August 2017

ASA Encourages Prime Contractors to Apply for National Construction Best Practices Awards

Prime contractors and specialty trade contractors that have signed, within the past year, a contract directly with a construction owner under which it performs construction services are encouraged to apply for ASA’s National Construction Best Practices Awards. These awards recognize prime contractors who construction subcontractors say are the best to work for—those who are committed to best business practices like safety management, prompt payment, prompt processing of change requests and claims, and effective project scheduling and coordination. The criteria for these awards include the use of a standard subcontract whose provisions substantially reflect the best practices incorporated into the ASA-endorsed ConsensusDocs 750 Standard Agreement Between Constructor and Subcontractor, as well as highly favorable evaluations from three specialty trade contractors, based on 20 project management factors. Each applicant must supply three sealed business-practices recommendations from specialty trade contractors that have worked for it in the past year along with a copy of its standard subcontract with its application. A construction attorney will evaluate the standard subcontract, and the ASA Task Force on Ethics in the Construction Industry will evaluate the recommendations from specialty trade contractors. Prime construction contractors that use the ASA-endorsed ConsensusDocs 750 contract form as their standard subcontract automatically pass the subcontract evaluation. The application deadline is Nov. 3, 2017, and the application fee is $495. Awards will be presented during ASA’s annual convention, SUBExcel 2018, which will take place Feb. 28-March 3, 2018, in Tempe, Ariz. Information about these awards is located under “About ASA” on the ASA Web site at www.asaonline.com.

Federal ‘Know-Before-You-Bid Construction Transparency’ Bill Introduced

Contractors and subcontractors in the construction industry are challenged daily with the idiosyncrasies of bidding and the challenge of getting paid in a timely manner for work performed. New federal legislation, introduced by Rep. Don Bacon (R-Neb.), addresses these concerns by providing small business contractors and subcontractors with information they need to be successful on federal construction. H.R. 2350, the “Small Business Know-Before-You-Bid Construction Transparency Act of 2017,” includes concepts initiated and supported by ASA. Specifically, the bill would require a federal agency to:

• Include in its requests for proposals or invitations for bid on federal construction projects likely to be performed by small businesses, information on its policies and procedures for processing requests for equitable adjustment, more commonly known as change orders. Some federal agencies routinely delay review and approval of change orders until the end of a project. In the meantime, contractors and subcontractors must pay their own bills—employees, suppliers and even taxes—while payments from their federal customers are delayed. This bill would provide prospective federal construction contractors and subcontractors with information they need to factor into their bids and offers to the federal government the risk and resulting cost of delayed payment for change orders.
• Post on a Web site each payment made to a prime construction contractor, including the date of payment and the amount paid, specifying any amounts withheld from the amount requested by the prime contractor and a general explanation of why an amount was withheld. This information will allow a subcontractor or supplier to determine when its payment is due (i.e., under the Prompt Payment Act, seven days after the government pays the prime contractor), without resorting to contacting directly the already harried contracting officer or the prime contractor. Further, the prime contractor will benefit from having a clear statement of why its federal customer did not issue full payment so that it can more expeditiously address and correct any problems.
• Post on a Web site a copy of any payment bond provided for under the contract and any modification to such bond required by the federal agency. The federal Miller Act requires a prime construction contractor with a federal contract of more than $150,000 to provide a payment bond to assure payment of its subcontractors and suppliers. In order to determine the validity of such a bond and where it must provide required notices, a subcontractor must have a copy of a bond. This bill will allow a subcontractor or supplier to obtain a copy of the payment bond without resorting to contacting directly the contracting officer or the prime contractor.

H.R. 2350 was referred to the House Small Business Committee, which is expected to hold a hearing on the bill in the very near future.

How Can You Help Get Congressional Support for H.R. 2350?

1. Ask your House member to co-sponsor H.R. 2350, the “Small Business Know-Before-You-Bid Construction Transparency Act of 2017.” Use the bullets in the above article to describe the bill to your elected representative or use ASA’s Legislative Action Center (http://bit.ly/2qXiynm) to see sample emails and a direct link to your legislator.
2. If your company has an example that illustrates the need for this H.R. 2350, contact ASA Chief Advocacy Officer E. Colette Nelson at cnelson@asa-hq.com. For example, has your company had difficulty in obtaining a copy of a payment bond on a federal construction contract? Has your company had difficulty finding out when your prime contractor got paid in order to determine the timeliness of your own payment on a federal construction project? Has your company experienced a lengthy delay in getting a change order approved on a federal construction project? If so, ASA needs your case studies to illustrate the need for this legislation.
3. Ask other construction associations to which you belong to support H.R. 2350. If you would like Nelson to follow up with them, contact her at cnelson@asa-hq.com. The Construction Industry Procurement Coalition supports the bill. Coalition members include:

