SURETY BONDS.

SEC. 508. SURETY BONDS.(a) Maximum Bond Amount .— Sec tion 411(a)(1) of the Small Business Investment Act of 1958 (15 U.S.C. 694b(a)(1)) is amended—(1) by inserting “(A)” after “(1)”;(2) by striking “$2,000,000” and inserting “$5,000,000”; and(3) by adding at the end the following:“(B) The Administrator may guarantee a surety under s ubparagraph (A) for a total work order or contract amount that does not exceed $10,000,000, if a contracting officer of a Federal agency certifies that such a guarantee is necessary.”. (b) Denial of Liability— Section 411 of the Small Business Investment Act of 1958 (15 U.S.C. 694b) is amended—(1) by striking subsect ion (e) and inserting the following:“(e) Reimbursement of Surety; Conditions.—Pursuant to any such gua rantee or agreement, the Administration shall reimburse the surety , as provided in subsection (c) of this section, except that the Administration shall be relieved of liability (in whole or in part within the discretion of the Administration) if—(1) the surety obtained such guarantee or agreement, or applied for such reinbursement, by fraud or material misrepresentation,(2) the total contract amount at the time of execution of the bond or bonds exceeds $5,000,000,(3) the surety has breached a material term or condition of such guarantee agreement, or(4) the surety has substantially violated the regulations promulgated by the Administration pursuant to subsection (d).”(2) by adding at the end the following:“(k) For bonds made or executed with the prior approval of the Administration, the Administration shall not deny liability to a surety based upon material information that was provided as part of the guaranty application.”.(c) Size Standards.—Section 410 of the Small Business Investment Act of 1958 (15 U.S.C. 694a) is amended by adding at the end the following:“(9) Notwithstanding any other provision of law or any rule, regulation, or order of the Administration, for purposes 123 STAT. 159 of sections 410, 411, and 412 the term ‘small business concern’ means a business concern that meets the size standard for the primary industry in which such business concern, and the affiliates of such business concern, is engaged, as determined by the Administrator in accordance with the North American Indust ry Classification System.”.(d) Study—The Administrator of the Small Business Administration shall conduct a study of the current funding structure of the surety bond program carried out under part B (15 U.S.C. 694a et seq.) of title IV of the Small Business Investment Act of 1958. The study shall include--(1) an assessment of whether the program’s current funding framework and program fees are inhibiting the program’s growth;(2) an assessment of whether surety companies and small business concerns could benefit from an alternative funding structure; and(e) Report—Not later than 180 days after the date of enactment of this Act, the Administrator shall submit to Congress a report on the results of the study required under subsection (d).(f) Sunset.—The amendments made by this section shall remain in effect until September 30, 2010.