Construction Legislative Week in Review
www.agc.org January 9, 2014
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On the Inside
APPROPRIATIONS
Funding Bill Awaits Consideration
ENVIRONMENT
AGC & Coalition Partners Meet with OMB on Clean Water Act Rule
LABOR
NLRB Abandons Notice-Posting Rule
AGC PAC
AGC PAC Prior Authorization Campaign
SMALL BUSINESS
Accelerated Payments to Small Business Subcontractors FAR Rule in Effect
Small Business Administration Issues Final Size Standards Rules
FEDERAL CONTRACTING
AGC Presses for Direct-Federal Construction Procurement Reform in 2014
WATER RESOURCES
House Leadership Lists WRDA as Top Legislative Priority
AGC EVENTS
AGC Financial Issues Forum Rundown
CONGRESS
Liz Cheney Exits Senate Race
Three More Retirements
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APPROPRIATIONS
Funding Bill Awaits Consideration
 

Members of the House and Senate Appropriations Committee continue to work on an omnibus spending bill that will fund the government for the remainder of fiscal year 2014, but it is almost certain the bill will not be considered by either chamber this week.

The current continuing resolution funding the activities of the federal government will expire next Wednesday, Jan. 15, but House members and Senators leaders remain confident that they will come to an agreement and avoid another government shutdown.   However, in order for the bill to pass through both chambers by Wednesday, it would have to be completed and filed tomorrow. If that doesn’t happen, the House and Senate will be forced to  pass a short term (as short as one or two days) spending package either Tuesday or Wednesday of next week. 

AGC sent a letter to House and Senate appropriators urging them to pass an omnibus spending bill that recognizes the need for investment 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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ENVIRONMENT
AGC & Coalition Partners Meet with OMB on Clean Water Act Rule
 

AGC and several other trade groups from the construction, agriculture, mining, and manufacturing sectors met with the Office of Information and Regulatory Affairs (OIRA), the part of the Office of Management and Budget (OMB) responsible for regulatory analysis, oversight, and coordinating inter-agency review. The group expressed serious concerns with the policy, science and economics of the upcoming rulemaking on Clean Water Act jurisdiction.

With the OMB regulation up for its final interagency review before being released as a proposed rule for public comment, the Waters Advocacy Coalition, of which AGC sits on the Steering Committee, presented its case for why the rule is not ready to be released. The group detailed why the rulemaking would be a serious expansion of federal Clean Water Act jurisdiction - far beyond what the agency had contemplated - by critiquing the methodology and data they used to arrive at their determination. The Coalition also explained why the rulemaking ran contrary to its goal of clarifying jurisdiction by introducing more unknowns left up to the agency to interpret – such as what they define floodplains or riparian areas to encompass.

The group also took issue with the process that EPA has undertaken with regard to the scientific report EPA has based much of the reasoning in the rulemaking upon. The scientific report is currently being examined by the Science Advisory Board and peer-reviewed on a parallel track with the development of the rulemaking, instead of finalizing the science before crafting the rule.  Therefore, it cannot be determined whether EPA’s initial report is flawed.

Finally, the group pointed out several glaring errors in the economic cost/benefit analysis used to justify the rule. For help with this, the group brought in Professor of Economics at UC Berkeley David Sunding. He pointed out areas where the agency has failed to use an adequate baseline for construction activity; based benefits calculations on outdated and irrelevant numbers without correcting for inflation; and failed to consider the costs associated impacts to the Clean Water Act beyond Section 404 programs.

With the clock having expired on the 90 day interagency review, OMB could release the rule for public comment at any time now. AGC will continue to educate members of Congress on this issue and make the construction industry’s case at the agency level for why this expansion of jurisdiction is a flawed course of action.

