Significant Changes to Federal Design-Build Laws

Despite two years of partisan gridlock, Congress is on the verge of passing legislation by the AIA to help architects design better buildings.

These efforts represent the culmination of years of work by AIA members like you who have written, emailed and visited with your elected representatives in record numbers, showing the power of the profession to advocate.

Here’s what we know so far:

  • The House has passed and the Senate is about to pass legislation that includes the first significant changes to federal design-build laws in years. The bill would limit the number of finalists in the second stage of a military design-build procurement to no more than five in competitions worth more than $4 million, putting the brakes on a practice that leaves firms spending more and more to win work, with worsening odds of actually winning anything. Although the final provision does not go as far as the AIA had pushed, it puts into U.S. law for the first time protections for firms from increasingly expensive and unwinnable competitions.
  • Congress also is about to send to the White House legislation that restores the 179D energy efficient building tax deduction, along with other tax incentives. The 179D deduction expired at the end of 2013; the bill restores it for projects placed into service in 2014. This enables commercial building owners to claim the deduction for work completed in 2014, and design firms to claim the deduction for public buildings placed into service in 2014 when the public entity allocates it. Although a broad coalition of business groups pushed for a longer extension, there already is talk of Congress taking up these provisions again in 2015.

With Congress about to adjourn and go home, it looks like we’ve managed to stop two bills that would have set us back.

  • The end of the Congress means the end (for now) of legislation repealing federal 2030 targets. Despite a strong lobbying push by the fossil fuel industry, an AIA-led coalition of more than 1000 companies and organizations blocked the effort. Although the provision may come under attack again in 2015, the AIA and its allies showed the power of grassroots engagement in protecting sensible sustainability policy.
  • For the fifth year running, the AIA and its allies knocked down a proposal to raise taxes on architecture and other professional services firms that organize as S corporations. Although the provision may return to life next year, the AIA and its allies have succeeded in building a collation on Capitol Hill that stands with architects against punitive tax increases.’

These victories show that when AIA members like you work together, we can get things done – even in an extremely difficult political environment.

December 15, 2014 UPDATE: Congress has passed this legislation. see this update.

Potentially Sticky Issues Anticipated in Coming General Assembly Session

Few anticipate General Assembly sessions with glee.  Most approach them with caution.  Architects fall into the latter group.

Why?  Because architects are licensed by the state, regulated by the state, and often find their fate affected by the state.  In the upcoming session, the Joint Legislative Committee and its legislative counsel anticipate a few sticky issues arising.

Among the most likely will be swapping the ever unappealing business, occupational and professional license (BPOL) gross-receipts tax for a tax on services and another attack on the Virginia Public Procurement Act (VPPA) and its provision for qualifications-based selection of professionals.

Early discussions indicated that a tax swap would aim to be revenue neutral.  This means that revenues from a service tax would be designed to equal the revenue raised from the BPOL tax.  The difficulty is that the BPOL tax is a local tax, assessed, collected and allocated as the locality wishes.  The state establishes the maximum rate for each business class — 58 cents per $100 of receipts for architects — and the locality may set its assessment anywhere from zero, as several do, to the maximum.

Through the VPPA, the General Assembly in the early 1980s required for all public bodies a different method for procuring professional services.  For goods and non-professional services, price could be the determining factor.  For professional services, the public body — state agencies; quasi-public authorities; school boards; cities, counties and towns; etc. — must first determine what firms are qualified without consideration of price.

To do this, public bodies are required to request proposals that describe the professional firm’s methods and capabilities for handling a specific project or project type.  The initial request for a proposal cannot ask for fee information.  In this way, the public entity can trim the list of potential providers to only those it believes are most qualified.

At that point, the agency or locality begins to discuss the details of the project, outlining, defining, and refining the specific scope and limitations of what is expected of the professional firm.  When that scope is suitably understood and agreed upon by both the agency or locality and the firms, the firms are ranked.

The public entity then begins negotiations with its top-ranked firm.  If a suitable price cannot be reached, negotiations are formally ended and negotiations begin with the second-ranked firm.

The federal government and most state governments have employed this system for decades as it has proved the best system to provide transparency in the procurement process and lessen the chances of favoritism.

 

 

National Advocacy Update

Over the past few months, the AIA has spearheaded an effort to bring the design and construction industry together to press lawmakers to address the challenges that are holding our industry back.  On Dec. 7, 2011, our coalition sent a letter to President Obama and all members of Congress outlining actions they need to take to create stability in the economy and promote growth in the private sector.  (You can read the letter here.) This week, AIA President Clark Manus, FAIA, delivered this message to top White House officials, and AIA National Board members took to Capitol Hill to call on Congress to act.

How can you help? By asking your representatives to support common-sense, bipartisan legislation that will address one of the biggest factors impeding recovery: the lack of financing for worthy design projects.

The AIA is a leading supporter of HR 1356 the Capital Access for Main Street Act of 2011, a bipartisan bill that would help small community banks write off debt over a longer period of time, which would free up capital for lending.  This is an approach that worked following an agricultural crisis in the 1980s to help business recover, and it does not cost the taxpayers a dime in funding.  This bill passed the House in 2010 with strong support, but did not make it through the Senate before the election.

We have a real chance to get this legislation through Congress, but for that to happen it needs more representatives to learn about it and support it. Therefore, we would like you to ask your House representative to cosponsor HR 1356.  The AIA Advocacy Center has a letter for you to send.

