Construction Legislative Week in Review
www.agc.org December 19, 2013
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On the Inside
BUDGET
Senate Passes Budget
AGC Works to Preserve National Diesel Grant Funding
FEDERAL CONTRACTING
AGC Legislative Priority Passes Congress
TAX
Baucus to be Nominated Ambassador to China
Baucus Releases New Tax Draft
Ryan sets sights on Ways and Means Gavel
LABOR
AGC Opposes USACE Government-Mandated PLA
CONGRESS
Three Major House Retirements
Byrne Wins Special Election
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BUDGET
Senate Passes Budget
 

This week, the Senate passed the bipartisan budget deal by a vote of 64 -36.  Nine Republican Senators joined all 55 Democrats in supporting the legislation, which passed the House last week. It is significant to note that this deal actually saves more money than the sequester did and sets the precedent that entitlement savings should be part of any future budget deals.

As reported in last week’s CLWIR, although the budget deal is small in scale, it provides four promising signs for AGC priorities. First, it creates agreed-upon budget numbers for the House and Senate. It also increases the chances of Congress passing an all-agency spending bill for fiscal year2014, instead of a year-long continuing resolution that would prohibit new federal construction project starts.  The budget deal will also likely lead to a more traditional appropriations process for fiscal year 2015.  That means that Congress can actually analyze federal spending priorities and make difficult decisions to eliminate bad programs and continue good programs. The traditional appropriations process is the only time Congress performs a line-by-line analysis of every federal program, which has not happened since 2006.

The detailed analysis also provides a forum for allowing Congress to have a say over regulations proposed by the Obama administration.

Third, it establishes the fact that Congress can work in a bipartisan manner.  Every item on the AGC agenda – whether it is tax reform, immigration reform, entitlement reform or a long-term highway authorization – is contingent upon bipartisan agreements in both the House and Senate.

Fourth, the deal recognizes the need for government programs to be paid for and it solidly states that those who benefit from government pensions should pay a little more for their retirement security and those who fly should pay a higher “user fee” for their aviation security .

 Currently the  House and Senate appropriators are working under the budget agreement  to complete  an all-agency omnibus spending bill, pass it through both chambers and have the president sign it prior to the expiration of the current continuing resolution on January 15 in order to avoid another government shutdown.

AGC will remain engaged throughout the process and continue to advocate that any spending bill recognize the importance of investing in federal construction programs.

For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@agc.org Return to Top

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AGC Works to Preserve National Diesel Grant Funding
 

AGC, along with a broad-based diesel coalition, sent a letter to the Office of Management and Budget encouraging them to include funding in the fiscal year 2015 budget for grants, loans, and rebates made possible by the Diesel Emission Reduction Act (DERA). 

AGC chapters – working with AGC of America – have won millions in federal funds to support AGC members’ voluntary “retrofit” projects.  The Environmental Protection Agency’s (EPA) National Clean Diesel Funding Assistance Program has awarded and distributed funding provided by DERA through a competitive grant program to incentivize and support many clean-diesel projects.  AGC chapters and members have voluntarily applied for and won millions of dollars in EPA diesel retrofit grants, in addition to leveraging millions more in matching and in-kind contributions to help their members afford the high cost of reducing emissions from construction equipment.

Future federal funding for the DERA program remains uncertain.  The President’s fiscal year 2014 budget only added to the uncertainty by proposing a 70 percent cut to DERA.  AGC is focused on ensuring both the Administration and Congress recognize the importance of the program and that they provide greater financial assistance to the many equipment owners who seek a fair and effective way to reduce emissions from existing fleets of off-road equipment.

For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@agc.org Return to Top
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FEDERAL CONTRACTING
AGC Legislative Priority Passes Congress
President to Sign Law Allowing Prime Contractors to Count Lower-Tier Small Businesses
 

On December 19, the Senate passed the National Defense Authorization Act of 2014 (NDAA), which includes a critical AGC-supported small business reform.  The AGC-supported reform will allow prime contractors to count lower-tier small business contractors towards the prime contractor’s small business subcontracting goals. The current law only allows prime contractors to count first-tier small business subcontractors towards these goals.

