SEC. 2. AUTHORITY OF SECRETARY TO GUARANTEE SUR-
ETY 
AGAINST 
LOSS 
FROM 
PRINCIPAL’S 
BREACH OF BOND. 
Subsection (e) of section 332 of title 49, United 
States Code, is amended to read as follows: 
‘‘(e) AUTHORITY
OF SECRETARY TO GUARANTEE 
SURETY AGAINST LOSS FROM PRINCIPAL’S BREACH OF 
BOND.— 
‘‘(1) AUTHORITY.— 
‘‘(A) IN
GENERAL.—The Secretary may, 
upon such terms and conditions as the Sec-
retary may prescribe, guarantee and enter into 
commitments to guarantee any surety against 
loss resulting from a breach of the terms of a 
bid bond, payment bond, performance bond, or 
bonds ancillary thereto, by a principal. 
‘‘(B) LIMITATION.—No such guarantee 
may be issued, unless— 
‘‘(i) the person who would be principal 
under the bond is an eligible small busi-
ness concern; 
‘‘(ii) the bond is required in order for 
such person to bid on a contract, or to 
serve as a prime contractor or subcon-
tractor thereon; 
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‘‘(iii) such person is not able to obtain 
such bond on reasonable terms and condi-
tions without a guarantee under this sub-
section; and 
‘‘(iv) there is a reasonable expectation 
that such principal will perform the cov-
enants and conditions of the contract with 
respect to which such bond is required, 
and the terms and conditions of such bond 
are reasonable in light of the risks involved 
and the extent of the surety’s participa-
tion. 
‘‘(2) INDEMNIFICATION
OF
SURETY
AGAINST 
LOSS FROM AVOIDING BREACH.—Subject to the pro-
visions of this subsection, in connection with the 
issuance by the Secretary of a guarantee to a surety 
under paragraph (1), the Secretary may agree to in-
demnify such surety against a loss sustained by such 
surety in avoiding or attempting to avoid a breach 
of the terms of a bond guaranteed by the Secretary 
in accordance with the following: 
‘‘(A) Prior to making any payment under 
this paragraph, the Secretary shall first deter-
mine that a breach of the terms of such bond 
was imminent. 
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‘‘(B) A surety must obtain approval from 
the Secretary prior to making any payments 
pursuant to this paragraph. 
‘‘(C) No payment by the Secretary pursu-
ant to this paragraph shall exceed 10 percent of 
the contract price unless the Secretary deter-
mines that a greater payment should be made 
as a result of a finding by the Secretary that 
the surety’s loss sustained in avoiding or at-
tempting to avoid such breach was necessary 
and reasonable. 
‘‘(D) In no event shall the Secretary pay a 
surety pursuant to this paragraph an amount 
exceeding the guaranteed share of the bond 
available to such surety pursuant to paragraph 
(1). 
‘‘(3) REIMBURSEMENT OF SURETY.— 
‘‘(A) IN
GENERAL.—Any guarantee or 
agreement to indemnify under this subsection 
shall obligate the Secretary to pay to the surety 
a sum— 
‘‘(i) not to exceed 90 percent of the 
loss incurred and paid by the surety, but 
in no event may the Secretary make any 
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duplicate payment pursuant to paragraph 
(2) or any other paragraph; or 
‘‘(ii) determined pursuant to para-
graph (2), if applicable. 
‘‘(B) EXCEPTION.—Pursuant to any such 
guarantee or agreement, the Secretary shall re-
imburse the surety, as provided in subpara-
graph (A), except that the Secretary shall be 
relieved of all liability if— 
‘‘(i) the surety obtained such guar-
antee or agreement, or applied for such re-
imbursement, by fraud or material mis-
representation; 
‘‘(ii) the surety has breached a mate-
rial term or condition of such guarantee or 
agreement; or 
‘‘(iii) the surety has substantially vio-
lated the regulations issued by the Sec-
retary pursuant to paragraph (4). 
