Posted on November 5, 2010 by Chris Cheatham

Do Davis-Bacon Wage Issues Affect Your Stimulus Project?

Across the country, government officials are scrambling to award and spend American Recovery and Reinvestment Act (ARRA) funding before upcoming deadlines.  If you are a contractor or subcontractor lucky enough to work on one of these projects, congratulations! 

Now comes the tough part. 

Working on a federal or state-funded project brings a myriad of regulatory issues that must be resolved.  One of those issues is Davis-Bacon compliance.  As you sort out compliance issues, here are some questions to think about: 

  • Is the project a federal project subject to federal labor laws? 
  • Is the project a state project subject to state labor laws?
  • Is the project both a federal and state project subject to both federal and state labor laws?

Is your head spinning yet?  In some circumstances, depending on the government agencies involved and the source of funding, you may actually be subject to both federal and state labor laws.  I have assisted clients with these confusing issues, so please contact me if you have questions (chris@cheathamconsulting.com). 

Photo Credit:  NIOSH

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Posted on March 5, 2010 by Chris Cheatham

Does Your Construction Project Require Davis-Bacon Wages?

[I have said many times that the legal principles that will apply to green building projects will be very similar to existing legal principles in the construction law field. Going forward, on Fridays we will be reviewing legal developments from the construction industry that most likely will be applied to green building projects.]
 
If you are working on a construction project funded by the American Recovery and Reinvestment Act (or you have any hint that you are), you need to be aware of your responsibility to pay Davis-Bacon wages.
 
Section 1606 of the American Recovery and Reinvestment Act (ARRA) sets out the Davis-Bacon wage requirements:
"Notwithstanding any other provision of law and in a manner consistent with other provisions in this Act, all laborers and mechanics employed by contractors and sub contractors on projects funded directly by or assisted in whole or in part by and through the Federal Government pursuant to this Act shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code."
The Department of Labor (DOL) has broadly interpreted Section 1606 (pdf) of American Recovery and Reinvestment Act (ARRA):
"Section 1606 of ARRA plainly indicates that the Davis-Bacon prevailing wage requirement broadly applies to ARRA-appropriated construction projects. . . . [The ARRA] also extends the prevailing wage requirements to projects 'assisted in whole or in part by and through the Federal Government pursuant to this Act' thus encompassing any assistance provided for ARRA projects through grants, loans, guarantees, and insurance."
In short, if any ARRA dollars are funding your construction project, Davis-Bacon wages are required (barring very limited exceptions). If you are working on a construction project in 2010, particularly one funded by a governmental entity, it is important that you ask if the project is being funded in any amount by ARRA funds.  If ARRA funds find their way into your project and you have not accounted for Davis-Bacon wage requirements, a change order may be necessary. 
 
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Posted on February 26, 2010 by Chris Cheatham

Los Angeles Times Assails Weatherization Program

Back in January 2010, I said this:  "Government officials and citizens are going to expect results form the significant investments in the green movement (particularly in an election year). In 2010, the nation will begin to decide if investments in the green building and renewable energy industries were worth it."

Not one month later, it appears that media critiques of American Recovery and Reinvestment Act(ARRA) green building programs have begun.  Last Thursday, the Los Angeles Times ran the following headline:  

"Obama's federal government can weatherize your home for only $57,362 each"

How did the Los Angeles Times come up with this number?  The Times did some very simple math to calculate how much money had been spent per home so far. 

"The Energy folks did tell ABC they've so far spent 522-million Recovery Act dollars on the program. So, let's see, about 9,100 homes divided into that chunk of stimulation change to believe in is -- gee! -- about $57,362 worth of very expensive weatherstripping for each home fixed up so far."

Of course there is more to the Times' blog post.  The Energy Department had to resolve Davis-Bacon wage determinations prior to starting the weatherization program.  At the end of the Los Angeles Times post, the Energy Department's response was included:  

"The GAO report cites figures from September 2009 -- almost five months out of date. Since then, we have resolved Davis-Bacon wage issues in all 50 states, clarified how states should handle historic preservation and worked with states to resolve any remaining barriers. As a result, by the end of 2009, our programs had weatherized about 124,000 homes in total, and we are on track to weatherize more than 250,000 this year. In fact, since September 2009, we have tripled the pace of Recovery Act funded home weatherization. The report also erroneously implies that our goal was to weatherize 593,000 homes in 2009. That is wrong. The goal has been to weatherize that number by March 2012, and we are on track to meet that goal."

