ConsensusDocs Announces New Master Subcontract & Project Work Order Agreements
ConsensusDocs recently published their new Standard Master Subcontract Agreement between a constructor and subcontractor, and the Standard Project Work Order. This new standard master agreement, ConsensusDocs 755 (CD 755), allows parties to negotiate the standard terms and conditions of their working relationship, and then issue multiple project work orders (ConsensusDocs 756) without having to negotiate specific legal terms. Through CD 755, general terms and conditions addressing issues such as indemnification, notice requirements, and dispute resolutions only have to be negotiated once. Project specific terms, which are often negotiated by project field employees along with insurance bonding requirements are addressed in the project work order.
Per ConsensusDocs Executive Director Brian Perlberg, “the document will allow parties to spend less time revisiting subcontracting terms and will reduce the transactional costs of hiring outside counsel to review project work orders. I expect that these two new documents will be two of the most used standard contracts within our catalog of 100 best practice contracts due to the interest and need that I see throughout the industry.”
For more information on CD 755, please Click Here
| ASA Continues to Support Section 877 (Miller Act) of the FY20 NDAA On July 24, 2019, ASA joined the members of the Construction Industry Procurement Coalition (CIPC) to urge the Senate and House Armed Services Committee Leadership to include Section 877 as enacted in H.R. 2500, in the 2020 National Defense Authorization Act Conference Report. Specifically, Section 877 exempts the federal Miller Act bond threshold from the required indexing of all federal acquisition thresholds for inflation. The Miller Act has required federal infrastructure projects to be bonded for over 90 years. The payment bond protects subcontractors and suppliers against the risk of non-payment. They rely on the payment bond in case the general contractor does not or cannot pay them. Subcontractors cannot lien public property, so the payment bond provides them their only protection. Subcontractors and suppliers often are small businesses on federal projects and the risk of non-payment can be catastrophic to their businesses. The performance bond protects taxpayers by ensuring completion of the contract. In the event of a default, the surety steps in to complete the construction contract, saving the federal agencies and taxpayers from costs of stopping, re-letting, and restarting the project. The performance bond assures the public contracting entity that the construction contract will be completed for the contract price. The Miller Act bond threshold is scheduled to increase from $150,000 to $200,000 by 2020. Industry data shows that the federal government’s annual exposure to loss from contractor defaults in just this one class of small contracts is $300 million annually. Assuming an average contract price of $175,000, over 1700 contracts/year are affected. Each adjustment also will increase the payment bond threshold, so more small subcontractors and suppliers will not have payment bond protection on increasingly larger federal construction contracts. Indexing of all federal acquisition thresholds was added to the FY 2005 NDAA report. A few thresholds were exempted at time, such as the wage law and trade agreements. Moreover, the Miller Act was enacted as a remedial protective statute, and as such, the Miller Act should also be exempted from these inflationary adjustments. Senate Environmental and Public Works Releases Transportation Bill On July 29, 2019, the Senate Environment and Public Works (EPW) Committee released America’s Transportation Infrastructure Act of 2019, which would reauthorize transportation programs at a level of $287 billion over five years. The current authorization, the FAST Act, is due to expire September 30, 2020, and the Senate EPW proposal would increase transportation and infrastructure funding by 27 percent compared to the previous bill. However, the Senate Finance Committee may consider an increase to the gas tax or a move toward a VMT (vehicle miles traveled tax fee) and the RUC (road use charge). Tempering expectations, the Senate Banking Committee is working on a transit title, the Senate Commerce Committee is working on a rail and safety section, and the Senate Finance Committee is working on a finance mechanism. The House Transportation and Infrastructure Committee may not release a bill until next year, and the House Ways & Means Committee will seek to solve the funding puzzle on the House side. Further, the current authorization expires at the end of September 2020, a month before the presidential election. This timing suggests a temporary extension into the next year will probably be necessary. |
