Procedural Notice 5000-854704 - Oversight and Accountability
Summary
SBA Procedural Notice, Control No. 5000-854704, effective April 12, 2024, to SBA employees and sureties participating in SBA's Surety Bond Guarantee Program, on oversight and accountability updates to SOP 50 45 3 and SOP 50 49 0. It informs SBA employees, surety companies, their agents and other program users of a change in the procedure for program user oversight and accountability. It states that SBA is updating its policies on surety oversight and accountability.
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Full text
SBA Procedural Notice
TO: All SBA Employees and Sureties CONTROL NO.: 5000-854704
participating in SBA’s Surety Bond Guarantee
Program EFFECTIVE: April 12, 2024
SUBJECT: Oversight and accountability updates to
SOP 50 45 3 and SOP 50 49 0
The purpose of this Notice is to inform SBA employees, Surety Companies, their Agents, and any
other program users (collectively referred to as “Surety”) of a change in the procedure for program
user oversight and accountability. SBA is updating its policies surrounding Surety oversight and
accountability. These changes update SOP 50 45 3 and SOP 50 49 to reflect clearer language and
new reporting measures used by SBA.
The procedure set forth in this Notice applies to all Sureties as defined by 13 CFR § 115.10 and
will control over any conflicting provisions in Standard Operating Procedure (SOP) 50 45 3 or SOP
50 49 0. Oversight and accountability procedures practiced by SBA on and after the effective date
of this Notice will follow the procedure set forth below. SBA will continue to review this process
over the coming months and will incorporate the revised procedure in the next SOP 50 45 and SOP
50 49 updates after determining whether additional changes are needed.
Prior Approval Surety Bond Guarantee Program
SOP 50 45 3, Chapter 3, Section 6 (beginning on page 22 and ending on page 24) is deleted in its
entirety and replaced with the following:
3.6. Surety Oversight and Accountability
SBA performs ongoing monitoring of Surety Bond Guarantee (SBG) program performance for all
participating Sureties to identify unacceptable risk profiles and, if appropriate, enforce SBG
program requirements through corrective actions (this is separate from SBA’s audit procedures).
SBA is responsible for ensuring that program utilization aligns with its mission. As outlined in 13
CFR § 115.21 and SOP 50 45, SBA reviews the adequacy and sufficiency of SBA-guaranteed
surety bonds supported by participating Sureties. The program shares this information with Surety
participants to increase transparency and to facilitate discussion and remediation of identified
concerns.
PAGE 1 of 5 EXPIRES: 4/1/25
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
1. Monitoring and Reporting Measurements
SBA continually monitors Sureties’ respective performance with a look-back period of up
to five (5) fiscal years (dependent on length of participation). In general, SBA will provide
Sureties a copy of SBA’s findings at intervals and thresholds determined by SBA.
SBA considers several factors when evaluating participating Surety risk profiles. These
include (but are not limited to):
• Portfolio performance relative to the overall program
• Regulatory compliance
• Standard operating procedure compliance
• Form submission compliance
• Risk and claims management
• Other qualitative factors as deemed necessary
2. Possible SBA Actions
When a Surety’s risk profile is determined to be unacceptable, as outlined in 13 CFR §
115.18 and SOP 50 45, SBA may require corrective actions to address identified concerns.
SBA may take other actions including, but not limited to or in any particular order, the
following:
• Require a Surety-submitted corrective actions plan;
• Require additional supporting documentation for application submission, user-
specific or program-wide;
• Further investigation, up to completion of an audit;
• Reduce access to program guarantees;
• Renegotiate SBA’s guarantee percentage;
• Renegotiate SBA’s charge to the Surety for bonds executed thereafter; and/or
• Suspend or terminate Surety’s program participation.
3. SBA Process to Require Corrective Action
The decision to require corrective actions be taken by a Surety is made by the Director,
Office of Surety Guarantees (D/OSG). While a corrective action is pending, SBA may
suspend program participation until the Surety satisfactorily meets all conditions set by
SBA for resumption of support.
If notified of a required corrective action by SBA, a Surety must respond in writing
according to the response timeframe indicated by SBA. The response must include
acknowledgement of the required corrective action and a statement of intent to comply.
