ASA President’s Letter—May 2018
Dear ASA Members,
In last month’s Letter, I discussed the new ASA policies on mechanic’s liens and statutory payment bonds developed and recommended by the ASA Task Force on Government Advocacy and approved by the ASA Board of Directors. I applaud the task force for its yearlong work on this project and its development of additional tools to help chapters and subcontractor advocates evaluate their state laws and determine what changes need to be made to provide stronger payment protections for subcontractors and suppliers.
The new policies, however, are just one example of many ASA advocacy accomplishments over the past year. I shared some of the accomplishments I’m most proud of in my “State of the Association” address in ASA’s annual meeting during SUBExcel 2018 in Tempe, Ariz.
For example, ASA’s work led to a House Small Business Committee roll call vote of 21 to 0 to support legislation to address the problem of slow or no pay of change orders on federal construction. ASA Chief Advocacy Officer E. Colette Nelson drafted the original language that led to that vote. H.R. 2594 would allow a contractor faced with a directed change to submit an invoice for work performed and then require the government owner to pay at least 50 percent of the estimated amount of the cost of work performed until it reaches final agreement with the contractor. The bill also would require the government to provide a status report on each change order with each such payment, thus providing information for cash-flow planning to the contractor.
In June, the Construction Industry Procurement Coalition—10 of the major associations representing the design and construction industries—asked Colette to testify on their behalf before the House Small Business Committee. More recently, she prepared the first draft of another bill on change orders—H.R. 4754 would require a federal contracting agency to provide with its invitations for bid and requests for proposals details on its change procedures and historical performance data about change orders. This bill is intended to help federal construction contractors and subcontractors understand the risk of nonpayment for change orders before bidding and signing a contract.
ASA worked to establish platforms to help subcontractors and suppliers determine when payment is due to them under contingent payment clauses. For several years, ASA staff has been spreading the word how a few city and state government agencies have tackled that challenge. Because of ASA’s groundwork and the leadership of Dan McLennon, chair of ASA’s Task Force on Government Advocacy, earlier this year, California became the first state to enact so-called payment transparency legislation. That new law requires a state agency to post on a Web site information on when, how much and for what it paid its prime construction contractors. ASA has carried this concept to the federal level. Colette drafted legislation and brokered an agreement among several construction and design professional associations on federal payment transparency legislation, which was introduced as H.R. 2350.
I also talked about how proud I am of ASA’s work with OSHA, within the construction industry and even in the courts to mitigate the impact of OSHA’s silica rule. OSHA began enforcing this rule late last year. After OSHA published its final rule in 2016, ASA not only launched a campaign to educate its members, it also sued OSHA to stop enforcement, arguing that the rule was technologically and economically infeasible. Unfortunately, the court ruled against ASA and other business groups. Throughout this tense process, ASA staff has been able to maintain good relations with OSHA to the extent that ASA is participating in the development of a new OSHA request for information and providing input to the agency on further educational materials for contractors on how to comply with the silica rule.
During Congressional consideration of tax cuts, ASA worked to educate federal legislators that “corporate tax reform” needed to cover more than just C corporations. More than half of ASA members are pass-through entities. ASA staff met with more than 100 Congressional offices to explain that these hardworking and, hopefully, profitable businesses need to be able to plan and invest as much as those organized as the more traditional C corporation. During the debate, ASA kept us informed about what was going on with this and other proposed tax provisions that impact our businesses, explaining what sometimes seemed to be a confusing process in plain English.
ASA continued to work to enact state legislation for subcontractor payment assurances on public-private partnerships. During 2017, at least eight states enacted new laws governing P3s. And, at the federal level, ASA worked with the surety industry to broker an agreement among construction associations to support federal legislation requiring bonding on federal P3 projects. This is even more important since the Trump Administration is an advocate of financing infrastructure through P3s.
I emphasized that ASA stands alone in advocating for the construction industry in the courts through its Subcontractors Legal Defense Fund. I noted that in December, the Kentucky Supreme Court agreed with an ASA “friend of the court” brief and ruled that a construction owner received substantial benefit in a situation when subcontractors had indisputably performed under the contract and the construction owner had never paid for that work. And, I noted that earlier in the year, ASA filed a brief in Texas that will determine whether workers’ compensation as part of a wrap-up insurance policy provides an exclusive remedy to an injured worker.
In my speech I also talked about all of the educational materials that ASA has developed and published to help subcontractors be their own best advocates in our day-to-day business operations. This includes the educational articles published in ASAToday, such as our tongue-in cheek awards for predatory contracting practices, weekly articles concerning change orders, and regular articles on best subcontract practices. It also includes the publication of more than a dozen white papers and manuals designed to help us all be better business people.
I concluded my remarks on advocacy accomplishments by thanking the many ASA volunteers who make this work possible, including Dan McLennon, chair of ASA’s Task Force on Government Advocacy; Brian Cubbage, chair of ASA’s Task Force on Contract Documents and ASA’s principal representative before ConsensusDocs; Scott Holbrook, chair of ASA’s Task Force on the Subcontractors Legal Defense Fund; and Zea Wright and Andy Cook, chair and vice chair respectively, of ASA’s Attorneys’ Council. I am very proud of these leaders and the dozens of other ASA members who volunteer their time and expertise to the work of these critical ASA advocacy committees.
2017-18 ASA President