Contractors Center Point

Federal Contract Upcoming Revisions

 

Effective October 1, 2010, the Federal Government will be inacting changes to surety bond requirements and new stimulus construction. Read on for further details of these changes.

Miller Act Surety Bonds to Be Required on Fewer Federal Construction Projects

 

Effective Oct. 1, 2010, contractors will have to furnish payment and performance bonds on federal construction projectsvalued at $150,000 or more, up from $100,000. In addition, the simplified acquisition threshold will increase from $100,000 to $150,000, and the prime contractor subcontracting plan threshold for construction will increase from $1 million to $1.5 million.

 

‘Buy American’ Requirements Effective Oct. 1 for New Stimulus Construction Contracts

 

Effective Oct. 1, 2010, subcontractors that enter into new construction contracts funded by the American Recovery and Reinvestment Act will be required to use only “iron, steel and manufactured goods used as construction material” that are produced or manufactured in the United States. Federal contracting officers may waive the requirements when American-made materials are not available in sufficient quantity and quality, or in instances where materials are unreasonably expensive.

 

For more information regarding both of these changes in federal contracting, contact the construction professionals at McKonly and Asbury, LLP or American Subcontractors Association at (703) 684-3450, Ext. 1333, or GovernmentRelations@asa-hq.com.

 

Federal Construction Reporting News

Subcontractors on Stimulus Projects Must Report Jobs Data

First-tier subcontractors working on new American Recovery and Reinvestment Act (stimulus) funded projects must now report job creation data to their prime contractors. An interim rule requires subcontractors working on stimulus projects with subcontracts valued at $25,000 or more and awarded on or after July 2, 2010, to report their physical address, performance address, and “a narrative description of the employment impact of work funded by the Recovery Act,” including a description of the types and number of jobs created or retained as a result of their work. Prime contractors must add subcontractors’ job creation figures to their quarterly reports, which are due 10 days after the start of the quarter to www.FederalReporting.gov.

New Rule Requires Federal Contractors to Report Subcontract Information for Most Projects

Federal contractors must report award data for first-tier subcontractors that win subcontracts valued at more than $25,000 for publication on a searchable public Web site. According to an interim rule issued on July 8, 2010, prime contractors must report subcontractors’ office and jobsite addresses; DUNS Numbers; NAICS codes; subcontract numbers; subcontract dates and amounts; description of the products or services being provided; and prime contract information. Federal contractors and first-tier subcontractors for which “80 percent or more of its annual gross revenues from federal contracts and $25 million or more in annual gross revenues from federal contracts” must also report compensation data for the five most highly compensated executives of the company. The reporting requirements take effect as follows:

• Until Sept. 30, 2010, any newly awarded subcontract is to be reported if the prime contract award amount was $20 million or more.
   

• From Oct. 1, 2010, until Feb. 28, 2011, any newly awarded subcontract is to be reported if the prime contract award amount was $550,000 or more.
   

• Starting March 1, 2011, any newly awarded subcontract is to be reported if the prime contract award amount was $25,000 or more.

Prime contractors must submit reports to the Federal Funding Accountability and Transparency Act Subaward Reporting System (www.fsrs.gov) by the end of the month following the month in which the prime contractor awards the subcontract.

For more information on both of these topics please contact American Subcontractors Assocation (ASA) at (703) 684-3450, Ext. 1333, or GovernmentRelations@asa-hq.com.

How Can I Find Stimulus Projects in My Region? Here’s How.

As part of our ongoing program to help contractors, architects, engineers and those in the construction community prepare for and win stimulus funded work, we thought it would be appropriate to provide some key websites to visit to access and indentify these opportunities. The list of websites below are a few that we have identified that provide meaningful information on American Recovery and Reinvestment Act (ARRA) projects throughout the Mid-Atlantic Region and United States.

www.construction.com: An information hub intended for identifying regional federal stimulus opportunities.  This information is provided by McGraw Hill Construction. 

In the center of the homepage, chose your region within the U.S. map.  Once clicked, you will see a listing of all available opportunities sorted by the date posted.  On the right of the page, inside the box, are your regions “Shovel-Ready Projects”.

www.FedBusOpps.com:  A site, which provides the ability to search all federal business opportunities and includes a search filter based on all ARRA opportunities.

The link we provided takes you directly to the opportunities section of the FedBizOpps.gov webpage.   To find opportunities near you, click in the keyword search box, type in your state or a nearby city and the search results should provide you with some options.  For a more specific search, click on the “Advanced Search” tab and enter the requested information. Under the “Advanced Search” tab you have the option to search the opportunities only associated with the ARRA.

www.Recovery.pa.gov:  A website which identifies opportunities provided by the federal recovery plan.

From the home page, scroll down to ARCHIVES heading and click on the first link, Grant Opportunities Under the American Recovery and Reinvestment Act.  This link will lead you to a PDF stating the ARRA funding projects available in PA including a description of the opportunity, deadlines, funding available, who is eligible, and how to apply.

For more stimulus information, visit:

www.StimulusWatch.org:  A website, which provides citizens of the U.S. with up-to-date local knowledge about the stimulus projects in their proximity.

For more information regarding these websites, how to navigate those sites or other general questions regarding Stimulus funded projects, please contact David Blain at dblain@macpas.com or Josh Deitch jdeitch@macpas.com.

Be Careful Calculating Wage and Fringe Benefit Costs When Bidding Government Contracts

Contractors handle wages and fringe benefits for their employees in a number of different ways. Traditionally, contractors have paid the “base” amount of wages in cash but have then chosen different ways to pay fringe benefits. As federal government compliance increases, ensuring that wages are paid in accordance with federal and state laws, such as the Davis-Bacon Act, are critical when bidding on federal contracts. By evaluating payment of fringe benefits, contractors may also identify more accurate labor costs resulting in more competitive bids.