The Los Angeles Times article suggests the media is going to comprehensively cover the progress and accounting of ARRA green building projects in 2010.  While this Los Angeles Times article may have relied on stale statistics, you can bet that the Department of Energy's weatherization program, and the contractors taking part in it, will be under additional scrutiny. 

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Posted on February 24, 2010 by Chris Cheatham

Where the Heck are the Green Jobs?

I often get the same question about the American Recovery and Reinvestment Act: where are the green jobs and projects?  A recent Wall Street Journal article sheds light on that question:

"The Obama administration's economic-stimulus program has delivered about a third of its total $787 billion budget during its first year, much of that to maintain social services and government jobs and to provide tax cuts for workers. Now, the pace and direction of stimulus spending are about to change.

Infrastructure spending is set to step up in the second year of the stimulus program, which should mean more money flowing to private-sector employers."

Infrastructure spending includes the green building projects that will be administered by the General Services Administration, the Department of Defense and the Department of Energy.  A large portion of the $180 billion set aside for infrastructure projects has not been spent: 

"During year one of the stimulus, only about $20 billion of money was handed out for infrastructure projects.

'I think we'll see a lot more stimulus money get into actual contracts and actual hiring in 2010 than we did in 2009,' said Kenneth Simonson, chief economist of the Associated General Contractors of America."  

If you are looking for ARRA green building projects, 2010 appears to be the year.  

Photo:  vividbreeze

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Bulk of Stimulus Spending Still to Come (WSJ)

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Posted on January 5, 2010 by Chris Cheatham

Green Building Industry to Face More Scrutiny

The green building industry is entering an interesting period. In 2009, the green building movement was embraced as a solution to economic and environmental problems. "Green jobs" were touted as a way to improve the economy while reducing unemployment. Investment in renewable energy and energy efficiency measures was championed as a way to reduce greenhouse gas emissions and increase energy security.
 
With the nation buying into the green movement, the Obama Administration and Congress were able to pass a $787 billion American Recovery and Reinvestment Act (ARRA) that included at least $25 billion for renewable energy and energy efficiency projects.

Government officials and citizens are going to expect results form the significant investments in the green movement (particularly in an election year). In 2010, the nation will begin to decide if investments in the green building and renewable energy industries were worth it.
 
Back in February 2009, I pointed out the potential issues that may arise when states and local jurisdictions attempt to manage ARRA-funded green building programs.  Stories are beginning to emerge of states mismanaging energy efficiency funds from the ARRA. Federal agencies are expressing confusion with new green mandates. In 2010, states and federal agencies will face pressure to monitor, investigate and audit ARRA green building and renewable energy projects. On Wednesday and Friday, we will look at two states and a federal agency that have been criticized for lack of oversight of ARRA green building programs.

As government entities face pressure to closely monitor ARRA projects, contractors involved in ARRA green building projects must remain diligent to ensure compliance.

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The Stimulus: Now for the Hard Part (GBLU)
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Posted on January 1, 2010 by Chris Cheatham

What's On the Horizon for Green Building Law in 2010?

[Happy New Year!

Today we are highlighting the green building legal story from 2009 that will have the most impact on the industry in 2010.  At the beginning of 2009, Congress and the Obama Administration spent months crafting the American Recovery and Reinvestment Act, which eventually included over $25 billion for green projects.  Less attention was paid to how these ARRA funds would be administered.  The story below suggested that states and cities may have trouble administering ARRA green funds.]

"The Stimulus: Now for the hard part"

On February 17, CNN ran the above headline after President Obama signed the stimulus bill.  To me, a more perfect headline could not have been written. 
 
Ever since I read about the stimulus bill, one particular nuance has interested me:  the package does not include earmarks.  Due to the lack of earmarks, the hardest part of the stimulus bill may be administering the $787 billion in funds. 

The lack of earmarks has important implications for state and federal energy programs throughout the country.  Without earmarks, state energy offices will have wide-ranging discretion in doling out large sums of money not previously seen: 

The biggest test of the administration’s energy goals may come in spending the billions that have been devoted to states and cities for improving energy efficiency.  To get the money out quickly, the plans sends it through a range of programs that are not accustomed to seeing funding on this scale.  State energy offices that annually receive less than $100 million combined from Washington are slated to receive $3.4 billion. 

