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GAO Report Validates AGC
Concerns Over HUBZone Program
July 17, 2008
Washington, D.C. — The Associated General
Contractors of America (AGC) today endorsed the
findings of a report released by the Government
Accountability Office (GAO), which found that
the Historically Underutilized Business Zone (HUBZone)
program is highly susceptible to fraud and
“widespread abuse.”
"The GAO report
confirms the claims contractors have been making
for years – that the Small Business
Administration (SBA) has failed to execute its
oversight authority over the HUBZone program,"
said AGC's chief executive officer Stephen E.
Sandherr. “The HUBZone program has been a huge
administrative failure, which has cost the
program its potential as a legitimate
contracting vehicle, the opportunity for growth
for these disadvantaged communities and billions
of lost taxpayer dollars.”
AGC has long
expressed significant concerns about the
effectiveness and fairness of the HUBZone
program as it is applied to the construction
industry and has advocated that significant
improvements be enacted to reform the program.
The program does not realize its goal of
increasing employment and reinvesting in
economically disadvantaged areas.
It does not require
the SBA to measure the successes and failures of
the program and it does not fairly reward firms
in a manner consistent with the intent of the
program. Consequently, this undermines not only
the intent of the program, but hurts small
businesses, HUBZones communities, and costs the
American taxpayers billions of dollars.
"For years the
HUBZone program has failed to meet its goals of
increasing employment opportunities, investment
and economic development in low income and/or
high unemployment areas,” added Sandherr. “We
thank Chairwoman Nydia Velazquez (D-NY) for her
foresight in recognizing the problems facing the
HUBZone program.”
For several years,
AGC has recommended several changes to improve
the HUBZone program:
-
Limit the Program to Construction Projects
in or Near a HUBZone. The SBA should apply
the HUBZone program only to contracts for
the construction of federal projects within
a 150-mile radius of the HUBZone
contractor’s principal place of business.
Only those projects can offer employment to
a significant number of HUBZone residents,
and only those projects can promise to make
a lasting change in their economic
circumstance.
-
Require HUBZone Contractors Ensure that
HUBZone Residents Receive at Least 30% of
the Payroll Needed to Perform All HUBZone
Contracts. Current regulations require
HUBZone contractors to self-perform only 15%
of their general construction contracts. 13
CFR 126.700 (a)(2). Using payroll as the
correct measure will avoid pass through
purchases of materials and supplies that
encourage brokering by legal HUBZones
entities that nonetheless are not actually
building construction projects. This change
would also help ensure that HUBZone
contractors are really in the market to
construct the projects on which they bid.
-
Require Annual Reports on Employment and
Income in the Nation’s HUBZones. With the
aid and assistance of the Departments of
Labor and Commerce, the SBA can and should
publish a report on employment and income in
each of the nation’s HUBZones at least once
each year.
-
Require SBA to Routinely Investigate Alleged
Abuses of the Program. Some construction
contractors have found the SBA indifferent
to their complaints that individual firms
are abusing the HUBZone program, or
violating its terms or conditions. The SBA
regulations should therefore require the
agency’s local offices to investigate such
complaints and publicly report their
findings and decisions in a public writing
within 10 days.
-
Change the 10% Price Preference to 5%.
Congress should authorize and require a
smaller price preference for the
construction industry, where prices rarely
vary by as much as 10%. Such a bid
preference would still exceed the profit
margin on the vast majority of federal
construction contracts. While Congress may
want to give HUBZone contractors some kind
of advantage, it should not go so far as to
guarantee federal contracts for any firm.
-
Authorize All Contractors Who Stand Ready,
Willing, and Able to Build to Protest. To
help prevent fraud or other abuse of the
HUBZone program, the regulations should also
permit contractors to protest a sole source
acquisition on the grounds that the HUBZone
contractor does not actually qualify for the
program.
-
Require Certification During Periods of Peak
Employment or Require Payroll Records.
Current regulations permit construction
contractors to seek and obtain certification
for the HUBZone program at any time. The SBA
should either limit certification to the
months of peak employment or require
construction firms – companies that
experience large fluctuations in employment
throughout the course of any given year – to
provide certified payroll records, at the
end of each year. This would establish that
HUBZone residents truly worked at least 35%
percent of all the hours worked in that
year.
