SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Surety Bond Improvement Act of 
2007''.

SEC. 2. DEFINITIONS.

    In this Act, the terms ``Administrator'' and ``Administration'' 
mean the Small Business Administration and the Administrator thereof, 
respectively.

SEC. 3. SURETY BONDS.

    (a) Rates.--Section 411(a) of the Small Business Investment Act of 
1958 (15 U.S.C. 694b(a)) is amended--
            (1) in paragraph (1), by striking ``$2,000,000'' and 
        inserting ``$3,000,000''; and
            (2) by adding at the end the following:
    ``(6) The Administrator shall authorize a surety that issues, 
monitors, or services bonds under paragraph (3) to use rates approved 
by the insurance commissioner in the State in which such contract will 
be performed.''.
    (b) Payment of Guarantees.--Section 411(b) of the Small Business 
Investment Act of 1958 (15 U.S.C. 694b(b)) is amended--
            (1) by redesignating paragraphs (1) through (3) as 
        subparagraphs (A) through (C), respectively, and adjusting the 
        margins accordingly;
            (2) by striking ``Subject to the provisions'' and inserting 
        the following: ``Indemnification.--
            ``(1) In general.--Subject to the provisions'';
            (3) by striking ``: Provided, however'' and inserting ``.
            ``(2) Conditions.--For a guarantee under this subsection--
        '';
            (4) by striking ``In no event shall'' and inserting the 
        following:
            ``(3) Maximum amount.--In no event shall''; and
            (5) by adding at the end the following:
            ``(4) Payment of guarantees.--The Administrator may not 
        refuse to make payment on a guarantee under this subsection 
        based on facts, circumstances, or defects that the 
        Administrator reasonably should have identified during the 
        process of making the guarantee.''.
    (c) Reports to Congress.--
            (1) In general.--On the date on which the Administrator 
        provides notice of a proposed change in fees under section 
        411(h) of the Small Business Investment Act of 1958 (15 U.S.C. 
        694b(h)), the Administrator shall submit to the Committee on 
        Small Business and Entrepreneurship of the Senate and the 
        Committee on Small Business of the House of Representatives, 
        and make publically available, a report regarding the basis for 
        the change in fees.
            (2) Contents.--Each report submitted under paragraph (1) 
        shall include--
                    (A) the contents of any study used by the 
                Administrator in determining whether to change fees 
                under section 411(h) of the Small Business Investment 
                Act of 1958; and
                    (B) the total amount of fees received under such 
                section 411(h) and the total cost of the program under 
                part B of title IV of the Small Business Investment Act 
                of 1958 (15 U.S.C. 694a et seq.)--
                            (i) for the first report submitted under 
                        paragraph (1), during the 3-year period ending 
                        on the date of the submission of the report; 
                        and
                            (ii) for each subsequent report, during the 
                        period beginning on the date of the submission 
                        of the prior report submitted under paragraph 
                        (1) and ending on the date of submission of 
                        such subsequent report.
    (d) Sense of Congress.--It is the sense of Congress that the 
program under part B of title IV of the Small Business Investment Act 
of 1958 (15 U.S.C. 694a et seq.) is not required to be self-funding 
and, therefore, the program may at times operate at a loss.

SEC. 4. MEDIATION.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, and in accordance with subchapter IV of chapter 
5 of title 5, United States Code, the Administrator shall promulgate 
regulations establishing a nonbinding, neutral, third party alternative 
dispute resolution procedure for mediating an issue in controversy 
between a participating surety and the Administration.
    (b) Contents.--The regulations promulgated under subsection (a) 
shall--
            (1) permit either a participating surety or the 
        Administration to request alternative dispute resolution 
        proceedings; and
            (2) establish--
                    (A) a process for selecting a neutral, third party 
                mediator;
                    (B) a reasonable time frame for the conclusion of 
                any mediation under this section; and
                    (C) a method for sharing the costs of any mediation 
                under this section between a participating surety and 
                the Administration.
    (c) Definitions.--In this section--
            (1) the term ``issue in controversy'' has the meaning given 
        that term in section 571 of title 5, United States Code;
            (2) the term ``participating surety'' means a surety 
        participating in a program under part B of title IV of the 
        Small Business Investment Act of 1958 (15 U.S.C. 694a et seq.); 
        and
            (3) the term ``surety'' has the meaning given that term in 
        section 410 of the Small Business Investment Act of 1958 (15 
        U.S.C. 694a).
Surety Bond Improvement Act of 2007 - Amends the Small Business Investment Act of 1958 to: (1) authorize the Administrator of the Small Business Administration (SBA) to guarantee any surety against loss from a small business principal's breach of bond on any total work or contract amount that does not exceed $3 million (under current law, $2 million); (2) direct the Administrator to authorize a surety that issues, monitors, or services such bonds to use rates approved by the insurance commissioner in the state in which the contract will be performed; and (3) prohibit the Administrator from refusing to make payment on a surety guarantee based on facts, circumstances, or defects that the Administrator should reasonably have identified during the guarantee process.

Requires the Administrator to notify the congressional small business committees regarding a proposed change in fees charged to guarantee surety bonds.

Expresses the sense of Congress that the surety bond guarantee program is not required to be self-funding and, therefore, may at times operate at a loss.

Directs the Administrator to establish a third-party alternative dispute resolution procedure for mediating an issue in controversy between a participating surety and the SBA.
A bill to amend the Small Business Investment Act of 1958 to improve surety bond guarantees, and for other purposes.