Construction Legislative Week in Review
www.agc.org October 8, 2015
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On the Inside
CONGRESS
House Republican Leadership Race Postponed
HEALTHCARE
Rare Change to Affordable Care Act Made Official
FEDERAL CONTRACTING
AGC-Backed Procurement Reforms Pass House & Senate
SBA Releases Lower-Tier, Small Business Subcontractor Counting Rule
FAR Council Proposes Rule to Help Limit Short-list for Design-Build
Senate Small Business Committee Advances Anti-Reverse Auction Bill
TRANSPORTATION
Signs of Progress But Still No Highway Bill in House
CONGRESS
House Republican Leadership Race Postponed
 

Today, Republican members of the House of Representatives met for a special party conference to select a candidate to replace Rep. John Boehner (R-Ohio) as the Speaker of the House, who announced his resignation last week, effective Oct. 29.  Majority Leader Kevin McCarthy (R-Calif.) was thought to have support from the majority of the party, but, unexpectedly, announced this morning that he was exiting the race. At a press conference, Leader McCarthy stated the party needed a “new face” and someone the conference could unite behind; the underlying message being he did not believe that all members of his party were committed to putting their personal agendas aside and uniting behind his leadership to achieve goals in their battles against the Obama administration.  

McCarthy’s exit from the race opens opportunities for others to run for the Speakership. House Oversight and Government Reform Committee Chairman Jason Chaffetz (R-Utah) and Rep. Daniel Webster (R-Fla.) plan to remain candidates for the job. Other candidates will likely step forward in the near future.

Following Leader McCarthy’s comments, Speaker Boehner announced that the race for Speaker has been postponed. He also announced that he would remain Speaker until a successor is selected.

Today’s GOP meeting was designed as an effort for Republicans to identify the party’s nominee to run against Democrat Leader Nancy Pelosi (D-CA) for Speaker.

For more information, please contact Jeff Shoaf at shoafj@agc.org or (202) 547-3350. Return to Top

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HEALTHCARE
Rare Change to Affordable Care Act Made Official
 

This week, the president signed into law the Protecting Affordable Coverage for Employees (PACE) Act, which repeals a provision in the Affordable Care Act (ACA) forcing employers with 51 to 100 employees to change health care plans by requiring them to purchase insurance with additional mandates in 2016, ultimately leading to higher premiums. This change was making the insurance market more expensive and healthy employers were forced to consider pulling out of the marketplace and self-fund their insurance. More information can be found at the 50-100 Coalition, which AGC is a member of.

The PACE Act is an example of a rare, bipartisan development in Congress and is especially unique in that it made a structural reform to the ACA that the president ultimately signed into law. The PACE Act was urgent and timely as employers prepare for the 2016 plan year. However, the legislative change leaves open the possibility that some states may choose to use the definition of small market as less than 100 employees because they had streamlined their state systems to the original ACA definition. While this definition may mute the benefits of the PACE Act in these states, the act shows a shift in Congress and by the president to make structural reforms to the law that work for employers. To date, there have only been a handful of changes to the ACA that were signed into law.

The Republicans in Congress are now looking at using a budget maneuver, reconciliation, to pass legislation that would repeal the employer and individual mandates under the ACA; repeal the medical device tax; repeal IPAB; eliminate the excise tax on high cost employer-sponsored health coverage (“Cadillac Tax”); and repeal auto enrollment. These efforts are unlikely to be signed into law; however, there are legislative attempts with bipartisan support that could see a path forward in the coming months. Some of the bills with AGC’s support include: changing the definition of a full-time employee, relief from employer reporting requirements, and repeal of the Cadillac Tax, to name a few.

For more information, please contact Jim Young at youngj@agc.org or (202) 547-0133. Return to Top

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FEDERAL CONTRACTING
AGC-Backed Procurement Reforms Pass House & Senate
 

The House and Senate approved the conference report for the National Defense Authorization Act for Fiscal Year 2016, which includes several AGC-supported procurement reforms. Those reforms:

  • Help prevent fraud in the federal construction surety bond market by requiring that individual sureties to back their bonds with real, easy to value assets—like U.S. Treasury bonds and instruments. A number of individual sureties were using hard-to-value, over-valued or difficult to liquidate assets—like coal mine refuse, vacation homes and other real property—to back their bonds. Many such sureties declared bankruptcy upon contractor default, leaving subcontractors without any means of payment.  
  • Mandate that Department of Defense agencies—including the U.S. Army Corps of Engineers and Naval Facilities Engineering Command—consider the past performance of the individual companies in joint venture/teaming arrangements that include a small business, not merely the past performance of the joint venture.  Many federal agencies demand that the small business and its joint venture/teaming partners only submit past relevant experience that they perform together or otherwise be disqualified from consideration.  
  • Address a recent court decision that would require small business construction contractors to only purchase their materials and supplies—i.e., steel, furniture and equipment for the project— from only other small businesses. Consequently, the legislative reform provides an exclusion for construction contractors from what is called the “non-manufacturer rule” meant to prevent small business manufactures from merely acting as fronts for large manufacturers through small business set-aside contracts for goods.