With residential and commercial backlog low, government provided opportunities have provided contractors with additional avenues of diversification of their business models. However, competition for this work is fierce. Just within the last 12 months there are 50,000 new registrants who have filed with the federal government to bid on federal project work (see http://www.contractorscenterpoint.com/2009/11/accessing-federal-stimulus-projects-where-to-go-and-what-to-do.html for further details on bidding federal stimulus projects). This new focus on federal work has increased compliance regulations and overall enforcement of federal stimulus work. 

One of the biggest challenges facing contractors is how to satisfy the wage obligation. Many contractors will pay the “base” amount of wages in cash and then choose how to pay the “fringe” portion. Some examples of how the “fringe” portion may be paid is 

• For vacation and holidays,
• Into approved apprenticeship programs,
• “Bona fide” fringe benefits, or
• As cash, and have it treated as wages

How to Be Prepared for Stimulus Work

Recently we provided a blog post on how to identify stimulus project opportunities with the federal and state governments. In that post we discussed different websites to access to find projects as well as requirements as a contractor to qualify for certain projects.

Now that you have identified opportunities that fit your organization, are you ready to succeed with these projects. Success goes far beyond the actual earth moving or construction of the project. Success for stimulus projects ultimately lies with your ability to properly plan, preparation and recordkeeping for the project.

When preparing for government and stimulus related work, consideration of these three steps could be the difference between a profitable, efficient project and one that is layered with delays that ultimately impacts cash flow and possible termination of the contract.

1. Learn the Rules and Reporting Requirements

Contractors must have a clear understanding of the law to be competitive and profitable. Stimulus-funded projects require contractors to follow the same laws, policies and procedures as any other public works project. Understanding the Davis-Bacon act and the local prevailing wage policies for your area will ensure that wages and fringe benefits are paid and reported according to the law. 

With the passage of the stimulus plan comes additional reporting requirements. These additional regulations were established to encourage competition, transparency and accountability:

• Quarterly online reports that show project status, number of jobs created, etc.
• "Buy American" requirements for materials used in construction and manufacturing
• Whistleblower protections for those who alert the federal government to contractors questionable use of stimulus funds; and
• Greater authority for the Government Accountability Office to audit any records of the contractor and subcontractor.

2. Streamline Accounting and Reporting Processes

The largest barrier standing between a contractor and government work is often the company's accounting system. Having a robust construction specific accounting system with good reporting features can help to resolve this possible barrier. Some accounting system necessities are:

Accessing Federal Stimulus Projects – Where to go and what to do

Stimulus funding for infrastructure projects is available but the big question is how to find it. This article will help contractors with two key questions regarding stimulus projects:

• Where can I find stimulus projects?
• What is required of me, the contractor, to apply for stimulus work?

Where can I find stimulus projects?

The best source for identifying stimulus projects is at two main locations:

• www.fedbizopps.gov
• www.eva.state.pa.us

The first site is a federal website. The second website is a link to federal stimulus projects within the Commonwealth of Pennsylvania. This same website can be used for other states as well. Just change the state designation from PA to the abbreviation for the state you are looking at for stimulus projects.

Other options for locating stimulus projects would be through federal agencies that manage their own projects through the federal stimulus program. Those agencies would be:

• Department of Defense 
• Department of the Army 
• Engineers 

This information can be obtained through agency supplements from the federal stimulus bill located at www.fedaccess.com/agency-supplements.htm. Once you access this supplement information look for:

 

• DFARS – Department of Defense
• AFARS – Department of the Army
• EFARS – Engineers

Other areas to turn to would be through the Small Business Administration (SBA) (www.sba.gov). The stimulus bill was developed to provide opportunities to small contractors to complete maintenance and infrastructure work throughout the United States. The stimulus bill has a number of small business “set asides” to allow for smaller contractors to bid on stimulus projects. The small business “set aside” requirements are based upon the following as established in 13 CFR Section 121:

 

• Size – Based upon gross revenues. Important for qualification as a small business.
• Number of Employees
• NAICS code

Other “set aside” options found in 13 CFR Sections 121 through 127 are

 

• 8(a) set aside programs
• Mentor or protégé programs
• Service Disabled Veteran Owned businesses
• HUB Zone 
• Woman Owned businesses 

What is required of me, the contractor, to apply for stimulus work?

All interested contractors who want to bid on federal stimulus projects must complete the following in the order as outlined:

Step 1 - Register as a contractor and qualifying business through the Business Partners Network at www.bpn.com

Step 2 - Register as a contractor and qualifying business at www.federalreporting.gov.

When registering with the Business Partners Network be sure to have available your Employer Identification Number (EIN) and information on Electronic Funds Transfers (EFT) as all stimulus projects are paid to the contractor through EFT. The Business Partners Network will also require registration with Central Contractors Regulations (CCR) and Online Reporting and Certification Applications.

If you are filing under the SBA for one of the many “set aside” opportunities you will need to complete these additional steps:

1. Determine your company size and NAICS code
2. Determine eligibility for disadvantaged business status
3. Certify where required
a. www.sba.gov
b. www.dbs.gov
4. Register with CCR

In total, there is much more to the process or qualifying for federal stimulus projects then the bidding process. Knowing the requirements of the federal and participating state governments will allow for contractors to gain an advantage in regards to obtaining stimulus projects. If you would like more information on this please feel free to contact David Blain at dblain@macpas.com.