Small Business: Responses to Survey on Construction Firms' Access to Surety Bonds (Letter Report, 06/26/95, GAO/RCED-95-173S). Federal law requires contractors to provide surety bonds on all federal construction contracts worth more than $25,000. Surety bonds guarantee that should a bonded contractor default, a construction project will be completed and the contractor's employees and material suppliers will be paid. Most state and local governments and some private sector lenders also require construction firms to be bonded. Some small construction firms argue that surety companies' decisions to approve or deny bonds can seem arbitrary and can impede the growth of small firms, especially those owned by women and minorities. Because limited data exist on this issue, GAO surveyed a random sample of 12,000 construction firms, of which about 98 percent were small enough to qualify for Small Business Administration programs. GAO focused on the (1) firms' overall rate of obtaining bonds; (2) characteristics of the small firms that did bonded work; (3) recent experiences of these firms in obtaining bonds; and (4) characteristics of those firms that did not perform bonded work, including their reasons for not doing such work. The first volume (GAO/RCED-95-173FS) discusses the survey results in detail. The second volume (GAO/RCED-95-173S) provides detailed statistics on the experiences of small construction firms. --------------------------- Indexing Terms ----------------------------- REPORTNUM: RCED-95-173S TITLE: Small Business: Responses to Survey on Construction Firms' Access to Surety Bonds DATE: 06/26/95 SUBJECT: Surety bonds Small business contracts Small business contractors Small business assistance Construction contracts Construction industry Bid guarantees Budget receipts Surveys ************************************************************************** * This file contains an ASCII representation of the text of a GAO * * report. Delineations within the text indicating chapter titles, * * headings, and bullets are preserved. Major divisions and subdivisions * * of the text, such as Chapters, Sections, and Appendixes, are * * identified by double and single lines. 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We are unable to accept electronic orders * * for printed documents at this time. * ************************************************************************** Cover ================================================================ COVER Supplement to Fact Sheet for Congressional Committees June 1995 SMALL BUSINESS - RESPONSES TO SURVEY ON CONSTRUCTION FIRMS' ACCESS TO SURETY BONDS GAO/RCED-95-173S Responses to Survey (385370) Abbreviations =============================================================== ABBREV CPA - certified public accountant DOT - Department of Transportation GAO - General Accounting Office SIC - standard industrial classification SBA - Small Business Administration FOREWORD ============================================================ Chapter 0 Federal law currently requires contractors to provide assurance--in the form of a surety bond--that federal construction contracts will be completed and that the contractors' employees and suppliers will be paid. Most state and local governments and some private-sector lenders also require construction firms to be bonded. Surety companies issue bonds on the basis of their evaluation of a construction firm's ability to complete a project successfully. To obtain a bond, a contractor must show that it has the financial capacity and experience to perform the project. Doing so can be difficult for small construction companies. The Small Business Access to Surety Bonding Survey Act, contained in the Small Business Credit and Business Opportunity Enhancement Act of 1992, directed us to survey small construction companies for information on their experiences in obtaining surety bonds between 1990 and 1993. We sent out a questionnaire to 12,000 firms. Our report on this survey is entitled Small Business: Construction Firms' Access to Surety Bonds (GAO/RCED-95-173FS, June 26, 1995). This supplement provides detailed statistics on the experiences of small construction firms. Section 1 of this supplement includes background information on the methodology and limitations of our survey along with statistics on the overall response rate and information on how to interpret the tables in the subsequent sections. Sections 2 to 4 include, among other data, detailed data on the results of our survey by the average annual revenues of the firms and the ethnicity and gender of the firms' owners. These sections parallel the discussion in sections 2 to 4 of our report GAO/RCED-95-173FS. The tables in section 2 of this supplement summarize the characteristics of construction firms that are small enough to be eligible for the Small Business Administration's (SBA) programs and that had obtained bonds. The tables in section 3 summarize the recent experiences of these firms in obtaining bonds. The tables in section 4 describe the characteristics of the firms that had not obtained bonds, including their reasons for not obtaining them. A copy of the questionnaire used in our survey is included in appendix I. Judy A. England-Joseph Director, Housing and Community Development Issues SURVEY METHODOLOGY ============================================================ Chapter 1 We selected a simple random sample of 12,000 companies from Dun & Bradstreet's list of 683,198 firms in the construction industry, excluding general contractors primarily involved in residential building construction, as of December 31, 1993. We eliminated firms working primarily as general contractors for and builders/developers of single-family residences from the study because they were not as likely as other firms to be asked to obtain bonds. A summary of the standard industrial classifications (SIC) of the firms included in the survey is provided in table 1.1, and the percentage of firms in the sample that fell into each of these classifications is shown in table 1.2. These classifications are based on definitions of industrial activity used by the U.S. Bureau of the Census. We sent the questionnaire to each firm in the sample. We alerted recipients by postcard before sending out the survey and mailed up to two follow-up questionnaires to firms that did not respond to our initial request. We conducted the survey from February to July 1994, with follow-up mailings in March and April 1994. As table 1.3 shows, 16.9 percent of the firms in our sample were out of business or were not doing construction work, or we lacked a current address. Of the remaining 9,964 firms, 50.2 percent responded to the questionnaire. From the list of nonrespondents as of May 13, 1994, we randomly sampled 800 to contact by telephone. We made up to four attempts to reach each firm by telephone to determine whether the nonrespondents differed from the respondents in their experiences with bonds. The responses to this effort are summarized in table 1.4. We acquired financial data on the sampled firms from Dun & Bradstreet's Research and Regulatory File. This information included historical sales data for all of the sampled firms and financial statements for 3,017 firms. We matched the firms' financial records with data from the survey. The survey respondents with bonding experience were more likely than the survey respondents with no bonding experience and the nonrespondents to have financial statements on file at Dun & Bradstreet. However, as table 1.5 shows, financial information was available for only 36.6 percent of the survey respondents. DEFINITIONS ---------------------------------------------------------- Chapter 1:1 We determined the ethnicity and gender of the owners of the firms from the answers to the following two questions in our questionnaire: "Is 51% or more of the firm owned by one or more of the following minority groups: Black or African American, Hispanic, Asian, American Indian or Native American, or Pacific Islander?" "Is 51% or more of the firm owned by women?" We determined the size of the firms by calculating their average annual construction revenues for 3 years before the date of the survey. When the revenues for 3 years were not available, we used the average revenues for 2 years or the revenues for the most recent year. For the firms that did not answer our question about revenues, we used Dun & Bradstreet's historical sales data to calculate similar averages. We determined that these data were reliable indicators of responses to our questions on revenues. We then grouped the firms into the following categories: the smallest firms--those with average annual revenues less than or equal to $500,000; medium-size firms--those with average annual revenues over $500,000 and up to $3.5 million; larger firms--those with average annual revenues over $3.5 million and up to the maximum allowed for eligibility in SBA's programs as a small business: $17 million for firms in general building construction and heavy construction and $7 million for special trade contractors; and the largest firms--those with average annual revenues that exceeded SBA's size standards for small businesses. (Data for these firms are not included in the tables.) We considered that a firm had "bonding experience" if it reported having had one or more of the experiences mentioned in the following question: "Has your firm ever provided a bid bond, a performance or payment bond, or had a preapproved bonding line?" We considered that a firm had recent experience if it had obtained a bond since 1990. LIMITATIONS OF THE SURVEY DATA ---------------------------------------------------------- Chapter 1:2 Our results can be generalized to construction firms that would have answered our survey if we had mailed our questionnaire to all companies. This is about half of the firms currently in business, primarily in construction, and identified as such by Dun & Bradstreet. The firms that would not have responded to our survey--and to which, therefore, the results cannot be generalized--are smaller, on average; work more often in special trades; and are less likely to have financial statements on record with Dun & Bradstreet than the firms that responded. According to our telephone survey, these firms are also less likely to have had bonding experience. Our results also cannot be generalized to the firms that have gone out of business; the newest/youngest firms, which have not been in business long enough to be identified by Dun & Bradstreet; or the firms working primarily as general contractors for or builders/developers of single-family residences, which we excluded from our review. Finally, our results cannot be generalized to the largest firms, that is, those with annual revenues exceeding SBA's size standards for small businesses. SAMPLING ERRORS -------------------------------------------------------- Chapter 1:2.1 As with all sample surveys, our statistical estimates contain sampling error--potential error that arises from not collecting data on all firms. We calculated the amount of sampling error for estimates of various statistics at the 95-percent confidence level. This means that if we repeatedly sampled 12,000 firms from the same Dun & Bradstreet file and performed our survey again, 95 percent of the samples would yield results within the ranges specified by our estimates, plus or minus the sampling errors. In calculating sampling errors, we did not make a correction for sampling from a finite population. The sampling errors for estimates of statistics other than percentages (e.g., averages) are reported in the tables. We do not provide sampling errors for estimates of percentages, but they can be computed using the formula s.e. = +/- 1.96 x square root [ (p) x (1-p) / n ] where p is the percentage of firms having a certain characteristic and n is the number of firms with and without the characteristic. Both p and n are provided in the tables. We tested the differences between subgroups we were interested in--such as the minority-owned firms and the firms not owned by minorities--for statistical significance. Statistical significance means that the differences we observed between subgroups are larger than would be expected from sampling error. When this occurs, some phenomenon other than chance is likely to have caused the difference. Statistical significance is absent when an observed difference between two subgroups, plus or minus sampling error, yields a range that includes zero. In this instance, sampling error alone could explain the difference. It should be noted, however, that the absence of a statistically significant difference does not mean that a difference does not exist. The sample size or number of respondents to a question may not have been sufficient to allow us to detect a difference. We report the results of the tests for statistical significance in each table. Table 1.1 Standard Industrial Classification (SIC) Codes of Firms in Construction Industry Included in Survey ---------------------------------- ---------------------------------- Major group 1500: Building cons ---------------------------------------------------------------------- 1522 General contractors--residential buildings other than single- family 1541 General contractors--industrial buildings and warehouses 1542 General contractors-- nonresidental buildings other than industrial buildings and warehouses Major group 1600: Heavy constru construction--contractors ---------------------------------------------------------------------- 1611 Highway and street construction, except elevated highways 1622 Bridge, tunnel, and elevated highway construction 1623 Water, sewer, pipeline, and communications and power line construction 1629 Heavy construction not elsewhere classified Major group 1700: Construction-contractors ---------------------------------------------------------------------- 1711 Plumbing, heating, and air- conditioning 1721 Painting and paper hanging 1731 Electrical work 1741 Masonry, stone setting, and other stone work 1742 Plastering, drywall, and acoustical and insulation work 1743 Terrazzo, tile, marble, and mosaic work 1751 Carpentry work 1752 Floor laying and other floor work not elsewhere classified 1761 Roofing, siding, and sheet metal work 1771 Concrete work 1781 Water well drilling 1791 Structural steel erection 1793 Glass and glazing work 1794 Excavation work 1795 Wrecking and demolition work 1796 Installation or erection of building equipment not elsewhere classified 1799 Special trade contractors not elsewhere classified ---------------------------------------------------------------------- Table 1.2 Percentage of Firms in Sample Meeting SBA's Size Standards in Selected Standard Industrial Classifications Percent of firms Standard industrial classification (n=12,000) -------------------------------------------------- ------------------ Building construction 11.5 Heavy construction 7.4 Special trade construction 81.1 ---------------------------------------------------------------------- Table 1.3 Summary of Responses to Questionnaires Response category Percent Number -------------------------------------------------- -------- -------- Respondents\ ---------------------------------------------------------------------- Completed questionnaire; 18.5 2 ,225 obtained a bond or had a bonding line Completed questionnaire; 23.0 2,771 had no bonding experience Completed some questions; 0.1 12 did not describe bonding experience Ineligible (no construction 10.9 1,310 revenues since 1990 or not in construction) ====================================================================== Subtotal 52.5 6,318\a Nonrespondents ---------------------------------------------------------------------- Out of business, no new forwarding address, or 6.0 726 deceased Refused 0.4 53 No information on reason for 41.0 4,928 nonresponse ====================================================================== Subtotal 47.5 5,707 ---------------------------------------------------------------------- \a Includes 25 firms that responded anonymously. Table 1.4 Summary of Responses to Follow-Up Telephone Interviews Response category Percent Number -------------------------------------------------- -------- -------- Respondents ---------------------------------------------------------------------- Completed interview; 14.0 112 provided a bond or had a bonding line No bonding experience 22.6 181 ====================================================================== Subtotal 36.6 293 Nonrespondents ---------------------------------------------------------------------- Out of business; 29.5 236 disconnected telephone Refused 3.0 24 No information on reason 30.9 247 for nonresponse ====================================================================== Subtotal 63.4 507 ---------------------------------------------------------------------- Table 1.5 Characteristics of Survey Respondents and Nonrespondents Ineligible/out Characteristic Respondents \a Nonrespondents \b of business -------------------- ------------------ ------------------ ------------------ Had financial 36.6% 18.6% 12.6% statement on file (n=5,008) (n=4,981) (n=2,036) with Dun & Bradstreet\c Average revenues\c $1,818,178 $799,716 $297,129 (+/-347,982) (+/-112,883) (+/-43,448) (n=5,001) (n=4,972) (n=2,026) Distribution of (n=5,003) (n=4,979) (n=2,035) revenues\d Up to $500,000 59.9% 74.9% 87.0% $500,001 to 32.1% 21.6% 12.4% $3.5 million Over $3.5 million 5.4% 2.6% 0.4% to SBA's maximum Over SBA's maximum 2.6% 1.0% 0.1% Distribution of (n=4,983) (n= 4,981) (n=2,036) standard industrial classifications\d Building 14.3% 9.9% 9.7% construction Heavy construction 9.1% 6.6% 5.8% Special trade 76.6% 83.5% 84.4% construction -------------------------------------------------------------------------------- \a Includes firms that had had bonding experience, firms that had not had bonding experience, and firms that responded but did not indicate their bonding experience. \b Includes refusals. \c Differences among all three groups are statistically significant. \d Differences in distribution by response category are statistically significant. Table 1.6 Characteristics of Respondents to Telephone and Mail Surveys That Met SBA's Definition of Small Businesses Characteristic Telephone\ Mail -------------------------------------- -------------- -------------- Bonding experience (n=289) (n=4,863) Had bonding experience 37.4% 43.2% Had no bonding experience 62.6% 56.8% Gender of owner (n=252) (n=4,634) Owned by women 8.7% 9.1% Not owned by women 91.3% 90.9% Ethnicity of owner (n=252) (n=4,524) Owned by minority 7.1% 6.9% Not owned by minority 92.9% 93.1% ---------------------------------------------------------------------- \a Includes firms with bonding experience and those with no bonding experience. Table 1.7 Size of Subgroups That Returned Questionnaires Obtained a bond or had a No bonding bonding line experience Subgroup (n=2,225) (n=2,771) -------------------------------------- -------------- -------------- Respondents, by size of firm ---------------------------------------------------------------------- Smallest (revenues $500,000 and under) 839 2,149 Medium-size (revenues $500,001-$3.5 1,007 598 million) Larger (revenues over $3.5 million to 254 16 SBA maximum size) SBA small\a subtotal 2,100 2,763 Largest\b 123 5 Size not reported 2 3 Respondents, by ethnicity of owner and size of firm ---------------------------------------------------------------------- Owned by minority Smallest 76 121 Medium-size 55 40 Larger 17 1 SBA small subtotal 148 162 Largest 5 0 Size not reported 0 1 ====================================================================== Total 153 163 Not owned by minority Smallest 733 1,791 Medium-size 930 512 Larger 236 12 SBA small subtotal 1,899 2,315 Largest 118 5 Size not reported 2 1 ====================================================================== Total 2,019 2,321 Ethnicity not reported 53 287 Respondents, by gender of owner and size of firm ---------------------------------------------------------------------- Owned by women Smallest 100 148 Medium-size 108 47 Larger 20 0 SBA small subtotal 228 195 Largest 5 0 Size not reported 1 0 Total 234 195 Not owned by women Smallest 709 1,854 Medium-size 878 522 Larger 233 15 SBA small subtotal 1,820 2,391 Largest 118 5 Size not reported 1 3 ====================================================================== Total 1,939 2,399 Gender not reported 52 177 ---------------------------------------------------------------------- \a "SBA small" includes the smallest, medium-size, and larger firms shown above; that is, those firms eligible for SBA's programs for small businesses. \b Largest firms are those whose revenues are higher than the maximum allowed for eligibility for SBA's programs. CHARACTERISTICS OF FIRMS THAT HAD OBTAINED SURETY BONDS ============================================================ Chapter 2 Forty-three percent of the firms that responded to our survey had at one time obtained surety bonds or had an approved bonding line. We estimate that in the universe of firms in our study, the percentage of firms with this experience is lower than 43 percent but no lower than 23 percent. The tables in this section provide estimates about at most the 119,560 (+/- 4,645) firms represented by respondents to our survey that had obtained bonds. The results in particular tables can be generalized only to the firms that said they had obtained a bond or had a bonding line and that provided the information covered in the table. The approximate number of firms can be estimated by multiplying the number of firms responding to the question (n) by the expansion factor, 683,198/12,000. We used the results from the telephone survey to increase the accuracy of our estimate of the number of small firms that had obtained bonds. In the tables, we have provided the statistics, the sampling errors for estimates other than percentages, and the sample sizes to enable the reader to calculate the sampling errors for our estimates of percentages using the formula provided in section 1. In some tables that present distributions, the columns do not add to 100 percent because of rounding. Table 2.1 Characteristics of Firms That Had Obtained a Bond or Had a Bonding Line Number providing Characteristic information Statistic -------------------------------------- -------------- -------------- Gender (n=2,048) Owned by women 11.1% Not owned by women 88.9% Ethnicity (n=2,047) Owned by minority 7.2% Not owned by minority 92.8% Size (n=2,100) Average revenues $1,569,840 (+/-98,680) Up to $500,000 40.0% $500,001-$3.5 million 48.0% Over $3.5 million to SBA's maximum 12.1% Years in construction (n=2,093) 20.4 (+/-0.7) years SIC (n=2,087) Building construction 20.7% Heavy construction 14.3% Special trade construction 65.0% ---------------------------------------------------------------------- Table 2.2a Annual Revenues of Firms, by Ethnicity of Owner Owned by Not owned by minority minority Revenues (n=148) (n=1,899) -------------------------------------- -------------- -------------- Average\a $1,363,715 $1,608,436 (+/-301,738) (+/-105,785) Distribution\b Up to $500,000 51.4% 38.6% $500,001-$3.5 million 37.2% 49.0% Over $3.5 million to SBA's maximum 11.5% 12.4% ---------------------------------------------------------------------- \a Difference by ethnicity is not statistically significant. \b Differences in distribution by ethnicity are statistically significant. Table 2.2b Annual Revenues of Firms, by Gender of Owner Not owned by Owned by women women Revenues (n=228) (n=1,820) ------------------------------ ------------------ ------------------ Average $1,398,811 $1,616,428 (+/-329,441) (+/-105,637) Distribution Up to $500,000 43.9% 39.0% $500,001-$3.5 million 47.4% 48.2% Over $3.5 million to SBA's 8.8% 12.8% maximum ---------------------------------------------------------------------- \a Differences in averages and distributions by gender are not statistically significant. Table 2.3a Firms' Average Years of Experience in Construction, by Size of Firm Over $3.5 $500,001- million to Up to $3.5 SBA's All SBA $500,000 million maximum small firms Experience (n=833) (n=1,006) (n=254) (n=2,093) -------------------------- ------------ ---------- ------------ ------------ Average number of years in 18.99 20.07 26.16 20.4 construction (+/-0.89) (+/-0.94) (+/-2.49) (+/-0.7) -------------------------------------------------------------------------------- \a Differences between the smallest firms and the firms with average revenues over $3.5 million and between the medium-size firms and the firms with average revenues over $3.5 million are statistically significant. Table 2.3b Firms' Average Years of Experience in Construction, by Ethnicity of Owner Owned by Not owned by Experience minority (n=148) minority (n=1,894) ------------------------------ ---------------- -------------------- Average number of years in 14.69 20.83 construction (+/-1.73) (+/-0.70) ---------------------------------------------------------------------- \a Difference by ethnicity is statistically significant. Table 2.3c Firms' Average Years of Experience in Construction, by Gender of Owner Not owned by Owned by women women Experience (n=227) (n=1,816) ---------------------------------- ---------------- ---------------- Average number of years in 18.51 20.68 construction (+/-1.76) (+/-0.71) ---------------------------------------------------------------------- \a Difference by gender is statistically significant. Table 2.4a Years of Construction Experience of the Firm's Most Experienced Person, by Size of Firm Over $3.5 $500,001- million to All SBA Up to $3.5 SBA's small $500,000 million maximum firms Years of experience (n=811) (n=990) (n=253) (n=2,054) ---------------------------- ---------- ------------ ------------ ---------- 1-3 1.2% \b 0.0% 0.6% 4-6 1.4% 0.9% \b 1.0% 7-9 3.1% 1.8% \b 2.2% 10 or more 94.3% 97.0% 98.4% 96.1% -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 2.4b Years of Construction Experience of the Firm's Most Experienced Person, by Ethnicity of Owner Not owned by Owned by minority minority Years of experience (n=145) (n=1,887) ---------------------------- ------------------ -------------------- 1-3 \b 0.6% 4-6 \b 1.0% 7-9 3.4% 2.1% 10 or more 93.8% 96.3% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 2.4c Years of Construction Experience of the Firm's Most Experienced Person, by Gender of Owner Owned by women Not owned by women Years of experience (n=226) (n=1,806) ---------------------------- ------------------ -------------------- 1-3 \b 0.7% 4-6 \b 1.1% 7-9 2.2% 2.2% 10 or more 96.9% 96.0% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 2.5a Percentage of Firms in Selected Standard Industrial Classifications, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA's small Standard industrial $500,000 million maximum firms classification (n=836) (n=1,001) (n=250) (n=2,087) ------------------------ ---------- ------------ ---------------- ---------- Building construction 14.4% 22.5% 34.8% 20.7% Heavy construction 8.5% 15.5% 29.2% 14.3% contractors Special trade 77.2% 62.0% 36.0% 65.0% contractors -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. Table 2.5b Percentage of Firms in Selected Standard Industrial Classifications, by Ethnicity of Owner Not owned by Standard industrial Owned by minority minority classification (n=146) (n=1,888) ---------------------------- ------------------ -------------------- Building construction 20.5% 20.7% Heavy construction 21.9% 14.0% contractors Special trade contractors 57.5% 65.3% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are statistically significant. Table 2.5c Percentage of Firms in Selected Standard Industrial Classifications, by Gender of Owner Standard industrial Owned by women Not owned by women classification (n=227) (n=1,809) ---------------------------- ------------------ -------------------- Building construction 19.4% 20.8% Heavy construction 16.7% 14.3% contractors Special trade contractors 63.9% 64.9% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. Table 2.6a Distribution of Firms' Work in 1993 Performed Directly for Owners and Through Subcontracting, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA's small $500,000 million maximum firms Type of work (n=812) (n=998) (n=251) (n= 2,061) ------------------------ ------------ ---------- ---------------- ---------- More direct work for 39.8% 43.6% 46.6% 42.5% owner More subcontracting 52.7% 50.5% 49.8% 51.3% Equal amounts of direct 7.5% 5.9% 3.6% 6.3% work and subcontracting -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are not statistically significant. Table 2.6b Distribution of Firms' Work in 1993 Performed Directly for Owners and Through Subcontracting, by Ethnicity of Owner Not owned by Owned by minority minority Type of work (n=147) (n=1,864) ---------------------------- ------------------ -------------------- More direct work for owner 38.8% 42.7% More subcontracting 56.5% 50.9% Equal amounts of direct work 4.8% 6.4% and subcontracting ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. Table 2.6c Distribution of Firms' Work in 1993 Performed Directly for Owners and Through Subcontracting, by Gender of Owner Owned by women Not owned by women Type of work (n=226) (n=1,785) ---------------------------- ------------------ -------------------- More direct work for owner 46.5% 42.0% More subcontracting 47.3% 51.7% Equal amounts of direct work 6.2% 6.4% and subcontracting ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. Table 2.7a Distribution of When Firms Obtained Their First Bonds, by Size of Firm $500,001- Over $3.5 All SBA When first bond or Up to $3.5 million to SBA's small bonding line was $500,000 million maximum firms obtained (n=816) (n=993) (n=253) (n=2,062) ------------------------ ---------- ------------ ---------------- ---------- Before 1985 46.7% 49.4% 71.5% 51.1% 1985-1989 25.6% 25.2% 12.6% 23.8% 1990-1992 19.5% 19.5% 12.6% 18.7% During 1993 8.2% 5.8% 3.2% 6.5% -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. Table 2.7b Distribution of When Firms Obtained Their First Bonds, by Ethnicity of Owner Not owned by When first bond or bonding line was Owned by minority minority obtained (n=144) (n=1,872) -------------------------------------- ------------------ -------------------- Before 1985 29.9% 53.1% 1985-1989 28.5% 23.5% 1990-1992 29.9% 17.5% During 1993 11.8% 6.0% -------------------------------------------------------------------------------- \a Differences in distribution by ethnicity are statistically significant. Table 2.7c Distribution of When Firms Obtained Their First Bonds, by Gender of Owner When first bond or bonding Owned by women Not owned by women line was obtained (n=223) (n=1,794) ---------------------------- ------------------ -------------------- Before 1985\b 44.8% 52.5% 1985-1989 27.8% 23.1% 1990-1992 19.3% 18.2% During 1993 8.1% 6.2% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. \b Difference in percentages by gender is statistically significant. Table 2.8a Percentage of Firms Reporting Net Profit in 1990-93 for Years in Which They Did Construction Work, by Size of Firm Profit Over $3.5 status $500,001-$3.5 million to SBA's All SBA small by year Up to $500,000 million maximum firms -------- ---------------- ---------------- ---------------- ---------------- 1990 (n=774) (n=961) (n=246) (n=1,981) Profit 57.4% 65.8% 81.7% 64.5% No 33.1% 27.5% 16.7% 28.3% profit No 9.6% 6.8% 1.6% 7.2% answer 1991 (n=791) (n=983) (n=251) (n=2,025) Profit 57.4% 63.1% 78.1% 62.7% No 33.2% 30.1% 20.3% 30.1% profit No 9.4% 6.8% 1.6% 7.2% answer 1992 (n=801) (n=986) (n=250) (n=2,037) Profit 56.1% 63.4% 75.6% 62.0% No 34.6% 30.0% 22.8% 30.9% profit No 9.4% 6.6% 1.6% 7.1% answer 1993 (n=796) (n=990) (n=251) (n=2,037) Profit 57.4% 64.4% 73.3% 62.8% No 33.7% 29.1% 25.1% 30.4% profit No 8.9% 6.5% 1.6% 6.8% answer -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant for all years. Table 2.8b Percentage of Firms Reporting Net Profit in 1990-93 for Years in Which They Did Construction Work, by Ethnicity of Owner Not owned by Profit status by year Owned by minority minority ---------------------------- ------------------ -------------------- 1990\a (n=131) (n=1,801) Profit 54.2% 66.2% No profit 36.6% 28.2% No answer 9.2% 5.7% 1991\a (n=138) (n=1,839) Profit 55.1% 64.3% No profit 35.5% 30.2% No answer 9.4% 5.5% 1992\b (n=141) (n=1,847) Profit 62.4% 63.0% No profit 28.4% 31.6% No answer 9.2% 5.4% 1993\a (n=144) (n=1,843) Profit 50.7% 64.8% No profit 40.3% 30.1% No answer 9.0% 5.2% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are statistically significant. \b Differences in distribution by ethnicity are not statistically significant. Table 2.8c Percentage of Firms Reporting Net Profit in 1990-93 for Years in Which They Did Construction Work, by Gender of Owner Profit status by year Owned by women Not owned by women ---------------------------- ------------------ -------------------- 1990 (n=209) (n=1,728) Profit 62.7% 65.7% No profit 31.1% 28.5% No answer 6.2% 5.8% 1991 (n=215) (n=1,767) Profit 57.7% 64.3% No profit 35.8% 29.9% No answer 6.5% 5.8% 1992 (n=218) (n=1,774) Profit 56.4% 63.6% No profit 37.2% 30.8% No answer 6.4% 5.6% 1993 (n=225) (n=1,765) Profit 57.3% 64.6% No profit 37.3% 29.9% No answer 5.3% 5.5% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant for any year. FIRMS' RECENT EXPERIENCE IN OBTAINING BONDS ============================================================ Chapter 3 Of the firms that had obtained a bond or had a bonding line (i.e., were preapproved by a surety company to obtain bonds), 72 percent had obtained bonds in 1990 or later. The tables in this section provide estimates about at most the 84,491 (+/- 4,024) firms represented by the respondents to our survey with recent bonding experience. The results in particular tables can be generalized only to the firms that said they had obtained a bond since 1990 and that provided the information discussed in the table. The approximate number of firms can be estimated by multiplying the number of firms responding to the question (n) by the expansion factor, 683,198/12,000. In the tables, we have provided the statistics, the sampling errors for our estimates other than percentages, and the sample sizes to enable the reader to calculate the sampling errors for our estimates of percentages using the formula provided in section 1. In some tables that present distributions, the columns do not add to 100 percent because of rounding. Table 3.1a Percentage of Bonded Firms That Had Obtained a Bond Since 1990, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms (n=816) (n=992) (n=253) (n=2,061) ------------------------ ---------- ------------ ---------------- ---------- Percentage that had 54.8% 79.8% 96.8% 72.0% obtained a bid, performance, or payment bond after January 1, 1990 -------------------------------------------------------------------------------- \a Differences by size of firm are statistically significant. Table 3.1b Percentage of Bonded Firms That Had Obtained a Bond Since 1990, by Ethnicity of Owner Not owned by Owned by minority minority (n=144) (n=1,872) ---------------------------- ------------------ -------------------- Percentage that had obtained 75.7% 72.3% a bid, performance, or payment bond after January 1, 1990 ---------------------------------------------------------------------- \a Difference by ethnicity is not statistically significant. Table 3.1c Percentage of Bonded Firms That Had Obtained a Bond Since 1990, by Gender of Owner Owned by women Not owned by women (n=226) (n=1,791) ---------------------------- ------------------ -------------------- Percentage that had obtained 78.3% 71.9% a bid, performance, or payment bond after January 1, 1990 ---------------------------------------------------------------------- \a Difference by gender is statistically significant. Table 3.2 Characteristics of Firms That Had Obtained a Bond Since 1990 Number providing Characteristic information Statistic ------------------------------------------ -------------- ---------- Gender (n=1,463) Owned by women 12.0% Not owned by women 88.0% Ethnicity (n=1,462) Owned by minority 7.5% Not owned by minority 92.5% Size (n=1,483) Average revenues $1,943,249 (+/- 126,958) Up to $500,000 30.1% $500,001-$3.5 million 53.4% Over $3.5 million to SBA maximum 16.5% Years in construction (n=1,481) 19.8 (+/-0.80) SIC (n=1,474) Building construction 22.2% Heavy construction 16.1% Special trade construction 61.7% ---------------------------------------------------------------------- Table 3.3a Percentage of Firms That Had Obtained Bonds Through Various Sources, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Source of bonds (n=443) (n=786) (n=244) (n=1,473) ------------------------ ------------ ---------- ---------------- ---------- Agent who was a 56.2% 75.7% 84.8% 71.4% specialist in surety bonds Agent who was not a 19.2% 9.9% 9.0% 12.6% specialist Surety company directly 5.2% 2.5% 1.6% 3.2% Source unknown 19.4% 11.8% 4.5% 12.9% -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. Table 3.3b Percentage of Firms That Had Obtained Bonds Through Various Sources, by Ethnicity of Owner Not owned by minori ty Owned by minority (n=1,3 Source of bonds (n=108) 45) ------------------------------------------ ------------------ ------ Agent who was a specialist in surety bonds 73.1% 71.4% Agent who was not a specialist 9.3% 12.7% Surety company directly 6.5% 2.9% Source unknown 11.1% 13.0% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. Table 3.3c Percentage of Firms That Had Obtained Bonds Through Various Sources, by Gender of Owner Owned by women Not owned by women Source of bonds (n=175) (n=1,278) ---------------------------- ------------------ -------------------- Agent who was a specialist 68.0% 72.1% in surety bonds Agent who was not a 10.9% 12.6% specialist Surety company directly 4.0% 3.1% Source unknown 17.1% 12.3% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. Table 3.4a Percentage of Firms Obtaining Their First Bond Between 1990 and 1993 That Had Requirements Explained in Advance the First Time They Asked for a Bond, by Size of Firm Extent to which $500,001- Over $3.5 All SBA information was given by Up to $3.5 million to SBA small agents, brokers, or $500,000 million maximum firms surety companies (n=171) (n=213) (n=37) (n=421) ------------------------ ------------ ---------- ---------------- ---------- Little or no extent 17.0% 11.3% \b 12.8% Some extent 15.2% 12.7% 16.2% 14.0% Moderate extent 29.2% 28.6% 21.6% 28.3% Great extent 25.7% 32.4% 27.0% 29.2% Very great extent 12.9% 15.0% 32.4% 15.7% -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.4b Percentage of Firms Obtaining Their First Bond Between 1990 and 1993 That Had Requirements Explained in Advance the First Time They Asked for a Bond, by Ethnicity of Owner Extent to which information Not owned by was given by agents, Owned by minority minority brokers, or surety companies (n=47) (n=363) ---------------------------- ------------------ -------------------- Little or no extent 17.0% 12.4% Some extent 14.9% 13.8% Moderate extent 36.2% 27.0% Great extent 21.3% 30.3% Very great extent 10.6% 16.5% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. Table 3.4c Percentage of Firms Obtaining Their First Bond Between 1990 and 1993 That Had Requirements Explained in Advance the First Time They Asked for a Bond, by Gender of Owner Extent to which information was given by agents, Owned by women Not owned by women brokers, or surety companies (n=50) (n=361) ---------------------------- ------------------ -------------------- Little or no extent 10.0% 13.0% Some extent 10.0% 14.1% Moderate extent 38.0% 26.6% Great extent 28.0% 29.9% Very great extent 14.0% 16.3% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. Table 3.5a Percentage of Firms That Had Used Government Bonding Assistance Programs, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Source of bonds (n=444) (n=785) (n=244) (n= 1,473) ------------------------ ------------ ---------- ---------------- ---------- Percentage that had used 14.6% 9.0% 3.7% 9.8% federal, state, or local assistance programs to get a bond in 1990-93 -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. Table 3.5b Percentage of Firms That Had Used Government Bonding Assistance Programs, by Ethnicity of Owner Not owned by Owned by minority minority (n=108) (n=1,346) ---------------------------- ------------------ -------------------- Percentage that had used 14.8% 9.4% federal, state, or local assistance programs to get a bond in 1990-93 ---------------------------------------------------------------------- \a Difference by ethnicity is not statistically significant. Table 3.5c Percentage of Firms That Had Used Government Bonding Assistance Programs, by Gender of Owner Owned by women Not owned by women (n=175) (n=1,278) ---------------------------- ------------------ -------------------- Percentage that had used 11.4% 9.4% federal, state, or local assistance programs to get a bond in 1990-93 ---------------------------------------------------------------------- \a Difference by gender is not statistically significant. Table 3.6 Percentage of Firms That Had Used Government Bonding Assistance Programs, by When the Firm Obtained Its First Bond or Bonding Line 1985- 1990- Before 89 92 1993 1985- 1985 (n=324 (n=330 (n=113 1993 (n=699) ) ) ) (n=767) ---------------------------------- ---------- ------ ------ ------ -------- Percentage that had used federal, 7% 13.9% 11.5% 11.5% 12.5% state, or local assistance programs to get a bond in 1990- 93 -------------------------------------------------------------------------------- \a Difference between the firms that had obtained a bond before 1985 and the other firms is statistically significant. Other differences among firms are not statistically significant. Table 3.7 Distribution of When Firms Obtained Their First Bonds, by Whether the Firm Had or Had Not Used Government Programs to Obtain a Bond Had used Had not used government government When obtained first bond or programs programs bonding a line (n=145) (n=1,321) ------------------------------ ------------------ ------------------ Before 1985 33.8% 49.2% From 1985-89 31.0% 21.1% From 1990-92 26.2% 22.1% During 1993 9.0% 7.6% ---------------------------------------------------------------------- \a Differences in distribution by whether the firm had or had not used government programs to obtain a bond are statistically significant. Table 3.8 Differences Between Firms That Had and Had Not Used Government Programs to Obtain Bonds Had used Had not used government government Characteristic programs programs ---------------------------------------- ------------------ ------------------ Average annual revenues $1,056,183 $2,041,737 (+/-211,380) (+/-138,304) (n=145) (n=1,327) Average size of largest bond provided in $385,635 $1,214,414 1993 (+/-109,736) (+/-349,768) (n=110) (n=927) Average fee paid for performance and 3.10% 2.38% payment bonds in 1993 (expressed as a (+/-0.56) (+/-0.13) percentage of the first $100,000 of the (n=113) (n=1,020) contract amount) Percent that paid for bid bonds in 1993 68.9% 50.0% (n=103) (n=846) Percent that lost an opportunity to bid 35.6% 18.0% in 1993 because bond request was not (n=132) (n=1,196) processed in time Percent that were denied a bond at least 33.6% 20.8% once (n=143) (n=1,304) Percent that were required to hire a 10.7% 3.6% financial management firm, consulting (n=140) (n=1,271) firm, or CPA selected by the surety company Percent that were required to enter into 5.7% 2.4% an arrangement that gives the surety (n=140) (n=1,271) company the right to manage the job being bonded, even when the firm is not in default Percent that obtained their first bond 66.2% 50.8% after 1985 (n=145) (n=1,321) -------------------------------------------------------------------------------- \a Differences between the firms that had and had not used government programs are statistically significant. Note: The following characteristics were not significantly different for firms that had and had not used government programs: standard industrial classification; years of experience in construction; percentage of revenues in 1993 from bonded work; whether the firm had a preapproved bonding line and, if so, when it was first approved; whether the firm was required to provide collateral, establish an escrow account controlled by the surety