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A new contractor has been chosen to finish work on the long-delayed East Gadsden Community Center. At Tuesday’s meeting of the Gadsden City Council, it authorized an agreement with Bob Smith Construction, Inc. to complete the remaining work under the original contract for the project The original bid for the project was $5.5 million, and City Attorney Lee Roberts said the city has $3.5 million remaining that has not been spent. He said the cost for completion will be $5.2 million, but the bonding company will cover the difference between the amounts. “Assuming there are no further hiccups out there, this project will be completed without any further spending of taxpayer money,” Roberts said. Groundbreaking on the project was held in February 2018, and the plan was to have the project completed in about nine months. However, Roberts said work on the new community center stopped during construction, and the city engaged the surety company earlier this year to step in and help finish the project. All public construction projects by the city are bonded through a surety company that ensures the project is completed by the terms of the contract, which includes things like quality and timeliness. Roberts said NGM Insurance Company worked with the city on the claim. “They have secured another contractor that is familiar with our city engineer and has a good past working with [him],” Roberts said. “We have entered into an agreement on how we’re going to finish the project.” In addition to the money covered by the bonding company, the city has received some money in liquidated damages, which hopefully will offset additional architecture fees and any unforeseen costs. Roberts said the new contractor has a year to finish the project, but he has told the city it will hopefully be finished before then. City Engineer Heath Williamson said after the meeting that he expects work to start after the first of the year as there is still paperwork to be done. Another infrastructure issue got attention at the meeting as District 3 council member Thomas Worthy talked about street lights being out on Tuscaloosa Avenue. Worthy said there are 19 lights out from Henry Street to 10th Street, and the first resolution to fix them came up in 2018. “I just don’t understand — we can find money for any project we want to have except for doing something in District 3,” said Worthy, who said he had been told by Mayor Sherman Guyton weeks ago that the city would fix the lights, and they shouldn’t have to wait until a new budget comes around. Guyton said it would have to be added to the city’s next budget, and he was mistaken when he said there was money already available. “To portray me as not [doing] anything for Carver, we’ve put more than $2 million into that whole strip since I’ve been in office,” said Guyton, who also listed several of those projects. “I’m glad to do that just like any other part of town, but it’s not in the budget and it’ll have to wait,” he said. The city also approved a memorandum of understanding regarding the use of Everbridge by Safeware — software that allows the sending of public alerts. The memo allows the Gadsden/Etowah Emergency Management Agency to split costs for the service with DeKalb, Marshall, Lauderdale, Calhoun, Cleburne and Morgan counties. Each agency’s cost will be determined by its population. https://www.gadsdentimes.com/news/20191210/contractor-named-to-finish-east-gadsden-community-center

AIG, Chubb, Markel, Swiss Re and Zurich are potentially liable for Thomas Cook repatriation and refund costs as they provide shortfall insurance for the Air Travel Organiser’s Licence’s (Atol) primary source of funding, The Insurance Insider can reveal. The Air Travel Trust (ATT) fund is the main source of funding for Atol, a financial protection scheme for package holidays backed by the UK government and managed by the Civil Aviation Authority (CAA). In its latest financial report for the year ended 31 March 2018, the ATT stated that it had a surplus of £170mn ($210mn). The ATT fund derives from Atol licence holders paying £2.50 for each person who books air travel covered by Atol. The ATT’s latest report said the fund had insurance cover with a £400mn annual limit. Sources said this “shortfall insurance” was provided by a panel of insurers including AIG, Chubb, Markel, and Zurich. The cover means there is around £570mn in place in total to meet refund and repatriation costs for any Atol holder failure. Swiss Re does not sit on the panel but reinsures part of the policy. Willis Towers Watson is also understood to have brokered part of the placement. The ATT’s policy was renewed on 30 April 2018 and provides cover until 31 March 2020, when it is up for renewal, the report stated. According to the ATT, the policy is triggered when costs arising from refunds or repatriations exceed £10mn, £70mn or £150mn in a policy year, with different thresholds applicable depending on the size of the tour operator. In its report the ATT said that there had been no claims on the policy since 2017, but sources told this publication there had been no claims since its inception in 2007. There is still uncertainty about the final repatriation bill but, in a statement to the House of Commons Transport Secretary Grant Schapps said that the Thomas Cook repatriation effort will cost around £100mn – twice the size of the Monarch Airlines collapse which cost the taxpayer around £50mn. According to the Financial Times, the government has also said the cost of refunding future bookings will be around £420mn. It is thought that the Thomas Cook collapse will severely deplete the ATT fund, with some sources saying it could wipe it out completely. In the case of fund exhaustion the government would likely be forced to provide assistance, possibly in the form of a loan, to mitigate the cost of repatriation operations and to ensure that protection is in place for future collapses. The CAA has denied