Is Your Surety Broker Prepared for Contract Surety E-Bonds?
“E-commerce” has become the buzzword of this century as businesses in every sector struggle to keep up with the rapidly changing technology available to help businesses grow and become more efficient. Automation has come to virtually every aspect of our lives, from procurement, through production to inventory control, administration and delivery. In keeping with this trend, the construction and surety industries are prepared and ready for the use of technology to enhance the level of service provided to their clients and to streamline administrative processes.
Electronic tenders are here with the promise of speed and efficiency. Gone are the days of last minute rushes, unreliable couriers and unexpected traffic jams on tender day.
It is important that you are partnered with a broker who has adapted to these technological challenges and is ready and able to assist you in submitting your electronic contract bonds. Some owners are already requesting E-Bonds, and the trend is only going to continue. Construction Industry experts expect the majority of larger government project owners will have fully adopted electronic tenders in the next couple of years.
Regardless of the system used, it is very important that the project owner trusts the process and is assured that the “document” received is as valid as any paper equivalent. In that regard, any electronically generated document should meet three threshold criteria:
- Integrity of Content: the assurances that the document received is the true document executed and the content has not been changed or altered.
- Secure Access: restricting the access to the document to those authorized to view and/or download it.
- Verifiability/Enforceability: assurances that the document was properly executed by the parties identified.
There are a number of commercially available software programs capable of creating reliable and enforceable electronic bonds that meet the criteria of the Surety Association of Canada (SAC). You need to be sure that your broker has partnered with the right provider that has been approved by SAC. Remember, it isn’t your job to navigate the E-Bonding requirement. Your surety broker should be ahead of the curve and pro-active in assisting you with this important transition.
Update: November 26th, 2020:
With the onset of the COVID pandemic and the push towards social distancing, the e-tendering and e-bonding process has accelerated with dozens of municipalities and private entities across Canada. In addition, the solutions available to contractors to procure contract surety bonds electronically has increased. In addition to third party electronic bond providers, who charge their contractors a fee, there are now insurance and surety companies that have developed their own proprietary systems. These systems have been created to allow clients of those companies access to these electronic contract bonds for free.
It is also important that your surety broker is aware of the solutions available in the market. They should be able to assist you in finding a secure, efficient and cost effective solution. They should also have the capability to assist you in creating your digital seal, walking you through the process and making sure you are comfortable with this new technology.