The simple change in this AGC-supported reform will encourage prime contractors to make sure small businesses have opportunities to compete for subcontracts at every tier, thereby allowing more opportunities for small business growth. In addition, it will help prevent first-tier small business “pass-through” situations and help provide transparency to the small business program.   

However, while the president will likely sign this change into law before the end of the year, the change itself will not be effective for at least 18 months after a rule making process occurs.  And, as with any rule making process impacting your construction contracting business, AGC will proactively work with regulators to help ensure that contractors are not overburdened by the implementation process. Please see below for more details.

Explanation of Lower-Tier Small Business Counting Legislation Enacted

Section 1614 of the National Defense Authorization Act of 2014 will allow prime contractors to count lower-tier small business contractors towards the prime contractor’s small business subcontracting goals. However, this reform will not be effective—and therefore contractors will not see it included in contracts—until the fiscal year after the U.S. Small Business Administration (SBA) issues final regulations to implement this change. Congress set a deadline of 18 months for SBA to complete the rule making process for this reform. That stated, AGC notes that to date, SBA has not issued many final regulations stemming from the Small Business Jobs Act of 2010, despite statutory deadlines set by Congress.

AGC points out that:

  • The newfound ability to count lower tier small business subcontractors will not eliminate the prime contractor’s responsibility to make a good-faith effort to hire small business subcontractors at the first-tier level of subcontracting;
  • Many subcontractors will have to maintain small business subcontracting plans. This requirement will not apply to small businesses subcontractors with no further subcontracting opportunities or  subcontractors who receive subcontracts of less than  $ 1 million—
  • In addition, prime contractors will be responsible for monitoring subcontractor compliance with subcontracting plans.

Questions remain as to the degree to which prime contractors must monitor or be responsible for subcontractor compliance with subcontracting plans, among other things. This is where AGC will continue its pro-active efforts to help ensure that the administration issues the least burdensome rules possible – as AGC successfully did for the veterans and disabled hiring rules for this important small business reform.  

Background on AGC Legislative Effort

At the request of the AGC Federal and Heavy Construction Division, the AGC Board of Directors approved this reform as a national legislative priority in late 2012.  AGC of America worked closely with its chapters and members to win support of key legislators in Congress.   AGC members throughout the country—through coordinated national and chapter legislative action center efforts—sent hundreds of letters to their representatives and senators in Congress on this issue. AGC members met with members of Congress both in Washington, D.C., and in their offices at home.

Among those key legislators AGC contacted were Reps. Sam Graves (R-Mo.)—chairman of the House Small Business Committee—and Richard Hanna (R-NY)—chairman of the House Small Business Subcommittee on Contracting and Workforce. With Chairman Graves’ support, Rep. Hanna held a hearing and had AGC testify on prospective legislation before the House Small Business Committee in May. On June 4, Chairman Graves introduced H.R. 2232, the Make Every Small Business Count Act of 2013, which included the AGC-supported reform. Along with Reps. Graves and Hanna, Reps. Scott Peters (D-Calif.), Duncan Hunter (R-Calif.), Chris Collins (R-N.Y.), Gerald Connolly (D-Va.), Mike Coffman (R-Co.) and Derek Kilmer (D-Wa.) cosponsored the bill.  By the end of June, the House of Representatives passed H.R. 2232 as an amendment to the National Defense Authorization Act of 2014, which also passed that chamber.

In the Senate, Sens. Chris Coons (D-Del.) and Roger Wicker (R-Miss.) introduced a lower-tiers counting amendment—at AGC’s urging—to that chamber’s NDAA bill in November. Although the Senate never voted on any amendments to its NDAA bill—as a result of time lost and ill-will generated from the change in the Senate’s approval of administration judicial and administration nominees, called the “nuclear option”—the Coons/Wicker amendment and AGC letters sent to the Senate generated momentum for the advancement of this important change.

While the final law enacted includes some implementation requirements not originally included in H.R. 2232 and the Coons/Wicker Amendment, it will allow prime contractors to count lower-tier small business subcontractors towards their small business goals.  AGC will pro-actively work with the SBA and Federal Acquisition Regulation Council to help ensure that the implementation of this important reform does not overburden prime contractors.