‘‘(4) REGULATIONS.—The Secretary may estab-
lish and periodically review regulations for partici-
pating sureties which shall require such sureties to 
meet the Secretary’s standards for underwriting, 
claim practices, and loss ratios. 
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‘‘(5) PROCEDURE FOR REIMBURSEMENT.—The 
Secretary may, upon such terms and conditions as 
the Secretary may prescribe, adopt a procedure for 
reimbursing a surety for its paid losses billed each 
month, based upon prior monthly payments to such 
surety, with subsequent adjustments after such dis-
bursement. 
‘‘(6) REPORTS TO AND AUDITS BY THE SEC-
RETARY.— 
‘‘(A) REPORTS TO THE SECRETARY.—The 
Secretary shall require each participating surety 
to make reports to the Secretary at such times 
and in such forms as the Secretary requires. 
‘‘(B) AUDITS BY THE SECRETARY.—The 
Secretary may at all reasonable times audit, in 
the offices of a participating surety, all docu-
ments, files, books, records, and other material 
relevant to the Secretary’s guarantee, commit-
ments to guarantee, or agreements to indemnify 
any surety pursuant to this subsection. 
‘‘(C) TIMING.—Each participating surety 
shall be audited at least once every three years 
by examiners selected and approved by the Sec-
retary. 
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‘‘(7) ADMINISTRATIVE PROVISIONS.—The Sec-
retary shall administer this subsection on a prudent 
and economically justifiable basis and establish such 
fee or fees for eligible small business concerns and 
premium or premiums for sureties as the Secretary 
deems reasonable and necessary, to be payable at 
such time and under such conditions as may be de-
termined by the Secretary. 
‘‘(8) STATE PROGRAM.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish a program under which not more than 
5 States may be selected to carry out, with a 
portion of the amounts appropriated for this 
subsection, the following: 
‘‘(i) Activities of the Secretary under 
this subsection with respect to issuing 
guarantees. 
‘‘(ii) Activities of a surety to assist eli-
gible small business concerns. 
‘‘(B) ASSESSMENTS
AND
STANDARDS.— 
States selected to participate in the program 
under subparagraph (A) shall be subjected to 
such assessments and shall meet such stand-
ards and conditions as the Secretary may pre-
scribe. 
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‘‘(C) REPORTS BY STATES.—A State se-
lected to participate in the program under sub-
paragraph (A) shall submit to the Secretary an 
annual report describing, at a minimum, the 
nature of the program such State administers, 
the total number and amounts of guarantees 
provided by the program, and the number of el-
igible small business concerns that have partici-
pated in the program. 
‘‘(9) ANNUAL REPORT.—Not later than June 1, 
2012, and annually thereafter, the Secretary shall 
submit to the Committee on Transportation and In-
frastructure of the House of Representatives and the 
Committee on Commerce, Science, and Transpor-
tation of the Senate a report that describes, at a 
minimum— 
‘‘(A) the actions taken to implement this 
subsection; 
‘‘(B) the number of sureties that have re-
ceived guarantees, the States with respect to 
which guarantees were issued, the number of el-
igible small business concerns that have partici-
pated in the program, and the number and 
total amount of guarantees paid by the Sec-
retary; and 
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‘‘(C) the number of States that have ap-
plied to manage amounts under the program es-
tablished under paragraph (8), the number of 
States approved to participate in such program, 
and the results achieved by States participating 
in such program. 
‘‘(10) DEFINITIONS.—In this subsection, the 
following definitions apply: 
‘‘(A) BID
BOND.—The term ‘bid bond’ 
means a bond conditioned upon the bidder on 
a contract entering into the contract, if the bid-
der receives the award thereof, and furnishing 
the prescribed payment bond and performance 
bond. 
‘‘(B) ELIGIBLE
SMALL
BUSINESS
CON-
CERN.—The term ‘eligible small business con-
cern’ means an entity determined by the Sec-
retary to be any of the following: 
‘‘(i) A small business concern owned 
and controlled by socially and economically 
disadvantaged individuals (as such term is 
defined in section 8(d)(3) of the Small 
Business Act (15 U.S.C. 637(d)(3))). 
