Small Business

Information on and Improvements Needed to Surety Bond Guarantee Programs Gao ID: RCED-91-99 April 23, 1991

Pursuant to a congressional request, GAO reviewed the: (1) Small Business Administration's (SBA) management of its Surety Bond Guarantee (SBG) program between fiscal year (FY) 1987 and FY 1989; and (2) status of the SBA pilot Preferred SBG Program.

GAO found that: (1) SBG program data indicated that SBA guaranteed 33,408 bonds having a total contract value of $3.9 billion between FY 1987 and FY 1989; (2) the number of guaranteed bonds remained at about 11,000 each year, and the value of contracts with SBA bond guarantees increased from $1.22 billion in 1987 to $1.4 billion in 1989; (3) minority contractors obtained about 15 percent of the guaranteed bonds, but the amount of bond guarantees that they obtained declined from 1,749 to 1,666 between FY 1987 and FY 1989; (4) specialty sureties underwrote 99 percent of all the guaranteed bonds; (5) SBA needed to improve the overall reliability of its SBG data, which could make it difficult to determine whether the new Preferred SBG program increased minority participation; (6) SBA was slow in implementing the pilot Preferred SBG program, issuing its first bond guarantee nearly 2 years after program authorization; and (7) SBA attributed the implementation delay to the lengthy process of drafting program regulations and consulting with the surety industry on establishing procedures for program administration.


Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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