company, or purchase insurance from the bonding agent in order to obtain a bond; and whether the firm perceived a tightening in the requirements to get a bond over the last 5 years. Table 3.9a Time Taken to Get First Request for Bond Approved for Firms That Received Their First Bond in 1990 or Later, by Size of Firm $500,001- All SBA Up to $3.5 Over $3.5 million small $500,000 million to SBA maximum firms Number of days (n=143) (n=161) (n=27) (n=331) ---------------------- ------------ ---------- ------------------ ---------- Up to 10 55.2% 49.1% 55.6% 52.3% 11-30 28.0% 29.2% 25.9% 28.4% More than 30 16.8% 21.7% 18.5% 19.3% -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are not statistically significant. Table 3.9b Time Taken to Get First Request for Bond Approved for Firms That Received Their First Bond in 1990 or Later, by Ethnicity of Owner Not owned by Owned by minority minority Number of days (n=39) (n=283) ---------------------------- ------------------ -------------------- Up to 10 46.2% 53.7% 11-30 28.2% 27.9% More than 30 25.6% 18.4% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. Table 3.9c Time Taken to Get First Request for Bond Approved for Firms That Received Their First Bond in 1990 or Later, by Gender of Owner Owned by women Not owned by women Number of days (n=38) (n=286) ---------------------------- ------------------ -------------------- Up to 10 44.7% 53.1% 11-30 34.2% 28.0% More than 30 21.1% 18.9% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. Table 3.10a Frequency With Which Firms Lost an Opportunity to Bid in 1993 Because Bond Request Was Not Processed in Time, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Frequency (n= 370) (n= 733) (n= 236) (n= 1,339) ------------------------ ------------ ---------- ---------------- ---------- Never 74.6% 80.5% 87.7% 80.1% 1-5 times 21.9% 16.2% 9.7% 16.7% 6-12 times 2.4% 2.0% 1.7% 2.1% More than 12 times 1.1% 1.2% \b 1.1% -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.10b Frequency With Which Firms Lost an Opportunity to Bid in 1993 Because Bond Request Was Not Processed in Time, by Ethnicity of Owner Not owned by Owned by minority minority Frequency (n=98) (n=1,225) ---------------------------- ------------------ -------------------- Never 56.1% 82.2% 1-5 times 36.7% 14.9% 6-12 times 5.1% 1.9% More than 12 times \b 1.0% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.10c Frequency With Which Firms Lost an Opportunity to Bid in 1993 Because Bond Request Was Not Processed in Time, by Gender of Owner Not owned by women Owned by women (n=1,1 Frequency (n=164) 60) ------------------------------------------ ------------------ ------ Never 77.4% 80.5% 1-5 times 17.7% 16.6% 6-12 times \b 2.1% More than 12 times 3.0% 0.9% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.11 Time Taken to Approve First Request for Bonds in 1993 for Firms That Lost an Opportunity to Bid on a Job Because of Delays in Processing a Bond Request Lost at least one Never lost an opportunity to bid opportunity to bid in 1993 in 1993 Number of days (n=23) (n=63) ---------------------------- ------------------ -------------------- Up to 10 26.1% 66.7% 11-30 52.2% 23.8% More than 30 21.7% 9.5% ---------------------------------------------------------------------- \a Differences in distribution are statistically significant. Table 3.12a Percentage of Firms Required to Provide Various Financial Information in Order to Get a Bond, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Requirement (n=407) (n=762) (n=242) (n=1,411) ------------------------ ------------ ---------- ---------------- ---------- Report of work on hand/ 72.2% 91.2% 95.9% 86.5% job status Personal financial 79.4% 89.5% 89.7% 86.6% statements Compilation of financial 72.5% 84.8% 84.7% 81.2% statements CPA review of financial 67.6% 82.4% 80.6% 77.8% statements Letters of credit/ 59.5% 68.8% 65.3% 65.5% bankers' acceptances Corporate tax returns 51.8% 69.3% 64% 63.4% Personal tax returns 58.2% 58.4% 49.2% 56.8% CPA audit of financial 44.5% 44.4% 65.7% 48.1% statements -------------------------------------------------------------------------------- \a Differences by size of firm are statistically significant. Table 3.12b Percentage of Firms Required to Provide Various Financial Information in Order to Get a Bond, by Ethnicity of Owner Not owned by Owned by minority minority Requirement (n=104) (n=1,296) ---------------------------- ------------------ -------------------- Report of work on hand/job 84.6% 86.7% status Personal financial 87.5% 86.6% statements Compilation of financial 81.7% 81.2% statements CPA review of financial 84.6% 77.4% statements Letters of credit/bankers' 63.5% 65.7% acceptances Corporate tax returns 71.2% 63% Personal tax returns\a 76% 55.5% CPA audit of financial 53.8% 47.6% statements ---------------------------------------------------------------------- \a Difference by ethnicity is statistically significant. Table 3.12c Percentage of Firms Required to Provide Various Financial Information in Order to Get a Bond, by Gender of Owner Owned by women Not owned by women Requirement (n=171) (n=1,230) ---------------------------- ------------------ -------------------- Report of work on hand/job 90.6% 86% status Personal financial 91.8% 85.9% statements\a Compilation of financial 82.5% 81% statements CPA review of financial 84.2% 76.9% statements\a Letters of credit/bankers' 71.3% 64.8% acceptances Corporate tax returns\a 71.3% 62.4% Personal tax returns 63.2% 55.9% CPA audit of financial 50.9% 47.6% statements ---------------------------------------------------------------------- \a Difference by gender is statistically significant. Table 3.13a Percentage of Firms Required to Provide Selected Financial Information More Than Once a Year, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small Requirement $500,000 million maximum firms ------------------------ ------------ ---------- ---------------- ---------- Report of work on hand/ 48.6% 66.3% 82.1% 67.6% job status\a (n\= 107)\b (n=415) (n= 179) (n= 701) Personal financial 20.2% 9.6% 9.1% 11.6% statements\a (n=178) (n=529) (n=186) (n=893) Compilation of financial 45.1% 41.9% 61.7% 46.6% statements\a (n=173) (n=523) (n=183) (n=879) CPA review of financial 27% 21.6% 27.7% 23.9% statements (n=174) (n=528) (n=177) (n=879) Letters of credit/ 15.8% 7.8% 3.9% 8.5% bankers' acceptances\a (n=114) (n=360) (n=127) (n=601) Corporate tax returns\a 8.4% 2.5% \c 3.4% (n=119) (n=398) (n=134) (n=651) Personal tax returns\a 10.5% \c 4.4% 3.4% (n=114) (n=320) (n=90) (n=524) CPA audit of financial 20.6% 12.9% 8.5% 13.3% statements\a (n=107) (n=241) (n=141) (n=489) -------------------------------------------------------------------------------- \a Differences by size of firm are statistically significant. \b "n" is the total number of firms required to provide the information monthly, quarterly, twice a year, or annually. \c This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.13b Percentage of Firms Required to Provide Selected Financial Information More Than Once a Year, by Ethnicity of Owner Not owned by Requirement Owned by minority minority ---------------------------- ------------------ -------------------- Report of work on hand/job 76.5% 66.9% status (n=51)\a (n=647) Personal financial 25% 10.4% statements\b (n=64) (n=823) Compilation of financial 65.2% 45.2% statements\b (n=66) (n=808) CPA review of financial 34.8% 23% statements\b (n=69) (n=805) Letters of credit/bankers' 18.4% 7.8% acceptances\b (n=38) (n=562) Corporate tax returns \c 3.2% (n=52) (n=596) Personal tax returns\b 11.3% 2.6% (n=53) (n=469) CPA audit of financial 29.3% 11.9% statements\b (n=41) (n=445) ---------------------------------------------------------------------- \a "n" is the total number of firms required to provide the information monthly, quarterly, twice a year, or annually. \b Difference by ethnicity is statistically significant. \c This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.13c Percentage of Firms Required to Provide Selected Financial Information More Than Once a Year, by Gender of Owner Requirement Owned by women Not owned by women ---------------------------- ------------------ -------------------- Report of work on hand/job 71.8% 67% status (n=78)\b (n=621) Personal financial 16.5% 10.6% statements (n=115) (n=772) Compilation of financial 49.5% 46% statements (n=103) (n=770) CPA review of financial 25.9% 23.6% statements (n=116) (n=757) Letters of credit/bankers' 9.9% 8.1% acceptances (n=81) (n=518) Corporate tax returns 5.5% 3.1% (n=91) (n=557) Personal tax returns 6.9% 2.7% (n=72) (n=448) CPA audit of financial 19.3% 12.1% statements (n=57) (n=428) ---------------------------------------------------------------------- \a Differences by gender are not statistically significant. \b "n" is the total number of firms required to provide the information monthly, quarterly, twice a year, or annually. Table 3.14a Amount of Collateral Required of Firms to Obtain a Bond, by Size of Firm $500,001- Over $3.5 All SBA Amount paid for Up to $3.5 million to SBA small performance and payment $500,000 million maximum firms bonds (n=416) (n=753) (n=242) (n=1,411) ------------------------ ------------ ---------- ---------------- ---------- Nothing 66.3% 76.1% 83.5% 74.5% 1-50% of contract amount 22.4% 18.6% 12.8% 18.7% 51-100% of contract 8.4% 3.9% 2.9% 5.0% amount More than 100% of 2.9% 1.5% \b 1.8% contract amount -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.14b Amount of Collateral Required of Firms to Obtain a Bond, by Ethnicity of Owner Not owned by Amount paid for performance Owned by minority minority and payment bonds (n=106) (n=1,292) ---------------------------- ------------------ -------------------- Nothing 63.2% 75.4% 1-50% of contract amount 23.6% 18.3% 51-100% of contract amount 12.3% 4.5% More than 100% of contract \b 1.9% amount ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.14c Amount of Collateral Required of Firms to Obtain a Bond, by Gender of Owner Amount paid for performance Owned by women Not owned by women and payment bonds (n=168) (n=1,230) ---------------------------- ------------------ -------------------- Nothing 71.4% 75.0% 1-50% of contract amount 21.4% 18.1% 51-100% of contract amount 5.4% 5.0% More than 100% of contract \b 1.8% amount ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.15a Percentage of Firms Asked to Meet Various Conditions to Obtain a Bond, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Condition (n=421) (n=759) (n=240) (n= 1,420) ------------------------ ------------ ---------- ---------------- ---------- Hire a financial 5.0% 4.1% 4.2% 4.4% management firm, consulting firm, or CPA selected by the surety company Establish an escrow 5.7% 2.2% 2.5% 3.3% account controlled by the surety company\a Enter into arrangement 3.3% 2.5% 2.5% 2.7% that gives the surety company the right to manage the job being bonded, even when the firm is not in default Purchase insurance from 26.8% 14.0% 4.2% 16.1% the bonding agent\a At least one of the 36.8% 20.0% 12.1% 23.7% above four conditions\a -------------------------------------------------------------------------------- \a Differences by size of firm are statistically significant. Table 3.15b Percentage of Firms Asked to Meet Various Conditions to Obtain a Bond, by Ethnicity of Owner Not owned by Owned by minority minority Condition (n=105) (n=1,303) ---------------------------- ------------------ -------------------- Hire a financial management 9.5% 3.9% firm, consulting firm, or CPA selected by the surety company\a Establish an escrow account 12.4% 2.6% controlled by the surety company\a Enter into arrangement that 7.6% 2.4% gives the surety company the right to manage the job being bonded, even when the firm is not in default\a Purchase insurance from the 21.9% 15.5% bonding agent At least one of the above 42.9% 21.9% four conditions\a ---------------------------------------------------------------------- \a Difference by ethnicity is statistically significant. Table 3.15c Percentage of Firms Asked to Meet Various Conditions to Obtain a Bond, by Gender of Owner Owned by women Not owned by women Condition (n=165) (n=1,242) ---------------------------- ------------------ -------------------- Hire a financial management 3.0% 4.5% firm, consulting firm, or CPA selected by the surety company Establish an escrow account 3.6% 3.2% controlled by the surety company Enter into arrangement that 2.4% 2.8% gives the surety company the right to manage the job being bonded, even when the firm is not in default Purchase insurance from the 16.4% 15.7% bonding agent At least one of the above 23.6% 23.2% four conditions ---------------------------------------------------------------------- \a Differences by gender are not statistically significant. Table 3.16a Frequency With Which Firms Had Been Denied Bonds Since 1990, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small Number of denials since $500,000 million maximum firms 1990 (n=439) (n=776) (n=245) (n=1,460) ------------------------ ------------ ---------- ---------------- ---------- None 82.0% 76.3% 82.0% 79.0% 1-5 13.9% 19.3% 13.9% 16.8% 6-12 3.4% 3.4% 3.7% 3.4% More than 12 \b 1.0% \b 0.8% -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.16b Frequency With Which Firms Had Been Denied Bonds Since 1990, by Ethnicity of Owner Not owned by Owned by minority minority Number of denials since 1990 (n=107) (n=1,339) ---------------------------- ------------------ -------------------- None 64.5% 80.1% 1-5 27.1% 16.1% 6-12 7.5% 3.1% More than 12 \b 0.8% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.16c Frequency With Which Firms Had Been Denied Bonds Since 1990, by Gender of Owner Owned by women Not owned by women Number of denials since 1990 (n=173) (n=1,273) ---------------------------- ------------------ -------------------- None 78.0% 79.2% 1-5 16.2% 16.8% 6-12 4.6% 3.2% More than 12 \b 0.8% ---------------------------------------------------------------------- \a Differences in distribution by gender are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.17a Percentage of Firms Reporting Various Reasons Why They Were Last Denied a Bond, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Reason\a (n=70) (n=159) (n=41) (n=270) ------------------------ ------------ ---------- ---------------- ---------- Firm's financial status 71.4% 64.8% 65.9% 66.7% not good enough (net worth, operating capital, etc.) Firm had never done that 28.6% 28.9% 31.7% 29.3% large a job, never worked in that location before, or never done that kind of work Not enough time to 22.9% 13.8% 9.8% 15.6% process the bond Firm had not done enough 24.3% 11.3% \c 13.7% bonded work\b No more bonds until 11.4% 12.6% 19.5% 13.3% current work completed Firm not in business 20.0% 8.2% \c 10.4% long enough\b Surety company did not 11.4% 8.8% 0% 8.1% want to bond subcontractors Size of bond requested 7.1% 6.9% 9.8% 7.4% would have required a change in surety company No bonds until claims 5.7% 5.7% 12.2% 6.7% against firm or legal disputes were resolved Firm chose not to make 5.7% 5.7% 9.8% 6.3% changes in business practices or meet other conditions required by surety Firm could not obtain 11.4% 4.4% \c 5.9% government guarantee of bond (SBA, DOT, etc.) Firm's key people were 5.7% \c \c 2.2% not experienced enough Firm had defaulted on a 0% 0% \c \c previous job Other reasons 10.0% 13.2% 14.6% 12.6% Reasons given were not 12.9% 8.2% 7.3% 9.3% clear or understandable No reason given for 0% 0% 0% 0% denial\d -------------------------------------------------------------------------------- \a Reasons for last denials prior to 1990 are not included. \b Differences by size of firm are statistically significant. \c This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. \d Some respondents who reported a reason or said the reasons given were not clear or understandable also said no reasons were given. We did not include these respondents in this category. Table 3.17b Percentage of Firms Reporting Various Reasons Why They Were Last Denied a Bond, by Ethnicity of Owner Not owned by Owned by minority minority Reason\a (n=35) (n=234) ---------------------------- ------------------ -------------------- Firm's financial status not 68.6% 66.2% good enough (net worth, operating capital, etc.) Firm had never done that 37.1% 28.2% large a job, never worked in that location before, or never done that kind of work Not enough time to process 17.1% 15.4% the bond Firm had not done enough 11.4% 13.7% bonded work No more bonds until current 31.4% 10.3% work completed\b Firm not in business long 17.1% 9.4% enough Surety company did not want 14.3% 7.3% to bond subcontractors Size of bond requested would 11.4% 6.8% have required a change in surety company No more bonds until claims 14.3% 5.6% against firm or legal disputes were resolved Firm chose not to make \c 6.4% changes in business practices or meet other conditions required by surety Firm could not obtain 14.3% 4.7% government guarantee or bond (SBA, DOT, etc.)