Surging Fuel, Asphalt,
Steel Costs "Clobber" Construction Budgets
Economist Simonson
Warns of Additional Increases for Gypsum,
Aluminum, Plastics
July
15, 2008
Washington,
D.C.—“Surging prices for diesel fuel, asphalt,
steel and other materials are clobbering
construction budgets,” Ken Simonson, Chief
Economist for The Associated General Contractors
of America (AGC), said today. Simonson was
commenting on the producer price index (PPI) for
June reported today by the Bureau of Labor
Statistics (BLS).
The PPI for inputs
to construction industries—materials used in all
types of construction plus items consumed by
contractors, such as diesel fuel—surged 10.4
percent over the past 12 months. The index for
highway and street construction leaped 18.9
percent.
“Bad as those
figures sound, the increases in asphalt and
steel costs have been even worse since these
prices were collected in mid-June,” Simonson
asserted. “In the first two weeks of July,
asphalt prices have jumped by 40 percent in
several parts of the country. Prices for
rebar—steel used to reinforce concrete in
highways, bridges and buildings—soared $200 per
ton.”
Regarding diesel
fuel, the Energy Information Administration
reported last night that the average price of
highway diesel hit a new record of $4.76 per
gallon, up 12 cents just in the past two weeks.
“These figures won’t show up in the PPI until
next month, but contractors are paying them
now,” Simonson noted.
“Suppliers have been
announcing price increases for many other
products as well,” Simonson added. “Yesterday,
two gypsum makers told contractors that
wallboard prices would rise at double-digit
rates in each of the next three months.”
In the futures
markets, aluminum has been setting records,
while natural gas has doubled in price from a
year ago. That has triggered jumps in the cost
of construction plastics—such as polyvinyl
chloride pipe, insulation and flooring—that use
natural gas as a feedstock.
“Unless Congress
passes additional funding in the next few weeks
to keep highway construction funds flowing, many
states will stop awarding contracts,” Simonson
warned. “Other public agencies, as well as
private owners, must adjust their budgets
promptly to reflect the new price realities for
construction.”
FasterBetterSafer Campaign Launch
AGC Supports Efforts
to Improve Transportation Infrastructure
June
23, 2008
Washington, D.C. —
The FasterBetterSafer Campaign of the Americans
for Transportation Mobility (ATM) Coalition
officially launched today at the National Press
Club in a nationwide effort by business, labor,
transportation organizations and concerned
citizens to increase federal investment in
transportation.
ATM’s diverse
membership, including the Associated General
Contractors of America (AGC), works to
demonstrate to policy-makers in Washington the
groundswell of public support for repairing,
rebuilding and revitalizing America’s aging
transportation system. AGC and its chapters have
been working with similar coalitions all over
the country, including Ohio, Minnesota, Utah,
California and Arizona.
“AGC’s top
legislative priority is investment in
infrastructure,” said AGC’s chief executive
officer, Stephen E. Sandherr. “In just the last
week, AGC members have generated over 1,500
letters and emails to Senators in support of a
plan to address the projected Highway Trust Fund
revenue shortfall in fiscal year 2009. Working
with our coalition partners, AGC, our chapters
and our members will continue to push to make
investment in critical infrastructure like
roads, bridges and transit systems federal,
state and local priorities.”
The Associated
General Contractors of America (AGC) is the
largest and oldest national construction trade
association in the United States. AGC represents
more than 33,000 firms, including 7,500 of
America’s leading general contractors, and over
12,500 specialty-contracting firms. More than
13,000 service providers and suppliers are
associated with AGC through a nationwide network
of chapters. Visit the AGC Web site at
www.agc.org.
AGC Urges Congress to Invest in Flood Control
June
23, 2008
Washington, D.C.
—The Associated General Contractors of America (AGC)
today called on Congress to provide an
appropriation of at least $6.8 billion for the
Corps of Engineers Civil Works program in FY
2009.
“Unfortunately
tragedies like the Midwest floods highlight the
deficiencies in America’s critical
infrastructure. AGC has been trying to get
Congress and the Administration to focus on the
massive documented needs for levees, locks and
dams,” said AGC’s chief executive officer,
Stephen E. Sandherr. “Our request for this
appropriations cycle is to invest now in
America’s critical infrastructure. The $6.8
billion that we are urging represents a small
down payment toward covering the nation's
staggering waterways investment gap. In order to
maintain our economic competitiveness and
national security, we must be willing to make
the necessary investments in our critical
infrastructure.”
