Construction Law Blog

Construction Procurement Laws of Missouri Under Attack!

Dave Seitter — 2009-11-03T05:47:00-06:00

The Heart of America Chapter of Associated Builders and Contractors (ABC) has filed a legal action demanding that Governor Jay Nixon and Missouri Attorney General Chris Koster enforce the construction procurement laws of the state. The lawsuit also asks the court to stop current construction, invalidate all construction contracts and force board members to repay any state funds illegally spent.

The “Fairness in Public Construction Act,” passed in 2007, is designed to maintain and promote the economical, nondiscriminatory and efficient expenditures of public funds in connection with publicly funded or assisted construction projects. Missouri prohibited so-called “project labor agreements” on state funded projects, and restricted their use on projects using local tax resources.

A project labor agreement is generally an agreement mandating the use of only union labor as a condition of working on the construction project. The 2007 law requires local governmental bodies to hold public hearings and justify the rational basis for banning non-union workers before they impose such a mandate on a publicly funded project.

Industry studies have conclusively shown that limiting competition by banning non-union companies and non-union workers increases the cost of public projects by as much as 25 percent. The increased costs are paid for by taxpayers. This scheme, usually promoted by organized labor, discriminates against the 8 out of 10 Missouri workers who have voluntarily chosen not to join a union.

ABC Heart of America Chapter initially requested the state to investigate after an intensive inquiry raised questions about whether the school and ambulance boards complied with Missouri law.

“When projects are bid using criteria designed to eliminate non-union bidders, taxpayers get taken for a ride,” stated Jim Kistler, President and CEO of the Heart of America Chapter of ABC. “The kind of cronyism that steers construction contracts to union-only contractors is discriminatory and wasteful. The Bayless School Project is a perfect example – taxpayers paid an additional $20,000 just for the union label.”

In the Bayless Schools case, the school district issued a project labor agreement just before the bid closing date. The late timing of this requirement prevented the public and bidders from understanding the full ramifications of the PLA. When the low bidder refused to sign the PLA, the school district concocted a scheme to disqualify the low bid and gave the project to a union firm.

“Imposing a PLA by ambush - in the eleventh hour of bidding - denies everyone their right to know how tax money is being spent,” stated Kistler. “The school district’s actions limited competition and avoided public scrutiny. The result violated both the state’s public contracting law and the public trust.”

The case involving the St. Charles County Ambulance District takes a different approach with the same discriminatory result. The ambulance district clearly indicated their desire for a PLA in the bid documents, and then forced companies to certify they were either already union or were willing to become union. The ambulance district did not permit bidders to certify their qualifications as a non-union contractor.

“The effect of the bid process used by the ambulance district was to scare off non-union bidders. The ambulance district clearly intended to force the construction to be performed only by union workers – creating a de facto PLA,” continued Kistler.

The lawsuit asserts that, in both cases, the bid process illegally excluded consideration of non-union contractors. ABC contends the Bayless School District and the St. Charles County Ambulance District violated Missouri’s statute on public procurement because no public hearings were held, no justification was provided for excluding non-union workers, and the statutory requirements which mandate a transparent public process before imposing a union-only agreement were not followed.

Violations of the laws governing the bid process and awarding of government contracts can result in a contract deemed illegal being declared null and void, and of no effect. In addition, the law is written to hold public officials involved in such a decision personally liable for the cost of the contract.

“ABC is committed to insuring that all public governmental bodies follow the law when it comes to spending taxpayer money,” stated Kistler. “We also intend to protect taxpayers by seeking to recover any state moneys spent in violation of the law.”

Federal OSHA to review all state plan programs

Dave Seitter — 2009-11-02T07:33:14-06:00

Trusty reporter Kate Whitby of Spencer Fane reports:

US Department of Labor assistant secretary testifies before Congress on OSHA state plan states' occupational safety and health programs
Federal OSHA to review all state plan programs

WASHINGTON- Jordan Barab, acting assistant secretary for the U.S. Department of Labor's Occupational Safety and Health Administration (OSHA), today told a Congressional committee that the serious shortcomings discovered during his agency's evaluation of the Nevada Occupational Safety and Health Administration's safety program raised concerns about federal OSHA's monitoring of all state plan states.

