Backend Category: Advocacy

The latest regulatory notice affecting the Federal Acquisition Regulations (FAR) provides 11 changes to the small business subcontracting plan procedures required of prime contractors on covered prime contracts ($1.5 million or more), the most significant of which is the subcontractor listing and payment protections.

The prime contractor must make demonstrable good faith efforts to use the same small business subcontractors they relied on in preparing and presenting their bid, proposal and small business utilization plan to the contracting agency for approval.

If the prime contractor fails to utilize the relied-upon small business subcontractors, the prime must provide a written explanation to the contracting agency within 30 days of contract completion. Failure to use the named subs can be the basis for future adverse prime contract performance evaluations and responsibility determinations.

The regulations also prohibit prime contractors from attempting to bar small business subcontractors from discussing subcontract plan compliance or prime contract payment problems with the contracting agency directly.

The regulations also require that prime contractors notify the contracting officer in writing if they pay a small business subcontractor a reduced amount or if payment is held more than 90 days after the prime has been paid.

And, any record of payment violations is to be recorded in the prime contractors’ past performance evaluation in the Federal Awardee Past Performance information System (FAPPIS).

MCAA testified in support of these provisions on May 23, 2013 before the House Small Business Committee. Read the testimony here.

Access the new regulations.

The annual round of MCAA local affiliated association summer board meetings continues to bring strong support for the national MCAA Political Action Committee (MCAA-PAC).  All members of MCA of New Jersey’s board of directors just contributed to the MCAA-PAC. The MCA of Connecticut, ARCA-MCA, CPMCA and the MCA Kansas City, among others, also have 100% board participation.  Last year, the Association Executives Council (AEC) also responded with strong participation by local affiliate executives. The MCAA Board of Directors members have contributed generously to the MCAA-PAC. With multiemployer pension reform leading MCAA’s legislative priorities, participation levels have increased markedly.  Lend your support to MCAA advocacy efforts by contributing to the MCAA-PAC by making a contribution today.

Small business subcontracting payment protections supplement those already in place in the Federal Prompt Payment Acts of 1982 and 1988 for construction subcontractors.

Those requirements (Far Part 52.232-5) require the prime contractor to pay the subcontractor within seven days of the prime’s receipt of payment for the subcontractors’ work.

The law permits the prime to impose retainage on the sub and permits withholding for written cause for specific performance deficiency. Interest is payable on late payments after seven days; interest accrues on payments withheld for cause after seven days as well. The payment rules affect all subcontractors on the covered project.

In addition, the Obama Administration has issued supplementary guidance to the Prompt Payment Act (PPA) calling for accelerated payments to small business prime contractors and subcontractors within 15 days of the contracting agency’s receipt of an invoice (the PPA permits agencies to take 30 days from receipt to pay the prime).

Click below to access OMB memos extending the accelerated payment procedures through December 2016.

OMB Memorandum

OMB Memorandum

The Pension Benefit Guaranty Corporation (PBGC) recently issued two reports underscoring its multiemployer plan insurance fund’s precarious position, predicting that complete insolvency is more likely than not by 2025, if not sooner.

The PBGC reports (PBGC MPRA Report, and FY2015 PBGC Projections Report) call for substantial if modulated minimum level premium increases as follows . . . “for the longer-term PBGC solvency scenarios, all four scenarios require a very substantial increase from the current $27 per participant premium rate, ranging from a 363 percent increase to a 552 percent increase.” They acknowledge that higher rate increases raise the likelihood of driving greater numbers of financially challenged plans into insolvency – compounding the need for further PBGC premium increases.

The reports offer some discussion of the Administration’s budget proposal for Congress to allow PBGC to set its own premiums, charge additional new risk-based premiums on multiemployer plans, and to charge an “exit” fee on sponsoring employers (not paid out of plan assets) to shore up PBGC resources.

In all this, there is little discussion on the impact of these measures on the competitiveness of plan sponsoring employers, or the tendency of PBGC premium issues and uncertainty to push sponsoring employers and plans out of the defined benefit system.