• American Council of Engineering Companies
• American Institute of Architects
• American Society of Civil Engineers
• Associated General Contractors of America
• Construction Management Association of America
• Council on Federal Procurement of Architectural and Engineering Services
• Design-Build Institute of America
• Independent Electrical Contractors
• Management Association for Private Photogrammetric Surveyors
• National Association of Surety Bond Producers
• National Electrical Contractors Association
• National Society of Professional Surveyors
• Sheet Metal and Air Conditioning Contractors National Association
• The Surety & Fidelity Association of America

ASA Resource Answers Construction Subcontractors’ Questions About Pay-If-Paid

“Pay-if-paid” contract clauses can cause big problems for unpaid construction subcontractors and suppliers. Such clauses specify that a subcontractor or material supplier will not be paid for the work it performed or the supplies or services it provided “if” the general contractor doesn’t receive payment from the project owner. Pay-if-paid is not enforceable in all circumstances, however, and ASA’s Contingent Payment Clauses in the 50 States helps subcontractors and suppliers understand their risk. “This resource is of tremendous business value to subcontractors and suppliers, who need to know the risk of pay-if-paid,” said ASA Chief Advocacy Officer E. Colette Nelson. “Pay-if-paid is enforceable in some but not all states, and the states in which pay-if-paid is enforceable differ as to when a contract clause creates a true ‘condition precedent to payment’ threatening the right of unpaid subcontractors to be paid for satisfactory work.” Contingent Payment Clauses in the 50 States explains for each state (plus the District of Columbia and the U.S. Virgin Islands):

• Whether a “pay-if-paid” clause will be enforced in that state if it is unambiguously drafted.
• Whether the state distinguishes between “pay-if-paid” and “pay-when-paid” provisions.
• Whether “pay-when-paid” clauses allow a contractor in the state to only delay payment to its subcontractors for a reasonable time.
• Key statutes and cases that describe the state’s position on contingent payment clauses.

The ASA-member law firm and ASA general counsel, Kegler, Brown, Hill and Ritter (http://www.keglerbrown.com/), Columbus, Ohio, prepared the manual, which contains contributions from construction attorneys from across the country. The manual is available to ASA members as a downloadable PDF document on the ASA Web site in the “Contracts & Project Management” section located under “Advocacy & Contracts” at www.asaonline.com.

Managing Human Resources When Workers Are in Short Supply

People are a subcontractor’s most important asset. If a subcontractor’s employees can say, “This is a great place to work,” they will be willing to stay for the long-term. During this time of workforce shortages, what a subcontractor needs most is people working harder and smarter than they ever have before. Some of the most difficult decisions for a subcontractor include changes in employee responsibilities and salaries/wages and benefits. A well-defined company mission statement can help the subcontractor navigate these changes. Many subcontractors describe one or more of the following elements in their mission statements:

• The company measures success by profitability, job performance and employee satisfaction—not by how large the annual sales volume is.
• The company is committed to safe, high-quality, well-managed work with satisfied clients.
• The company is dedicated to building a capable and loyal workforce and seeking jobs within its capability. (This is different from taking on projects that force a subcontractor to build up its workforce quickly with transient employees who often lack sufficient training.)
• The company organizes work for maximum efficiency and productivity.
• The company considers customer service a priority and rewards employees who practice it.

When company owners and managers have a clear sense of mission and model their behavior on it, it makes discussing changes within the company easier and boosts morale.

ASA Asks New Labor Secretary to Reopen and Stay OSHA Silica Rule

On May 3, ASA joined 24 others in construction in requesting Alexander Costa, the Secretary of Labor, to reopen the rulemaking and record and issue an administrative stay of the rule on crystalline silica, issued in March 2016 by the Occupational Safety and Health Administration. The petition described the “significant issues” that construction employers are facing as they prepare to comply with the rule, which currently is scheduled to take effect on Sept. 23. The Construction Industry Safety Coalition wrote,

“These issues are driven principally by OSHA’s final Table 1, which does not present a viable compliance option for contractors. The issues are compounded by OSHA’s failure to assess the feasibility of the rule for construction outside of the Table 1 context. And despite the Agency’s recent 90-day delay in enforcement of the rule, construction employers are being forced to expend significant resources to even attempt to comply with a rule that is infeasible and unworkable in the construction industry.”

