Federal reimbursements to WSDOT could mean fraction of cash-on-hand

July 17th, 2014 by Jerry

The fate of the Highway Trust Fund has been a popular topic in recent media reports. The fund faces potential insolvency unless Congress acts by to prevent that from happening. This is a cause of concern for all states, and especially those that heavily depend on federal reimbursements to pay for transportation projects.

As most people know, the Congress has failed to pass a long-term federal highway bill.  As reported by AGC of America, this week the House, by a vote of 367 to 55, approved H.R. 5021, a $10.8 billion Highway Trust Fund patch which provides sufficient revenue to maintain current funding levels through May 2015.  The action now heads to the Senate where there is expected to be debate about limiting the extension until December 31, 2014 with the hope of forcing consideration of a long term transportation bill with sufficient revenue to support it following the mid-term elections in November.

Meanwhile, WSDOT Secretary Lynn Peterson released the following statement:

USDOT Secretary Anthony Foxx informed states on July 1 that if Congress fails to act by Aug. 1, 2014, the Federal Highway Administration will institute uniform cash management procedures to distribute the flow of federal dollars twice a month. So, what does this mean for WSDOT’s programs? It means that over the short term, the amount FHWA will reimburse WSDOT will be limited to a share of the available cash in the fund. Our share is based on our portion of the FFY 2014 federal-formula apportionment, 1.72 percent.

We’ve been good stewards of our resources and by using our strategic investment goals – managing to meet our priorities and critical needs, we can sustain the proportional payments of federal dollars under this plan for four to six months.

We remain hopeful that Congress will act in time to stave off more significant, long-term impacts. Look for more updates as their deadline approaches.

Lynn Peterson, Secretary of Transportation

Sedge of cranes return to roost in Seattle?

June 24th, 2014 by Jerry

That’s right, I said “sedge.”  That’s the name for a group of cranes (the bird kind)…you can look it up.

My AGC colleague Sean Lewis shot the video below from our offices on Lake Union.  He counts 18 construction cranes on the city skyline, a pretty high number for our informal “crane index”.  Back in the heyday of 2007, there were 22.  By 2010 there were, oh, zero.  But now we’re all the way back up to 18.  Our crane index is backed up by some recent, and actual, economic data: Construction employment in  Washington State grew 5.5% in the last year — one of the largest increases in  the nation, as reported by AGC of America.  Plus, the Census Bureau  recently announced that Seattle is the fastest growing big city in the  country.

It’s great to see this sedge; long may it roost in Washington State!

 

No filing fee for contractors with no employee hours to report

June 23rd, 2014 by Jerry

In case you missed it:  Starting June 12, 2014, if a contractor files an Affidavit of Wages Paid and they are exempt from having to pay prevailing wages, they do not have to pay the filing fee. The fee exemption applies to both online filing and paper forms.

All contractors and all subcontractors on public works (construction, reconstruction, maintenance, replacement or repair performed at a cost to state or local government agencies) must file Intent and Affidavit forms that normally require a $40 filing fee each. A new Affidavit filing fee exemption applies to contractors performing public works contracts without any prevailing wage eligible employees:

a. Sole owners and their spouses (i.e. owner operators);

b. Any partner who owns 30% or more of a partnership;

c. The President, V.P. and Treasurer of a corporation if each one owns 30% or more;

d. Contractors and subcontractors working under the federal Housing Act of 1937 exemption;

e. Contractors who have no eligible employees (usually because all contract work was subcontracted.)

Check out L&I’s Filing Fee FAQ for more info.

SBA increases small business size standards for construction

June 20th, 2014 by Jerry

On June 12, the U.S. Small Business Administration issued an interim final rule that increases a number of construction industry small business size standards to account for inflation since 2008.

The size standard for Commercial and Institutional Building Construction (NAICS Code 236220), as well as many of the Heavy and Civil Engineering Construction size standards (NAICS Subsector 237), will increase from $33.5 million to $36.5 million. The size standard for Specialty Trade Contractors under NAICS Subsector 238 will increase from $14 million to $15 million. To review the changes to construction small business thresholds, see page 33657 of the rule.

The SBA estimates that “this rule will enable approximately 8,500 firms in industries and subindustries to gain small business status.” The interim rule takes effect on July 14, 2014.

L&I has some ideas to keep you from falling

June 2nd, 2014 by Ben

According to L&I, falls account for the highest number of deaths among construction workers nationally and more than half of all worker hospitalizations across all industries in Washington state.
L&I wants to reduce that and has teamed with OSHA to create Safety Stand-Down week — a voluntary event that encourages employers to talk with employees about fall hazards and hammer home the importance of fall prevention. The program runs this week.
“Preventable falls — whether from rooftops, ladders or slips and trips — cause many disabling injuries and a number of deaths in our state each year,” said Anne Soiza, assistant director of L&I’s division of occupational safety and health, in a release. “We hope that every employer in the state will set aside time during the Stand-Down to focus on fall prevention.”
To get the ball rolling, L&I has come up with a series of slightly humorous one-minute videos called Eye on Safety. They can be found at www.EyeOnSafety.info. Below is one on walkway obstruction.

