has not provided any guidance as to the requirements of surety bonds. NASBP is meeting with states individually in respect to the kit and the contract language recommendation around the surety bond.

States can reach out to Lawrence (Larry) LeClair (lleclair@nasbp.org) for additional guidance.

MSBA is hosting its Winter Conference on December 3 at the Westin in Jackson, Miss. NASBP will go over the kit and proposed recommendations to the states during the panel discussion.

I would like to invite all broadband offices to join the meeting remotely or in person to listen to the conversation. You can register for the event via the link below, MSBA will email all remote registrants a link to the conference.

Join Us “MSBA’s Winter Broadband Summit,” sponsored by KGPCo., Nokia, UniTek Global Solutions and Ready.net. Or see the NASBP Surety Bond Kit.

Quinn Jordan is an accomplished executive with a passion for bridging the digital divide and creating opportunities for all Mississippians. Quinn graduated from Mississippi College with a degree in marketing and management. With experience in telecommunications, private industry and local governmental affairs, Quinn brings a unique perspective to his role as the Executive Director of the Mississippi Broadband Association (MSBA). This Expert Opinion was originally posted on Broadband.io on Oct. 16, 2024, and is republished with permission.

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