Barab said in testimony before the House Committee on Education and Labor that, as a result of deficiencies found in Nevada OSHA's program and this administration's goal to move from reaction to prevention, federal OSHA will implement a number of changes to strengthen the oversight, monitoring and evaluation of all state programs.

"To improve oversight immediately, I sent interim guidance to OSHA regional administrators about the monitoring tools available to them and encouraged more in-depth investigation of potential problems," said Barab. "To ensure that deficiencies similar to those found in Nevada do not exist in any of the other state plans, OSHA will conduct a baseline evaluation, similar to what we conducted in Nevada, for every state that administers its own program. These evaluations will lead to better program performance and consistency throughout all state plans."

Although federal OSHA is strengthening its oversight of state plan programs, Barab also pointed out the benefits of state programs. They add resources to the federal program and cover state and local government employees not covered by federal OSHA. Federal OSHA strongly supports the initiative and dedication of state programs.

"We want to work together with the states and provide assistance before a state's program becomes deficient and causes worker deaths, injuries and illness," said Barab. "We are not trying to change the nature of our relationship between federal and state OSHA, but we need to speak with one voice and assure American workers they will receive adequate protection regardless of the state in which they work."

The Occupational Safety and Health Act of 1970 encourages states to develop and operate their own job safety and health programs. Federal OSHA approves and monitors the state plans and provides up to 50 percent of an approved plan's operating costs. Twenty-five states and two American territories have sought and obtained plan approval.

OSHA's role is to promote safe and healthful working conditions for America's men and women by setting and enforcing standards, and providing training, outreach and education. For more information, visit http://www.osha.gov.

Good economic news for contractors in the Midwest?

Dave Seitter — 2009-10-19T04:34:00-05:00

ENR reports housing starts could be up in 2010, sparking a rebound in the economy...that coupled with the Kansas City Business Journal's article declaring jobs level locally will be at pre-recession levels leads me to conclude one can conclude commercial construction will not be back in 2010....ask yourself: are you better off at year end 2009 than year end 2008? I think most folks were feeling last year 2009 would be a pretty good year.....I do not know many contractors who feel 2010 will be a good year for them.......Time to check in with KC's economic prognosticator, Dr. Chris Kuehl for his thoughts...check him out at Armada Intelligence.

Employers with workers in Illinois....a new law you need to be familiar with regarding equal pay!

Dave Seitter — 2009-10-13T08:18:30-05:00

Expanded Protections for Workers Under the Illinois Equal Pay Act

On August 14, 2009, Governor Pat Quinn signed House Bill 3634 (HB 3634), amending the Illinois Equal Pay Act. HB 3634 went into effect immediately. The new legislation expands two different time limits related to the filing of claims, and increases the time that records must be kept.

The Illinois Equal Pay Act prohibits employers with four or more employees from paying unequal wages to men and women doing the same or substantially similar work, requiring equal skill, effort, responsibility and under similar working conditions, subject to certain exceptions. It protects both men and women from pay disparity. Furthermore, it protects any individual who files an equal pay complaint from harassment or retaliation. If an employer is found to have engaged in unlawful pay discrimination, it will be required to pay the employee the wage difference plus possible legal costs and civil fines of up to $2,500 per violation.

An employee or former employee may file a complaint with the Illinois Department of Labor alleging a violation of the Equal Pay Act. Under HB 3634, the time for filing a complaint with the Illinois Department of Labor has increased from 180 days after the date the employee learned of the violation to one year from the date of underpayment.

An employee or former employee may also pursue an equal pay claim in court. Under HB 3634, the time for filing a claim in court has increased from three years after the date the employee learned of the underpayment to five years from the "date of underpayment." HB 3634 also makes clear that a "date of underpayment" is triggered each time wages are underpaid, consistent with the Lilly Ledbetter Fair Pay Act of 2009.

The recordkeeping requirements of the Equal Pay Act have also changed. In general, an employer must maintain records that document the name, address, and occupation of each employee and the wages paid to each employee. Employers are now required to keep these records for five years, as opposed to the three year period that applied under the prior version of the law. In addition, employers must maintain records related to an ongoing investigation or enforcement action until their destruction is authorized by the Illinois Department of Labor or by court order.

The most significant of these changes for most employers is the expanded record retention obligation. Employers in Illinois should review their record retention policies, especially those related to compensation, justification for compensation decisions, job descriptions, performance evaluations, disciplinary records and other documents related to individual compensation decisions. It is even more important that these documents be retained, and preserved for a minimum of five years.

