By adoption of House Resolution No. 40 during the 1977 Session of the General Assembly, the House Committee on General Laws was requested to conduct a study of the ways and means available to provide the necessary bonding for small and disadvantaged business in order that they may bid on, obtain and perform contracts for federal, state and local governments. This request arose out of the difficulty which small and disadvantaged businesses were having in participating significantly in the multi-million-dollar capital improvements, procurement and contracting activities of federal, state and local governments. The difficulty encountered was in obtaining adequate bonding of all types, bid, performance and payment bonds, which are required in order to participate. Upon completion of its study the Committee prepared and introduced legislation deemed appropriate, to ease the problem, and for consideration by the 1978 Session of the General Assembly.

A Subcommittee, consisting of members of the full House Committee, was appointed to conduct the study. The Subcommittee held public hearings in Richmond and in Charlottesville, to allow the public the opportunity to offer testimony on the major subjects of the study in order to fulfill the demands of House Resolution 40. The Subcommittee worked with the basic premise that state and local government contracts, whether for construction and public works, or for the procurement of goods and services, should be awarded so as to acquire quality goods and services at minimum costs, having as an objective the protection of the interests of the taxpayers. This result could probably best be obtained through fair and open competition among bidders who have full opportunity to compete on an equal basis. When a contract is awarded to a successful bidder, assurance that the bidder will be able to perform satisfactorily under the contract becomes of vital importance to the governmental unit whose tax dollars are expended to pay the contractor.

Those who testified before the Subcommittee were heads of State offices and agencies, small businesspersons, heads of State-wide leagues and representatives of the bonding and insurance community. The testimony elicited from the thirty-three witnesses overwhelmingly indicated that there was indeed a problem facing small and minority businesses as they attempt to obtain bonding so that they may participate in contracting activities of the State and its localities.