One little-noticed provision of the recently enacted defense authorization bill could be a big boon to small and emerging contractors.

The Defense Authorization Act of 2013, signed into law on Jan. 2, includes language that increases the size of projects that are eligible for the Small Business Administration’s Surety Bond Guarantee Program. The provision benefits small businesses in construction and other industries by expanding their ability to obtain bonds through the SBA Surety Bond Guarantee program for federal, state, local and private contracts.

The SBA program has traditionally sought to give small firms access to contracts by guaranteeing bid, performance and payment bonds for contracts valued at $2 million or less.

The 2009 American Recovery and Reinvestment Act had increased the contract limit to $5 million, but that provision sunset in September 2010 and the ceiling reverted to $2 million. The new defense authorization language increases the cap to $6.5 million.

According to Mark McCallum, chief executive officer of the National Association of Surety Bond Producers, the change will give a leg up to small and emerging contractors that might not be able to obtain bonds in the standard surety market. “A lot of emerging contractors don’t have a significant amount of working capital have been able to use the SBA bond guarantee program to secure financial credit to establish relationships with a bond producers and a surety insurers, and eventually graduate from the SBA program into the standard market, and become successful businesses,” he says.

He says NASBP supported the language in the bill.