\b Firm's key people were not 0% 2.6% experienced enough Firm had defaulted on a 0% \c previous job Other reasons \c 13.7% Reasons given were not clear 20.0% 7.7% or understandable\b No reason given for denial\d 0% 0% ---------------------------------------------------------------------- \a Reasons for last denials prior to 1990 are not included. \b Difference by ethnicity is statistically significant. \c This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. \d Some respondents who reported a reason or said the reasons given were not clear or understandable also said no reasons were given. We did not include these respondents in this category. Table 3.17c Percentage of Firms Reporting Various Reasons Why They Were Last Denied a Bond, by Gender of Owner Owned by women Not owned by women Reason\a (n=34) (n=234) ---------------------------- ------------------ -------------------- Firm's financial status not 73.5% 65.8% good enough (net worth, operating capital, etc.) Firm had never done that 32.4% 28.6% large a job, never worked in that location before, or never done that kind of work Not enough time to process 14.7% 15.8% the bond Firm had not done enough \b 15.0% bonded work No more bonds until current 17.6% 12.8% work completed Firm not in business long \b 10.3% enough Surety company did not want \b 8.5% to bond subcontractors Size of bond requested would 0% 7.7% have required a change in surety company No bonds until claims \b 6.4% against firm or legal disputes were resolved Firm chose not to make 14.7% 5.1% changes in business practices or meet other conditions required by surety\c Firm could not obtain \b 6.0% government guarantee of bond (SBA, DOT, etc.) Firm's key people were not \b 2.1% experienced enough Firm had defaulted on a 0% \b previous job Other reasons \b 14.1% Reasons given were not clear \b 10.3% or understandable No reason given for denial\d 0% 0% ---------------------------------------------------------------------- \a Reasons for last denials prior to 1990 are not included. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. \c Difference by gender is statistically significant. \d Some respondents who reported a reason or said the reasons given were not clear or understandable also said no reasons were given. We did not include these respondents in this category. Table 3.18a Percentage of Firms That Were Given Oral or Written Reasons for Their Most Recent Bond Denial After 1989, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Type of reason given (n=70) (n=159) (n=41) (n=270) ------------------------ ------------ ---------- ---------------- ---------- Oral reasons only 78.6% 86.2% 92.7% 85.2% At least one written 21.4% 13.8% \b 14.8% response -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.18b Percentage of Firms That Were Given Oral or Written Reasons for Their Most Recent Bond Denial After 1989, by Ethnicity of Owner Not owned by Owned by minority minority Type of reason given (n=35) (n=234) ---------------------------- ------------------ -------------------- Oral reasons only 68.6% 87.6% At least one written 31.4% 12.4% response ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are statistically significant. Table 3.18c Percentage of Firms That Were Given Oral or Written Reasons for Their Most Recent Bond Denial After 1989, by Gender of Owner Owned by women Not owned by women Type of reason given (n=34) (n=234) ---------------------------- ------------------ -------------------- Oral reasons only 73.5% 86.8% At least one written 26.5% 13.2% response ---------------------------------------------------------------------- \a Differences in distribution by gender are statistically significant. Table 3.19a Time Taken to Deny Last Bond Request for Firms, by Size of Firm $500,001- Over $3.5 All SBA Number of days to get Up to $3.5 million to SBA small last bond denial in 1990 $500,000 million maximum firms or later (n=53) (n=110) (n=30) (n=193) ------------------------ ------------ ---------- ---------------- ---------- Up to 10 62.3% 63.6% 60.0% 62.7% 11-30 28.3% 30.0% 33.3% 30.1% More than 30 9.4% 6.4% \b 7.3% -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.19b Time Taken to Deny Last Bond Request for Firms, by Ethnicity of Owner Not owned by Number of days to get last Owned by minority minority bond denial in 1990 or later (n=24) (n=168) ---------------------------- ------------------ -------------------- Up to 10 37.5% 66.1% 11-30 45.8% 28.0% More than 30 16.7% 6.0% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are statistically significant. Table 3.19c Time Taken to Deny Last Bond Request for Firms, by Gender of Owner Number of days to get last Owned by women Not owned by women bond denial in 1990 or later (n=24) (n=167) ---------------------------- ------------------ -------------------- Up to 10 58.3% 64.1% 11-30 20.8% 30.5% More than 30 20.8% 5.4% ---------------------------------------------------------------------- \a Differences in distribution by gender are statistically significant. Table 3.20 Time Taken for Most Recent Denial in 1993 for Firms That Lost an Opportunity to Bid on a Job Because of Delays in Processing a Bond Request Lost at least one Never lost an opportunity to bid opportunity to bid in 1993 in 1993 Number of days (n=61) (n=33) ------------------------------ ------------------ ------------------ Up to 10 59.0% 72.7% 11-30 34.4% 21.2% More than 30 6.6% \b ---------------------------------------------------------------------- \a Differences in distribution are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.21a Changes in Bonding Requirements Over the Last 5 Years, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Change reported (n=383) (n=726) (n=237) (n=1,346) ------------------------ ------------ ---------- ---------------- ---------- Requirements relaxed 11.7% 13.6% 16.5% 13.6% Requirements tightened 39.4% 46.3% 41.4% 43.5% Requirements stayed 48.8% 40.1% 42.2% 42.9% about the same -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. Table 3.21b Changes in Bonding Requirements Over the Last 5 Years, by Ethnicity of Owner Not owned by Owned by minority minority Change reported (n=101) (n=1,232) ---------------------------- ------------------ -------------------- Requirements relaxed 16.8% 13.2% Requirements tightened 54.5% 42.7% Requirements stayed about 28.7% 44.1% the same ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are statistically significant. Table 3.21c Changes in Bonding Requirements Over the Last 5 Years, by Gender of Owner Owned by women Not owned by women Change reported (n=162) (n=1,171) ---------------------------- ------------------ -------------------- Requirements relaxed 13.6% 13.6% Requirements tightened 41.4% 43.6% Requirements stayed about 45.1% 42.8% the same ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. Table 3.22a Percentage of Firms Reporting Various Reasons Given by Agents, Brokers, and Surety Companies to Explain Why They Tightened up Requirements for Bonds, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Reason given (n=149) (n=334) (n=98) (n=581) ------------------------ ------------ ---------- ---------------- ---------- Firm requested increase 12.1% 19.5% 17.3% 17.2% in capacity Firm's financial 31.5% 39.8% 28.6% 35.8% strength declined (less net worth, less collateral, diversion of profits to other business activities, etc.) Firm's key personnel \b 4.2% 4.1% 3.3% changed Surety company's policy 37.6% 38.9% 42.9% 39.2% changed New surety agent or 14.8% 15.6% 16.3% 15.5% company used General economic 44.3% 49.4% 49.0% 48.0% conditions or new government regulations Other reasons 3.4% 6.3% 8.2% 5.9% Reasons given to firm by 9.4% 6.6% 5.1% 7.1% agent or broker not clear No reasons given to firm 6.7% 3.9% \b 4.1% by agent or broker -------------------------------------------------------------------------------- \a Differences by size of firm are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.22b Percentage of Firms Reporting Various Reasons Given by Agents, Brokers, and Surety Companies to Explain Why They Tightened up Requirements for Bonds, by Ethnicity of Owner Not owned by Owned by minority minority Reason given (n=55) (n=522) ---------------------------- ------------------ -------------------- Firm requested increase in 23.6% 16.7% capacity Firm's financial strength 58.2% 33.7% declined (less net worth, less collateral, diversion of profits to other business activities, etc.)\a Firm's key personnel changed \b 3.3% Surety company's policy 30.9% 40.0% changed New surety agent or company 16.4% 15.5% used General economic conditions 29.1% 50.0% or new government regulations\a Other reasons \b 6.3% Reasons given to firm by 16.4% 6.1% agent or broker not clear\a No reasons given to firm by \b 3.6% agent or broker ---------------------------------------------------------------------- \a Difference by ethnicity is statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.22c Percentage of Firms Reporting Various Reasons Given by Agents, Brokers, and Surety Companies to Explain Why They Tightened up Requirements for Bonds, by Gender of Owner Owned by women Not owned by women Reason given (n=67) (n=507) -------------------------------------- ------------------ -------------------- Firm requested increase in capacity 16.4% 17.6% Firm's financial strength declined 37.3% 35.9% (less net worth, less collateral, diversion of profits to other business activities, etc.) Firm's key personnel changed \a 3.2% Surety company's policy changed 38.8% 39.3% New surety agent or company used 13.4% 16.0% General economic conditions or new 46.3% 48.1% government regulations Other reasons 7.5% 5.7% Reasons given to firm by agent or 16.4% 5.9% broker not clear\b No reasons given to firm by agent or \a 3.9% broker -------------------------------------------------------------------------------- \a This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. \b Difference by gender is statistically significant. Table 3.23a Percentage of Firms Paying Various Types of Fees for Bid Bonds in 1993, by Size of Firm Type of fee paid ---------------- ------ ------ ------ ------ ------ ------ ------ ------ No fee\b 25.5% 48.6% 70.5% 48.2% Percentage of 24.0% 15.4% 13.0% 16.7% contract amount\b Up to 2.5%\b 38.0% 51.8% 73.1% 50.9% More than 2.5% 62.0% 48.2% 26.9% 49.1% Flat fee for 36.1% 30.4% 25.5% 30.6% each bid bond\c Up to $200\c 82.7% 84.1% 94.1% 85.5% Over $200 17.3% 15.9% 5.9% 14.5% Annual service 21.2% 16.5% 8.0% 15.7% fee\b Up to $200\c 77.3% 66.3% 68.8% 69.8% Over $200 22.7% 33.7% 31.3% 30.2% -------------------------------------------------------------------------------- \a Column totals exceed 100 percent because some firms paid more than one type of fee. \b Difference in distribution by size of firm is statistically significant. \c Difference in distribution by size of firm is not statistically significant. Table 3.23b Percentage of Firms Paying Various Types of Fees for Bid Bonds in 1993, by Ethnicity of Owner Type of fee paid -------------------------------------- ------ ------ ------ ------ No fee 40.7% 49.0% Percentage of contract amount 16.9% 16.7% Up to 2.5% 60.0% 50.3% More than 2.5% 40.0% 49.7% Flat fee for each bid bond 33.9% 30.4% Up to $200 80.0% 85.8% Over $200 20.0% 14.2% Annual service fee 16.9% 15.5% Up to $200 60.0% 70.1% Over $200 40.0% 29.9% ---------------------------------------------------------------------- \a Column totals exceed 100 percent because some firms paid more than one type of fee. \b Differences by ethnicity are not statistically significant. Table 3.23c Percentage of Firms Paying Various Types of Fees for Bid Bonds in 1993, by Gender of Owner Type of fee paid ------------------------------ -------- -------- -------- -------- No fee\b 44.2% 49.1% Percentage of contract 13.3% 17.3% amount\b Up to 2.5%\c 62.5% 50.0% More than 2.5% 37.5% 50.0% Flat fee for each bid bond\d 4 0.8% 28.9% Up to $200\c 93.9% 83.5% Over $200 \e 16.5% Annual service fee\b 1 5.8% 15.6% Up to $200\c 68.4% 70.3% Over $200 31.6% 29.7% ---------------------------------------------------------------------- \a Column totals exceed 100 percent because some firms paid more than one type of fee. \b Difference by gender is not statistically significant. \c Differences in distribution by gender are not statistically significant. \d Difference by gender is statistically significant. \e This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.24a Average Fee (Percentage of Contract) Paid in 1993 for Performance and Payment Bonds for Contracts up to $100,000, by Size of Firm $500,001- All SBA Up to $3.5 Over $3.5 million small $500,000 million to SBA maximum