For more information, please contact Scott Berry at (703) 837-5321 or berrys@agc.org Return to Top
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LABOR
NLRB Abandons Notice-Posting Rule
 

The battle over the National Labor Relations Board’s notice-posting rule has effectively ended by Board forfeit.  The rule would have required most private-sector employers to post a designated notice informing employees of the right to unionize and of other rights under the National Labor Relations Act (NLRA).  The Board issued the final regulation in August 2011 but put implementation on hold as a result of legal challenges.  In separate cases decided in May and June of 2013, both brought by AGC-supported organizations, the U.S. Courts of Appeals for the D.C. and Fourth Circuits struck down the rule on different grounds.  On Jan. 2, 2014, the Board let the deadline for seeking Supreme Court review of those decisions to pass without action.

In a statement issued on Jan. 6, 2014, the Board said that it “will continue its national outreach program to educate the American public about the statute.”  The Board has also reminded employers that they may voluntarily post the designated notice, which remains available on the agency’s website.

The Board could issue a new notice-posting rule, but this would require restarting the formal rulemaking process from scratch, and, so far, the Board has made no indication that it intends to do so.  This stands in contrast with indications from the Board that it very well might revisit its other embattled rulemaking effort, the so-called “Quickie Election” Rule.  That rule – which would expedite the process in union representation elections to unions’ advantage – has been suspended since a court ruled that the Board issued it without a proper quorum.  The Board has chosen to abandon its appeal of the decision in that case as well, but it continues to keep the initiative on its regulatory agenda.

AGC members are reminded that, while the Board’s notice-posting rule is now defunct, many federal contractors must still comply with similar rules issued by the U.S. Department of Labor and the FAR Council.

For more information, please contact Denise Gold at (703) 837-5326 or goldd@agc.org. Return to Top
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AGC PAC
AGC PAC Prior Authorization Campaign
 

Before the holiday season, you or someone in your company may have received a fax from David Ashinoff, director of AGC PAC & Political Advocacy, with the subject “AGC of America Compliance Needed.”  While many faxes we receive nowadays tend to be scams or spam, please know this fax was neither.  AGC PAC kicked off a year-end prior authorization effort by sending a form via fax to AGC primary contacts at member companies that did not have a prior authorization on file or that had one expiring on Dec. 31, 2013.

Because AGC is a corporate-based trade association, AGC PAC is required by federal election regulations to obtain permission before it can communicate with member companies’ administrative and executive personnel.  When members grant authorization, it allows AGC PAC to inform and educate them on how the national PAC is helping to advance construction priorities in Washington, D.C. through its support of pro-construction candidates.  It also allows AGC PAC to ask for or accept support.  All of this, of course, is completely voluntary and not participating will in no way affect an AGC membership.

This effort is part of an ongoing prior authorization campaign which is helping to grow the AGC PAC.

Please visitagc.org/PriorAuthorization to learn more about prior authorization and to grant your company’s prior authorization online.

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

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SMALL BUSINESS
Accelerated Payments to Small Business Subcontractors FAR Rule in Effect
 

As of Dec. 26, 2013, a new clause will be added to all new direct-federal solicitations requiring prime contractors to make accelerated payments to small business subcontractors upon receiving an accelerated payment from the federal government. Prime contractors are required to flow down flow down the clause in subcontracts with other small businesses.

To view the final rule issued by the Federal Acquisition Regulation (FAR) Council establishing this new clause, click here.

For more information, please contact Jimmy Christianson at (703) 837-5325 or christiansonj@agc.org Return to Top
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Small Business Administration Issues Final Size Standards Rules
Only Dredging and Land Subdivision NAICS Codes Change
 

As part of its ongoing comprehensive size standards review, the U.S. Small Business Administration (SBA) published a final rule on construction industry size standards for small businesses on Dec. 23 of last year. The final rule increases only two of the 32 size standards for Construction North American Industry Classification System (NAICS) codes:

Dredging and Surface Cleanup Activities from $20 million to $25.5 million; and

Land Subdivision from $7 million to $25.5 million.

The final rule is effective on Jan. 22, 2014. For more information, click here to view a client alert from Smith Currie & Hancock, LLP.