On these points, the PBGC MPRA report says: “Given the scale of the necessary premium increases, their design and structure are critical. A well-designed increase may encourage additional contributions, encourage continued participation in plans, and strengthen the multiemployer system. A poorly designed premium increase may encourage employer withdrawals and accelerate plan insolvency with a resulting cost to plan participants and a need for even larger premiums.”

House Education and Workforce Chairman John Kline (R-MN-2)(retiring), the leading proponent of the MCAA and NCCMP-backed composite plan proposal, cited the PBGC fiscal challenge as yet one more instance of the imperative need for Congress to modernize the multiemployer system. MCAA and the entire NCCMP Retirement Security Reform Coalition continue to press for new composite plan design options to be enacted by Congress.

Click here for the PBGC reports.

Bob Bolton, a member of the MCAA Board of Directors and the MCAA Government Affairs Committee, discussed the recent Treasury Department decision to veto the Teamster Central States remedial benefit suspension proposal with Labor Secretary Tom Perez at a recent Rhode Island Chamber of Commerce event in Providence, RI.

Bolton raised the issue of the potential impact of Treasury Department Special Master Ken Feinberg’s reevaluation and denial of the Teamster Central States remedial plan and its potentially devastating impact on the Pension Benefit Guaranty Corporation (PBGC) multiemployer plan insurance fund. He also noted the devastating PBGC premium increases on all well-funded plans in other industries.

In response, Mr. Perez said that the Administration was carefully analyzing the impact on PBGC premiums and the collateral effects on healthy plans in other industries on an ongoing basis. Bolton attended the Rhode Island event just after lobbying the pension reform issue at the MCAA/Quality Construction Alliance National Issues Conference in Washington, DC.

During the United Association’s Eighth Annual Tripartite Conference in Chicago April 26, MCAA President Tom Stone highlighted the best-value proposition MCAA employers and UA labor present for construction owners nationwide.

President Stone’s remarks also included a video of the MCAA Lifetime Achievement Award presentation to General President Hite at the association’s 2016 convention.

U.S. Labor Secretary Tom Perez addressed the group and lauded the labor/management collaboration between MCAA and the UA nationally and locally as a model for widespread deployment in other U.S. industries. Secretary Perez commended the UA for its leadership in helping address and remedy the water contamination crisis in Flint, MI. He expressed strong support for prevailing wage law enforcement efforts and the Department of Labor’s efforts to crack down on widespread wage fraud nationally perpetrated by worker misclassification.

North America Building Trades Union (NABTU) President Sean McGarvey also addressed the conference, highlighting a new NABTU initiative to promote the deployment of pension plan investment policies that would yield high returns in projects using union labor.

An MCAA-led industry group provided analyses to the Office of Management and Budget (OMB), Office of Information and Regulatory Analysis (OIRA), and the Department of Labor’s (DoL) Wage and Hour Division as part of its efforts to obtain an industry exemption from President Obama’s Executive Order 13706—requiring paid sick leave accrual for those working on federal contracts—for employees covered by a collective bargaining agreement who are working on direct federal construction and federal facility HVAC service contracts.

MCAA representatives Adam Snavely of The Poole & Kent Co. (Baltimore, MD), Chip Mitchell of the Kirlin Group (Rockville, MD), Steve Weissenberger of MCA-Maryland, Bob Battista representing the MCA-MD and MCA Detroit and MCAA General Counsel John McNerney met with OMB/OIRA/DoL officials on February 11 to discuss the rationale for providing a collective bargaining exemption in the upcoming EO 13706 regulatory proposal.

MCAA’s position, also supported by the Construction Employers of America, laid out an analysis of ways to implement EO 13706 that are consistent with federal procurement, labor, and regulatory implementation policies. MCAA’s effort is aimed at gaining a favorable regulatory approach before a proposed regulation is published, rather than waiting for a proposed rule to be issued with less favorable options.

EO 13706 proposed regulations may be issued within the next month. MCAA’s initial letter to OMB and an outline of MCAA’s February 11 oral presentation are available by clicking on the links below.

Written Comments

Oral Presentation Outline

Labor Department Wage and Hour Administrator Dr. David Weil released a new Administrator’s Interpretation 2016-1: Joint Employer under the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).