The
Administration's proposal of $4.4 billion for
the U.S. Army Corps of Engineers Civil Works
program is short sighted. It demonstrates a
failure to invest in the nation's water
resources infrastructure by proposing an $800
million cut over what was enacted by Congress
for FY 2008. AGC and its members have long
advocated for investment in flood protection
efforts to secure homes, businesses and other
critical infrastructure from devastating
floodwaters.
“The recent flooding
in the Midwest highlights the magnitude of need
for new investments in improved flood control,
increasing navigation capacity and ecosystem
restoration,” added Sandherr.
The Associated
General Contractors of America (AGC) is the
largest and oldest national construction trade
association in the United States. AGC represents
more than 33,000 firms, including 7,500 of
America’s leading general contractors, and over
12,500 specialty-contracting firms. More than
13,000 service providers and suppliers are
associated with AGC through a nationwide network
of chapters. Visit the AGC Web site at
www.agc.org.
Contractors Applaud
Administration's Call to Boost Oil Supply
June
18, 2008
Washington, D.C. — The nation’s largest
construction trade association today applauded
President Bush’s proposal to increase domestic
oil supply. The Associated General Contractors
of America (AGC), representing more than 33,000
members nationwide, announced its support for
the Administration’s proposal to expand
opportunities for domestic energy production.
“The
President’s announcement underscores the basic
truth that we cannot reduce our reliance on
foreign oil without increasing domestic
production,” noted Stephen E. Sandherr, AGC’s
Chief Executive Officer.
The
Associated General Contractors of America (AGC)
is the largest and oldest national construction
trade association in the United States. AGC
represents more than 33,000 firms, including
7,500 of America’s leading general contractors,
and over 12,500 specialty-contracting firms.
More than 13,000 service providers and suppliers
are associated with AGC through a nationwide
network of chapters. Visit the AGC Web site at
www.agc.org.
AGC LEED Course Receives
USGBC Approval
June
18, 2008
Washington, D.C. —
The Associated General Contractors of America (AGC)
today announced its highly popular Building to
LEED for New Construction: Overview and the
Impact on Construction Practices course
curriculum has been reviewed and approved
through the U.S. Green Building Council (USGBC)
Education Provider Program. Approval through the
USGBC Education Provider Program attests to the
credibility of the course, which was introduced
in March at AGC’s 89th Annual Convention in Las
Vegas.
“AGC prides itself
on preparing members to lead in innovate new
fields, such as green building,” said AGC chief
executive officer, Stephen E. Sandherr. “Armed
with this knowledge, AGC contractors can show
owners the latest green options and better
utilize the LEED rating system.”
The course explains
the contractor’s role in a project intended to
achieve certification under LEED for New
Construction, outlines all prerequisites and
credits within the LEED rating system and
identifies which have a major, moderate or some
impact on construction practices. The course
also provides a very detailed analysis to the
ways those credits with a “Major Impact” will
affect estimating decisions, scheduling,
documentation, contracts and other construction
activities.
“Education is
paramount to USGBC’s mission of transforming the
building marketplace,” said Peter Templeton,
Senior Vice President of Research & Education,
USGBC. “The Education Provider Program
accelerates that mission by bringing top-quality
courses that have been rigorously tested and
reviewed to the public.”
The Education
Provider Program distinguishes top-quality
courses that provide building professionals with
an increased understanding of green building
theory, techniques and trends. The program aims
to drive the green market transformation by
reviewing and promoting innovative courses that
increase green building knowledge and capacity
across the industry. AGC’s “Building to LEED for
New Construction” was reviewed by a third-party
team and meets the instructional design and
subject matter criteria established by USGBC
Professional Development Committee. The course
is listed along with other third-party-reviewed
green building courses, including the USGBC's
core LEED offerings, in the newly re-launched
www.greenbuild365.org.
The Associated
General Contractors of America (AGC) is the
largest and oldest national construction trade
association in the United States. AGC represents
more than 33,000 firms, including 7,500 of
America’s leading general contractors, and over
12,500 specialty-contracting firms. More than
13,000 service providers and suppliers are
associated with AGC through a nationwide network
of chapters. Visit the AGC Web site at
www.agc.org.