Top Line: A Faint Heartbeat for “Implied Waiver”?

April 2nd, 2014 by Todd

In an article I wrote in 2008 for the now-defunct Northwest Construction magazine, I called American Safety v. City of Olympia, a 2007 decision of the Washington Supreme Court, the “final nail in the coffin of implied waiver.” More than six years later, a new case might have me revise that pronouncement to the “next to last nail” instead.

Since 2003, construction lawyers and their contractor clients have had the Mike M. Johnson v. Spokane County decision of the Washington Supreme Court repeatedly beaten into their weary heads. We lawyers have come to believe it to be the next-to-the last word on the issue of a construction project’s owner’s ability to demand absolute adherence to a requirement that a contractor provide the owner with written notice of an intent to seek more money or time for any change that occurs on a construction project. When the court announced its decision in Mike M. Johnson, it appeared to many of us that a long line of authority that originally arose with decisions made before statehood by our Territorial Supreme Court was in grave danger. Those cases stood for the proposition that requirements for written notice in a construction contract were for “the convenience of the owner,” and could be waived in myriad ways, including by implication (course of conduct on the project, the owner ordering the work and clearly knowing the contractor was expecting more time and/or money, etc.). In Mike M. Johnson, a majority of our Supreme Court essentially said, “a deal’s a deal,” holding that requirements for written notice (and presumably requirements for written agreement on changes) in a construction contract were strictly enforceable absent some “unequivocal” indication that the owner had waived them.

The day that the Mike M. Johnson decision was announced was, by pure happenstance, the same day as the annual meeting of the Washington State Bar Association Construction Law Section. Members of our section who regularly represent public owners virtually danced into our meeting that day, while we who more regularly advise contractors were—to say the least—not happy with the decision. And since 2003, the Mike M. Johnson decision has been the subject of innumerable articles and Powerpoint slides produced by construction lawyers and experts. Several attempts to introduce anti-Mike M. Johnson legislation in Olympia have withered and died without passing out of committee. I believe many of us were convinced that it was authority here to stay, and we regularly told our clients, “whatever you do, get it in writing.”

In American Safety, the City of Olympia, having unilaterally closed a project after the contractor apparently went out of business, entered into post-contract discussions with the contractor’s surety, which asserted that it (standing it the shoes of its principal, the contractor) was entitled to extras under the contract. For a period of some months, the surety and the City exchanged information and negotiated about those changes. Then, citing to Mike M. Johnson, the City asserted that because neither the principal nor surety had given timely notice of the alleged additional costs, no right existed to request them. The surety sued, claiming that the City’s willingness to negotiate on a project it had closed was at least implied waiver of the notice requirements. But, the Washington Supreme Court disagreed, curiously holding that the City’s behavior in negotiating extras with the surety was “equivocal,” and therefore not “unequivocal,” leading to a Mike M. Johnson-like result. My take was that if opening a closed job and negotiating for a period of months was not “implied waiver” of the requirements for written notice, nothing ever would be, and therefore, I—somewhat boldly–announced that the nearly 150-year old concept of “implied waiver” was likely forever dead in Washington state.

But hold on there, Buckaroo. After Division I of the Washington Court of Appeals published its opinion in Top Line Builders v. U.S. Bank on March 10, it seems that “implied waiver” may actually have some life after all. Top Line involved a contractor’s attempt to foreclose a lien, which it had recorded for an amount including both the unpaid balance of its written contract, and an even larger amount of what it asserted to have been agreed-upon but unwritten change orders. U.S. Bank, the project’s lender, didn’t record its deed of trust (security for its loan) until after the contractor had begun its work, meaning that any proper lien recorded by the contractor would have priority in a foreclosure of the real property. The bank asserted that because the contract between the contractor and its customer required all changes to be in writing, the lien was only proper as to the unpaid amount of the written contract (the lien statute restricts liens to the “contract price”), and that the alleged change order amounts were not properly part of the lien (and therefore the amounts of those alleged changes were not superior to the bank’s priority), because the requirement for written change orders (and presumably the accompanying requirement for written notice) was not adhered to by the contractor. Essentially, the bank repeated the same rationale the City of Olympia had given the surety in American Safety.

I was surprised to see the Top Line Court cite a number of pre-Mike M. Johnson cases, holding that the requirements for written change orders could be “mutually waived” by the parties, including by a showing of “evidence that the owner authorized, permitted and/or directed” the extra work to be done. Ultimately, the court determined that the contractor and project owner had, in fact, waived the requirements for written change orders, and that the amounts for those changes were properly recoverable in quantum meruit. In holding that both the remaining contract balance and the quantum meruit change orders were properly part of the lien, the court interpreted the definition of “contract price” as set out in the lien statute, and specifically, the portion of that definition that says, “if no price is agreed upon, then [the contract price is] the reasonable and customary charge therefore.”

