Currently forty six of the fifty states have implemented electronic surety bonding after the enactment of the Uniform Electronic Transactions Act on the state level as well as Global and National Commerce Act at the federal level. Both Acts have given the execution of surety bonds, in the electronic format, and electronic signatures validity by making them legally binding by all parties that are involved in the transaction. Due to technology advances, the delivery of contract bonding is able to be sent between all respectful parties in a safe and secure manner and with the implementation of a Private Key Infrastructure, digital signatures are genuine and cannot be denied due to authenticity.
The process of electronic bonding is based and handled in the same manner that more traditional bonding is being executed today. The bond must still be signed by the principal being required to have the bond and by the surety company that has made the decision to issue the bond, to the obligee who had originally required the necessity of a surety bond. The only major difference is the transferring of the bond in between all of these parties over the Internet or some other web-based formatted environment with the electronic signatures.
Perhaps the strongest supporters of a new way to handle the bonding process comes from The Surety & Fidelity Association of America (SFAA) as well as The National Association of Surety Bond Producers (NASBP). Due to the fact that the processing costs are lowered while efficiency of execution and electronic filing increases, every party involved reaps the benefit. The obligees, contractors and principals can now receive the issued bond in a more-timely manner, while the surety bond producers and the surety companies can execute the bonds in a similar fashion all the while maintaining the necessary security that is required for the existence of the surety bond.
The best example of how this new form of bonding can work is seen by the State Department of Transportation (DOTs) in regards to bidding on DOT construction jobs. An electronic bidding system has been instituted to completely automate the process of bidding on jobs, now all required information is submitted electronically from checking a contractorâ€™s license number, down to line item pricing for the construction project. As of now there are thirty one DOTs that have instituted this new electronic bidding process, with the Pennsylvania Department of Transportation going so far as to also include an electronic step for the final bonds.