firms (n=265) (n=653) (n=222) (n=1,140) ---------------------- ------------ ---------- ------------------ ---------- Average fee 3.47% 2.31% 1.60% 2.44% (+/-0.39) (+/-0.14) (+/-0.14) (+/-0.13) -------------------------------------------------------------------------------- \a Differences by size of firm are statistically significant. Table 3.24b Average Fee (Percentage of Contract) Paid in 1993 for Performance and Payment Bonds for Contracts up to $100,000, by Ethnicity of Owner Not owned by Owned by minority minority (n=77) (n=1,053) ---------------------------- ------------------ -------------------- Average fee 2.70% 2.42% (+/-0.77) (+/-0.13) ---------------------------------------------------------------------- \a Difference by ethnicity is not statistically significant. Table 3.24c Average Fee (Percentage of Contract) Paid in 1993 for Performance and Payment Bonds for Contracts up to $100,000, by Gender of Owner Owned by women Not owned by women (n=136) (n=993) ---------------------------- ------------------ -------------------- Average fee 2.07% 2.45% (+/-0.17) (+/-0.14) ---------------------------------------------------------------------- \a Difference by gender is statistically significant. Table 3.25 Fees Paid in 1993 for Bid, Performance, and Payment Bonds, by Standard Industrial Classification Special Building trade 1993 fee construction Heavy construction construction -------------------------- ------------------ ------------------ ------------ Percentage of firms that 44.4% 41.7% 59.1% paid for bid bonds\a (n=248) (n=180) (n=513) Average fee paid for first 2.15 2.06 2.67 $100,000 of contract (+/-0.18) (+/-0.26) (+/-0.20) amount for performance (n=275) (n=191) (n=666) and payment bonds, expressed as a percentage of contract amount\a -------------------------------------------------------------------------------- \a Differences between the special trade construction and the other firms are statistically significant. Table 3.26a Average Fee (Percentage of Contract) Paid in 1993 for Performance and Payment Bonds for Contracts up to $100,000, by Size of Firm, Standard Industrial Classification, and Ethnicity of Owner Not owned by Average revenues of firm Owned by minority minority ------------------------------ ------------------ ------------------ Up to $500,000 ---------------------------------------------------------------------- Building and heavy 2.81% 3.47% construction contractors (+/-0.50) (+/-0.86) (n=10) (n=59) Special trade contractors 4.28% 3.42% (+/-3.45) (+/-0.41) (n=17) (n=174) $500,001-$3.5 million Building and heavy 2.13% 2.09% construction contractors (+/-0.36) (+/-0.13) (n=16) (n=239) Special trade contractors 2.55% 2.45% (+/-1.18) (+/-0.23) (n=16) (n=373) Over $3.5 million to SBA maximum Building and heavy 1.59% 1.53% construction contractors (+/-0.47) (+/-0.20) (n=11) (n=129) Special trade contractors 2.02% 1.69% (+/-0.82) (+/-0.24) (n=6) (n=72) ---------------------------------------------------------------------- \a Differences by ethnicity are not statistically significant. Table 3.26b Average Fee (Percentage of Contract) Paid in 1993 for Performance and Payment Bonds for Contracts up to $100,000, by Size of Firm, Standard Industrial Classification, and Gender of Owner Average revenues of firm Owned by women Not owned by women ---------------------------- ------------------ -------------------- Up to $500,000 ---------------------------------------------------------------------- Building and heavy 1.92% 3.70% construction contractors\a (+/-0.55) (+/-0.87) (n=13) (n=57) Special trade contractors\a 2.63% 3.44% (+/-0.51) (+/-0.43) (n=24) (n=163) $500,001-$3.5 million Building and heavy 1.95% 2.10% construction contractors (+/-0.32) (+/-0.14) (n=25) (n=230) Special trade contractors 2.03% 2.52% (+/-0.28) (+/-0.26) (n=55) (n=335) Over $3.5 million to SBA maximum Building and heavy 1.64% 1.53% construction contractors (+/-0.45) (+/-0.21) (n=14) (n=127) Special trade contractors 1.92% 1.70% (+/-1.15) (+/-0.24) (n=5) (n=73) ---------------------------------------------------------------------- \a Difference by gender is statistically significant. Table 3.27a Percentage of 1993 Construction Revenues Covered by Bonds for Firms, by Size of Firm $500,001- Over $3.5 All SBA Percentage of 1993 Up to $3.5 million to SBA small revenues from bonded $500,000 million maximum firms work (n=404) (n=755) (n=232) (n=1,391) ------------------------ ------------ ---------- ---------------- ---------- Average 24.2% 32.4% 48.7% 32.8% (+/-3.14) (+/-2.41) (+/-4.47) (+/-1.81) Distribution -------------------------------------------------------------------------------- 0% 35.6% 18.0% 5.6% 21.1% 1-19% 24.0% 29.9% 21.1% 26.7% 20-39% 12.6% 17.0% 16.8% 15.7% 40-59% 10.9% 10.3% 13.8% 11.1% 60-79% 5.2% 7.5% 12.9% 7.8% 80-99% 5.2% 11.9% 22.8% 11.8% 100% 6.4% 5.3% 6.9% 5.9% -------------------------------------------------------------------------------- \a Differences among averages and distributions by size of firm are statistically significant. Table 3.27b Percentage of 1993 Construction Revenues Covered by Bonds for Firms, by Ethnicity of Owner Not owned by Percentage of 1993 revenues Owned by minority minority from bonded work (n=104) (n=1,273) ---------------------------- ------------------ -------------------- Average 41.5% 32.2% (+/-7.38) (+/-1.87) Distribution ---------------------------------------------------------------------- 0% 20.2% 21.2% 1-19% 21.2% 27.0% 20-39% 10.6% 16.0% 40-59% 8.7% 11.2% 60-79% 9.6% 7.7% 80-99% 20.2% 11.2% 100% 9.6% 5.6% ---------------------------------------------------------------------- \a Differences in averages and distributions by ethnicity are statistically significant. Table 3.27c Percentage of 1993 Construction Revenues Covered by Bonds for Firms, by Gender of Owner Percentage of 1993 revenues Owned by women Not owned by women from bonded work (n=165) (n=1,212) ---------------------------- ------------------ -------------------- Average 35.7% 32.5% (+/-5.57) (+/-1.92) Distribution ---------------------------------------------------------------------- 0% 23.0% 20.9% 1-19% 23.0% 26.9% 20-39% 12.1% 16.3% 40-59% 10.9% 11.1% 60-79% 9.7% 7.6% 80-99% 13.9% 11.6% 100% 7.3% 5.7% ---------------------------------------------------------------------- \a Differences in averages and distributions by gender are not statistically significant. Table 3.28 Percentage of 1993 Construction Revenues Covered by Bonds for Firms, by Standard Industrial Classification Average percent of revenues Standard industrial classification \a ---------------------------------------- ---------------------------- Building construction 39.80% (t/-3.95) (n=317) Heavy construction 49.45% (+/-5.07) (n=225) Special trade construction 25.5% (+/-2.05) (n=840) ---------------------------------------------------------------------- \a Differences among firms by standard industrial classification are statistically significant. Table 3.29a Bonding Capacity (Largest Bond) of Firms, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small Year $500,000 million maximum firms ------------------------ ------------ ---------- ---------------- ---------- 1990 (n=169) (n=399) (n=165) (n=733) Average\a $244,772 $3,084,024 (+/- $1,530,272 (+/-507,530) $1,583,641 101,773) (+/- (+/- 1,474,802) 813,703) Distribution\b Under $100,000 42.6% 14.0% \c 17.6% $100,000-$499,999 46.2% 36.8% 10.3% 33.0% $500,000-$999,999 5.9% 23.3% 13.3% 17.1% $1,000,000 and over 5.3% 25.8% 75.8% 32.3% 1991 (n=156) (n=391) (n=165) (n=712) Average\a \c \c $3,054,305 (+/-510,976) $1,686,225 (+/- 861,026) Distribution\b Under $100,000 41.0% 15.6% 1.8% 18.0% $100,000-$499,999 47.4% 35.5% 6.1% 31.3% $500,000-$999,999 5.8% 22.3% 14.5% 16.9% $1,000,000 and over 5.8% 26.6% 77.6% 33.8% 1992 (n=187) (n=423) (n=179) (n=789) Average\a \c $3,377,315 $1,468,204 (+/-579,808) $1,668,616 (+/- (+/- 1,389,801) 769,581) Distribution\b Under $100,000 45.5% 13.2% 2.8% 18.5% $100,000-$499,999 45.5% 36.6% 9.5% 32.6% $500,000-$999,999 3.7% 21.7% 11.7% 15.2% $1,000,000 and over 5.3% 28.4% 76.0% 33.7% 1993 (n=268) (n=617) (n=231) (n=1,116) Average\a,d $276,439 $3,782,612 (+/-79,271) $1,254,340 (+/-646,869) $1,542,829 (+/- (+/- 953,794) 548,778) Distribution\b Under $100,000 46.6% 16.7% 2.6% 21.0% $100,000-$499,999 40.7% 35.8% 12.6% 32.2% $500,000-$999,999 5.6% 19.9% 10.8% 14.6% $1,000,000 and over 7.1% 27.6% 74.0% 32.3% -------------------------------------------------------------------------------- \a Difference between the smallest firms and the firms with average revenues over $3.5 million is statistically significant. \b Differences in distribution by size of firm are statistically significant. \c This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. \d Difference between the medium-size firms and the firms with average revenues over $3.5 million is statistically significant. Table 3.29b Bonding Capacity (Largest Bond) of Firms, by Ethnicity of Owner Not owned by Year Owned by minority minority ---------------------------- ------------------ -------------------- 1990 (n=61) (n=667) Average $849,431 $1,659,863 (+/-399,956) (+/-893,357) Distribution Under $100,000 23.0% 17.1% $100,000-$499,999 31.1% 33.3% $500,000-$999,999 23.0% 16.2% $1,000,000 and over 23.0% 33.4% 1991 (n=55) (n=654) Average $764,952 1,770,596 (+/-$ 397,536) (+/-936,604) Distribution Under $100,000 16.4% 17.9% $100,000-$499,999 43.6% 30.4% $500,000-$999,999 18.2% 16.7% $1,000,000 and over 21.8% 35.0% 1992 (n=65) (n=721) Average $852,494 $1,748,304 (+/-339,966) (+/-841,446) Distribution Under $100,000 20.0% 18.2% $100,000-$499,999 32.3% 32.7% $500,000-$999,999 20.0% 14.7% $1,000,000 and over 27.7% 34.4% 1993 (n=79) (n=1,028) Average $1,064,159 $1,587,168 (+/-318,259) (+/-595,175) Distribution Under $100,000 15.2% 21.4% $100,000-$499,999 34.2% 31.9% $500,000-$999,999 12.7% 14.7% $1,000,000 and over 38.0% 32.0% ---------------------------------------------------------------------- \a Differences by ethnicity are not statistically significant. Table 3.29c Bonding Capacity (Largest Bond) of Firms, by Gender of Owner Year Owned by women Not owned by women ---------------------------- ------------------ -------------------- 1990 (n=82) (n=644) Average $769,633 $1,702,718 (+/-285,499) (+/-925,168) Distribution Under $100,000 13.4% 17.9% $100,000-$499,999 39.0% 32.1% $500,000-$999,999 23.2% 16.3% $1,000,000 and over 24.4% 33.7% 1991 (n=82) (n=624) Average $788,748 1,818,766 (+/-$ 295,654) (+/-981,354) Distribution Under $100,000 19.5% 17.6% $100,000-$499,999 36.6% 30.4% $500,000-$999,999 18.3% 16.7% $1,000,000 and over 25.6% 35.3% 1992 (n=97) (n=685) Average $824,472 1,803,605 (+/-$ 264,334) (+/-885,289) Distribution Under $100,000 23.7% 17.5% $100,000-$499,999 33.0% 32.4% $500,000-$999,999 11.3% 15.8% $1,000,000 and over 32.0% 34.3% 1993 (n=139) (n=968) Average $975,626 $1,633,218 (+/-249,112) (+/-631,483) Distribution Under $100,000 18.0% 21.3% $100,000-$499,999 36.0% 31.5% $500,000-$999,999 15.8% 14.5% $1,000,000 and over 30.2% 32.7% ---------------------------------------------------------------------- \a Differences by gender are not statistically significant. Table 3.30a Bonding Capacity (Total Program) of Firms, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small Year $500,000 million maximum firms ------------------------ ------------ ---------- ---------------- ---------- 1990 (n=186) (n=436) (n=172) (n=794) Average\a $305,807 $6,874,462 (+/-99,008) $2,978,835 (+/-1,197,281) $3,196,549 (+/- (+/- 2,709,313) 1,517,353) Distribution\b Under $100,000 39.8% 7.8% 0.0% 13.6% $100,000-$499,999 38.7% 26.8% 3.5% 24.6% $500,000-$999,999 12.4% 17.9% 5.8% 14.0% $1,000,000 and over 9.1% 47.5% 90.7% 47.9% 1991 (n=172) (n=429) (n=171) (n=772) Average\a $7,004,657 \d $2,872,090 (+/-1,257,766) $3,349,015 (+/- (+/- 2,747,826) 1,578,856) Distribution\b Under $100,000 36.6% 7.5% \d 12.4% $100,000-$499,999 41.9% 24.2% 2.3% 23.3% $500,000-$999,999 12.2% 18.9% 4.7% 14.2% $1,000,000 and over 9.3% 49.4% 92.4% 50.0% 1992 (n=206) (n=462) (n=181) (n=849) Average\a,c $7,636,781 \d $2,862,378 (+/-1,451,977) $3,587,826 (+/- (+/- 2,548,947) 1,504,098) Distribution\b Under $100,000 38.8% 6.5% \d 13.2% $100,000-$499,999 41.3% 22.9% 3.9% 23.3% $500,000-$999,999 11.2% 19.5% 3.9% 14.1% $1,000,000 and over 8.7% 51.1% 91.2% 49.4% 1993 (n=279) (n=634) (n=231) (n=1,144) Average\a,c $367,208 $7,903,661 (+/- $2,394,450 (+/-1,508,042) $3,012,481 104,196) (+/- (+/- 1,858,457) 1,084,334) Distribution\b Under $100,000 41.6% 10.6% 1.7% 16.3% $100,000-$499,999 39.8% 24.3% 9.1% 25.0% $500,000-$999,999 8.2% 18.8% 5.2% 13.5% $1,000,000 and over 10.4% 46.4% 84.0% 45.2% -------------------------------------------------------------------------------- \a Difference between the smallest firms and the firms with average revenues over $3.5 million is statistically significant. \b Differences in distribution by size of firm are statistically significant. \c Difference between the medium-size firms and the firms with average revenues over $3.5 million is statistically significant. \d This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.30b Bonding Capacity (Total Program) of Firms, by Ethnicity of Owner Not owned by Year Owned by minority minority ---------------------------- ------------------ -------------------- 1990 (n=64) (n=725) Average\a $1,596,537 $3,355,471 (+/-685,669) (+/-1,660,340) Distribution\b Under $100,000 23.4% 12.7% $100,000-$499,999 23.4% 24.7% $500,000-$999,999 12.5% 13.9% $1,000,000 and over 40.6% 48.7% 1991 (n=57) (n=712) Average\a $1,625,849 $3,500,304 (+/-727,110) (+/-1,710,589) Distribution\c Under $100,000 14.0% 12.1% $100,000-$499,999 36.8% 22.3% $500,000-$999,999 7.0% 14.7% $1,000,000 and over 42.1% 50.8% 1992 (n=65) (n=781) Average\a $1,820,176 $3,747,957 (+/-673,358) (+/-1,633,734) Distribution\b Under $100,000 13.8% 12.9% $100,000-$499,999 27.7% 23.0% $500,000-$999,999 15.4% 14.0% $1,000,000 and over 43.1% 50.1% 1993 (n=79) (n=1,056) Average\a $2,290,703 $3,086,073 (+/-735,083) (+/-1,173,345) Distribution\b Under $100,000 10.1% 16.8% $100,000-$499,999 26.6% 24.8% $500,000-$999,999 16.5% 13.1% $1,000,000 and over 46.8% 45.4% ---------------------------------------------------------------------- \a Difference by ethnicity is not statistically significant. \b Differences in distribution by ethnicity are not statistically significant. \c Differences in distribution by ethnicity are statistically significant. Table 3.30c Bonding Capacity (Total Program) of Firms, by Gender of Owner Year Owned by women Not owned by women ---------------------------- ------------------ -------------------- 1990 (n=89) (n=698) Average $1,835,467 $3,400,364 (+/-667,287) (+/-1,723,579) Distribution Under $100,000 12.4% 13.5% $100,000-$499,999 27.0% 24.1% $500,000-$999,999 18.0% 13.5% $1,000,000 and over 42.7% 49.0% 1991 (n=88) (n=678) Average $1,878,362 $3,568,052 (+/-682,772) (+/-1,795,146) Distribution Under $100,000 14.8% 11.9% $100,000-$499,999 23.9% 23.0% $500,000-$999,999 19.3% 13.6% $1,000,000 and over 42.0% 51.5% 1992 (n=101) (n=741) Average $1,911,529 $3,848,725 (+/-630,798) (+/-1,720,538) Distribution Under $100,000 16.8% 12.4% $100,000-$499,999 23.8% 23.1% $500,000-$999,999 16.8% 13.8% $1,000,000 and over 42.6% 50.7% 1993 (n=139) (n=996) Average $1,896,534 $3,190,191 (+/-507,795) (+/-1,243,116) Distribution Under $100,000 12.2% 16.8% $100,000-$499,999 29.5% 24.2% $500,000-$999,999 15.1% 13.3% $1,000,000 and over 43.2% 45.8% ---------------------------------------------------------------------- \a Differences in averages and distributions by gender are not statistically significant. Table 3.31a Average Growth in Bonding Capacity From 1990 to 1993, by Size of Firm Over $3.5 All SBA Up to $500,001- million to SBA small $500,000 $3.5 million maximum firms ------------------------ ---------- ------------ ---------------- ---------- Dollar growth in largest \c $152,352 $1,168,330 $402,590 bond\a (n=115) (+/- (+/-631,966) (+/- 66,655) (n=162) 173,805) (n=348) (n=625) Dollar growth in total \c \c $2,191,473 $612,110 program\a,b (n=133) (n=385) (+/-1,089,960) (+/- (n=169) 297,040) (n=687) 1993/1990 ratio for 2.33 1.94 1.63 1.93 largest bond (+/- (+/-0.26) (+/-0.22) (+/-0.3) 1.40) (n=348) (n=162) (n= 625) (n=115) 1993/1990 ratio for 2.09 2.26 1.55 2.05 total program (+/- (+/-1.03) (+/-0.24) (+/- 1.15) (n=385) (n=169) 0.62) (n=133) (n= 687) -------------------------------------------------------------------------------- \a Difference between the smallest firms and the firms with revenues over $3.5 million is statistically significant. \b Difference between the medium-size firms and the firms with revenues over $3.5 million is statistically significant. \c This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.31b Average Growth in Bonding Capacity From 1990 to 1993 for Firms, by Ethnicity of Owner Not owned by Owned by minority minority ---------------------------- ------------------ -------------------- Dollar growth in largest \b $421,468 bond (n=48) (+/-188,918) (n=572) Dollar growth in total \b $618,718 program (n=48) (+/-318,581) (n=634) 1993/1990 ratio for largest 4.22 1.75 bond (+/-3.41) (+/-0.16) (n=48) (n=572) 1993/1990 ratio for total 3.56 1.95 program (+/-3.20) (+/-0.63) (n=48) (n=634) ---------------------------------------------------------------------- \a Differences by ethnicity are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.31c Average Growth in Bonding Capacity From 1990 to 1993 for Firms, by Gender of Owner Owned by women Not owned by women ---------------------------- ------------------ -------------------- Dollar growth in largest $450,404 $400,337 bond (+/-223,207) (+/-195,594) (n=69) (n=550) Dollar growth in total $578,931 $621,689 program (+/-283,895) (+/-334,980) (n=75) (n=606) 1993/1990 ratio for largest 2.31 1.76 bond (+/-0.79) (+/-0.18) (n=69) (n=550) 1993/1990 ratio for total \b 1.64 program (n=75) (+/-0.15) (n=606) ---------------------------------------------------------------------- \a Differences by gender are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 3.32a Distribution of Change in Bonding Capacity (Largest Bond) From 1990 to 1993 for Firms, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Distribution (n=115) (n=348) (n=162) (n=625) ------------------------ ---------- ------------ ---------------- ---------- Decrease in largest bond 13.0% 19.3% 18.5% 17.9% capacity No change in largest 54.8% 35.3% 29.6% 37.4% bond capacity Increase in largest bond 32.2% 45.4% 51.9% 44.6% capacity -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. Table 3.32b Distribution of Change in Bonding Capacity (Largest Bond) From 1990 to 1993 for Firms, by Ethnicity of Owner Not owned by Owned by minority minority Distribution (n=48) (n=572) ---------------------------- ------------------ -------------------- Decrease in largest bond 18.8% 17.7% capacity No change in largest bond 25.0% 38.3% capacity Increase in largest bond 56.3% 44.1% capacity ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. Table 3.32c Distribution of Change in Bonding Capacity (Largest Bond) From 1990 to 1993 for Firms, by Gender of Owner Owned by women Not owned by women Distribution (n=69) (n=550) ---------------------------- ------------------ -------------------- Decrease in largest bond 14.5% 18.5% capacity No change in largest bond 31.9% 37.8% capacity Increase in largest bond 53.6% 43.6% capacity ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. Table 3.33a Distribution of Change in Bonding Capacity (Total Program) From 1990 to 1993 for Firms, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Distribution (n=133) (n=385) (n=169) (n=687) ------------------------ ---------- ------------ ---------------- ---------- Decrease in total bond 12.0% 14.3% 13.0% 13.5% capacity No change in total bond 58.6% 43.1% 36.1% 44.4% capacity Increase in total bond 29.3% 42.6% 50.9% 42.1% capacity -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. Table 3.33b Distribution of Change in Bonding Capacity (Total Program) From 1990 to 1993 for Firms, by Ethnicity of Owner Not owned by Owned by minority minority Distribution (n=48) (n=634) ---------------------------- ------------------ -------------------- Decrease in total bond 16.7% 13.1% capacity No change in total bond 29.2% 45.4% capacity Increase in total bond 54.2% 41.5% capacity ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. Table 3.33c Distribution of Change in Bonding Capacity (Total Program) From 1990 to 1993 for Firms, by Gender of Owner Owned by women Not owned by women Distribution (n=75) (n=606) ---------------------------- ------------------ -------------------- Decrease in total bond 10.7% 14.0% capacity No change in total bond 37.3% 45.0% capacity Increase in total bond 52.0% 40.9% capacity ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. Table 3.34a Percentage of Firms With Preapproved Bonding Line, by Size of Firm $500,001- Over $3.5 Up to $3.5 million to SBA All SBA $500,000 million maximum small firms (n=430) (n=770) (n=240) (n=1,440) ---------------------- ---------- ------------ ---------------- ------------ Had preapproved 42.6% 69.9% 82.1% 63.8% bonding line -------------------------------------------------------------------------------- \a Differences by size of firm are statistically significant. Table 3.34b Percentage of Firms With Preapproved Bonding Line, by Ethnicity of Owner Not owned by Owned by minority minority (n=108) (n=1,315) ---------------------------- ------------------ -------------------- Had preapproved bonding line 55.6% 64.6% ---------------------------------------------------------------------- \a Difference by ethnicity is not statistically significant. Table 3.34c Percentage of Firms With Preapproved Bonding Line, by Gender of Owner Owned by women Not owned by women (n=174) (n=1,251) ---------------------------- ------------------ -------------------- Had preapproved bonding line 67.8% 63.4% ---------------------------------------------------------------------- \a Difference by gender is not statistically significant. Table 3.35a Distribution of When Firms Obtained Their First Preapproved Bonding Line, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small Type of bonding $500,000 million maximum firms experience (n=163) (n=473) (n=144) (n=780) ------------------------ ------------ ---------- ---------------- ---------- Before ever needing a 38.0% 37.4% 38.9% 37.8% bond With first approved bond 44.2% 25.4% 18.8% 28.1% for a specific job After completing one or 14.1% 25.8% 24.3% 23.1% a few bonded jobs After completing many 3.7% 11.4% 18.1% 11.0% bonded jobs -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. Table 3.35b Distribution of When Firms Obtained Their First Preapproved Bonding Line, by Ethnicity of Owner Not owned by Owned by minority minority Type of bonding experience (n=56) (n=717) ---------------------------- ------------------ -------------------- Before ever needing a bond 28.6% 38.6% With first approved bond for 44.6% 26.6% a specific job After completing one or a 12.5% 24.0% few bonded jobs After completing many bonded 14.3% 10.7% jobs ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are statistically significant. Table 3.35c Distribution of When Firms Obtained Their First Preapproved Bonding Line, by Gender of Owner Owned by women Not owned by women Type of bonding experience (n=99) (n=675) ---------------------------- ------------------ -------------------- Before ever needing a bond 46.5% 36.7% With first approved bond for 28.3% 27.6% a specific job After completing one or a 18.2% 24.0% few bonded jobs After completing many bonded 7.1% 11.7% jobs ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. Table 3.36a Size of Bonds Obtained by Firms in 1993, by Size of Firm 500,001- Over $3.5 All SBA Up to $3.5 million to SBA small Size of bond $500,000 million maximum firms ------------------------ ------------ ---------- ---------------- ---------- Average bond\a $108,370 $460,048 $984,724 $511,564 (+/- (+/- (+/-247,363) (+/- 34,710) 418,589) (n=189) 246,687) (n=162) (n=468) (n=819) Distribution\b Under $100,000 67.9% 33.5% 11.1% 35.2% $100,000-$499,999 27.2% 49.1% 36.0% 41.8% $500,000-$999,999 3.7% 12.8% 21.7% 13.1% $1,000,000 and over \c 4.5% 31.2% 10.0% Average size of largest $228,043 $794,695 $2,607,974 bond\a,d 7 (+/-1,862) (+/- (+/-24,347) $1,033,733 (n=268) 4 77,329) (n=231) 2 (+/- (n=618) 5 90,030) (n=1,117) Distribution\b Under $100,000 51.9% 20.9% 4.8% 25.0% $100,000-$499,999 38.4% 42.2% 15.6% 35.8% $500,000-$999,999 4.5% 19.9% 16.0% 15.4% $1,000,000 and over 5.2% 17.0% 63.6% 23.8% -------------------------------------------------------------------------------- \a Difference between the smallest firms and the firms with average revenues over $3.5 million is statistically significant. \b Differences in distribution by size of firm are statistically significant. \c This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. \d Difference between the medium-size firms and the firms with average revenues over $3.5 million is statistically significant. Table 3.36b Size of Bond Obtained by Firms in 1993, by Ethnicity of Owner Not owned by Size of bond Owned by minority minority ---------------------------- ------------------ -------------------- Average bond $377,388 $525,161 (+/-134,496) (+/-267,046) (n=57) (n=756) Distribution Under $100,000 31.6% 35.2% $100,000-$499,999 36.8% 42.2% $500,000-$999,999 21.1% 12.6% $1,000,000 and over 10.5% 10.1% Average size of largest bond $897,560 $1,047,655 (+/-253,670) (+/-314,174) (n=79) (n=1,029) Distribution Under $100,000 19.0% 25.5% $100,000-$499,999 35.4% 35.7% $500,000-$999,999 13.9% 15.5% $1,000,000 and over 31.6% 23.3% ---------------------------------------------------------------------- \a Differences in averages and distributions by ethnicity are not statistically significant. Table 3.36c Size of Bond Obtained by Firms in 1993, by Gender of Owner Size of bond Owned by women Not owned by women ---------------------------- ------------------ -------------------- Average bond $259,709 $548,316 (+/-86,003) (+/-280,689) (n=95) (n=719) Distribution Under $100,000 38.9% 34.2% $100,000-$499,999 47.4% 41.3% $500,000-$999,999 6.3% 14.0% $1,000,000 and over 7.4% 10.4% Average size of largest bond $708,421 $1,085,086 (+/-202,105) (+/-332,904) (n=139) (n=969) Distribution Under $100,000 20.9% 25.4% $100,000-$499,999 44.6% 34.5% $500,000-$999,999 15.1% 15.6% $1,000,000 and over 19.4% 24.6% ---------------------------------------------------------------------- \a Differences in averages and distributions by gender are not statistically significant. Table 3.37a Average Financial Status of Firms That Had Financial Statements on File With Dun & Bradstreet, by Size of Firm $500,000- Over $3.5 All SBA Indicator of financial Up to $3.5 million to SBA small status in 1993 $500,000 million maximum firms ------------------------ ------------ ---------- ---------------- ---------- Indicator of financial $500,001- Over $3.5 All SBA status in 1993 Up to $3.5 million to SBA small $500,000 million maximum firms Net worth\b,c,d $188,891 $362,888 $1,185,954 $527,722 (+/- (+/- (+/-284,122) (+/- 70,075) 67,107) (n=91) 85,861) (n=61) (n=238) (n=390) Working capital\b,c,d $96,891 $201,932 $701,041 $301,961 (+/- (+/- (+/-161,968) (+/- 51,377) 31,124) (n=91) 47,885) (n=61) (n=238) (n=390) Age of accounts 59.3 60.5 59.9 60.2 receivable (days) (+/-16.8) (+/-8.2) (+/-6.9) (+/-5.8) (n=42) (n=174) (n=71) (n=287) Quick ratio\d 3.3 3.1 1.6 2.8 (+/-1.7) (+/-1.1) (+/-0.3) (+/-0.7) (n=59) (n=232) (n=90) (n=381) Current ratio\c,d 5.1 4.0 2.0 3.7 (+/-2.5) (+/-1.2) (+/-0.3) (+/-0.8) (n=59) (n=236) (n=91) (n=386) -------------------------------------------------------------------------------- \a The number of survey respondents in each group from left to right is 447, 792, 245, and 1,484. Financial data were not available for the majority of the firms. The fewest data--9.4% of the responding firms--were available for the smallest firms' age of accounts receivable. \b Difference between the smallest firms and the medium-size firms is statistically significant. \c Difference between the smallest firms and the firms with average revenues over $3.5 million is statistically significant. \d Difference between the medium-size firms and the firms with average revenues over $3.5 million is statistically significant. Source: GAO's analysis of Dun & Bradstreet's data. Table 3.37b Average Financial Status of Firms That Had Financial Statements on File With Dun & Bradstreet, by Ethnicity of Owner Indicator of financial Owned by Not owned by status in 1993 minorities minorities ---------------------------- ------------------ -------------------- Net worth $431,593 $538,478 (+/-190,255) (+/-91,496) (n=22) (n=363) Working capital $279,811 $305,895 (+/-165,271) (+/-50,554) (n=22) (n=363) Age of accounts receivable 60.7 60.1 (+/-17.0) (+/-6.1) (n=17) (n=267) Quick ratio 1.5 2.8 (+/-0.4) (+/-0.8) (n=21) (n=355) Current ratio 1.8 3.8% (+/-0.4) (+/-0.9) (n=21) (n=360) ---------------------------------------------------------------------- \a The number of survey respondents in each group is 109 for the firms owned by minorities and 1,354 for the firms not owned by minorities. Financial data were not available for the majority of the firms. The fewest data--15.6% of the responding firms--were available for the age of accounts receivable for the firms owned by minorities. \b Differences by ethnicity are not statistically significant. Source: GAO's analysis of Dun & Bradstreet's data. Table 3.37c Average Financial Status of Firms That Had Financial Statements on File With Dun & Bradstreet, by Gender of Owner Indicator of financial status in 1993 Owned by women Not owned by