For more information, please contact Jimmy Christianson at (703) 837-5376 or christiansonj@agc.org Return to Top

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TAX
Baucus to be Nominated Ambassador to China
 

This week, Senate Finance Committee Chairman Max Baucus (D-Mont.) told colleagues that he intends to be nominated by President Obama to be the next ambassador to China, succeeding outgoing U.S. Ambassador Gary Locke. As one of the most tenured senators currently serving, his potential early resignation in the Senate could trigger new policy and political implications in 2014, including passage of a tax reform bill. A resignation by Baucus would leave Senator Jay Rockefeller (D-W.Va) as the successor to the Finance Committee chairmanship, but Rockefeller has signaled that he intends to remain chair of the Commerce Committee until he retires at the end of 2014. Next in line is Senator Ron Wyden (D-Ore.) who has a keen interest in tax reform and it is likely to take up the charge.  However, much of the momentum Baucus and his staff have gained to potentially pass a tax reform bill in 2014 will be lost.  It is not yet known when Baucus's nomination will reach the Senate for consideration.

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org. Return to Top
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Baucus Releases New Tax Draft
 

As news of Chairman Baucus’s nomination came as a surprise to those monitoring the Finance Committee’s policy moves, the chairman released a new staff discussion draft on energy-related tax incentives and stated that he has more tax drafts to release after Congress returns from the holiday break in January. Under the proposal, over 40 existing energy tax incentives – including incentives for residential energy efficiency, electric plug-in vehicles, as well as oil and gas tax industry credits – would be eliminated and replaced with two new expanded credits for electricity and transportation fuel.

The proposal, which would be effective starting in 2017, would phase out the new credits over a four-year period once the “greenhouse gas intensity” of the electricity generation or fuel declines to the point that it is 25 percent cleaner than it was in 2013, a metric that would be determined by new regulations set forth by the Environmental Protection Agency. Overall, the bill is expected to reduce current federal spending on all energy incentives of $150 billion over 10 years with the majority of the savings coming from the repeal of oil and gas industry tax incentives, as well as the provisions eliminated in the committee’s cost recovery and accounting draft. Finance Committee staff stated that the savings would be used to lower the corporate income tax rate (a 1 percent reduction is about $133 billion in savings). Committee staff declined to specify how many more drafts remain in the queue, or provide a timeline for how long they would continue to come out next year.

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org. Return to Top
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Ryan sets sights on Ways and Means Gavel
 

In an interview this week with the Wall Street Journal, House Budget Chairman Paul Ryan (R-Wisc.) stated that he planned to try and succeed term-limited Chairman Dave Camp (R-Mich.) for the Ways and Means gavel in 2015. Chairman Camp must decide whether to seek a waiver to retain his chairmanship; however, there is a slim chance the House Republican Steering Committee, which selects leadership and chairmen positions, will grant his request. While Chairman Ryan became the first lawmaker on the tax-writing committee to publicly state his intentions for the top position, there are two senior members that are in the running: Reps. Kevin Brady (R-Texas), a policy wonk who has chaired multiple subcommittees, and Devin Nunes (R-Calif.) a fundraising juggernaut. Chairman Ryan's status within the Republican Party as a fiscal policy leader, former vice presidential candidate and fundraiser with name recognition gives him advantages.

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org. Return to Top
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LABOR
AGC Opposes USACE Government-Mandated PLA
 

Recently, AGC sent a letter opposing the possible use of a project labor agreement (PLA) mandate posted by the U.S. Army Corps of Engineers Wilmington District for the North Carolina/Virginia general construction multiple award task order contract.

AGC has sent over 80 letters to federal agencies opposing PLA mandates and bid preferences during the Obama Administration, most in response to agency announcements that a PLA mandate or preference was under consideration for a particular project or an anticipated set of projects in a particular area. Of those, only one PLA mandate has been issued to date.

AGC neither supports nor opposes contractors’ voluntary use of PLAs on government projects, but strongly opposes any government mandate for contractors’ use of PLAs. AGC is committed to free and open competition for publicly funded work, and believes that the lawful labor relations policies and practices of private construction contractors should not be a factor in a government agency’s selection process. To view AGC efforts opposing government mandated PLAs, click here.