Specifically, the coalition requested:

1. A full consideration of the technological feasibility of the construction standard. The coalition said that OSHA’s feasibility analysis was incomplete and insufficient.
2. A re-examination of Table 1. The coalition asserted that tool manufacturers have not developed tools with the control measures recognized by Table 1 for use in the wide variety of settings in the construction environment.
3. A revisiting of three ancillary provisions—housekeeping, a written exposure control plan, and medical surveillance.

The coalition also asked DOL to administratively stay the compliance date in OSHA’s silica rule to allow for reconsideration and to avoid unnecessary expenditure of resources. ASA, in collaboration with 22 other construction associations, also has initiated a lawsuit to prevent OSHA from implementing its silica rule. In the meantime, ASA urges construction employers to take steps to comply with the OSHA silica rule by Sept. 23. For more information, see the ASA Fact Sheet on OSHA’s Rule on Respirable Crystalline Silica (http://bit.ly/1MBCrJp), the ASA Frequently Asked Questions on the OSHA Standard on Respirable Crystalline Silica (http://bit.ly/1MB0UOX), and the free ASA video-on-demand, “OSHA Silica Rule—Applications for Subcontractors (http://bit.ly/2lmJfTq)” (Item #8101), presented by Gary Visscher, Esq., Law Office of Adele L. Abrams, P.C.

OSHA Revokes Interpretation Memo Regarding Union Rep on Walk-Around Inspections

The Occupational Safety and Health Administration has withdrawn a February 2013 memorandum that granted union representatives permission to accompany OSHA inspectors on walk-around inspections at non-union workplaces. Under the original memorandum, an OSHA inspector, at his/her own discretion could invite the union representative to participate in an inspection, if the inspector thought the representative would add value to the inspection and the employees chose to have the union representative act as their representative for purposes of the inspection. As a result of the rescission, the policy is no longer part of OSHA procedures.

OSHA Rescinds Recordkeeping Rule

On May 3, the Occupational Safety and Health Administration formally rescinded its rule (http://bit.ly/2p5sJ75) that was intended to clarify that an employer’s duty to record an injury or illness continues for as long as the employer must keep records of the recordable injury or illness. In March, Congress had approved H.J.Res. 83 (http://bit.ly/2oDnTlh), which invalidated the rule under the Congressional Review Act; President Donald Trump signed the resolution on April 3. The CRA allows Congress to roll back recently-adopted regulations by a simple majority vote. ASA had argued that the OSHA rule was an overreach of the agency’s authority and a clear misinterpretation of the law. The rescission took effect upon publication.

Guideline Can Help You on the Critical Path to Success

Project schedules don’t just impose constraints on when your company’s work must be completed. They also can be tools for insisting on efficient project management. Remember: The project schedule is a two-way street! For example, suppose a schedule specifies the sequence and duration of inspection, punch list and closeout activities, and who is supposed to do them. You need to have your work done and be ready to take care of loose ends and closeout promptly according to the schedule. By the same token, that schedule makes it difficult for a customer to justify demands that your company continually return to the job site to take care of items on an endless punch list. At a certain point, it’s clear that the customer failed to properly supervise work at an earlier stage, or else it would have been on schedule. Looking at each project schedule as a two-way street requires both experience and learning. An experienced project manager will be acquainted with the effects of having—or not having—the project schedule put together in a certain way. How does the schedule account for the possibility of early or late starts, for example? A schedule explaining this removes ambiguity about how early/late starts affect your work and the work of other trades, and could even help your company with delay claims. A tool for both experienced and less experienced project managers is the “Guideline on Sequenced Project Scheduling.” The guideline is one of the Guidelines for a Successful Construction Project (http://bit.ly/29r0aLT) jointly developed and published by ASA, the Associated General Contractors of America, and the Associated Specialty Contractors. It describes the rationale, components and communication required to make sequenced schedules work. For example, it states that “[t]he scheduler should be familiar with all of the various trades and be able to communicate with each trade” and “[t]he schedule should receive input and support from all stakeholders.” If a scheduler does not meet these expectations, your project manager can cite the guideline when asking for a replacement. If a schedule excluded the input of your trade, cite the guideline when asking for an adjustment. Citing the guideline may create temporary stress with a customer, but the payoff is long-term. You’ll have better relationships with customers, and both you and your customers will reap financial rewards. When project schedules are used to establish not just constraints but also real efficiency on all parties’ behalves, contractors and subcontractors may avoid liquidated damages. That’s a win-win if there ever was one.