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

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FEDERAL CONTRACTING
AGC Presses for Direct-Federal Construction Procurement Reform in 2014
Prohibiting Reverse Auctions, Reforming Design-Build and Implementing Lower Tier Small Business Subcontractor Counting
 

AGC will press for action on a host of direct-federal construction procurement initiatives in 2014, including: (1) prohibiting reverse auctions for construction services; (2) reasonably limiting single-step design-build procurements; (3) reasonably limiting second-step design-build finalists to three to five teams; and (4) reasonably implementing the allowance of prime contractors to count lower tier small business subcontractors towards their small business subcontracting goals. The first three initiatives are legislative and well-under way in Congress as a result of AGC advocacy efforts in 2013. The last initiative is regulatory and faces implementation through the U.S. Small Business Administration, after AGC successfully pressed for the small business reform before Congress in 2013.

Turning to the legislative initiatives, two AGC-supported direct-federal construction procurement reform bills were introduced in 2013: (1) H.R. 2751, the Commonsense Construction Contracting Act of 2013, by Rep. Richard Hanna (R-N.Y.); and (2) H.R. 2750, the Design-Build Efficiency and Jobs Act of 2013, by Rep. Sam Graves (R-Mo.). H.R. 2751 would prohibit federal agencies from procuring construction services that small businesses could perform through online reverse auctions. H.R. 2750 would prohibit single-step design-build procurements for projects above $750,000 and limit second-step design-build finalists to three to five teams.

Prior to their introduction, AGC testified in May 2013 before the House Small Business Committee urging members of Congress to advance these general initiatives.  Shortly thereafter in July, Reps. Graves and Hanna introduced the aforementioned legislation. In December, AGC testified before a joint hearing of the House Committees on Veterans Affairs and Small Business on H.R. 2751 and the prohibition of reverse auctions for construction services. That same month, AGC also testified before the House Oversight and Government Reform on H.R. 2750 and design-build procurement reform. At that hearing, AGC testified that the association generally supports H.R. 2751, but notes that the $750,000 single-step design-build procurement threshold may be too low in certain situations, and some degree of flexibility was needed. The U.S. Army Corps of Engineers (USACE) agreed with AGC and offered a solution whereby all design-build procurements will be two-steps, unless the contracting officer receives approval for single-step design-build procurement through USACE Headquarters.

On the regulatory issues, in December Congress passed and the president signed into law the AGC-supported reform that will allow prime contractors to count lower-tier small business contractors towards the prime contractor’s small business subcontracting 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, the reform itself will not be effective for at least 18 months after an SBA rulemaking process occurs.  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.

For more information, please contact Jimmy Christianson at (703) 837-5325 or christiansonj@agc.org Return to Top
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WATER RESOURCES
House Leadership Lists WRDA as Top Legislative Priority
 

On Jan. 3, House Majority Leader Eric Cantor (R-Va.) released a memorandum noting the House Leadership’s intent to hold a vote on a final bill Water Resources Development Act (WRDA) bill as soon as it is ready for consideration. Select members of the House and Senate—called conferees—have been working on resolving the discrepancies between the two chambers’ respective WRDA bills in a conference committee since late November. The short legislative schedule during the holiday season resulted in negotiations continuing into 2014. Please visit AGC’s Legislative Action Center and ask your members of Congress to support the construction industry’s priorities for the final WRDA bill. 

AGC has been active throughout the WRDA legislative process and has advocated for the construction industry’s WRDA priorities, detailed in a letter to all conferees. In both its letter and continuing lobbying efforts, AGC articulates the need for:

  1. An adequate and efficient project authorization process;
  2. Spending harbor maintenance tax revenues on harbor maintenance;
  3. Addressing the Olmsted Locks and Dam project in a way that allows other necessary inland waterways projects to proceed;
  4. Environmental streamlining and project delivery acceleration through limiting the time to file lawsuits on projects under the National Environmental Policy Act and setting firm deadlines for pre-construction project studies; and
  5. Innovative financing methods—including a public private partnership pilot program and Water Infrastructure Finance and Innovation Authority—that supplement, not replace, traditional government funding for water resources infrastructure.