For more information, please contact Jimmy Christianson at 703-837-5325 or christiansonj@agc.org Return to Top

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CONGRESS
Three Major House Retirements
 

Three House members surprisingly announced retirements yesterday, potentially altering the outlook for 2014.  Veteran Congressmen Frank Wolf (R-VA-10), Tom Latham (R-IA-3), and Jim Matheson (D-UT-4) each will not seek re-election, representing an aggregate total of 68 years of congressional seniority. 

At first glance, it appears the eventual Republican nominee will be the prohibitive favorite to convert the solidly conservative 4th Congressional District of Utah, while both the Virginia and Iowa marginal seats will begin in the toss-up category.  Along with the vacant FL-13 seat, three more Republican seats will now become competitive and susceptible to Democratic conversion.  The party needs 17 seats to claim the House majority and converting these three winnable districts would reduce their net minimum number to just 15.

Iowa-3

Rep. Latham, originally elected in 1994, has seen his district become ever more competitive in recent years.  Particularly in 2012 when he was paired with veteran Rep. Leonard Boswell (D-IA-3) in the four-seat post-redistricting plan, Mr. Latham had to campaign hard to score a sound 52-44 percent win in a place where he represented only 17 percent of the new constituency, versus the 56 percent who had previously voted for Mr. Boswell.  President Barack Obama carried the new district with a 51-47 percent margin.  Therefore, just looking at these basic numbers gives us a perspective that the Democrats have a significant conversion opportunity in central Iowa.

Months before Mr. Latham decided not to seek re-election, Democratic former state Sen. Staci Appel announced her candidacy.  Now that the seat is open, it is likely other Democrats will jump into the race for the Des Moines anchored seat.  Republicans have a lot of options here, despite this area trending mostly away from them.  Secretary of State Matt Schultz, West Des Moines Mayor Steve Gaer, and former state Republican Party chairman Matt Strawn are listed as possible GOP contenders.  Looking at the quality of candidates from both parties coupled with the district's marginal nature means this new open seat contest will become one of the top national House campaigns in the 2014 election cycle.

Utah-4

Rep. Jim Matheson was originally elected to the Salt Lake City-based 2nd District back in 2000.  As the only Democrat in the Utah federal delegation, Rep. Matheson has carefully protected his Utah constituency and still kept loyal to his party leaders in Washington.  He typically held one of the top two or three Republican seats in the entire country represented by a Democratic congressman. 

Without Mr. Matheson as the party standard bearer, Democrats will have a very difficult time even waging a competitive battle here.  Obviously Mayor Love has the inside track to the Republican nomination and will be difficult to beat for a candidate with considerably fewer advantages than the veteran incumbent.  This race will likely be a Republican conversion.

Virginia-10

The longest-serving of yesterday's retiring trio is 17-term veteran Frank Wolf (R) of northern Virginia.  Elected in the Reagan landslide of 1980, Mr. Wolf defeated then incumbent Joseph Fisher (D) 51-49 percent, after scoring 47 percent against him in 1978.  He would go onto win 16 more times in his career.

The 2011 redistricting process helped make the Wolf seat more Republican.  However, this will still be a highly competitive race with toss-up status potential, and the Democrats in particular have a large number of incumbent state legislators and local officials who will be giving consideration to entering the race.  Previously announced is Fairfax County Supervisor John Foust, but it remains to be seen if others step up to challenge him for the Democratic nomination.  On the Republican side, the three most notable names appearing as the product of early congressional candidate speculation are state Sen. Richard Black and Delegates Barbara Comstock and Tim Hugo.

For more information, please contact David Ashinoff at (202) 547-5013 or ashinoffd@agc.org Return to Top

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Byrne Wins Special Election
 

As expected, former state Senator and gubernatorial candidate Bradley Byrne (R) easily won the special election to replace resigned Rep. Jo Bonner (R), scoring a 2:1 victory over Democrat Burton LeFlore in the strongly Republican southwestern Alabama congressional district.

Mr. Byrne will take the oath of office in early January and serve the balance of the current term.  He should have little trouble securing a full term next year.

Concluding these two special elections will mean the House vacancy total is down to only one seat - the late Rep. Bill Young's (R) FL-13 seat. Recently confirmed Federal Housing Finance Agency Director Mel Watt (D) who represents NC-12 is expected to resign any day to begin work at the agency.

For more information, please contact David Ashinoff at (202) 547-5013 or ashinoffd@agc.org. Return to Top
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