Issue link: https://read.dmtmag.com/i/826899
76 • JUNE 2017 • WORLD FENCE NEWS lien rights – on such projects. "Construction subcontractors and suppliers considering work on proj- ects financed through P3 arrange- ments need to confirm what, if any, payment assurances are available to them before they bid," Nelson added. Both Ohrenberg and Miller, along with KCASA board member Nathan Buhrmester, Haas Wilkerson, Inc., Fairway, Kan., serve on KCASA's leg- islative committee. They testified on Feb. 7 in support Kansas subcontractors and suppliers win important payment protections on public-private projects continued from page 74 of SB55 before the Senate Commerce Committee. As a surety account exec- utive, Buhrmester was instrumental during his testimony, because he ex- plained the bonding costs to a project. His knowledge of, and ability to ex- plain, the bonding costs and process to the Senate and House members made it easy for them to understand subcontractors' need for payment pro- tections, noted Nelson. "The lack of this protection/guar- antee [on public-private partnership projects] for subcontractors leaves them vulnerable to non-payment or slow payment, which can have an ex- treme adverse effect on their ability to perform on this and other projects, creating a domino effect on other proj- ects and on their internal operations, threatening their ability to pay their employees and pursue other work," Buhrmester testified. "Additionally, without this guar- antee, many smaller subcontractors may forgo pursuing this work or sur- charging their bid to account for the added risk. This could result in fewer and less qualified subcontractors bid- ding the project and at a higher cost." Buhrmester continued, "Coinci- dentally, cost is one of the main objec- tions some opponents will likely bring up. The cost of payment and perfor- mance bonds are based on the con- tract price, and those rates are tiered. That is, while a $500,000 contract may come at a cost of 1.5 percent of the contract price, the next tier starts at $2.5 million with a lower cost, say 1 percent, and continues to decrease. "The lowest tier is anything over $7.5 million and that cost could be as low as 0.2 percent of the contract price," he said. "Because most of the P3 projects are hundreds of millions or billions of dollars, this requirement could add as little as 0.5 percent to the cost of the project. However, if it is not required, smaller subcontractors and suppliers could add much more to their bids – 5 percent to 15 percent – to account for the additional risk, as stated above. So I would purport that requiring these bonds will actually help to keep costs down, as well as en- sure the most qualified contractors are performing the work." ASA–Greater Kansas City rep- resents all construction subcontrac- tors, specialty trade contractors, and suppliers. KCASA assists members to op- erate their businesses more profitably and equitably by offering educational programs, industry liaisons, govern- ment advocacy, networking opportu- nities, and member benefit programs for the purchase of goods and services. For more information on ASA and its goals, visit www.asaonline.com.