Catagory:Articles and Publications

By: Lawrence M. Prosen & Andrew R. McFall, K&L Gates, Washington DC

Over the past several years, the current business conditions have had an impact on all areas and aspects of the economy.  Recent reports indicate that no industry has been harder hit than that of construction, an industry possessing one of the highest national levels of unemployment.  Unemployment in the construction industry has spiked from 7.1 percent in 2000 to around 20 percent in early 2011.  Tied to this issue is the fact that the commercial and private construction and real estate markets substantially dried up as a result of the economy and underlying bank crises.  This, in effect, resulted in government construction and real estate projects being the predominant area in which work was available; forcing contractors to enter the federal market, often for the first time, and ‘‘learn on the fly.’’

The current economic problems have also resulted in Congress increasing or maintaining spending levels for a number of years on construction and related projects to try and bolster the economy.  These expenditures and stimulus efforts have led to an increased curiosity and concern for how government monies are being spent.  Coupled with the inauguration of President Obama in 2009, there has been a significant uptick in the amount of government regulation and oversight regarding government contracting and the construction industry.  As part of that effort, the United States Government Accountability Office and other governmental organizations have conducted investigations and released reports dealing with government expenditures and budgeting.  This article discusses one such report.

On March 22, 2011, GAO released a report (the ‘‘Report’’) raising several issues and concerns with the U.S. Department of Labor’s (‘‘DOL’’) methodology for making Davis-Bacon Act wage determinations.  The Report is noteworthy, in that the Davis-Bacon Act plays a significant role in federal and federally funded construction projects throughout the United States.  This article provides a brief background on the Davis-Bacon Act, a description of the Report and its recommendations, a discussion of the potential implications of the Report on the Service Contract Act, and a list of practical tips that construction contractors should consider in light of the Report.

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By:  Lawrence M. Prosen, Joel S. Rubinstein, Tim L. Peckinpaugh, James T. Walsh, Andrew R. McFall & Christopher M. Smith, K&L Gates, Washington DC

Government shutdowns, while very uncommon, are no longer a completely unknown beast to government contractors (or at least the threats of them are not).  Much has been written about their causes, effects, and the ways contractors can prepare for them.  The current discussions about raising the debt ceiling, however, present a completely different, and unknown, challenge to government contractors.  There is a very real fear that the gridlock in Congress may prevent a raising of the debt ceiling, forcing the government into default on its financial obligations.  This would be a novel occurrence, a first for the U.S. government, with unknown consequences.  The best-prepared contractors, however, will be the ones to weather the storm successfully and come out the other side better positioned in the marketplace, and in all possibility with significantly fewer competitors.

This Legal Insight is intended to make you aware of some of the unique aspects of a U.S. government default and its effects.

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By: Lawrence M. Prosen, Samson Y. Chen, K&L Gates, Washington DC

On March 22, 2011, the United States Government Accountability Office (“GAO”) released a report (the “Report”) raising several issues with how the U.S. Department of Labor (“DOL”) has been making Davis-Bacon Act wage determinations.  This is a significant report, in that the Davis-Bacon Act plays a substantial role in federal and federally funded construction projects throughout the United States.  The Davis-Bacon Act, located at 40 U.S.C. 3141 et seq., requires contractors on federally funded construction projects in excess of $100,000.00 to pay locally “prevailing wages” to their hourly paid field employees performing work on the project site.  In other words, in order to bid on federal construction projects, construction contractors and subcontractors alike must pay their field employees at least as much as other construction workers in the area earn as determined by the DOL’s Wage-Hour Division.  The Davis-Bacon Act’s stated purpose is to preserve local wage standards and promote local employment.  This alert briefly highlights DOL’s problems in determining wage rates and summarizes GAO’s recommendations for improvement.

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By:  Lawrence Prosen, Barry Hartman, Nickolas Milonas, K&L Gates, Washington D.C. 

Federal Agencies Issue Interim Rule Promoting Sustainability & Green Building

Sustainability and “green building” have continued to gain momentum and visibility.  Over the past several years, the Federal Government and its various agencies and administrations have increased the extent to which these goals are embodied in government contracting, ranging from green design outlined in the U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) requirements to the use of recycled paper for printers and copiers.  This trend has continued to gain prominence through such things as changes in building codes to President Obama’s issuance of Executive Orders on the topic.  See Exec. Order No. 13,423; Exec. Order No. 13,514.

On May 31, 2011, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration issued a joint interim rule (the “Rule”) that for the first time directly and specifically incorporates sustainability requirements into the Federal Acquisition Regulation (located at Title 48 of the Code of Federal Regulations).  76 Fed. Reg. 31,395 (May 31, 2011).  The Rule took effect immediately and implemented the aforementioned Executive Orders that require Federal agencies to lead by example in conservation and energy efficiency.

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By: Jason L. Richey, Amy Ream, K&L Gates, Pittsburgh

Following the Supreme Court’s decision in Hall Street Associates, LLC v. Mattel, courts across the country have divided as to whether an arbitrator’s “manifest disregard of the law” remains a proper basis for judicial review of arbitration awards.  For construction disputes taken to arbitration, this unsettled question could impact the final outcome of the dispute.

Whether “manifest disregard of the law” is an acceptable ground for judicial review of an arbitration award concerns the application of the Federal Arbitration Act (FAA).  The FAA provides expedited judicial review for confirming, vacating, or modifying an arbitration award.  Under the FAA’s expedited review process, a reviewing court must confirm an arbitration award unless a specific ground for judicial review exists.  The primary grounds for judicial review appear in the statute itself, under sections 10 and 11 of the FAA.  These sections set forth specific grounds, such as an arbitrator’s material miscalculation of an award, that trigger a court’s power to vacate or modify an award.

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By:  Lawrence M. Prosen, Andrew R. McFall, K&L Gates, Washington, D.C.

The United States Small Business Administration’s (“SBA”) 8(a) Small Business Development Program plays a significant role in federal procurement.  The 8(a) program was developed by the SBA, from enabling legislation known as the Small Business Act, to assist small disadvantaged businesses (“SDBs”) owned by socially and economically disadvantaged individuals.

In recent years, the United States Congress and the United States Government Accountability Office (“GAO”), as well as various Offices of Inspector General and “watchdog groups,” have increasingly monitored and investigated the 8(a) program.  As a result of these investigations and oversight, the GAO released a report on March 2010, which identified a number of contracts that had been awarded to businesses that were not eligible for the 8(a) program.  Concurrent with various investigations, the SBA began the process of updating the regulations that govern the 8(a) program.  On February 11, 2011, the SBA published its final revised 8(a) program regulations, which are the first significant changes to the program in a decade or longer.  This white paper focuses on a few key provisions in the new 8(a) regulations that affect not only the SDBs themselves, but often large businesses as well.

To view the complete white paper, click here.