The House passed its WRDA bill in October by an overwhelming 417-3 vote. The Senate also passed its version of the bill in May on an equally impressive bipartisan 83-14 vote. During their conference meeting, the only legislative issue of some controversy was the environmental streamlining provisions. The conference committee could conclude its work resulting in a final WRDA bill this month.

Again, please visit AGC’s Legislative Action Center and ask your members of Congress to support the construction industry’s priorities for the final WRDA bill.  AGC will continue to advocate for the construction industry’s legislative priorities as conferees continue their discussions.

For more information, please contact Jimmy Christianson at (703) 837-5325 or christiansonj@agc.org. Return to Top
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AGC EVENTS
AGC Financial Issues Forum Rundown
 

This week nearly 50 member company CFOs, CEOs and other senior accounting professionals are participating in the AGC Financial Issues Forum (FIF) Winter Meeting in Miami, Florida. FIF members are being brought up to speed on pertinent tax and accounting issues and engaging in colloquies with peers on the latest accounting proposals impacting the construction industry. On the first day of the forum attendees heard from speakers on a wide variety of topics including:

  • An economic outlook for the industry by AGC’s Economist Ken Simonson;
  • Update on Financial Accounting Standards Board (FASB) open projects such as lease accounting and revenue recognition by FASB senior staff, CBIZ MHM, and an AGC member CFO;
  • Update on the implementation of the Affordable Care Act, as well as details on the law’s penalties and taxes from Cavanaugh Law firm attorneys;
  • A discussion on latest audit issues faced by construction companies.

On day two, members will be presented information during dedicated segments covering:

  • A discussion on construction tax issues by representatives from Moss Adams, Carbis Walker and CBIZ MHM;
  • A tax reform policy dialogue concerning the recently published legislative drafts and future congressional action by AGC tax and government affairs staff;
  • A discussion with former Ways & Means Committee staff director; and the author of the definitive book on the 1986 reform on the thinking behind members of Congress’ approach to tax reform.

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

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CONGRESS
Liz Cheney Exits Senate Race
 

Saying "serious health issues have arisen in our family", Liz Cheney, the former national television commentator and daughter of former Vice President Dick Cheney, officially dropped her Republican primary challenge to Wyoming Sen. Mike Enzi.  

Trailing by more than 30 points in a number of publicly-released polls, the Cheney campaign never fully came to fruition as a serious challenge to the three-term incumbent.  She was successful on the fundraising trail, however, amassing more than $1 million since her July 2013 announcement, and that is prior to publishing the fourth quarter financial numbers in the year-end Federal Election Commission disclosure report.

The Wyoming Senate race should now be an easy ride for Mr. Enzi, as he will likely be unopposed for re-nomination.  The Democrats will not seriously contest the seat in the general election.

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

One Republican and two Democratic members of the U.S. House of Representatives recently announced that they will not seek re-election later this year.

Six-term Rep. Jim Gerlach (R-PA-6), announced on Monday that he will not seek a seventh term from his Philadelphia suburban congressional district.  Aside from spending what will be 12 years in the House at the end of the current Congress, Mr. Gerlach also served a dozen years in the Pennsylvania legislature.  The 6th District is highly competitive and will be rated as a toss-up in an open seat situation.

Two days later a pair of veteran Democratic House members, both originally elected in 1996, announced that they will not seek re-election as well.

Rep. Carolyn McCarthy (D-NY-4), citing health reasons after being diagnosed with lung cancer earlier this year, will not seek a tenth term in the House from her Long Island congressional seat.  With an Obama '12 victory margin of 56-43 percent, the eventual Democratic nominee will have an edge at winning this seat.

Rep. Mike McIntyre (D-NC-7), who survived the closest election of the 2012 cycle (654 votes) has also decided to end his career in the House.  As the number one Republican national target, it has become clear that the congressman's victory chances are diminishing.  Former state Sen. David Rouzer (R), the close-finishing 2012 nominee, has announced and been running for weeks.  Multiple candidates from both parties will now likely line up to run. 

Wednesday’s developments expand the number of House open seats to 27 (18 Republicans; 9 Democrats).

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