Article Date: 06/28/2013

Contracting Reform Amendment Clears House; ConstructionPro Week Profiles 21 Other Proposals Potentially Affecting the U.S. Construction Industry

By Steve Rizer


A significant number of contractors, subcontractors, engineers, manufacturers of construction materials, and others would be affected by legislation now undergoing congressional consideration. Of particular importance is an amendment to National Defense Authorization legislation (H.R. 1960) the House approved earlier this month that would allow prime contractors to count small business subcontracting at all tiers to meet federal small-firm participation goals, a proposal supported by the Associated General Contractors of America (AGC) and American Council of Engineering Companies (ACEC).


Current rules require set-asides for small-business subcontractors but prohibit general contractors from truly accounting for the total number of dollars flowing to small businesses, AGC representative Thomas Kelleher recently told the House Small Business Committee’s Contracting and Workforce Subcommittee. “As it stands, if a non-small business is included as a first-tier subcontractor, a prime contractor is disqualified from reporting further dollars going to small businesses at lower tiers. Although the rules allow subcontractors to report this information to general contractors, it is the general contractors’ experience that subcontractors very infrequently report such information, as there is no incentive for or penalty against the subcontractors to make this effort. As a result, unfortunately, these current counting rules provide an incomplete picture of true small-business participation.” He emphasized that the proposed change in policy would help bring greater transparency to small-business subcontracting goals. 


“This simple record-keeping change in [the amendment to H.R. 1960, if passed into law,] will encourage prime contractors to make sure small businesses have the opportunity to compete for subcontracts at every tier, thereby allowing more opportunities for small-business growth,” according to AGC. 


Added ACEC President David Raymond: “[The proposed reforms] are particularly important for engineering projects, as the new policy [would] make it easier to assemble design teams based on the specialization and expertise needed to fully respond to the needs of our federal clients.”


The amendment, which stems from Small Business Committee Chairman Sam Graves’ (R-Mo.) Make Every Small Business Count bill (H.R. 2232), passed the House on June 14 without objection. Supporters of the proposal are pushing for inclusion of similar language in the Senate’s comparable authorization bill (S. 1034).


ACEC is seeking the removal of language in H.R. 1960 that would limit allowable employee compensation for federal contractors. The bill would retain the current $763,029 limit but tie future adjustments to the U.S. Bureau of Labor Statistics Employment Cost Index and make unallowable the total compensation of the five highest compensated employees in any firm with more than $500 million in federal contracts for the previous fiscal year.


Here is some of the other legislation undergoing congressional consideration:


S. 109 (comparable bill: H.R. 436) -- Sen. David Vitter’s (R-La.) Government Neutrality in Contracting bill would direct the head of any federal agency that awards or obligates funds for any construction contract -- or that awards grants, provides financial assistance, or enters into cooperative agreements for construction projects -- to ensure that bid specifications, project agreements, or other controlling documents do not require or forbid a bidder, offeror, contractor, or subcontractor to enter into or adhere to agreements with a labor organization with respect to that construction project or another related construction project. The agency head also could not “otherwise discriminate against such a party because it did or did not become a signatory or otherwise adhere to such an agreement.” The bill would allow exemptions to avert an imminent threat to public health or safety or to serve national security. The measure also would permit additional exemptions for certain projects. The bill would direct the Federal Acquisition Regulatory Council to amend the Federal Acquisition Regulation to implement the bill with respect to the applicable federal contracts. The bill, which has 15 cosponsors, is undergoing Senate Homeland Security and Governmental Affairs Committee consideration.


H.R. 448 -- Rep. Paul Gosar’s (R-Ariz.) Responsibility in Federal Contracting bill would require that the locally prevailing wage paid to various classes of laborers and mechanics working under federally financed or federally assisted contracts for construction, alteration, and repair of public buildings or public works (Davis-Bacon Act) be determined by the U.S. Department of Labor (as under current law), but acting through the U.S. Bureau of Labor Statistics (BLS), using surveys carried out by BLS that use proper random statistical sampling techniques. The bill, which has two cosponsors, is undergoing consideration in the Senate Education and the Workforce’s Workforce Protections Subcommittee.


H.R. 776 -- Rep. Richard Hanna’s (R-N.Y.) Security in Bonding bill would revise requirements related to assets pledged by a surety (CPW, March 7, 2013, “CEO of Surety Bond Producers Group Comments on How the ‘Security in Bonding’ Bill May Fare the Second Time Around”). The measure would declare that if another applicable law or regulation permits the acceptance of a bond from a surety that is not subject to specified federal law, and is based on a pledge of assets by the surety, the assets pledged by such surety would consist of eligible obligations given as security instead of surety bonds and be submitted to the government official required to approve or accept the bond, who would deposit the assets with a depository (the U.S. Department of Treasury, a federal reserve bank, or a depository designated by the department). The bill would amend the Small Business Investment Act of 1958 regarding any U.S. Small Business Administration (SBA) guarantee or agreement to indemnify a surety under the Small Business Investment Program against loss from a breach of the terms of a bid bond, payment bond, performance bond, or ancillary bonds, by a principal on any total work order or contract amount at the time of bond execution that does not exceed $ 6.5 million, as adjusted for inflation. The bill would increase from 70 percent to 90 percent of the loss incurred and paid by a surety authorized to issue bonds subject to SBA guarantee the SBA’s maximum obligation to pay the surety under the guarantee or agreement to indemnify. The proposal, which has four cosponsors, is undergoing consideration in the House Small Business Committee and the House Judiciary Committee’s Regulatory Reform, Commercial and Antitrust Law Subcommittee.