Even as we demand Congress and the White House take action to improve the economy, we are not waiting on Washington to act. Last month, the AIA launched its stalled projects campaign.  This site is designed to help connect investors with design and construction projects. Already investors with $7 billion in funding have signed up.  So please take a look and add your projects to the list.

There is no silver bullet to fixing the problems in the economy. But by marshaling the forces of our entire industry, asking our elected leaders to act on common-sense policies, and connecting investors to projects, together we can help to make a difference and get our profession back to work.

Sincerely,

Paul T. Mendelsohn

Vice-President, AIA Government and Community Relations

Coalition Asks President, Legislators for Action

© 2006, The American Institute of Architects. All rights reserved.On Dec. 7, 2011, a broad coalition of design and construction industry organizations asked the White House and Congressional leaders to put aside partisan differences and enact legislation that will return this sector to its role as one of the biggest job-producing engines of the American economy.

In an open letter to President Obama, Senate Majority Leader Harry Reid and Republican Leader Mitch McConnell, House Speaker John Boehner and House Democratic Leader Nancy Pelosi, 45 industry representatives asked the President and Congress to work together to achieve three goals to spur immediate job creation:

  • Pass surface transportation, aviation, water resources, and clean water and drinking water infrastructure authorization bills. Enactment of these authorizations, the letter states, will immediately provide programmatic and fiscal certainty that will help job creators in every state put people back to work.
  • Pass and sign appropriations bills for the remainder of fiscal year 2012 as soon as possible. The signatories to the letter state that failure to pass authorization bills undermines business confidence and damages the economy by providing little or no certainty to public agencies or those who perform work for them.
  • Jump-start new privately-funded construction with pro-growth tax policies that will boost economic expansion.

The signatories to the letter commended the President and Congress for repealing both the three-percent withholding mandate on government contractors and expanded the Form 1099 information reporting requirements. However, much more needs to be done to return the sector to its former prominence as an engine of the economy.

“Rather than blame each other for a sluggish economy, the two political parties can enact legislation that will jumpstart the economy just as the presidential election cycle begins in earnest,” said AIA President Clark Manus, FAIA. “The last thing either party wants as it campaigns for re-election is an economy that sputters along with an unemployment rate that in my sector is greater than 13 percent.”

Indeed, the design and construction industry accounts for 5.7 percent of the Gross Domestic Product, employing more than seven million Americans who design, construct and maintain the infrastructure on which our economy depends. When unemployment in this sector is high, the letter states, “the impact is felt in every community across the nation.”

“The recovery of the construction industry is vital not just to the millions of people working in the industry, but to the end-users of construction: the American people,” said 2011-12 ASA President Kerrick Whisenant, preconstruction director, Cornerstone Detention Products Inc., Tanner, Ala. “Virtually every American lives, works, or travels in the built environment. This is a rare opportunity where leaders on both sides of the aisle can agree on a path forward that meets the needs of millions of Americans and provide a jumpstart to the economy with better tax policies.”

“The pent-up potential for employment can quickly turn into action that will not only benefit the economy, but have a direct impact on the health and welfare of communities and the public,” said Nancy Somerville, Hon. ASLA, Hon. AIA, and executive vice president and CEO of the American Society of Landscape Architects. “Urban infrastructure, public health, energy, transportation — America must lead on these and other issues, and Congress holds the keys to freeing the creativity and innovation that is central to our national identity and has been stalled by uncertainty.”

“Passing long-delayed infrastructure bills and enacting measures to encourage greater private sector investments in construction will help put many unemployment construction workers back on the job,” said Stephen E. Sandherr, the chief executive officer of the Associated General Contractors of America.  “Our economy will not fully recover until the millions of construction workers that have lost their jobs during the past four year can once again find work.”

About The American Institute of Architects
For over 150 years, members of the American Institute of Architects have worked with each other and their communities to create more valuable, healthy, secure, and sustainable buildings and cityscapes. Members adhere to a code of ethics and professional conduct to ensure the highest standards in professional practice. Embracing their responsibility to serve society, AIA members engage civic and government leaders and the public in helping find needed solutions to pressing issues facing our communities, institutions, nation and world. Visit http://www.aia.org/.
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About the American Subcontractors Association, Inc.
Founded in 1966, ASA amplifies the voice of, and leads, trade contractors to improve the business environment for the construction industry and to serve as a steward for the community. ASA’s vision is to be the united voice dedicated to improving the business environment in the construction industry. The ideals and beliefs of ASA are ethical and equitable business practices, quality construction, a safe and healthy work environment, and integrity and membership diversity.

About LonMark International
LonMark International is a non-profit corporation supporting the testing and certification of products, people and companies supporting the ISO/IEC 14908 body of standards.  Its nearly 400 members manufacture, distribute, develop, install or use systems based on these standards.  For more information about LonMark International, please visit http://www.lonmark.org/.

About ASLA
Founded in 1899, ASLA is the national professional association for landscape architects, representing some 16,000 members in 48 professional chapters and 68 student chapters. The Society’s mission is to lead, to educate and to participate in the careful stewardship, wise planning and artful design of our cultural and natural environments. Members of the Society use their “ASLA” suffix after their names to denote membership and their commitment to the highest ethical standards of the profession. Learn more about landscape architecture online at http://www.asla.org/.

About AGC
Located in the Metropolitan Washington, DC area, The Associated General Contractors of America (AGC) is the leading association for the construction industry. Operating in partnership with its nationwide network of Chapters, AGC provides a full range of services satisfying the needs and concerns of its members, thereby improving the quality of construction and protecting the public interest.