The California Contractors State License Board (CSLB) monitors legislation that it is sponsoring as well as bills that may have an impact on the construction industry. In its Summer 2014 Newsletter, the CSLB identifies a handful of bills that it is watching.
On June 20, 2014, Missouri Governor signed into law Senate Bill 529. The Act revises and expands the scope of the Missouri Public Prompt Payment Act and the law relating to public works projects. The revised provisions are operative August 28, 2014. Of note, under existing law, all public works contracts made by a political subdivision for a public works project must provide for prompt payment to the contractor. Under the revised Act, these contracts must also provide for prompt payment of any professional engineer, architect, landscape architect, or land surveyor.
In mid-April 2014, Nebraska Governor signed into law Legislative Bill 961. Of note, it includes revisions to the Nebraska Construction Prompt Pay Act. The Act is set forth in Nebraska Revised Statutes §§ 45-1201 to 45-1210 and Section 8 of L.B. 961. The revised provisions are operative July 18, 2014.
On April 8, 2014, Tennessee Governor signed into law Senate Bill 1713, a bill amending by deleting the section in its entirety and substituting Title 62, Chapter 6, Part 1, § 62-6-119, relative to requirements for invitations to bid. The amended law is effective July 1, 2014.
For any contractors who have ever considered manipulating disadvantaged business enterprise (DBE) requirements as a way to obtain work, this recent FBI press release provides a cautionary tale.
According to the press release, in 2007 a Connecticut contractor was awarded a highway project, funded by state and federal sources, based on its low bid of $39.6 million. In its bid documents, the contractor had represented that a certain DBE subcontractor would perform about $3.1 million of the work, furnishing all supervision, labor, and materials. Instead, the government claims the contractor used the DBE subcontractor as a shell to pass through payment to other subcontractors that the contractor negotiated with and supervised in actual performance of the work.
Under the non-prosecution and civil settlement agreement reached between the government and the contractor, the contractor agreed to a number of reforms, such as establishing an Ethics and Compliance Officer and removing the personnel directly involved in the scheme, in addition to paying a $2.4 million fine. The non-prosecution agreement only addressed the contractor's corporate criminal liability--the government's investigation of individuals continues.
On February 12, 2014, President Obama issued an Executive Order to raise the minimum wage for Federal contractors and subcontractors under certain contracts, as he had foreshadowed in this year's State of the Union. The Executive Order sets forth the new wage rate, when it may take effect, and what contracts will be affected by this minimum wage increase.
Click here for a link to the full alert, which I co-authored with my colleague Meghan Doherty.
Yesterday, Pillsbury attorneys Joël Van Over and Alex Ginsberg published their advisory titled Who Says Life's Not Fair: Good Faith and Fair Dealing Prevails in Metcalf Case. The Advisory discusses the Federal Circuit's highly anticipated decision in Metcalf Construction Company, Inc. v. United States, No. 2013-5041 (Fed. Cir. Feb. 11, 2014). The Federal Circuit ruled that a contractor suing the government for breaching the implied duty of "good faith and fair dealing" need not show that the government's conduct was "specifically targeted" to reappropriate the contractor's benefits under the subject contract except in limited circumstances present in the court's 2010 decision in Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed. Cir. 2010). Rather, in Metcalf, the court reaffirmed the vitality of traditional standards used to prove a breach of the duty of good faith and fair dealing, such as where the government hindered or failed to cooperate with the contractor's performance so as to "destroy the [contractor's] reasonable expectations. . . regarding the fruits of the contract."
Yesterday, Pillsbury attorney Julia E. Judish and Maryelena Zaccardelli, Principal, MEZ Consulting, LLC, published their advisory titled Government Contractors Face Expanded Affirmative Action RequirementsRegulations relate to veterans and individuals with disabilities discussing the Obama Administration's Office of Federal Contract Compliance Programs' expansive new regulations. The Advisory discusses, among other things, what the new regulations require, including that government contractors will be required to undertake greater efforts to employ veterans and individuals with disabilities.
Recently a California Court of Appeal affirmed a superior court's judgment and order confirming that the City of San Leandro (City) had not abused its discretion by waiving a bid defect and awarding the public project contract to that bidder. The court, in Bay Cities Paving & Grading, Inc. v. City of San Leandro, Case No. A137971 (Jan. 28, 2014), rejected Bay Cities Paving & Grading, Inc.'s (Bay Cities) contention that the City improperly awarded the contract to Oliver Desilva, Inc. dba Gallagher & Burk (hereafter G&B) because G&B inadvertently omitted the first page of its bid bond, a bond required by the contract specifications. The court found that the City had before it the information needed to determine that G&B had satisfied the bid bond requirement when it concluded that G&B was the lowest responsible bidder.
Star Equipment, Ltd., Manatt's, Inc., and Short's Concrete Cutting Co. recently secured a victory in the Iowa Supreme Court when the Court, in Star Equipment, Ltd., v. State of Iowa, Iowa Department of Transportation, Case No. 12-1378 (Jan. 31, 2014), reversed the district court's ruling on the scope of remedies available to subcontractors under Iowa Code § 573.2 for unpaid work. For the state projects, the Iowa Department of Transportation (IDOT) had waived the requirement of a construction surety bond because the general contractor qualified as a Targeted Small Business (TSB). Ruling in favor of the subcontractors, the Court construed Section 573.2 "as a waiver of sovereign immunity that allows subcontractors to recover from IDOT the unpaid balances TSBs owe for work on public improvements." It went on to rule that the subcontractors, as prevailing parties, are eligible, in the district court's discretion, to recover their reasonable attorneys' fees from IDOT.
With the U.S. Congress unable to reach an agreement on a continuing resolution, the U.S. federal government shut down all non-essential services on October 1, 2013. The shutdown will remain in effect until Congress passes appropriations legislation for fiscal year 2014. This Pillsbury client alert, which originally was published in March 2011, provides guidance on how a shutdown affects federal contractors and what they can do to prepare for and react to the shutdown.
There are numerous contractor-related bills making their way through the California legislature this year. The following bills, although not an all-inclusive list, are worth noting:
Assembly Bill 44 - An Act to amend, repeal, and add Public Contract Code § 4104 relating to public contracts - signed into law by the Governor September 9, 2013 and operative July 1, 2014. The Subletting and Subcontracting Fair Practices Act, Cal. Public Contracting Code §§ 4100, et seq., requires an entity taking bids for the construction of any public work or improvement to specify that any person making a bid or offer to perform the work to, in his or her bid or offer, include specified information, including the name and location of the place of business of each subcontractor who will perform work or labor or render service to the prime contractor in or about the work or improvement. Commencing on July 1, 2014, any person making a bid or offer to perform the work to, in his or her bid or offer, will be required to include the California contractor license number of each subcontractor.
In IAP World Services, Inc.; EMCOR Government Services, B-407917.2 et al. (July 10, 2013), involving a protest challenging an award by the U.S. Department of the Navy (the "Navy") for base operating support services, the Government Accountability Office ("GAO") held that the Navy unreasonably credited the joint venture awardee with the corporate experience and past performance of two affiliates of one of the joint venture partners, where the record did not demonstrate that the affiliates would play a role in contract performance.