New Federal Legislation Would Help Taxpayers
Get the Most for Their Federal Construction Dollars

ALEXANDRIA, Va. - As Congress oversees billions of dollars of construction funded by the federal stimulus package and prepares to appropriate billions more for fiscal year 2010, the American Subcontractors Association is supporting legislation introduced by Rep. Paul Kanjorski, D-Pa., that would help ensure that taxpayers get the most for their construction dollars.

The Construction Quality Assurance Act of 2009 (H.R. 3492), introduced on July 31, 2009, would help promote open competition for construction contracts, assure quality construction, and increase national security by requiring contractors bidding on federal agencies construction projects to inform agencies of the major subcontractors they would use on projects, and the types of work that those subcontractors would perform.

"As our nation's infrastructure continues to age and the recession continues to batter the construction industry, maximizing value on federal construction projects is more important than ever," said 2009-10 ASA President Darlene East, Holes Incorporated, Houston, Texas. Right now, federal agencies are forced to accept bids without any assurance of which subcontractors will actually perform the work on their projects. This lack of oversight inflates construction prices and jeopardizes the quality and security of federal construction. Taxpayers deserve better, and mandatory bid listing is the responsible solution.

The Construction Quality Assurance Act would help preserve the integrity of the competitive bid system for construction that benefits the federal government, the construction industry, and the economy of the United States as a whole. It would require firms that bid on federal agency solicitations for construction over $1 million to list the name, location of the place of business, and nature of the work of each subcontractor they plan to use for $100,000 or more of the work. The bill would not interfere with contractors ability to select the subcontractors on which they base their bids to federal agencies, or to submit bids for self-performing all or part of a project's scope of work.

"My bill would not only ensure that contractors maintain the quality of work promised to the federal government, but restore fairness and stability to the construction industry," said Kanjorski.

The listing of subcontractors required by H.R. 3492 would help eliminate business practices that deliver no value, or reduce the value delivered, to agencies' construction projects. One such practice is bid shopping, which occurs when a contractor, after the award of a contract, requires subcontractors to perform their work at a lower price than was used to calculate the bid that won the award. "For too long the unethical practice of bid shopping penalized the hardworking specialty trade contractors throughout our construction industry, as well as diminished the quality of work performed for American taxpayers," said Kanjorski. Bid shopping results in a windfall of profit to the bid shopper while depriving taxpayers and the federal government of the full value of their construction dollars.

Under the Construction Quality Assurance Act, the penalty for replacing a listed subcontractor without the consent of a contracting officer would be an amount equal to the greater of: 10 percent of the amount of the subcontractors bid; the difference between the amount of the listed subcontractors bid and the replacement subcontractors bid; or the difference between the amount of the bid by a substituted subcontractor and the dollar value specified by the contractor for the work that the contractor had listed for its own performance. Contracting officers would have the authority to allow contractors to replace listed subcontractors with unlisted subcontractors for good cause, such as when a listed subcontractor could not perform its subcontract. Listed subcontractors would have the right to object to substitution requests within five working days.

ASA encourages supporters of quality federal construction to meet with or e-mail their representatives in the U.S. House of Representatives, listed at www.house.gov, to ask them to co-sponsor H.R. 3492.

For more information or to get involved in ASA's grass roots team supporting this legislation, visit www.asaonline.com or send an e-mail to: GovernmentRelations@asa-hq.com.

- August 17, 2009

ASA Contact: David Mendes
(703) 684-3450, Ext. 1335
dmendes@asa-hq.com