Our President and Chief Underwriter, Constantin Poindexter appeared recently in the Engineering New Record Surety Supplement, responding to a general Q&A about why surety participation in public private partnerships is essential. Copied below is the response in full, which you can also find on the ENR portal at http://www.zinio.com/reader.jsp?issue=416308039&o=ext
Q: What are the benefits that surety offers owners on P3s that other risk management tools do not?
“The public private partnership (P3) concept was a result of the government’s struggle to accomplish important public projects in the face of diminishing revenues. A “P3” is a contract which allows a private entity to perform work traditionally done by government agencies. P3s work for many reasons. They offer more efficient completion of projects, nullify the public entity’s need to incur debt to finance them, and give the public entity access to qualified professionals in the field. The trade off is a lack of transparency regarding the financial condition and capacity of the private partner.
From my perspective surety bonding (performance bonds) involving both the contractor and private partner are essential. Regardless of the contract that it enters in to with a private enterprise, a public entity is responsible for providing essential services and facilities. If the P3 fails the taxpayers will eventually shoulder the burden. Historically the contract surety prequalification process has proven itself to be an excellent element of construction risk management strategy. In the case of a private partner that engages in investment, finance or other non-construction activities, the prequalification process becomes even more valuable to the public. A public entity can never know a bonded principal or have the same depth of relationship with a him or her that a surety company does. In the case of a failure by the private partner or contractor, the public is further protected by the financial strength/creditworthiness of the surety company as well as its expertise in the coordination or completion and remediation.”
If you wish to speak with the author or provide feedback about surety bonds and P3s you may contact Constantin Poindexter S. at (787) 333-0222 or by email to Underwriting@SuretyOne.com.
National performance bond leader, Surety One, Inc. focuses on supporting the performance bonding needs of the commercial, highway, heavy industrial and construction contracting industries. We offer performance bonds to construction and commercial service contractor applicants small and large. Visit SuretyOne.com, call (787) 333-0222 or (800) 373-2804, or email Underwriting@SuretyOne.com for a performance bond application package or information about any surety bonding need. Recuérde que le asesoramos en SU idioma, así que comuníquese con nosotros, SU compañía afianzadora preferida para la fianza.