Needless to say, I was a little taken aback in reading the Top Line decision. Having written a number of articles touching on the Mike M. Johnson case over the years, Mr. Johnson and I have become occasional e-mail pen pals. After reading Top Line, I went back and reviewed the facts cited by the Washington Supreme Court in the decision that so dramatically impacted Mr. Johnson’s life (see the decision by Division III of the Washington Court of Appeals in Travelers v. Mike M. Johnson to learn about some of that impact). In his dissent in Mike M. Johnson, the late Justice Tom Chambers was concise: “…[Spokane County] directed the contractor to do additional work, was fully informed of all relevant information known by the contractor, and observed the contractor do the work.” Maybe I’m wrong, but I’d bet a dollar to a donut that had he known he could rely on the owner’s “direction” to do the added work as “evidence” of implied waiver by Spokane County (as the Top Line contractor did), Mr. Johnson would have been yelling “I was directed!” at the top of his voice in 2003.

But where does Top Line leave us we now? Are we back to a pre-Mike M. Johnson “implied wavier” possibility? My guess is, and my advice to my clients will be that we’re not. What’s not spelled out in the facts of Top Line is whether or not the contract specified that failure to comply with requirements for a writing waived any claim. That language not only appears in the WSDOT Standard Specifications, it is creeping into many private works contracts that are crossing contractors’ (and their lawyers’) desks today. Clearly, “better safe than sorry” remains the watchword today. I often tell my clients that in any aspect of their businesses, they take need to do all they can to give the other side with no reason not to pay. And, while many of us grew up on the handshake agreements that were regularly honored “back in the day,” in a post Mike M. Johnson world, getting it in writing still seems to be the surest way to get paid. In this century, anyway.

Proposed rule expands Clean Water Act jurisdiction

March 31st, 2014 by Jerry

AGC of America reports that the Environmental Protection Agency (EPA) and US Army Corps of Engineers (USACE) proposed their new rule aimed at clarifying the definition of “waters of the U.S.” and which bodies of water fall under federal jurisdiction. This definition is critical to many of the Clean Water Act programs affecting how contractors perform their work, such as the Section 404 Dredge and Fill Permits, Section 402 Stormwater programs, and Section 311 Spill Prevention, Control, and Countermeasures plans.

At this point, the proposed rule appears substantially similar to a previously leaked version, a massive – and unnecessary – expansion in Clean Water Act jurisdiction. Ditches, ephemeral and intermittent streams, tributaries, and isolated waters located in a floodplain or riparian area (which have no defined limit in the rule) are all now potentially jurisdictional.

The rule is expected to be published in the Federal Register soon, with a 90-day comment period in effect after publication.

IMCO shows students construction in action

March 24th, 2014 by Jerry

imcoOur thanks to IMCO General Construction, Superintendent Joe Lupo and his outstanding crew for hosting a group of Bellingham High School students at Imco’s Lynden Wasterwater Treatment Plant expansion project today.

AGC’s Northern District provided lunch for the whole gang, and Joe had their attention every step of the way on his site tour. Thanks again, Joe!

Bad roads cost you nearly $2000 annually

March 20th, 2014 by Jerry

Driving on deficient roads costs each Seattle area driver $1,845 per year and Spokane area drivers $1,423 per year in the form of extra vehicle operating costs as a result of driving on roads in need of repair, lost time and fuel due to congestion-related delays, and the cost of traffic crashes in which roadway features likely were a contributing factor.

This is one of the alarming findings in a new report,Washington State Transportation by the Numbers: Meeting the State’s Need for Safe and Efficient Mobility,” by TRIP, a national transportation research firm.

The report notes that throughout Washington, nearly half of major roads and highways are in poor or mediocre condition. A total of 27 percent of Washington bridges show significant deterioration or do not meet current design standards. The state’s major urban roads are becoming increasingly congested, with drivers wasting increasing amounts of time and fuel. And Washington’s rural non-interstate traffic fatality rate is significantly higher than the fatality rate on all other roads in the state.

Of course, increased investment in transportation improvements at the local, state and federal levels could relieve traffic congestion, improve road and bridge conditions, boost safety, and support long-term economic growth.  But the 2014 State Legislature recently adjourned without passing a comprehensive transportation funding package.  Hopefully the TRIP report will spur renewed attempts.

General contractor needed for CPAR Board

March 5th, 2014 by Ben

The state has an opening for a general contractor representative on its Capital Projects Advisory Review Board. Applications are due by March 14.

The board evaluates public capital project construction processes and advises the Legislature on policies related to public works delivery methods. There are 23 members on the board, including four legislators and five political subdivision representatives.

Board members must be knowledgeable about public works contracting. They serve four-year terms and can be reappointed once.

Applications can be found at www.governor.wa.gov/boards/application/default.aspx. Questions can be directed to Molly Keenan, Molly.keenan@gov.wa.gov or (360) 902-4110.