January 2019 Edition

SUBExcel 2019 Education Workshop to Discuss 3D LiDAR Scanning and Drone Photogrammetry

Subcontractors will learn about some of the most exciting new technologies to be used in construction, 3D LiDAR scanning and drone photogrammetry, in a newly added contractor education workshop during ASA’s annual national convention. “Reality Capture for Existing Conditions—Save Time, Lower Risk,” presented by David F. Dengler and Garrett Maldoon, Kelar Pacific, San Diego, Calif., will be offered from 10:30 a.m. to 11:45 a.m. on Friday, March 8, 2019, during SUBExcel 2019. SUBExcel 2019 “Technology—for Millennials to Dinosaurs” will take place March 6-9, 2019, at the Renaissance Nashville Hotel in Nashville, Tenn. Register online, make your hotel reservations, explore the program, and read about the speakers at www.subexcel.com. The early-bird deadline ends Feb. 1, 2019, and the hotel cutoff date is Feb. 6. New technologies including 3D LiDAR scanning and UAV/UAS drone photogrammetry deliver the real existing conditions to your computer faster and safer than traditional methods. Consider the amount of man-hours you invest in multiple site visits to obtain somewhat realistic laser and tape measurements. Learn how reality capture levels the playing field for any size firm.

David F. Dengler is passionate about both aerial and terrestrial Reality Capture solutions that produce accurate existing conditions. Along with being a licensed FAA 107 UAV/UAS (drone) pilot, Dengler conducts CEU presentations and helps educational institutions bring Reality Capture and CAD/BIM solutions into their classrooms. He has extensive real-world experience combined with a technical background. Dengler worked for Vectorworks Inc., a 3D modeling software, and founded his own iOS app development company, Illudium Q-36. Dengler has held project designer/manager positions with various California and Maryland architectural firms for over 15 years. His design experience spans both residential and commercial projects.

Garrett Maldoon is an AEC technical specialist at Kelar Pacific. As the Job Captain for in-house projects, Maldoon manages project coordination activities and performs BIM modeling for construction ranging from residential to commercial to healthcare. Maldoon provides field services including 3D LIDAR Scanning and Point Layout. He continually looks for ways to connect the field to the digital environment using VR/MR/XR technologies. Maldoon uses his knowledge to teach Revit classes and to support the team by creating Revit content.

Reintroduction: Discussion Draft Change Orders Legislation

Despite the government shutdown and the start of the new 116^th Congress, ASA is yet again partnering with the Construction Industry Procurement Coalition in drafting a discussion draft “change orders” legislation that would amend the Government-wide Federal Acquisition Regulation to provide prospective construction contractors with the following:

• Information on bid proposals and the administration of construction contracts;
• Improvement on payment protections for subcontractors; and
• It would prohibit the use of reverse auctions for design and construction services.

Ultimately, this discussion draft will include three sections that will be very important to the ASA Membership, and they are:

• Equitable adjustments to construction contracts,
• Provide certainty regarding claims under federal construction contracts, and
• Pre-Bid transparency of federal construction services.

More specifically, on the Equitable Adjustments to Construction Contracts Section, we anticipate the draft language will mirror legislation introduced by Rep. Fitzpatrick (R-PA) in the 115^th Congress, which would do the following:

• Require agencies to report during the solicitation process when it is the agency’s policy or procedure to bundle change orders for approval and payment at the end of the job, long after the contractor has completed the work.
• Require an agency to pay for 50 percent of the actual (incurred or committed) cost to perform change order work.

Under ASA’s former Chief Advocacy Officer E. Colette Nelson’s leadership, ASA worked directly with CIPC and Rep. Fitzpatrick on this legislation and on May 25, 2017, Nelson testified on this issue at a House Small Business Committee Hearing.

As the draft discussion legislation continues to matriculate through the drafting process in anticipation of a formal introduction within the next few weeks, I will keep you posted on it.  Finally, ASA’s collaboration with the CIPC on this important legislation will be paramount and the CIPC involves the following groups:

• American Council of Engineering Companies
• American Institute of Architects
• American Society of Civil Engineers
• American Subcontractors Association
• 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

Partial Government Shutdown Update

The partial government shutdown that is impacting a quarter of the government and nearly 800,000 federal employees has surpassed the previous 22-day shutdown record in 1996, with little progress being made to resolve the political stalemate. The issue separating Republican and Democratic Leadership is President Trump’s request of $5.7 billion from Congress to fund a border wall between the United States and Mexico. President Trump has made it clear that he will veto any spending package sent to his desk if border wall fund is not included. Democratic Leadership has refused to give in to the president’s funding request. In one of her first acts as Speaker of the House, Speaker Pelosi (D-CA) called up a package of bills on the first day of the 116^th Congress that would reopen the government. The package, which has now passed the House multiple times this month, does not include funds for the border wall. Senate Majority Leader McConnell (R-KY) has refused to consider any House Package without border wall funding, knowing that it will be met with a veto from the president.

Earlier this month, President Trump made his first Oval Office address to the American people, which was met with a rebuttal from Speaker Pelosi (D-CA) and Senate Minority Leader Schumer (D-NY). Both President Trump and the Democratic Leadership ended their speeches by demanding the other side bring an end to the shutdown. Over the course of several weeks, negotiations between President Trump and Democratic Leaders have been few and far between, resulting in little progress to resolve the conflict.

While the government remains partially shutdown, the U.S. Department of Labor remains open, with normal operations for unemployment benefits and OSHA. The Social Security Administration is also fully operational which is allowing benefit checks to go out on time.  Both agencies received their full funding for fiscal year 2019 last September, allowing them to remain open. However, ramifications are beginning to affect the day-to-day operation of the country, including the closing of the Small Business Administration (SBA). The closure of the SBA means small businesses are unable to move forward on public contracts, delayed payments and the inability to obtain SBA loans. Finally, per Kevin Hassett, Chairman of the White House Council on Economic Advisors, “the shutdown is estimated to cut U.S. economic output by 0.1 percent every two weeks.”

IRS Issues Proposed Regulations on New Business Interest Expense Deduction Limit

The Internal Revenue Service has issued proposed regulations for a provision of the Tax Cuts and Jobs Act, which limits the business interest expense deduction for certain taxpayers. Certain small businesses whose gross receipts are $25 million or less and certain trades or businesses are not subject to the limits under this provision. For tax years beginning after Dec. 31, 2017, the deduction for business interest expense is generally limited to the sum of a taxpayer’s business interest income, 30 percent of adjusted taxable income and floor plan financing interest. Taxpayers will use new Form 8990, Limitation on Business Interest Expense Under Section 163(j), to calculate and report their deduction and the amount of disallowed business interest expense to carry forward to the next tax year. This limit does not apply to taxpayers whose average annual gross receipts are $25 million or less for the three prior tax years. This amount will be adjusted annually for inflation starting in 2019. Other exclusions from the limit are certain trades or businesses, including performing services as an employee, electing real property trades or businesses, electing farming businesses and certain regulated public utilities. Taxpayers must elect to exempt a real property trade or business or a farming business from this limit. Taxpayers may rely on the rules in these proposed regulations until final regulations are published in the Federal Register. Written or electronic comments and requests for a public hearing on these proposed regulations must be received within 60 days of publication in the Federal Register.