On March 4, President Obama signed a Presidential Memorandum designed to reform government contracting, strengthen oversight and manage taxpayer dollars. The proposal would end no-bid and cost-plus contracts, maximize the use of competitive procurement processes and clarify the rules prescribing when outsourcing is and is not appropriate. The reform is projected to save taxpayers up to $40 billion a year.The memorandum tasks the Federal Acquisition Reform (FAR) Council to develop and issue by July 1, 2009, government-wide guidance to assist agencies in reviewing contracts, and create processes for ongoing review of existing contracts in order to identify those that are "wasteful, inefficient, or not otherwise likely to meet the agency's needs." The guidance will also formulate appropriate corrective action in a timely manner. The memorandum also mentions taking corrective action, such as modifying or canceling contracts that are deemed to meet that criteria.The Office of Management and Budget (OMB) is also directed to develop and issue by September 30, 2009, government-wide guidance to:govern the appropriate use and oversight of sole-source and other types of noncompetitive contracts and to maximize the use of full and open competition and other competitive procurement processes;govern the appropriate use and oversight of all contract types, in full consideration of the agency's needs, and to minimize risk and maximize the value of government contracts generally, consistent with the regulations to be promulgated pursuant to section 864 of Public Law 110-417;assist agencies in assessing the capacity and ability of the Federal acquisition workforce to develop, manage, and oversee acquisitions appropriately; andclarify when governmental outsourcing for services is and is not appropriate, consistent with section 321 of Public Law 110-417 (31 U.S.C. 501 note).Senators Carl Levin (D-MI), Claire McCaskill (D-MO), John McCain (R-AZ) and Representatives Edolphus Towns (D-NY) and Peter Welch (I-VT) pledged to work with the President on this effort. In addition, the President endorsed the goals of the bipartisan effort on defense procurement reform led by Senators Levin and McCain, and has asked Defense Secretary Gates to work with the Senators on these efforts.AGC looks forward to working with OMB, the FAR council and Congress throughout the rulemaking and legislative process.

AGC submitted comments yesterday to the Internal Revenue Service (IRS) in response to the agency's December 5, 2008 notice of proposed rulemaking to implement the 3 percent withholding law enacted in 2006. Effective January 1, 2012, federal, state and local governments with annual expenditures of $100 million or more are required to withhold 3 percent from payments for goods and services, including payments made under government contracts with construction companies. The law was intended to reduce the so-called "tax gap" and tax evasion. AGC has strongly opposed this legislation since it was introduced.IRS' proposed rule clarifies that payments for the construction of a building or other public works projects are subject to 3 percent withholding, which could adversely affect a contractor's cash flow. To view a copy of AGC's letter, and for additional information on the proposed rule and AGC's position, please click here.Congress recently enacted a one-year delay in the effective date of the law (i.e., from 2011 to 2012) as part of H.R. 1, the American Recovery and Reinvestment Act. AGC has made full repeal of the onerous 3 percent withholding tax a top priority of the 111th Congress and will continue efforts to urge Congress to enact such legislation.On January 7, Representative Kendrick Meek (D-FL) introduced H.R. 275, a bill to repeal the 3 percent withholding law. On January 21, Senator Arlen Specter (R-PA) introduced a Senate version, S. 292. AGC is working with a broad coalition of stakeholders to enact the legislation.

The House Committee on Transportation and Infrastructure yesterday approved $88.7 billion in new investment to t he nation's aviation and clean water infrastructure. The FAA Reauthorization Act of 2009 will provide $70 billion to the Federal Aviation Administration and federal aviation infrastructure programs for the next four years. The Water Quality Investment Act of 2009 will give $18.7 billion for water and environmental infrastructure.The FAA bill provides $16.2 billion for the Airport Improvement Program, $13.4 billion for FAA Facilities & Equipment, and $1 billion for Research, Engineering, and Development. The funding will enable the FAA to modernize its air traffic control system and improve capacity at the nation's airports. In addition, the bill provides $39.3 billion for FAA operations.The Water Quality Investment Act authorizes $13.8 billion in Federal grants over five years to capitalize the Clean Water State Revolving Fund and provide low-interest loans to communities for wastewater infrastructure. It also reauthorizes $250 million in grants over five years for alternative water source projects and authorizes $1.8 billion over five years in grants to municipalities and states to control sewer overflows. It amends the Clean Water Act to provide a national standard for public notification of overflows, and increases the authorization of appropriations to $150 million for each of the fiscal years 2010 through 2014. Finally, the bill increases the authorized funding levels for the cleanup of contaminated sediment in the Great Lakes, which was enacted into law in 2008 with funding levels below the House-passed version of the bill.The Committee also approved the Views and Estimates for Fiscal Year 2010, which helps guide the development of the year's budget resolution. It lays out the Committee's position on the budget proposed last week by the Obama Administration and calls for authorization of surface transportation programs, reauthorization of the FAA, selected provisions of the Clean Water Act and the Comprehensive Environmental Response, Compensation and Liability Act, reauthorization of the Coast Guard and the Federal Emergency Management Agency and consideration of a water resources development act.The Committee also noted that recent projections by the Congressional Budget Office show that the current levels of highway, transit and highway safety investment are unsustainable under current revenue projections. AGC is actively working to ensure the Highway Trust Fund remains solvent.Click here to view a comparison chart of state-by-state estimates for FY 2009 highway formula funding and FY 2010 estimated highway formula funding.

