Washington, D.C. – Associated Builders and Contractors (ABC) today welcomed the decision by the Internal Revenue Service (IRS) to defer for one year – from Jan. 1, 2012 to Jan. 1, 2013 – the withholding of 3 percent tax on all payments for goods and services made by the federal, state, and local governments with total expenditures of $100 million or more. Three percent withholding applies to the total contract, not to the net revenue generated from a project.
While we welcome this news by the IRS, ABC firmly believes that delaying the effective date is not a solution because there is still no equitable, practical, or cost-effective way to implement this new requirement,” said ABC Vice President of Federal Affairs Geoff Burr. “We will continue to work with our coalition partners to fully repeal this burdensome and unfair regulation.”
The problem with the 3 percent withholding regulation for construction contractors is that the government will retain the funds necessary to complete a project, such as those needed to pay for subcontractors, materials and suppliers,” said Burr. “In addition, the increased administrative costs to both large and small contractors as well as the government to comply with this withholding requirement will drive up the cost of construction, which in turn, will force smaller firms out of the public sector market.
Currently, there are three bills pending in Congress: H.R. 674, S. 89 and S.164 that would fully repeal Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005.
To view this statement on ABC's website, click here.
Associated Builders and Contractors (ABC) is a national association with 77 chapters representing 25,000 merit shop construction and construction-related firms with two million employees. Visit us at www.abc.org.
Associated Builders and Contractors (ABC) today issued the following statement regarding repeal of the expanded 1099 tax reporting requirements (H.R. 4), which was signed into law April 14 by President Obama.“Repeal of the 1099 mandate eliminates an unnecessary administrative burden that more.. – In testimony today before the U.S. House Committee on Education and the Workforce Subcommittee on Workforce Protections, Associated Builders and Contractors (ABC) member Thomas Mistick, principal of Church Restoration Group, Cranberry Township, Pa., stated that the Davis-Bacon Act, as administered by the U.S. Department of Labor, “hinders economic growth, increases the federal deficit; and imposes an enormous paperwork burden on both contractors and the federal government.” Mistick spoke at the hearing "Examining the Department of Labor's Implementation of the Davis-Bacon Act.” more..
An April 6 report by the Government Accountability Office (GAO) uncovered serious flaws in how Davis-Bacon Act wages are determined and recommended steps for the Department of Labor (DOL) to take in order to remedy some of the issues. GAO examined how well DOL has addressed previous concerns from stakeholders and also looked at new issues that need to be resolved.
In the report, GAO acknowledged recent actions by DOL to correct problems with the process and with the surveys themselves, but criticized its inability to fix major problems related to accuracy, overall quality and timeliness – pointing out that DOL is still years behind schedule on many of its surveys, forcing federal contractors to rely on out-of-date information.
GAO also noted ongoing issues with the representativeness of the wage determination survey results, reporting that about 25 percent of final wage rates for job classifications are based on wages reported for six or fewer workers. In addition, 63 percent of all DOL wage determinations consider wages set by union agreements to be “prevailing,” even though only 13 percent of construction workers are covered by such an agreement.
According to the report, DOL acknowledged that nonunion contractors are more likely not to respond to wage surveys because it can be more difficult for them to compile the information and because of a generally more cautious attitude toward wage reporting.
The report showed that a lack of transparency in the process and no incentive to participate was partially to blame for the low response rates and noted that less participation often results in wage determinations that are inaccurate. DOL also admitted nonresponse is likely to cause a bias in the surveys; however the agency said it has no idea whether its wage determinations accurately reflect prevailing wages because it does not calculate response rates or analyze survey nonrespondents.
In light of the major flaws the report uncovered, GAO recommended DOL obtain expert and objective advice on its survey design and methodology and examine the possibility of using statistical sampling instead of a census survey. DOL agreed that there are problems with the surveys, but told GAO it would prefer to rely on staff experience to implement those changes.
The GAO report was released in advance of a U.S. House Committee on Education and the Workforce Subcommittee on Workforce Protections hearing titled, “Examining the Department of Labor's Implementation of the Davis-Bacon Act.” During the hearing, an ABC member will testify on how the Davis-Bacon Act negatively impacts his construction business and ways that the problems can be addressed. Those interested can watch the event live April 14 at 10:00 a.m. (ET).
DOL plans to hold five conferences throughout the United States this year to attempt to clarify some of the rules concerning prevailing wage requirements under the Davis-Bacon Act, McNamara-O’Hara Service Contract Act and the labor standards provisions of the American Recovery and Reinvestment Act of 2009. For more information, visit the DOL website.
WASHINGTON, D.C. – In testimony delivered today on Capitol Hill, Associated Builders and Contractors’ (ABC) General Counsel Maurice Baskin, a partner with Venable, L.L.P., stated that recent administration efforts to make project labor agreements (PLAs) part of the federal procurement process are “threatening to violate the longstanding Congressional mandate of full and open competition in federal procurement—at taxpayers’ expense.” Baskin’s remarks were given during a hearing on the impact of the administration’s pro-PLA policy on construction job creation and the efficient use of taxpayer dollars held by the House Committee on Oversight and Government Reform’s Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending.
“Neither the president nor the Federal Acquisition Regulatory Council has the authority to override the statutory mandate of full and open competition in all federal procurements,” Baskin said. “No fact-based justification for the change in policy has ever been shown, leading to the widespread belief that the administration’s policy is simply a political payback to organized labor.” According to Baskin, this is the kind of political favoritism that The Competition in Contracting Act was enacted to prevent.
“Since 2009, ABC members have filed a series of bid protests with the Government Accountability Office to stop unjustified PLA mandates from being imposed by federal agencies. In each case, the federal agency has withdrawn the PLA mandate rather than risk a finding of a procurement law violation.
“The government’s own market research has shown repeatedly that PLAs will not serve the interests of taxpayers, will discourage competitive bidding and will increase costs. Yet, we continue to see PLA requirements popping up on agency procurements around the country,” Baskin said
“Eighty-seven percent of all construction workers currently choose not to belong to a labor union. Rather than promoting full and open competition and maximizing the available labor pool for government construction projects, which is overwhelmingly merit shop, government-mandated PLAs result in the award of federal construction contracts primarily to the much smaller group of unionized contractors and their union employees,” said Baskin.
PLAs are pre-hire contracts that require projects to be awarded only to contractors and subcontractors that agree to recognize unions as the representatives of their employees on that job; use the union hiring hall to obtain workers; obtain apprentices exclusively from union apprenticeship programs; pay into underfunded and mismanaged union benefit plans; and obey costly, restrictive and inefficient union work rules.
In his testimony, Baskin also urged Congress to support the Government Neutrality in Contracting Act (H.R. 735), which would prohibit the federal government from requiring contractors to execute a PLA as a condition of winning federal or federally funded construction projects. “This legislation will result in more construction jobs, more infrastructure renewal and a more accountable federal government,” Baskin said. ABC members John Ennis, Jr., CEO of Ennis Electric Company, Inc., Manassas, Va.; and John F. Biagas, CEO of Bay Electric, Newport News, Va., also testified at the hearing. Associated Builders and Contractors (ABC) is a national association with 75 chapters representing more than 23,000 merit shop construction and construction-related firms with nearly two million employees. Visit us at
www.abc.org and
www.thetruthaboutplas.com.