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1
SENATE RESOLUTION NO. 199

 
2    WHEREAS, Small business growth is at the heart of any
3economic recovery as most new jobs are created by small
4businesses; and
 
5    WHEREAS, Minority-owned and women-owned small businesses
6(M/WBEs) are particularly important drivers of job growth for
7African-Americans and Latinos who experience
8disproportionately high unemployment rates; and
 
9    WHEREAS, It has long been a strategic objective of the
10State of Illinois to support the development of minority-owned
11and women-owned businesses through the M/WBE programs for State
12procurement, particularly in construction; and
 
13    WHEREAS, During the recent credit crunch, one of the single
14largest barriers to growth for women-owned and minority-owned
15construction businesses has been bonding requirements and the
16very stringent financial terms imposed upon M/WBE businesses by
17the bonding companies; and
 
18    WHEREAS, It is not uncommon for a bonding company to
19require a construction company to provide collateral,
20including personal property, in order for the bonding company
21to sell to the construction company a performance bond for the

 

 

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1project; and
 
2    WHEREAS, As M/WBE construction firms tend not to be heavily
3capitalized, the rates charged to the M/WBE firms by the
4bonding companies tend to be far higher than the rates charged
5to large legacy firms; and
 
6    WHEREAS, The purpose of a bond requirement is to
7financially reimburse the State in the event of default by the
8construction company, not to suppress competition or enrich
9bond companies; and
 
10    WHEREAS, There may be more efficient alternative methods to
11protect the State from any financial loss in the event of lack
12of performance by M/WBE firms on a construction project; and
 
13    WHEREAS, The members of the Federation of Women
14Contractors, the Hispanic American Construction Industry
15Association, and the Illinois Black Chamber of Commerce believe
16that the current state of the bond market and the bond
17requirements are among very significant impediments to growth;
18therefore, be it
 
19    RESOLVED, BY THE SENATE OF THE NINETY-SEVENTH GENERAL
20ASSEMBLY OF THE STATE OF ILLINOIS, that the Department of
21Commerce and Economic Opportunity consider whether a surety

 

 

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1program successfully administered years ago be resurrected in
2order to provide a financial guarantee to bonding companies for
3projects conducted by M/WBE firms in order to lower the costs
4to M/WBE firms and increase their access to capital; and be it
5further
 
6    RESOLVED, That the Department of Insurance, which
7regulates bond issuing companies, consider how it can help
8identify and encourage bond companies to participate in a
9program for M/WBE construction firms; and be it further
 
10    RESOLVED, That the Department of Transportation and the
11Capital Development Board review their bonding requirements
12for M/WBE participants in light of the actual number of
13defaults in general and the actual number of defaults by M/WBE
14companies in particular over the last 5 years to determine
15whether the bonding requirements are more stringent than
16necessary to protect against risk; and be it further
 
17    RESOLVED, That the Department of Commerce and Economic
18Opportunity, the Department of Insurance, the Department of
19Transportation, and the Capital Development Board report to the
20General Assembly with recommendations to reform bonding
21requirements for M/WBE firms in public construction projects by
22January 15, 2012.