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So what is the best government contract available for construction companies?

Dave Seitter — 2009-10-12T01:45:00-05:00

In a recent decision, Tyler Construction Group v. United States, 2009 Westlaw 1796702 (Fed. Cir. June 25, 2009), the U.S. Army Corps of Engineers are permitted to use Indefinite Delivery/Indefinite Quantity contracts (IDIQ) for design and construction of multiple military facilities. This is consistent with my thought process that there could be a movement to this type of bargaining, especially in light of what appears to be President Obama's reticence to use government-wide area contracts (GWACs) but yet wanting to streamline a process where certain types of contractors can be called upon for a variety of work as opposed to undertaking the difficult and somewhat costly process of using RFPs to obtain work. For this, I recommended to several clients to look at acquiring contractors who have these types of contractual relationships with the government.

Recent "Damages for Delay" case in Kansas involving......the attorneys at MidwestConstructionLaw.com

Dave Seitter — 2009-09-28T17:53:53-05:00

Midwest Construction Law attorneys Josh Dickinson and Barry Pickens recently obtained a victory before the United States Court of Appeals for the Tenth Circuit in a case involving a construction client from the Pittsburg area. (opinion may be found at http://www.ca10.uscourts.gov/opinions/08/08-3076.pdf). The underlying lawsuit involved the application of a "no damage for delay" provision in a large-scale construction project fraught with several lengthy delays. At the District Court level in Kansas, the Court ruled that the "no damage for delay" provision was fully enforceable. The Tenth Circuit, however, reversed the decision on several procedural fronts. The Court of Appeals sent the case back to the District Court to address several arguments advanced, including whether the disagreement fell outside of the scope of the provision, whether the general contractor was estopped from asserting the provision based upon certain statements made during the course of the project, and whether the provision had been waived by the general contractor.

The application and enforceability of "no damage for delay" clauses vary from state to state. These clauses should be carefully considered by owners, contractors and subcontractors, both before the contract is signed and after a significant delay occurs.

Is the construction industry hiring? In infrastructure and government contracting - YES!

Dave Seitter — 2009-09-16T08:10:30-05:00

My headhunter source, Joe Bunta of Nexxus Solutions out of the east coast tells me (a) he is seeing an increase in hiring generally, (b) the hiring is due to attrition and (c) an "up-tick" in hiring where his customers are looking for operational individuals (project supers., etc.). He notes only 5% of the stimulus money has been release....next year will be big year for infrastructure and military base expenditures. His construction economic group has done research to indicate the money gong out in 2010 to 2011 versus revenue reported by the top 400 last year will require contractors to grow to capture the opportunities.

I have known Joe along time and I do NOT believe he is puffing in his assessments. He noted that commercial work will be commercial renovation next year but perhaps 2011 commerical contracting will be back.......He also notes lower income housing is starting to come back in a major way.

E-Verify webinar can be found at www.Midwestconstructionlaw.com

Dave Seitter — 2009-09-15T03:28:00-05:00

Apologies that not everyone was able to listen in on this important new law now imposed at the federal contracting level and in certain states (Missouri and Nebraska most notably).

What to do if you think it is time to sell your business and why would you want to?

Dave Seitter — 2009-09-14T06:00:00-05:00

OK....lets figure this out......the estate tax expires next year along with capital gains tax cut.....the highest personal tax rate at the federal level goes back up to 39.6% (this does not include state and local income tax rates) and most likely a surtax will be created for the new health care plan......do I have this correct?

Maybe, just maybe if there was a time to sell versus next year, the year after, or the year after that .... maybe it is right now....

Oh ja, your business has to have been set up for sale long before now to take advantage of the situation right now

John H. Brown's "How To Run Your Business So You Can Leave It In Style" is a good outline of how to accomplish this "feat"!

Chinese Drywall litigation heating up?!

Dave Seitter — 2009-09-11T10:15:00-05:00

The litigation issues regarding Chinese drywall are on the rise and now Congress is looking into relief for taxpayers...a plan to hold the makers accountable. But will this litigation get lost in the health care debate?

In the interim the United States District Court for the Eastern District of Louisiana appears to be one of the key jurisdictions to follow as this unfortunate situation unfolds...............