A recent NPR story, "Earmark-Free Stimulus Bill Lacks Spending Direction", focused on the potential problems that may arise when the money is sent to the states:  
 
When this bill passes, a Niagara Falls of money will flow out of Washington and into the accounts of state highway commissioners, governors and legislatures, local school boards, county executives -- even mayors, [the Brookings Institution's Sarah] Binder says.

"It raises a whole host of questions about how efficiently money can be spent, how effectively it will be spent, how quickly money can be spent, just because there's no set process here for determining how money will get out the door to create jobs or, as the president said, to save jobs," she says.

In one particular instance, a South Carolina official who runs the state’s energy efficiency programs, will be tasked with managing large sums of money and finding proper projects and programs for the money:
 
In South Carolina, the state energy office is so small that its director, John Clark, answers the phone.  He said his office, which receives $.15 million per year, has put out an urgent call to state offices and school districts for energy-saving projects to receive.  He will also have to advise the state’s cities and counties, which have even less experience in big energy efficiency projects and are slated to get $35 million of their own from a separate $3.5 billion block-grant program in the package.”  
 
While Republicans, Democrats and the President argued over the stimulus package for weeks, the real battle may arise when state agencies and officials attempt to divide up the stimulus funding and choose the projects that receive funding.  How are you planning to seize the opportunities that arise from the stimulus? 
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Posted on December 29, 2009 by Chris Cheatham

My Favorite Green Building Stories of the Year

2009 was my first full year blogging at Green Building Law Update. It was a difficult year for the construction industry, but the green building movement continued to grow.

I recently went back and reviewed the Green Building Law Update stories from 2009. Below are some of my favorite quotes from my favorite posts. If you have a moment, go back and check out some of these posts, as we will continue discussing these topics well into 2010.

  • "'Green' was the buzz word in 2008. In 2009, Green Building Law Update predicts that green buzz words will become more nuanced and the focus will be on 'energy efficiency,' 'retrofits,' and 'existing buildings.'"  Prediction: It's All About the Retrofit

 

  • "A security instrument guaranteeing LEED certification is the unicorn of the green building industry."  The Green Building Unicorn

 

Thanks for taking the time to read Green Building Law Update this year. On Wednesday, we are going to look at the most important green building legal story of the year and on Friday we will look at the green building legal story that will have the most impact on the industry in 2010.

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Posted on July 27, 2009 by Chris Cheatham

Reporting Green Jobs is Tricky

If you are a contractor lucky enough to have won a stimulus project, one of the pesky requirements attached to the project is reporting the number of new jobs created by the project.  Many builders and contractors have been wondering how exactly to do that.  Finally, at long last, the White House has provided clarity: 

''Just count the people being paid out of Recovery Act dollars,'' said Rob Nabors, deputy director at the White House budget office.

 

Wait, that didn't answer all the questions out there.  If someone was already working for you, do they count?  What about subcontractors?  If you receive multiple stimulus contracts and employ the same person for both jobs, is that one job or two?  Maybe there is further clarification:  

''This whole thing is tricky. I'm not going to pretend it's not,'' Nabors said. ''This whole effort is virtually unprecedented.''

Oh, now I get it!

The reporting of ARRA jobs is going to be an extremely confusing and important issue for all parties. Back on June 22, I wrote:  "As we draw closer to the 2010 election cycle, you can bet that politicians who supported the ARRA will be looking to tout green jobs that were created." 

Turns out, the federal government isn't the only one hoping to tout good job creation numbers:

If the numbers are to be reliable, however, states, cities and contractors must report honestly. White House officials know there are political and financial incentive to cheat: Contractors can use job-creation data as a public relations ploy. Local politicians can turn job numbers into campaign literature. And states that use the money well could be in line to get more of it.
 
In the absence of these rules, some states have announced jobs based on out-of-date formulas, leading to implausible estimates. Ohio officials, for instance, have estimated that a $20 million bridge construction project will create or save 10,500 jobs.

As funds for green building projects start flowing from the General Services Administration and the Department of Energy, everyone will be paying attention to the number of green jobs created by these agency projects.  If you have to report green jobs, be extra careful that you follow the reporting requirements, whatever those requirements may be.

Photo:  talkradionews

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