S. 1178 (comparable bill: H.R. 2426) -- The National Society of Professional Engineers (NSPE) June 25 announced its endorsement of Sen. Kirsten Gillibrand’s (D-N.Y.) Educating Tomorrow’s Engineers bill. The legislation would provide grants to integrate engineering curricula into classrooms across the United States and expand the uses of existing federal education programs to include engineering education. “Though early education is vital to developing the desire and skills to become an engineer, there are few programs that advance engineering and technological literacy at the K–12 level. The [bill] would enhance K–12 engineering education and provide for expanded research to inform best practices," NSPE stated. The proposal’s goals of expanding student exposure to engineering design skills, providing instructors with tools and support to effectively teach engineering, enabling schools to target more resources toward engineering education, and promoting research in engineering education “are all critical to cultivating the next generation of engineers,” according to the association. The Senate’s Health, Education, Labor, and Pensions Committee is considering the measure, which does not have a cosponsor.


H.R. 1563 -- Rep. Brett Guthrie’s (R-Ky.) Concrete Masonry Products Research, Education, and Promotion bill would direct the U.S. Department of Commerce (DOC) to issue orders applicable to manufacturers of concrete masonry products. The bill would require any such order to provide for the establishment of a Concrete Masonry Products Board, which would carry out a program of promotion, research, and information regarding concrete products. The legislation would require manufacturers and importers to maintain, and make available, specified records. The bill would require any such order to provide that assessments be paid by concrete manufacturers with respect to concrete manufactured and marketed in the U.S. The bill would provide assessment rates and require that at least half of the assessments paid by a manufacturer be used to support research, education, and promotion plans and projects in support of the geographic region of the manufacturer. The bill would direct DOC, during the 60-day period preceding the proposed effective date of an order, to conduct a referendum for order approval among the manufacturers required to pay assessments under the order. Additionally, DOC would be authorized to conduct “appropriate” investigations in order to administer the bill (with power of subpoena). DOC would be directed to suspend or terminate any order or provision that obstructs or does not tend to effectuate the purposes of the bill or that is not favored by persons voting in a referendum. The bill, which has 35 cosponsors, is undergoing review in the House Energy and Commerce Committee’s Commerce, Manufacturing and Trade Subcommittee.


H.R. 1942 -- Last month, the Sheet Metal and Air Conditioning Contractor’s National Association (SMACNA) applauded the introduction of Rep. Carolyn Maloney’s (D-N.Y.) Construction Quality Assurance bill. The measure would change low-bid contractor selection procedures for federal construction projects of $1 million or more by simply requiring prime contractors to list major subcontractors and requiring those subcontractors to be used except for cause in clearly defined circumstances. “By banning ‘bid shopping’ on federal projects in excess of $1 million, the [bill] would promote quality construction and prevent abusive construction contracting practices,” according to SMACNA. “A ban on bid shopping would in effect require a general contractor to honor his submitted list of subcontractors whose estimates have been used to calculate the bid package for the federal construction project. Bid shopping occurs when a prime contractor seeks to lower his costs by soliciting lower subcontractor bids after being awarded the contract by federal sources. [Because] bid shopping occurs after the contract has been awarded, these savings are not passed along to the federal government and the taxpayer, but instead are pocketed as profit by the prime contractor. Under this legislation, the federal government would recover the contract savings accrued through subcontractor replacement or related contract changes. H.R. 1942 [would] greatly improve the federal construction procurement system for federal agencies, subcontractors, and taxpayers.” The House Oversight and Government Reform Committee is reviewing the measure, which does not have a cosponsor. 


H.R. 2216 -- Rep. John Abney Culberson’s (R-Texas) Military Construction and Veterans Affairs, and Related Agencies Appropriations bill proposes fiscal 2014 funding levels for military construction for the Army, Navy and Marine Corps, and Air Force (military departments), U.S. Department of Defense, the Army, and Air National Guard as well as the Army, Navy, and Air Force reserves. The bill cleared the House June 4 (H. Rpt. 113-090) and is undergoing Senate Appropriations Committee review. As explained in Title I of the House report, there would be $9.954 billion appropriated to the U.S. Department of Defense for military construction in FY'14, down from the $11.011 billion that President Obama (D) requested earlier this year and a decrease of approximately $645 from the FY’13 enacted level.


Transportation Appropriations Bill (number not assigned) -- The House Appropriations Committee’s Transportation, Housing and Urban Development, and Related Agencies Subcommittee last week approved the fiscal 2014 Transportation, Housing, and Urban Development spending bill. Associated General Contractors of America reported that the bill “funds the federal highway and transit programs at MAP-21 [Moving Ahead for Progress in the 21st Century] levels. In total, the bill provides over $40 billion for the highway program and $10 billion for the transit program.” Update: The full House Appropriations Committee yesterday approved the bill, but details were not accessible at press time.


The ConstructionPro Network member version of this article includes profiles of 13 additional bills. To sign up for a membership, click here.



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