Combatting Fraud in The Individual Surety Bond Program

Fraud has been no stranger to federal procurement both historically and in modern times. One slice of the current procurement fraud pie involves the federal governments individual surety bond program. This program was designed to increase opportunities for small businesses to compete for federal contracts. The program seeks to achieve this goal by providing a more accessible and less expensive alternative to corporate surety bonds, which are provided by contractors to satisfy the demands of the Miller Act. Under this program an individual can post certain collateral, such as land, in support of a surety bond for a federal contract. Unfortunately, many of the safeguards that make corporate surety bonds more expensive and less available to financially insecure contractors are missing from the individual surety bond program. The reduced number of safeguards, coupled with various systemic shortcomings, have produced a nidus for fraud.