FUNDS MANAGEMENT CONTROL ALSO CALLED TRIPARTITE AGREEMENT
Funds management control is also known as a tripartite agreement. The tripartite agreement was enacted by congress so the small native American contractor and the minority contractors could get bonds with the help of the government, As you are are aware there has been very little surety/guarantee support for the small minority and Native American entities for the last 20 years plus.
The trend to institute strict funds control through a third party funds administrator has shown to be the protection to entice the surety/guarantee to consider small minority and Native American preference for the federal and no-federal projects.
The alternatives bonding markets writes all its bid,performance and payments bonds through bonding companies that offer funds control agreements that are necessary to help obtain the bonds.
The bonding companies that do write funds control agreements will try very hard to get the bonds issued for the contractor. They will work from the time of the application to the finally stage of issuing the bond to make sure that the contractor understands how and what needs to be done for him.
Since this is funds control management we look at the contractor in unique ways. With the standard company if you do not have the security and the cash to back you up then the project probably will not get done. If you credit is less than adequate then the cannot help you. If you have never had a bond before they probably will not help then either.
The alternative bonding companies will not judge you solely on your credit history or financial situation. If your project makes good business sense,they should be able to put a satisfactory package together that protects all parties concerned.
Three things they look at to get you qualified:
1. Are you qualified in the area of work for your particular contract?
2. Is there a decent profit margin involved?
3.Do you have enough liquid funds to get to the first draw?
Here is how the funds management control/tripartite agreements work. If the contractor is awarded the job,then there is and agreement made between the surety company and the contractor that allows all funds to be deposited into a locked box or checking account that is held by a bank that is federally insured. The three parties involve in the fund control are the prime contractor,contracting officer or project manager and the funds administrator. The funds administrator receives the bills and has them approved by all three parties. Then the fund administrator issues an invoice to the owner. The owner then deposit that amount into the account that has been set up for that job. The Funds administrator pays the bills within in 24 hours of the time of the deposit. The Funds administrators is the only person that is permitted to sign on the checking account. After all the bill and labor cost have been paid then the draw to the contractor would be issued.
The funds administrator can and does hold about 10% of the job until the release or the project is signed off by all parties .
If you need help in finding a company that will help you get the bond that you need,please contact Ric Cline at 719-588-3601 or toll free at 1-800-772-9904.
Funds Management Control
Thanks for letting me do what I do best, and taking the head ache of the funds, and payables control out of my toolbox.