‘‘(ii) A small business concern owned 
and controlled by service-disabled veterans 
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(as such term is defined under section 3(q) 
of the Small Business Act (15 U.S.C. 
632(q))). 
‘‘(iii) A qualified HUBZone small 
business concern (as such term is defined 
under section 3(p) of the Small Business 
Act (15 U.S.C. 632(p))). 
‘‘(iv) A small business concern owned 
and controlled by women (as such term is 
defined under section 3(n) of the Small 
Business Act (15 U.S.C. 632(n))). 
‘‘(C) 
OBLIGEE.—The 
term 
‘obligee’ 
means— 
‘‘(i) in the case of a bid bond, the per-
son requesting bids for the performance of 
a contract; or 
‘‘(ii) in the case of a payment bond or 
performance bond, the person who has con-
tracted with a principal for the completion 
of the contract and to whom the obligation 
of the surety runs in the event of a breach 
by the principal of the conditions of a pay-
ment bond or performance bond. 
‘‘(D) PAYMENT
BOND.—The term ‘pay-
ment bond’ means a bond conditioned upon the 
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payment by the principal of money to persons 
under contract with the principal. 
‘‘(E) PERFORMANCE
BOND.—The term 
‘performance bond’ means a bond conditioned 
upon the completion by the principal of a con-
tract in accordance with its terms. 
‘‘(F) PRIME
CONTRACTOR.—The term 
‘prime contractor’ means the person with whom 
the obligee has contracted to perform the con-
tract. 
‘‘(G) PRINCIPAL.—The term ‘principal’ 
means a person who may be a prime contractor 
or a subcontractor and— 
‘‘(i) in the case of a bid bond, is bid-
ding for the award of a contract; or 
‘‘(ii) is primarily liable to complete a 
contract for the obligee, or to make pay-
ments to other persons in respect of such 
contract, and for whose performance of his 
obligation the surety is bound under the 
terms of a payment or performance bond. 
‘‘(H) SECRETARY.—The term ‘Secretary’ 
means the Secretary of Transportation, acting 
through the Minority Resource Center estab-
lished under subsection (b). 
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‘‘(I) SUBCONTRACTOR.—The term ‘subcon-
tractor’ means a person who has contracted 
with a prime contractor or with another subcon-
tractor to perform a contract. 
‘‘(J) SURETY.—The term ‘surety’ means 
the person or State that— 
‘‘(i) under the terms of a bid bond, 
undertakes to pay a sum of money to the 
obligee in the event the principal breaches 
the conditions of the bond; 
‘‘(ii) under the terms of a perform-
ance bond, undertakes to incur the cost of 
fulfilling the terms of a contract in the 
event the principal breaches the conditions 
of the contract; 
‘‘(iii) under the terms of a payment 
bond, undertakes to make payment to all 
persons supplying labor and material in 
the prosecution of the work provided for in 
the contract if the principal fails to make 
prompt payment; or 
‘‘(iv) is an agent, independent agent, 
underwriter, or any other company or indi-
vidual empowered to act on behalf of such 
person or State. 
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‘‘(11) AUTHORIZATION OF APPROPRIATIONS.— 
There is authorized to be appropriated to the Sec-
retary to carry out activities under this subsection 
$50,000,000 for each of fiscal years 2012 through 
2016, of which not more than $20,000,000 may be 
made available each fiscal year to carry out activities 
under paragraph (8).’’. 
SEC. 3. NATIONAL INFORMATION CLEARINGHOUSE. 
Section 332(b)(1) of title 49, United States Code, is 
amended by striking ‘‘the maintenance, rehabilitation, re-
structuring, improvement, and revitalization of the rail-
roads of the United States’’ and inserting ‘‘any Federal, 
State, or local mode of transportation’’. 
SEC. 4. PROVISION OF RELEVANT INFORMATION. 
Section 332(d) of title 49, United States Code, is 
amended by striking ‘‘United States Railway Association, 
the Consolidated Rail Corporation, and the’’. 
Æ 
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