Public Agencies and the financial services industry are challenged with finding ways to improve access to opportunities for small and emerging contractors. 

Quite often large projects have mandatory percentages for small and emerging companies as a condition for being the prime contractor, and XBRL-CET will help companies achieve the percentages required.

Small businesses do not generate significant revenue, subsequently banks, surety agents or surety markets may not pursue that vital business segment. By reducing the cost to provide brokerage services and reducing the cost of underwriting while improving the ability to manage the risk for banks and surety markets more businesses will support that segment because it will become more profitable.


Imagine the impact of having a state agency issue bid procurement information that any estimating system could import, and then to

have any contractors system be able to send that same project data to their surety broker who in turn could import the data into their surety brokerage system for processing and forwarding on to the surety company who in turn can import the project and company data for underwriting processing and ultimately return to that original state agency a fully executed electronic bond.

Improving access to surety and bank credit through implementation of open standards is race and gender neutral, and focuses on assisting qualified contractors get expanded surety support based on better information, not collateral or other methods that have unqualified contractors burdening the prime contractor or tying up public funds.

One way to improve access to opportunities for small business is by taking advantage of XBRL-CET and other recent developments in technology, but more importantly to help foster development of new technologies in ways that are consistent with the objective of open competition for delivery of services versus proprietary systems or products. 


The common generic responses to improving access to surety and/or bank credit for small and emerging contractors are: 

  1. Have the owner provide a collateral pool to reimburse the surety/bank for a defaulted small contractor. 
  2. Have the SBA reimburse the surety/bank for writing a defaulted small contractor. 
  3. Just make the general contractor meet a percentage goal and let it be their problem. 
  4. Provide educational programs. 


While these options do assist in securing a bond, they do nothing to make small contractor surety more cost effective to administer or to prevent a contractor’s default.

By reimbursing the surety for losses unqualified contractors are more likely to be on projects, and a burden to the general contractor.

Even with recovery from the surety the general contractor still has impacts the bond doesn’t cover. These options do not take advantage of technology and the quality of information that is becoming available through the internet.


The objective of XBRL-CET is to take a fresh look at new and emerging options that are available.

We advocate that it is in having qualified subcontractors have easier access to surety and bank credit because the information to the surety and bank is more cost effectively processed, and most importantly project data could be used to effect a risk management environment where the surety’s ability to monitor their risk can promote early engagement to mitigate the potential of default. 


If public agencies were to provide better information, the surety industry could provide better risk management services from beginning to end.

That is better for general contractors that are required to meet goals than having the surety reimbursed for its mistake leaving the general contractor to manage the default and all it implications. 


So instead of public agencies limiting themselves to the usual options they could be part of a collaboration of public agencies, surety brokers, surety markets contractors and computer system vendors which could offer the following as an additional and complementary effort: 


Reduce the costs on brokers for administering the surety program of small and emerging contractors and more brokers will serve that segment of the business. 

      Accomplished by XBRL-CET data sets for company profile and financial reporting along with electronic bonds.

Reduce the costs on surety companies for administering the surety program of small and emerging contractors and more surety companies will serve that segment of the business. 

      Accomplished by XBRL-CET data sets for company profile and financial reporting.


Increase the quality of information to the surety in their analysis of the qualifications of the contractor, so that unqualified contractors can be better screened and surety profitability maintained. 

       Accomplished by XBRL-CET data sets for company profile, financial reporting.


Increase the quality of information to the surety in their monitoring of the project so they have the potential of mitigating their risk by early engagement. 

      Accomplished by XBRL-CET data sets monthly progress payments.


How Will Open Standards Improve Access to Surety and Bank Credit 

First, by reducing the costs to administer a surety or bank program. While larger companies generate significant revenue to offset administration costs, smaller companies generate limited revenue and their costs may exceed the income to the bank, surety broker and the surety. Reducing

the cost increases the profitability of handling small contractors.  

Initial Underwriting and Contractor Submission 

If a contractor could complete one standard application that could be imported by any bank, surety broker, surety company, program administrator, or general contractor the data could be imported so the person processing the information didn’t have to manually enter the information into their system, and instead was able to proceed directly to working the submission. 


The data could easily be printed onto applications and/or indemnity agreements for execution by the applicant. 


The broker could make secure submissions to multiple markets online, with the same submission acceptable by all markets. 


Helping the applicant in their outreach effort 

If a contractor that completes the common application uses it to apply for surety or bank credit they can also use it to let others know about their company, plus the data is portable so the contractor can generate an XBRL-CET file that can be shared with any agency or contractor that can upload an industry standard XBRL-CET file as part of a pre-qualification process. 


Processing Bonds 

If a public agency, or project owner, had their online projects out to bid with an optional XBRL-CET downloadable format:

  1.  ​The contractor could download the project information to their bid management application without any errors, with a link back to owners project site.  
  2. The surety broker could use the data to generate a paper or electronic bond and the link to get additional project information. 
  3. The surety market could use the link to get additional project information, and approve the bond. 


If the public agency provided digital data on projects and accepted electronic bonds: 

  1. The incidence of bond form errors from transpositions, spelling, and improperly cited project numbers would drop dramatically, allowing the city to award to the lowest bidder instead of the higher priced second or third bidder.
  2. The incidence of fraudulent bonds would be eliminated. 
  3. The efficiency of the City to manage the various bonds it receives as well as verify and monitor surety sufficiency could be internally automated. 
  4. The cost to the surety broker would drop to almost nothing, leaving a greater portion of the brokers revenue for profit. 
  5. The exposure for the broker for incorrectly completed bond forms, improper notaries or powers of attorney would be eliminated, and could greatly affect the cost of E&O insurance and leaving a greater portion of the brokers revenue for profit. 
  6. The saving of paper and processing are consistent with the green objectives of most public agencies. 


Project Information 

If a public agency, project owner or general contractor made progress payment information available to the surety markets; 


The surety could monitor their outstanding exposures efficiently, and improve their ability to apply risk management and loss mitigation ability. 

Examples of this are Caltrans and VDOT


The surety could reliability determine the success of their contractors clients with ongoing projects and be more flexible in extending additional surety credit based on better information. 


Project owners and general contractors would have better communication with the surety on their projects, and improve the ability of the bond to provide the desired protection. 

Improving Access to Surety Credit for Small and Emerging Companies

XBRL Extension for Construction, Energy and Transportation