AGC of America Questions
New Executive Order Requiring Federal
Contractors to Use E-Verify
June
10, 2008
Washington, D.C. —
President Bush has just signed an executive
order requiring federal contractors to use the
"E–Verify" system to determine that all new
hires are eligible for employment in the United
States and to determine that all employees
working on federal contracts – including current
employees hired in accordance with pre–existing
rules and standards — are also eligible for such
employment.
"While AGC supports
the full enforcement of our immigration laws,
AGC remains committed to their comprehensive
reform, and the association questions whether
this piecemeal measure will hasten or delay the
day when we will see that kind of reform," said
Stephen E. Sandherr, chief executive office of
the Associated General Contractors of America (AGC).
"Ironically, we also find ourselves questioning
whether the executive order is itself in
violation of our current laws," he added.
The new requirement
will take effect only after the relevant federal
agencies revise the regulations that govern
federal contracts. AGC will carefully examine
the new executive order and the proposed
revisions of the regulations to determine if the
changes would cause problems for the contractors
responsible for constructing and maintaining the
federal infrastructure. AGC also will
investigate whether or not the changes conflict
with the current immigrations laws, and if so,
may contemplate even stronger action.
Immediately, AGC
will also begin seeking further guidance on a
host of questions that the executive order
raises, including:
Who is a
"contractor" for the purposes of the executive
order? Does it include a subcontractor? Does it
include a material supplier? Does it include a
vendor of commercial items?
What
– if any – are the procedures and deadlines for
employers and/or employees to correct the many
mistakes that even the E–Verify system will
inevitably make?
How
should employers deal with individuals who can
satisfy the pre–existing rules and standards –
which Congress has written into the Immigration
and Nationality Act – but not the E–Verify
system that the President has mandated entirely
on his own? How do employers avoid getting
caught in the middle?
What are the penalties for non–compliance?
Should federal contractors anticipate debarment
for even honest mistakes made in ignorance of
technical requirements?
The
Associated General Contractors of America (AGC)
is the largest and oldest national construction
trade association in the United States. AGC
represents 33,000 firms, including 7,500 of
America's leading general contractors and 12,500
specialty–contracting firms. More than 13,000
service providers and suppliers are associated
with AGC through a nationwide network of
chapters. Visit the AGC Web site at
www.agc.org.
AGC members are "Building Your Quality of Life."
Looming Tax Increases Unsettle
Construction Industry
June 3, 2008
Washington, D.C. — Without
Congressional action, and because of arcane
budgetary rules, tax cuts enacted in 2001 and
2003 will expire in 2011. The elimination of
those tax cuts will have a significant impact on
the construction industry in particular and the
economy in general, according to the nation’s
largest construction trade association, the
Associated General Contractors of America (AGC).
“In 2001 and 2003, Congress made
the right decision to join with the President
and lower the tax burden on our nation’s
businesses to stop a recession and keep the
country moving forward,” said Stephen E.
Sandherr, chief executive officer of AGC. “With
a precarious economy, it is time for Congress
make the cuts permanent.”
Tax rates will go up across the
board for all Americans, including the
pass-through entities, such as partnerships and
“S” corporations, which make up most businesses
in the construction industry. The death tax
jumps to a rate of 55% in 2011, while the
impending enactment of 3% withholding on public
works contracts will devastate construction
businesses, which on average make 2.4% per
contract.
The marginal tax increases raise
taxes up to 5% in 2011 unless Congress acts and
impact more than 60% of construction companies
that file their business taxes at the individual
level. The sharp rise in the death tax – from
zero in 2010 to 55% in 2011 – will take the life
out of many small and medium sized companies.
Owners will be forced to take their focus off
their businesses and instead focus on ways to
save their companies for future generations and
their current work force.
The new 3% withholding law, set
to be imposed in 2011, requires most government
entities on every level to take 3% from the cost
of the contract and send it to the IRS, rather
than pay the company performing on a public
works contract.
Construction companies will be
especially hard hit by this because their profit
margin is less than the withholding – 2.4% on
average. This will force many small businesses
out of the government market, increase the costs
of performing public works contracts, and
increase the costs to the taxpayer.
"Congress should permanently
implement the Bush tax cuts and repeal the
hazardous 3% withholding before it’s too late,”
added Sandherr.