AGC testified in support of these reforms earlier this year before the House Small Business Committee. AGC has also lead a coalition of 15 national construction trade associations in an effort to push such construction procurement reforms through Congress. With both chambers of Congress approving this legislation, it now moves to the president for his signature or veto. The president is threating to veto the NDAA conference report because it does not address defense budget cuts under the 2011 Budget Control Act.  However, the president has threatened to veto the annual NDAA bill over the last several years and has never actually vetoed the bill after it passed Congress.

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

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SBA Releases Lower-Tier, Small Business Subcontractor Counting Rule
Positive Change Stemming from AGC Legislative Action
 

The U.S. Small Business Administration (SBA) released a proposed rule that would allow prime contractors to count lower-tier, small business subcontracts towards their small business subcontracting goals. Currently, prime contractors can only take credit for their small business subcontracts at the first tier. This proposed rule will allow prime contractors to take credit for such subcontracts—above $650,000—at any tier to meet such goals.  

SBA issued the proposed rule as a result of AGC’s congressional advocacy efforts. In 2013, Congress passed and the president signed into law the National Defense Authorization Act of FY 2014, which included a provision mandating this change. AGC testifiedbefore the House Small Business Committee on this issue and worked with key members in the House and Senate to ensure its passage from bill introduction to enacted law. Comments on the proposed rule are due December 7.

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

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FAR Council Proposes Rule to Help Limit Short-list for Design-Build
AGC Legislative Success Begins Implementation Process
 

The FAR Council released a proposed rule that would help limit the number of short-listed design-build teams to no more than five during a two-step design-build procurement through federal agencies. The proposed rule takes a two-pronged approach to implementing this policy. First, for contracts at or below $4 million, contracting officers will have to document their reasons for including more than five teams on the short-list. Second, for contracts above $4 million, contracting officers will not only have to provide such documentation to include more than five teams, but also have approval from the head of the contracting agency—i.e., Chief of Engineers at U.S. Army Corps of Engineers—to include more than five teams on the short-list.

Previously, a loophole in law allowed federal contracting officers to short-list any number of teams, without documenting their reasons or being approved by higher level, senior agency officials. As a result, a number of design-build procurements saw 10 or more teams selected for the short-list and asked to submit expensive technical proposals.

The FAR Council issued this proposed rule as a result of AGC’s congressional advocacy efforts. The National Defense Authorization Act of FY 2015, passed last year, included a provision requiring this change to be made. AGC testified before the House Small Business and House Oversight and Government Reform Committees on this critical change.

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

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Senate Small Business Committee Advances Anti-Reverse Auction Bill
Prohibits Reverse Auctions for Construction Services Contracts
 

This week, Sens. David Vitter (R-Louisiana) and Jeanne Shaheen (D-N.H.) introduced and passed legislation out of the Senate Small Business and Entrepreneurship Committee that would help prohibit federal agencies from conducting reverse auctions for construction services contracts. A reverse auction is a procurement process through which contractors bid down price—and can see others’ bids—for a good or service contract in real time. Many federal agencies use reverse auctions to procure non-variable commodities like pens and paper. However, several federal agencies also use reverse auctions to procure construction services, which are inherently variable based on the project, site location and construction professionals.

The Small Contractors Improve Competition Act, S. 2139, received unanimous, bipartisan support from the committee. AGC sent a letter to Sens. Vitter and Shaheen thanking them for their leadership on this issue, as they are the Chairman and Ranking Member, respectively, of the committee. The bill may now be considered for a vote on the Senate floor.

Sens. Rob Portman (R-Ohio) and Mazie Hirono (D-Hawaii) introduced a more comprehensive AGC-backed construction procurement bill in June as a result of the AGC co-chaired Construction Industry Procurement Coalition. That legislation also includes a provision that would help prohibit reverse auctions for construction services. For more information on reverse auctions, please see AGC’s recent testimony on the topic.

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

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TRANSPORTATION
Signs of Progress But Still No Highway Bill in House
Meet with Reps. Next Week
 

This week there were encouraging reports out of the House Transportation & Infrastructure Committee that they plan to finalize and move their long-term highway & transit bill before the end of October.  Committee Chairman Bill Shuster (R-Pa.) and Ranking Democrat Peter DeFazio (D-Ore.) met today to continue negotiations with the goal of announcing a mark-up the week of Oct. 26.  It is unclear what funding levels the House bill will provide, due in large part to the breakdown in negotiations last week between Ways & Means Chairman Paul Ryan and Senator Charles Schumer, who had been negotiating a bipartisan compromise on how U.S. corporations are taxed on their overseas assets and using that revenue to fund a transportation bill.

Although there seems to be more clarity on when the House will mark up their bill, the fact remains that the current extension of federal highway and transit program expires on Oct. 29 and it appears that  another extension will be necessary in order for the full House to consider a bill and for differences to be resolved with Senate, who passed the DRIVE Act in July.  

It is imperative that the House move their bill and start negotiations with the Senate as soon as possible.  AGC members need to use the upcoming Columbus Day recess to contact and meet with their representative and encourage them to move as quickly as possible in passing a transportation bill.  For more information visit Hardhats for Highways.

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

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