that government intervention with taxpayer money would be necessary, saying that its insurance pot is healthy and that a credit facility could also be used to make up the shortfall. CAA CEO Richard Moriarty said that the refund programme for the 360,000 future holidays booked through Thomas Cook was three times larger than any refund programme it had ever managed before, and it was putting new systems in place to process refunds as quickly as possible. He added that around 100,000 bookings were made by direct debit and that these would be refunded in 14 days whereas other payments would take longer, but that an online system would be launched on 7 October to manage those claims. Direct debit and credit card companies could also have exposure to surety losses as they facilitated payment for the package holidays. Sources also told this publication that Zurich and Swiss Re could also be exposed to losses for Thomas Cook’s German subsidiary and its affiliate tour operator Condor, which is 49 percent owned by Thomas Cook. Condor was granted a EUR380mn ($414.8mn) bridging loan from the German government, which will allow it to continue operations until a buyer is found. Thomas Cook GmbH filed for insolvency last Wednesday and said it would restructure its business independently. A Zurich spokesperson told this publication that the maximum amount of contractual obligations to Thomas Cook in Germany was EUR110mn. Parent company Thomas Cook filed for insolvency on 23 September after it failed to secure £250mn rescue deal and the government refused to bail out the business. Following its collapse, the CAA launched the largest ever peacetime repatriation effort to bring the estimated 150,000 UK holidaymakers home. According to the CAA more than 100 aircraft have been used for the operation. As of 1 October, over three quarters of the holidaymakers, or 115,000 people, had been returned to the UK, with around 94 percent having flown on their original departure date. The repatriation will continue until 6 October, with more than 1,000 flights planned. A Zurich spokesperson confirmed that the insurer is one of number of carriers that covered the ATT fund through a surety policy, adding that they were in the “process of assessing the net impact after reinsurance for the group”. A CAA representative said the state agency did “not want to speculate on the likely impact on the ATT fund of the collapse of Thomas Cook” as the final figure may not be known for many months, until all outstanding claims are processed. AIG, Chubb, Markel, Willis and Swiss Re declined to comment. https://www.insuranceinsider.com/articles/129146/surety-market-braces-for-thomas-cook-atol-claim

In the summer of 2017, a District Judge sitting in the District of Columbia issued a decision holding that a surety could be held liable under the False Claims Act where it becomes aware of facts suggesting that a bonded principal is fraudulently participating in a government set-aside program and nonetheless continues to do business with that principal. United States ex rel Scollick v. Narula, 2017 WL 3268857 (D.D.C. July 31, 2017). Although the Narula decision arose in the context of a motion to dismiss, where the court’s findings are limited to determining the viability of the claims as plead, the decision has drawn close scrutiny (and criticism) from professionals across the surety industry. Many underwriters have exercised additional caution prior to bonding set-aside contractors due, in large part, to the draconian penalties that may be imposed for violations of the False Claims Act, including treble damages. The close scrutiny and additional caution unfortunately appear to have been well-founded. On September 4, 2019, the United States Attorney’s Office for the Western District of North Carolina announced that it had entered into a settlement agreement with a surety to resolve allegations that the surety violated the False Claims Act by bonding a general contractor that submitted false claims to the government for services performed under fraudulently obtained government contracts. The surety agreed to pay $1,040,035.20 to resolve the government’s allegations. The government alleged that South Carolina general contractor Claro Company, Inc. (“Claro”) made materially false, fictitious, and fraudulent statements and representations, or material omissions, to gain entry into and to continue participation in the 8(a) program and that Claro’s surety knew or should have known that Claro was not eligible for 8(a) set-asides. The government contended that the surety knew or should have known that Claro was not controlled by a socially and economically disadvantaged individual, and that it was affiliated with and controlled by another entity and/or individuals that did not meet the SBA’s definition of being socially and economically disadvantaged; that neither the affiliation nor control were disclosed to the SBA; and that Claro made material misrepresentations regarding its financial status to the SBA in order to avoid early graduation from the 8(a) program. The government further contended that despite the foregoing allegations, the surety continued to do business with Claro by bonding its projects and therefore allowing it to continue to fraudulently bid for contracts under the preferences in the 8(a) program. In announcing the settlement, the government acknowledged that the claims resolved in the settlement are allegations only and there has been no determination of liability against the surety. As of this writing, detailed information regarding the government’s investigation and allegations are not publicly available. It is, thus, not clear at this time whether this settlement marks the next step in a trend by the government (and qui tam plaintiffs), which started with Narula, to pursue recovery under the False Claims Act against sureties, or if this settlement is a one-off due to the unique facts and circumstances of the Claro matter. We all hope it is the latter.