The Associated General
Contractors of America (AGC) is the largest and
oldest national construction trade association
in the United States. AGC represents more than
32,000 firms, including 7,000 of America’s
leading general contractors, and over 11,000
specialty-contracting firms. More than 13,000
service providers and suppliers are associated
with AGC through a nationwide network of
chapters. Visit the AGC Web site at
www.agc.org.
AGC of America Continues to
Oppose California Effort to Change Standards for
Existing Fleets of Diesel Equipment
May
20, 2008
Washington, D.C.—Today, the Associated General
Contractors of America (AGC of America)
announced that it will continue to oppose
California’s effort to set new standards for the
exhaust from existing fleets of off-road diesel
equipment, persisting in its effort to bring
reason to the long-running debate over this
equipment.
“This is a tragic example of what can happen
when government regulators turn a blind eye to
the economic and technical obstacles to their
admittedly worthy goals,” said Stephen E.
Sandherr, chief executive officer of the
Associated General Contractors of America. “AGC
members share California’s interest in
protecting the environment, but they equally
appreciate the need to maintain and improve the
state’s infrastructure,” he added.
“If
you cripple the construction industry, you put
everything from roads and bridges to schools,
hospitals and other facilities at very great
risk,” Sandherr emphasized.
California is the only state that the Clean Air
Act permits to set its own engine exhaust
standards. The debate over its off-road diesel
equipment began in 2005, when the California Air
Resources Board (CARB) loudly announced that it
planned to impose much more stringent standards
on the exhaust from such equipment. CARB
completed its work on those standards in April
of this year.
The
new standards and related rules require
California’s construction contractors to
retrofit, repower or replace their exiting
fleets of off-road diesel equipment at a cost
expected to reach $13 billion. The latest
development came late last Friday, when the
state’s Office of Administrative Law completed
its review of the standards, and announced its
approval of them.
California cannot enforce its new standards
until the U.S. Environmental Protection Agency
(EPA) also reviews and approves of them, and the
courts have yet to address whether CARB has met
the relevant legal standards, or even possesses
the authority – as a matter of state law – to
adopt them. If the rule were to clear all of the
remaining hurdles, other states with air quality
problems would, however, be free to adopt the
same rule.
Fifteen other states have already adopted one or
more of California’s other emission standards,
and several have already expressed an interest
in the latest one. “This is far from over, but
it does have national implications, and that is
precisely why AGC of America will see this
matter through to its final conclusion,”
Sandherr also stated.
The
standards and related rules require the owners
of off-road diesel equipment to start labeling
and reporting on their equipment, and to start
limiting the equipment’s idling time, and their
purchases of older equipment, in 2009. In the
following years, the rules require these
companies either to meet annually declining
targets for average emissions, or to retrofit,
repower or replace a percentage of their
equipment fleets’ total horsepower. During the
rulemaking, AGC of America submitted four
separate sets of comments, affidavits and expert
reports exceeding a total of 300 pages in
length. In the comments, AGC demonstrated that
CARB had:
-
understated the cost of retrofitting or
replacing the existing equipment;
-
overstated the options for repowering such
equipment with entirely new engines;
-
undercounted the amount of existing
equipment, and exaggerated its natural
turnover rate;
-
exaggerated the resale value of the
equipment that the rule would render
unusable anywhere in California;
-
wrongly assumed that construction
contractors can simply pass all cost
increases along to their clients, without
regard to the competitive forces at work in
the construction marketplace;
-
failed to account for the rule’s impact on
construction contractors’ net worth, and in
turn, their ability to finance the required
investments; and
-
disregarded downstream effects on employment
in the construction industry, and the time
and cost of making critical improvements to
the state’s infrastructure.
Another great concern is that the major engine
manufacturers cannot make a public commitment to
providing the technical support that the
construction industry needs to comply with the
rule. At this point, it remains far from clear
that compliance is even possible.
The
Associated General Contractors of America (AGC)
is the largest and oldest national construction
trade association in the United States. AGC
represents more than 32,000 firms, including
7,000 of America’s leading general contractors,
and over 11,000 specialty-contracting firms.
More than 13,000 service providers and suppliers
are associated with AGC through a nationwide
network of chapters. Visit the AGC Web site at
www.agc.org.