women ---------------------------- ------------------ -------------------- Net worth\b $397,244 $549,298 (+/-110,775) (+/-97,398) (n=48) (n=339) Working capital\b $261,579 $309,296 (+/-108,120) (+/-53,020) (n=48) (n=339) Age of accounts receivable\c 76.0 57.9 (+/-15.0) (+/-6.2) (n=38) (n=248) Quick ratio\b 3.1 2.7 (+/-2.4) (+/-0.8) (n=48) (n=330) Current ratio\b 3.8 3.7 (+/-2.6) (+/-0.9) (n=48) (n=335) ---------------------------------------------------------------------- \a The number of survey respondents in each group is 177 for the firms owned by women and 1,287 for the firms not owned by women. Financial data were not available for the majority of the firms. The fewest data--19.3% of responding firms--were available for the age of accounts receivable of the firms not owned by women. \b Difference by gender is not statistically significant. \c Difference by gender is statistically significant. Source: GAO's analysis of Dun & Bradstreet's data. CHARACTERISTICS OF FIRMS THAT HAD NOT OBTAINED BONDS ============================================================ Chapter 4 Fifty-seven percent of the firms that responded to our survey had never obtained a surety bond or had a preapproved bonding line. We estimate that in the universe of firms in our study, the percentage is higher than this, but no higher than 77 percent. The tables in this section provide estimates about at most the 157,306 (+/- 5,146) firms represented by the respondents to our survey that had never provided a bond or had a bonding line. The results in particular tables can be generalized only to the firms that said they had never obtained a bond or had a bonding line and that provided the information discussed in the table. The approximate number of firms can be estimated by multiplying the number of firms responding to the question (n) by the expansion factor, 683,198/12,000. In the tables we have provided the statistics, the sampling errors for our estimates other than percentages, and the sample sizes to enable the reader to calculate sampling errors for our estimates of percentages using the formula provided in section 1. In some tables that present distributions, the columns do not add to 100 percent because of rounding. Table 4.1 Characteristics of Firms With No Bonding Experience Number providing Characteristic information Statistic ------------------------------ ------------------ ------------------ Gender (n=2,586) Owned by women 7.5% Not owned by women 92.5% Ethnicity (n=2,477) Owned by minorities 6.5% Not owned by minorities 93.5% Size (n=2,763) Average revenues $391,129 (+/-24,199) Up to $500,000 77.8% $500,001-$3.5 million 21.6% Over $3.5 million to SBA 0.6% maximum Years in construction (n=2,662) 15.3 (+/-0.4) SIC (n=2,756) Building construction 9.1% Heavy construction 4.6% Special trade construction 86.3% ---------------------------------------------------------------------- Table 4.2a Firms' Average Years of Experience in Construction, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Experience (n=2,059) (n=588) (n=15) (n=2,662) ------------------------ ------------ ---------- ---------------- ---------- Average number of years 15.13 15.97 21.33 15.35 in construction (+/-0.48) (+/-1.01) (+/-12.15) (+/-0.44) -------------------------------------------------------------------------------- \a Differences by size of firm are not statistically significant. Table 4.2b Firms' Average Years of Experience in Construction, by Ethnicity of Owner Not owned by Owned by minority minority Experience (n=158) (n=2,278) ---------------------------- ------------------ -------------------- Average number of years in 13.33 15.34 construction (+/-1.43) (+/-0.48) ---------------------------------------------------------------------- \a Difference by ethnicity is statistically significant. Table 4.2c Average Years of Experience in Construction of Firms, by Gender of Owner Owned by women Not owned by women Experience (n=192) (n=2,350) ---------------------------- ------------------ -------------------- Average number of years in 13.09 15.44 construction (+/-1.86) (+/-0.46) ---------------------------------------------------------------------- \a Difference by gender is statistically significant. Table 4.3a Percentage of Firms in Selected Standard Industrial Classifications, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small Standard industrial $500,000 million maximum firms classification (n=2,143) (n= 598) (n=15) (n=2,756) ------------------------ ------------ ---------- ---------------- ---------- Building construction 7.0% 15.4% 60.0% 9.1% Heavy construction 4.4% 5.4% 0% 4.6% contractors Special trade 88.6% 79.3% 40.0% 86.3% contractors -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. Table 4.3b Percentage of Firms in Selected Standard Industrial Classifications, by Ethnicity of Owner Not owned by Standard industrial Owned by minority minority classification (n=161) (n=2,311) ---------------------------- ------------------ -------------------- Building construction 12.4% 9.2% Heavy construction 3.7% 4.6% contractors Special trade contractors 83.9% 86.2% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. Table 4.3c Percentage of Firms in Selected Standard Industrial Classifications, by Gender of Owner Standard industrial Owned by women Not owned by women classification (n=194) (n=2,385) ---------------------------- ------------------ -------------------- Building construction 6.7% 9.4% Heavy construction 11.3% 4.0% contractors Special trade contractors 82.0% 86.6% ---------------------------------------------------------------------- \a Differences in distribution by gender are statistically significant. Table 4.4a Distribution of Firms' Work in 1993 Performed Directly for Owners and Through Subcontracting, by Size of Firm All SBA $500,001- Over $3.5 small Up to $3.5 million to SBA firms $500,000 million maximum (n=2,5 Type of work (n=1,987) (n=564) (n=15) 66) ---------------------------- ------------ ---------- ---------------- ------ More direct work for owner 38.6% 38.1% 46.7% 38.5% More subcontracting 55.0% 55.7% 53.3% 55.1% Equal amounts of direct work 6.4% 6.2% 0% 6.4% and subcontracting -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are not statistically significant. Table 4.4b Distribution of Firms' Work in 1993 Performed Directly for Owners and Through Subcontracting, by Ethnicity of Owner Not owned by Owned by minority minority Type of work (n=154) (n=2,203) ---------------------------- ------------------ -------------------- More direct work for owner 43.5% 38.4% More subcontracting 52.6% 55.2% Equal amounts of direct work and subcontracting 3.9% 6.4% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. Table 4.4c Distribution of Firms' Work in 1993 Performed Directly for Owners and Through Subcontracting, by Gender of Owner Owned by women Not owned by women Type of work (n=184) (n=2,278) ------------------------ ------------------ ------------------------ More direct work for 35.9% 38.8% owner More subcontracting 59.8% 54.7% Equal amounts of direct work and subcontracting 4.3% 6.5% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. Table 4.5a Percentage of Firms Reporting Various Reasons for Not Obtaining Bonds Since 1990, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small $500,000 million maximum firms Reason (n=2,016) (n=574) (n=14) (n=2,604) ------------------------ ------------ ---------- ---------------- ---------- Not asked to provide 83.2% 74.9% 57.1% 81.2% bonds since 1990 or does not bid on bonded jobs\a Surety company's 16.3% 23.7% 35.7% 18.0% requirements to get bonds were too burdensome for firm\a Financial commitment 15.6% 20.4% 28.6% 16.7% required to get bonds is more than firm has wanted\a Firm could not afford 12.7% 16.4% 28.6% 13.6% the cost of preparing financial information for the surety company\a Believed the firm would 11.2% 15.9% 28.6% 12.3% not be able to get bonds so did not ask for them\a Fees charged by surety 11.1% 12.9% \b 11.4% companies make it unprofitable for firm to do bonded work Use or have used cash 3.7% 8.7% \b 4.9% instead of bonds\a Perform work in 7.7% 11.0% \b 8.4% partnership or as a joint venture with a firm that is/was bonded\a Requests for bonds were 3.2% 3.7% \b 3.3% denied Use or have used letter 1.6% 2.6% \b 1.8% from surety company saying firm is bondable Other reasons 5.4% 5.2% 0% 5.3% -------------------------------------------------------------------------------- \a Differences by size of firm are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 4.5b Percentage of Firms Reporting Various Reasons for Not Obtaining Bonds Since 1990, by Ethnicity of Owner Not owned by Owned by minority minority Reason (n=157) (n=2,244) -------------------------------------- ------------------ -------------------- Not asked to provide bonds since 1990 73.2% 81.7% or does not bid on bonded jobs\a Surety company's requirements to get 17.8% 18.1% bonds were too burdensome for firm Financial commitment required to get 17.8% 16.7% bonds is more than firm has wanted Firm could not afford the cost of 16.6% 13.5% preparing financial information for the surety company Believed the firm would not be able to 17.8% 11.6% get bonds so did not ask for them\a Fees charged by surety companies make 12.1% 11.4% it unprofitable for firm to do bonded work Use or have used cash instead of 9.6% 4.8% bonds\a Perform work in partnership or as a 8.9% 8.5% joint venture with a firm that is/ was bonded Requests for bonds were denied 6.4% 3.3% Use or have used letter from surety 2.5% 1.9% company saying firm is bondable Other reasons 7.6% 5.2% -------------------------------------------------------------------------------- \a Difference by ethnicity is statistically significant. Table 4.5c Percentage of Firms Reporting Various Reasons for Not Obtaining Bonds Since 1900, by Gender of Owner Owned by women Not owned by women Reason (n=187) (n=2,321) -------------------------------------- ------------------ -------------------- Not asked to provide bonds since 1990 70.6% 82.4% or does not bid on bonded jobs\a Surety company's requirements to get 23.0% 17.7% bonds were too burdensome for firm Financial commitment required to get 20.9% 16.2% bonds is more than firm has wanted Firm could not afford the cost of 16.0% 13.5% preparing financial information for the surety company Believed the firm would not be able to 18.2% 11.8% get bonds so did not ask for them\a Fees charged by surety companies make 13.9% 11.2% it unprofitable for firm to do bonded work Use or have used cash instead of bonds 3.2% 5.0% Perform work in partnership or a as 13.4% 8.1% joint venture with a firm that is/ was bonded\a Requests for bonds were denied 3.7% 3.3% Use or have used letter from surety \b 1.9% company saying firm is bondable Other reasons 6.4% 5.0% -------------------------------------------------------------------------------- \a Difference by gender is statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 4.6a Percentage of Firms That Had Requirements Explained in Advance the First Time They Asked for a Bond, by Size of Firm Extent to which $500,001- Over $3.5 All SBA information was given by Up to $3.5 million to SBA small agents, brokers, or $500,000 million maximum firms surety companies (n=1,993) (n=563) (n=15) (n=2,571) ------------------------ ------------ ---------- ---------------- ---------- Little or no extent 4.4% 6.4% 0.0% 4.8% Some extent 4.9% 7.1% \b 5.4% Moderate extent 4.3% 7.6% 26.7% 5.2% Great extent 2.9% 6.4% \b 3.7% Very great extent 0.9% 1.2% \b 1.0% Did not remember 2.9% 2.0% 0.0% 2.7% Never asked for a bond 79.7% 69.3% 53.3% 77.3% -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 4.6b Percentage of Firms That Had Requirements Explained in Advance the First Time They Asked for a Bond, by Ethnicity of Owner Extent to which information Not owned by was given by agents, Owned by minority minority brokers, or surety companies (n=156) (n=2,246) ---------------------------- ------------------ -------------------- Little or no extent 6.4% 4.6% Some extent 4.5% 5.3% Moderate extent 3.8% 5.2% Great extent 7.1% 3.5% Very great extent \b 0.9% Did not remember 2.6% 2.5% Never asked for a bond 74.4% 77.9% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 4.6c Percentage of Firms That Had Requirements Explained in Advance the First Time They Asked for a Bond, by Gender of Owner Extent to which information was given by agents, Owned by women Not owned by women brokers, or surety companies (n=189) (n=2,319) ---------------------------- ------------------ -------------------- Little or no extent 5.8% 4.6% Some extent 4.8% 5.3% Moderate extent 6.3% 4.9% Great extent 6.9% 3.3% Very great extent \b 0.9% Did not remember \b 2.6% Never asked for a bond 74.1% 78.4% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 4.7a Frequency With Which Firms That Had Asked for a Bond Have Been Denied Bonds Since 1990, by Size of Firm $500,001- Over $3.5 All SBA Up to $3.5 million to SBA small Number of denials since $500,000 million maximum firms 1990 (n=251) (n=105) (n=3) (n=359) ------------------------ ------------ ---------- ---------------- ---------- None 78.9% 73.3% 66.7% 77.2% 1-5 17.1% 25.7% 0.0% 19.5% 6-12 2.4% 0.0% \b 1.9% More than 12 1.6% \b 0.0% 1.4% -------------------------------------------------------------------------------- \a Differences in distribution by size of firm are statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 4.7b Frequency With Which Firms That Had Asked for a Bond Have Been Denied Bonds Since 1990, by Ethnicity of Owner Number of denials Owned by minority Not owned by minority since 1990 (n=25) (n=319) ---------------------- ---------------------- ---------------------- None 72.0% 77.7% 1-5 20.0% 19.4% 6-12 \b 1.3% More than 12 0.0% 1.6% ---------------------------------------------------------------------- \a Differences in distribution by ethnicity are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. Table 4.7c Frequency With Which Firms That Had Asked for a Bond Have Been Denied Bonds Since 1990, by Gender of Owner Owned by women Not owned by women Number of denials since 1990 (n=32) (n=319) ---------------------------- ------------------ -------------------- None 65.6% 78.4% 1-5 28.1% 18.5% 6-12 \b 1.6% More than 12 0.0% 1.6% ---------------------------------------------------------------------- \a Differences in distribution by gender are not statistically significant. \b This estimate is omitted because the sampling error is larger than the estimate, leaving no confidence in the estimate. (See figure in printed edition.)Appendix I NATIONAL SURVEY OF CONSTRUCTION COMPANIES' EXPERIENCES GETTING BID, PERFORMANCE AND PAYMENT BONDS ============================================================ Chapter 4 (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.) (See figure in printed edition.)