If prompted for a corrective action plan by SBA, a Surety must respond in writing within 45
business days of email receipt of such notice unless SBA notifies the Surety of a different
timeframe. The response must include a corrective action plan with details on actions the
PAGE 2 of 5 EXPIRES: 4/1/25
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
Surety will take to address each finding and corrective action required.
A Surety must implement all corrective actions within 90 calendar days of the date of email
receipt of the notice unless SBA provides written notice of another timeframe. After
receiving Participant’s response, SBA generally will assess the plan and notify the Surety of
whether its plan/actions are satisfactory, not satisfactory, or SBA requires additional
information.
SBA may conduct a targeted review to confirm the Surety has implemented its corrective
action(s). The corrective action process is a key tool for bringing Sureties into compliance
and limiting agency and Surety risk.
Preferred Surety Bond (PSB) Program
SOP 50 49, Chapter 6 (pages 24-27) is revised as follows:
The chapter numbering is changed to the following:
Chapter 6, Section A. Audit Process
SOP 50 49, Chapter 6 is revised by adding to the end the following:
Chapter 6, Section B. General Oversight and Accountability
SBA performs ongoing monitoring of Surety Bond Guarantee (SBG) program performance for all
participating Sureties to identify unacceptable risk profiles and, if appropriate, enforce SBG
program requirements through corrective actions. SBA is responsible for ensuring that program
utilization aligns with its mission. As outlined in 13 CFR § 115.21 and SOP 50 49, SBA reviews
adequacy and sufficiency of SBA-guaranteed surety bond support by participating Sureties. The
program shares this information with Surety participants to increase transparency and to facilitate
discussion and remediation of identified concerns.
1. Monitoring and Reporting Measurements
SBA continually monitors Sureties’ respective performance with a look-back period of up
to five (5) fiscal years (dependent on length of participation). In general, SBA will provide
Sureties a copy of SBA’s findings at intervals and thresholds determined by SBA.
SBA considers several factors when evaluating participating Surety risk profiles. These
include (but are not limited to):
• Portfolio performance relative to the overall program.
• Regulatory compliance
• Standard operating procedure compliance
• Form compliance
• Risk and claims management
PAGE 2 of 5 EXPIRES: 4/1/25
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
• Other qualitative factors deemed necessary.
2. Possible SBA Actions
When a Surety’s risk profile is determined to be unacceptable, as outlined in 13 CFR §
115.18 and SOP 50 49, SBA may require corrective actions to address identified concerns.
SBA may take other actions including, but are not limited to or in any particular order, the
following:
• Require a Surety-submitted corrective actions plan;
• Require additional supporting documentation for application submission, user-
specific or program-wide;
• Further investigation, up to completion of an audit;
• Reduce access to program guarantees;
• Renegotiate SBA’s guarantee percentage;
• Renegotiate SBA’s charge to the Surety for bonds executed thereafter; and/or
• Suspend or terminate Surety’s program participation.
3. SBA Process to Require Corrective Action
The decision to require corrective actions be taken by a Surety is made by the Director,
Office of Surety Guarantees (D/OSG).
If notified of required corrective action by SBA, a Surety must respond in writing according
to the response timeframe indicated by SBA. The response must include acknowledgement
of the required corrective action and a statement of intent to comply.
If prompted for a corrective action plan by SBA, a Surety must respond in writing within 45
business days of email receipt of such notice unless SBA notifies the Surety of a different
timeframe. The response must include a corrective action plan with details on actions the
Surety will take to address each finding and corrective action required.
A Surety must implement all corrective actions within 90 calendar days of the date of email
receipt of the notice unless SBA provides written notice of another timeframe. After
receiving Participant’s response, SBA generally will assess the plan and notify the Surety of
whether its plan/actions are satisfactory, not satisfactory, or SBA requires additional
information.
SBA may conduct a targeted review to confirm the Surety has implemented its corrective
action(s). The corrective action process is a key tool for bringing Sureties into compliance
and limiting agency and Surety risk.
PAGE 2 of 5 EXPIRES: 4/1/25
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
Questions concerning this Notice may be directed to Kevin Valdes, Management Analyst, at
Kevin.Valdes@sba.gov.
Jermaine Perry
Director, Office of Surety Guarantees.
PAGE 2 of 5 EXPIRES: 4/1/25
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
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