This interpretive guidance, with less significance than a regulation, has primary significance to the construction industry as a way to stem rampant misclassification of employees as independent contractors, an unfair competitive advantage that some non-signatory firms have over signatory employers. This guidance also affects only wage-and-hour compliance and is separate from the controversy surrounding the new National Labor Relations Board’s (NLRB) joint employer ruling that is roiling unorganized firms in the context of union organizing efforts. In either case, the NLRB or Labor Department’s single employer policies have very limited application to union-signatory Section 8(f) contractors or prime contractors in the ordinary course of construction industry construction prime contract and subcontract commercial contract performance. Following is an example from the DoL Guidance derived from the air conditioning service industry:

A mechanic is employed by Airy AC & Heating Company. The Company has a short-term contract to test and, if necessary, replace the HVAC systems at Condor Condos. The Company hired and pays the mechanic and directs the work, including setting the mechanic’s hours and timeline for completion of the project. For the duration of the project, the mechanic works at the Condos and checks in with the property manager there every morning, but the Company supervises his work. The Company provides the mechanic’s benefits, including workers’ compensation insurance. The Company also provides the mechanic with all the tools and materials needed to complete the project. The mechanic brings this equipment to the project site. These facts are not indicative of joint employment of the mechanic by the Condos.

Click on the link below for the entire DoL release. Within that material is an example of a DoL enforcement action against a drywall firm for misclassification in that industry. Some comments indicate that construction prime and subcontract commercial contracts can be revised to address or defend against adverse application of these rules in the commercial contracting business. An initial analysis of those comments shows that regulators (see example above) are focused on the workforce realities of worker conduct and supervision, and boilerplate contract or subcontract terms will not be an effective defense against an adverse determination finding on a factual application of the single employer rules in either a union election process or a wage-and-hour misclassification context.

DoL Release

MCAA filed comments on the Administration’s Paid Sick Leave Executive Order (EO) 13706, which also is under an expedited path for final publication for mid-2016 and implementation in 2017. The EO would require direct federal prime contractors and subcontractors to provide paid sick leave (one hour of paid leave for every 30 hours worked) on a covered federal contract or subcontract of $2,000 or more. The minimum annual amount of leave is 56 hours, which can be carried over on an annual basis and reinstated after breaks in service of less than a year.

MCAA filed comments on its own behalf and on behalf of the Construction Employers of America after the draft proposed regulations were sent to the Office of Management and Budget and Office of Information and Regulatory Analysis (OIRA) for pre-clearance before the expected early release of a regulatory proposal in February 2016.

MCAA’s comments raised a number of questions about the statutory authority for the EO and the specific implementation issues under the federal Acquisition Regulations. MCAA also requested an in-person discussion on the comments at OIRA in the review process. OIRA is expected to grant that request and provide a hearing with MCAA and coalition representatives in late January. MCAA is assembling a team of select federal contractors, prime and subcontractors that perform covered federal new construction and service contracts to discuss the EO issues with OIRA in late January.

Read the Comments

As the last year of the Obama Administration begins, regulatory activity is intensifying to get long-delayed initiatives off the regulatory docket and into regulations before the end of the legislative year to avoid Congressional suspension and review of midnight regulations. One issue concerns new and much more comprehensive affirmative action and non-discrimination regulations proposed for registered apprenticeship programs.

MCAA filed comments in late December seeking an extension of the comment period, slated to close January 5, until March 6, 2016 or later. The delay would allow more comprehensive and constructive analyses of sweeping new rules that set goals for disabled apprenticeship applicants and written affirmative action plans, comprised of specific labor market workforce availability analyses for minority and female candidates, and utilization analyses and specific goals and timetables for affirmative action goal compliance.

The proposed regulations also add age and gender identity/sexual preference as categories for non-discrimination safeguards in program administration. Penalties for non-compliance range up to program de-registration.

MCAA is working with the UA and the International Training Fund and an outside consultant on program compliance guidance. The Department of Labor granted the extension, with the comment period now due to expire on January 20, 2016.