The bipartisan National Surface Transportation Infrastructure Financing Commission released its final report today, unanimously recommending the ten-year phase-out of federal motor fuel taxes to be replaced by a distance fee based on "vehicle miles traveled" (VMT). To fund transportation needs while this transition is underway, the finance commission also recommends increases of 10 centers per gallon in the federal gasoline tax and 15 cents per gallon in the diesel tax, combined with new public-private revenue streams, expanded tolling and congestion pricing.

AGC has updated its stimulus Web site to provide comprehensive information on what the final legislation signed by President Obama means for the construction industry. Included on the site is a breakdown of construction spending by program, with as much detail as is currently available about how the money will be allocated, by whom, and if possible, how much will go to each state. The site also includes analysis of the various tax provisions within the legislation that affect the construction industry and an overview of some of the policy implications of the legislation.The intent of the site is to provide members, and more broadly the construction community, the widest possible range of current information about the stimulus. In addition, over the coming weeks we will be creating a new site, "Stimulus At Work," which will highlight the work our members are doing to help ensure the success of the stimulus package. Visit www.agc.org/stimulusatwork to share your success stories related to the stimulus.

This week, legislation was introduced in the House by Congressman Stupak (D-Mich.) that would permanently exempt returning H-2B visa holders from the existing annual numerical cap of 66,000. H.R. 1136, is similar to a Senate bill (S. 388) introduced by Senator Mikulski (D-Md.) that would extend the exemption for three years.The H-2B visa program provides construction contractors the opportunity to get temporary workers into the country. This is a very popular visa that is difficult for contractors to use partially because of the high demand and low number of visas. For example, the cap for the 2nd half of fiscal year 2009 was reached on January 8, 2009. AGC will closely watch for opportunities for these bills to move forward, although the current economic climate does not lend itself this. However, the H-2B visa program is one immigration issue that has bipartisan support.

On Tuesday, February 24, the Senate confirmed Congresswoman Hilda Solis (D-Calif.) to be the new Secretary of Labor under the Obama Administration. Republicans remain concerned about her strong support for the "so-called" Employee Free Choice Act, otherwise known as Card Check (she was a sponsor of the legislation in the 110th Congress).Now that a new Secretary has been confirmed, AGC expects to quickly see more nominations at the Department of Labor for positions such as Assistant Secretary for Occupational Health and Safety.

Supporters of the (so-called) Employee Free Choice Act (EFCA) remain short of their goal of original cosponsors thanks to AGC members voicing their concerns. AGC opposes EFCA and urges AGC members to discourage cosponsorship.EFCA would take away a worker's right to a federally supervised private ballot election when deciding whether or not to select union representation. It also imposes unrealistically short deadlines for labor-management negotiations over a first contract before mandating third-party mediation and binding arbitration.AGC supports the status quo, which allows both card-check recognition and secret-ballot elections to establish union representation and remains the most fair and reliable way to determine the desire of employees to be represented by a union.Please reach out to your Members of Congress to urge them not to co-sponsor or support the bill. Make your voice heard on this issue by using AGC's Legislative Action Center. Contact your congressional delegation today and urge them not to co-sponsor or support the (so-called) Employee Free Choice Act.

The U.S. House of Representatives Wednesday approved a $410 billion omnibus appropriations bill that includes the remaining nine of 12 annual spending bills not enacted prior to the end of fiscal year 2008 on September 30, 2008. The bill passed by a vote of 245 to 178. The majority of federal government programs are currently operating under a continuing resolution that expires on March 6. The bill now goes to the Senate for consideration.An AGC analysis of the omnibus appropriations bill shows that Congress would increase funding for federal construction programs by 5.5 percent above the FY 2008 level. AGC found that Congress provided $115.6 billion for federal construction programs in FY 2008. The omnibus would provide $121.9 billion for the same accounts. AGC has prepared a chart that compares the amounts in the omnibus with the levels Congress enacted in FY 2008 and those President Bush recommended in his FY 2009 budget request to Congress.

Following President Obama's address to Congress Tuesday, his administration today released a blueprint of his upcoming budget request to Congress for fiscal year 2010. The outline provides a glimpse of the administration's budgetary and fiscal priorities for the next four years. Specific details and funding levels will not be available fully until the entire budget is submitted in April.Summaries released today show a significant increase in at least one AGC market area: water and wastewater construction. The administration is recommending $3.9 billion for the Safe Drinking and Clean Water State Revolving Loan Fund Programs, about a $2.4 billion increase over FY 2009 levels (excluding the economic stimulus). However, the budget appears to recommend essentially level funding for the Corps of Engineers and Department of Transportation.The budget also provides insight into the administration's tax priorities for the next four years. Specifically, it shows a proposed tax increase for married couples making $250,000 or more a year or singles making $200,000 or more a year by reinstating the 36 and 39.6 percent rates. The budget also proposes imposing a 20 percent rate on capital gains and dividends for these taxpayers, as well as reinstating the personal exemption phase-out and limitation on itemized deductions. These upper-income tax provisions would raise approximately $637 billion over the next 10 years for deficit reduction. The budget also proposes maintaining the estate tax-set to drop to zero in 2010-at the 2009 level of 45 percent and a $3.5 million exemption.The budget outline also shows about $650 billion in proceeds from the auctioning of emission allowances that would be reserved for clean energy technology initiatives and to compensate families through the Making Work Pay tax cut. Evidence of these revenues shows that the administration intends to seek climate change legislation on Capitol Hill that includes a market-based mechanism (e.g., cap and trade) to control greenhouse gas emissions.