Attorneys: Expect stringent oversight to fight fraud amid federal stimulus | Contractors should prepare for changed construction sites, operations | Calif. appeals court: Little Miller Act trumps surety law, pay-when-paid provision
May 6, 2020
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Oversight of the federal government stimulus during the coronavirus pandemic will be "vigorous" to keep false claims and other fraud in check, two attorneys write. Companies should carefully document for audit purposes how they have used any relief funds, and they need to stay focused on their compliance policies, the attorneys write.
The coronavirus pandemic is changing construction by highlighting the need for clean work sites where technology is increasingly used to ensure proper distancing between employees, according to experts. The pandemic is also likely to increase projects' duration and heighten demand for health care, distribution and warehouse facilities, experts say.
A California appeals court recently held that industry standard pay-when-paid clauses run afoul of state law because they can impair subcontractors' bond claim rights by indefinitely delaying their ability to recover payment. This important decision likely will be used in future cases to challenge other standard contract terms, two attorneys write.
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Businesses applying for loans through the Paycheck Protection Program must ensure they qualify for the program and that their applications are accurate. Even minor technical errors could be construed as fraud and lead to an enforcement action years down the road, attorneys write.
The Small Business Administration has clarified eligibility requirements for the Paycheck Protection Program, with the main one being that a business must provide a good-faith certification that it needs the loan and cannot tap into other sources of liquidity. The SBA also has established a safe harbor provision holding businesses harmless for certification-related mistakes if they pay back the full amount of their loans by May 14.
Clear your calendar for the May 20 NASBP Virtual Event: Bonding with Bandwidth! This complimentary event for NASBP Members, Affiliates, and Associates will be a unique experience for the membership from 1 to 4 p.m. Eastern on Wednesday, May 20. Join us to learn information specific to the surety industry during two panel discussions, one on the industry's efforts to obtain electronic bonding acceptance and the second on False Claims Act liability implications for surety professionals. In addition, the new NASBP Board of Directors for 2020-2021 will be announced and awards will be presented to recognize NASBP colleagues' contributions to the industry. The event will include remarks from outgoing NASBP President John Bustard and from the incoming 2020-2021 NASBP president. Register now to join us on May 20.
New episode of NASBP podcast "Let's Get Surety" dives into PPP and False Claims Act Risk
The coronavirus pandemic is posing a test for construction project insurance coverages as well as the benchmarks that ratings agencies use for projects that are public-private partnerships. The pandemic also might become a test of how future contracts should be structured, experts say.
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Founded in 1942, NASBP is the association of and resource for surety bond producers and allied professionals. NASBP producers specialize in providing surety bonds for construction contracts and other purposes to companies and individuals needing the assurance offered by surety bonds.