AGC Applauds New
Construction Ethics Association
All Founding Members Are Members
of AGC
April 30, 2008
Washington, D.C. – The
Associated General Contractors of America (AGC)
applauds the Construction Industry Ethics and
Compliance Initiative (CEICI) and the thirteen
construction companies that came together to
form this non-profit association for the sole
purpose of promoting ethical behavior and full
compliance with the law. The CEICI was formed
April 25, 2008.
The CEICI is not a lobbying
organization; it will instead focus on
construction companies’ best practices for
encouraging ethical behavior and ensuring full
compliance. Its goals are to identify and spread
those practices throughout the construction
industry.
“We note and are proud to report
that all thirteen of the CEICI’s founding
members are also AGC members,” said AGC’s chief
executive officer Stephen E. Sandherr. “We
encouraged them to take this step and we will
continue to support their effort to make a
statement about the character and quality of the
good people who work in the construction
industry.”
While AGC has endorsed the CEICI
and explained its goals and objectives to AGC
members, the CEICI is independent of AGC or any
other trade group, and will govern its own
affairs. Its first chairman is William G. Dorey,
the president and CEO of Granite Construction,
and its Interim Coordinator is Richard J. Bendar,
a Washington lawyer well-known for his work for
and on behalf of the Defense Industry
Initiative.
The thirteen founding members of
the CEICI are:
-
Austin Industries Inc. -
Dallas, Texas
-
Balfour Beatty - Atlanta,
Ga., and Dallas, Texas
-
Clark Construction Group,
LLC - Bethesda, Md.
-
Granite Construction
Incorporated - Watsonville, Calif.
-
Kenny Construction Company -
Northbrook, Ill.
-
Kiewit Corporation - Omaha,
Neb.
-
The Lane Construction
Corporation - Cheshire, Conn.
-
Lusardi Construction Company
- San Marcos, Calif.
-
Suffolk Construction
Company, Inc. - Boston, Mass.
-
Sundt Construction, Inc. -
Tempe, Ariz.
-
Traylor Bros., Inc. -
Evansville, Ind.
-
The Walsh Group - Chicago,
Ill.
-
Zachry Construction
Corporation - San Antonio, Texas
“This kind of leadership will
also contribute to a much larger effort to
improve the standing and enhance the image of
the construction industry,” Sandherr said.
The Associated General
Contractors of America (AGC) is the largest and
oldest national construction trade association
in the United States. AGC represents 33,000
firms, including 7,500 of America’s leading
general contractors and 12,500
specialty-contracting firms. More than 13,000
service providers and suppliers are associated
with AGC through a nationwide network of
chapters. Visit the AGC Web site at
www.agc.org.
AGC members are "Building Your Quality of Life.”
Gallup Poll Shows More
Concern for Clean Drinking Water Than Climate
Change
Earth Day Celebrants
Overlook Americans’ Top Concerns
June 23, 2008
Washington, D.C. – Yesterday’s
celebration of Earth Day successfully raised
awareness for many environmental concerns across
the country, but the Associated General
Contractors of America fears that ensuring clean
drinking water lacks the attention it deserves.
A recent Gallup Poll shows that Americans
perceive clean drinking water as a threat more
than climate change.
Fifty-three percent of Americans
worry “a great deal” over the pollution of
drinking water, while just thirty-seven percent
place that concern on global warming, according
to a Gallup Poll taken March 6-9, 2008. Gallup
suggests the numbers might have been higher had
the survey been conducted following an
Associated Press report on pharmaceuticals in
drinking water.
“These poll results demonstrate
that the public is out in front of policy
makers,” said Stephen E. Sandherr, chief
executive officer of the Associated General
Contractors of America. “They recognize that our
deteriorating water delivery systems are in need
of repair and they want someone to do something
about it.”
Gallup conducts an Environment
survey annually, and notes that pollution of
drinking water has been Americans’ top concern
since 1990.
The Associated General
Contractors of America (AGC) is the largest and
oldest national construction trade association
in the United States. AGC represents 33,000
firms, including 7,500 of America’s leading
general contractors and 12,500
specialty-contracting firms. More than 13,000
service providers and suppliers are associated
with AGC through a nationwide network of
chapters. Visit the AGC Web site at
www.agc.org.
AGC members are "Building Your Quality of Life.”
