Senators seek to close water P3 ‘loophole’

Two US senators have introduced legislation to require all primary contractors working on water infrastructure projects financed by federally guaranteed loans to hold a surety bond.

The landmark Fargo-Moorhead P3 utilized WIFIA funding

Senator Kevin Cramer (R-ND), Ranking Member of the Environment and Public Works (EPW) Subcommittee on Transportation and Infrastructure, and Senator Mark Kelly (D-AZ) have introduced the bipartisan Water Infrastructure Subcontractor and Taxpayer Protection Act.

They said the law seeks to close a loophole in which P3s financed by the Water Infrastructure Finance and Innovation Act (WIFIA) are exempt from current surety bond requirements.

According to the senators, the legislation will “ensure the improvement of project delivery and reduce the risk of federally financed water infrastructure projects”.

They cited research by EY’s Quantitative Economics and Statistics Group, in collaboration with the Surety & Fidelity Association of America, which found that unbonded projects are 10 times as likely to default than bonded projects. They also pointed out that surety bonds are already required for water infrastructure projects funded by the Environmental Protection Agency through the State Revolving Loan Fund.

“North Dakotans know just how important public-private partnerships are to large scale infrastructure projects,” said Cramer. “We must work to close existing loopholes in federal law to protect not just American taxpayers, but local small business contractors and workers who make these projects possible.”

“Local governments should not be left holding the bag when contractors don’t deliver,” added Kelly.

To read the full text of the bill, click here.