Includes employer mandates, insurance policy mandates, premium and tax increases, and Medicare cuts

After weeks of behind-the-scenes negotiations, House Speaker Nancy Pelosi (D-Calif.) released legislation that will overhaul the nation's health care system. The 1,900 page legislation comes with a preliminary cost estimate from the Congressional Budget Office of $900 billion over the next ten years. The cost estimate only pertains to the expanded coverage and not other changes to existing programs, so the official price tag could significantly increase to over $1 trillion.  A major change from previous versions of the legislation is that many of the reform timeframes will be moved up, allowing democrats to enter the 2010 and 2012 elections with some achievements.

The majority of the Affordable Health Care for America Act is financed through a surtax on married couples with adjusted gross incomes exceeding $1 million a year and individuals earning over $500,000 a year.  The surtax is not indexed for inflation and would begin in 2011 at a 5.4 percent rate.  Previous drafts of the legislation had thresholds of $280,000 for individuals and $350,000 for couples, but it was indexed for inflation.  The tax will generate $460.5 billion, much of it from small business owners who are at the forefront of our economic recovery.

In addition to the surtax, businesses with a combined annual payroll exceeding $750,000 will be required to pay an 8 percent penalty for its uninsured workers.  Employers who choose to offer coverage must contribute at least 72.5 percent of premiums for individuals and 65 percent for families.  The legislation includes credits for small business but they provide small employers limited value.

The legislation contains a government insurance option and expands Medicaid. It also includes a corporate information reporting proposal, which would require reporting on most third party transactions, limit the amount employees can contribute to health care flexible spending accounts, end deductions companies can take for retiree prescription drug coverage, and increase penalties for nonqualified distributions from health savings accounts.

AGC supports health care reform that expands coverage and makes coverage more affordable. However, H.R. 3962 fails to reduce costs and address the rising cost of insurance. The current proposal will increase insurance premiums and will impose indirect tax increases on employers to pay for the reform.

Impacts single- and multi-employer plans 

Representatives Earl Pomeroy (D-N.D.) and Pat Tiberi (R-Ohio) Tuesday introduced H.R. 3936, the Preserve Benefits and Jobs Act, which that would provide single- and multi-employer pension plan funding relief to mitigate against the effects of investment losses in 2008. 

Under the bill, multi-employer plans that meet a solvency test would be eligible for relief through two options that would allow employers to repay recent losses over a 30-year period, and employers would be unable to increase plan benefits for two years.  For plans in endangered or critical status, the bill would extend the rehabilitation and funding improvement periods.  The bill would also facilitate mergers of funds and allow the Pension Benefit Guarantee Corporation (PBGC) to provide assistance to lower long-term costs.  The bill would also update PBGC benefit guarantees. 

AGC, along with the National Coordinating Council on Multiemployer Plans (NCCMP) has been advocating for legislation to provide relief to troubled defined benefit pension plans.  AGC will continue to work with NCCMP and Congress to enact pension funding relief legislation prior to the end of the year. 

For a section by section summary of H.R. 3936, click here.

Senate may vote next week

Senators have been trying to reach an agreement this week on an amendment to legislation that would extend unemployment insurance that would expand both the first-time home buyer tax credit and net operating loss (NOL ) carry-back from two to five years.

Senator Max Baucus (D-Mont.) today outlined his amendment that would extend the existing $8,000 first-time home buyer tax credit, set to expire on November 30, 2009 through June 30, 2010 (contracts must be in place by April 30 to qualify).  In addition, the amendment would expand the income thresholds to those with incomes of $125,000 for individuals and $225,000 for couples, up from $75,000 and $150,000 under current law.  Further, the tax credit would be expanded at a reduced figure of $6,500 to home buyers who have lived in their homes for at least five years. 

The amendment would also expand NOL carry-back relief from two to five years.  The NOL provision would allow unprofitable companies to obtain immediate cash refunds on taxes they paid in previous years.  Current law allows companies to get refunds of taxes paid in the previous two years, or five years for smaller companies in 2008.  Proponents of NOL relief-including AGC-are seeking to extend the two-year period to five years for all companies for both 2008 and 2009 losses.

AGC has called for expansion of these two tax provisions in its Build Now for the Future: A Blueprint for Economic Growth.  AGC sent a letter last week in support of the home buyer and NOL expansions.

Bill will increase energy and fuel costs, restrict highway capacity improvements
 
The Senate Environment and Public Works Committee this week conducted three days of legislative hearings with over 50 witnesses providing testimony on S. 1733, the Clean Energy Jobs and American Power Act, a bill that would create a "cap and trade" regulatory program to reduce U.S. greenhouse gas (GHG) emissions to address global climate change concerns.  The bill aims to reduce U.S. GHG emissions by 20 percent below 2005 levels by 2020 and 83 percent below 2005 levels by 2050. 

Late last week, Senators John Kerry (D-Mass.) and Barbara Boxer (D-Calif.) released a 932-page revised "Chairman's Mark" to S. 1733.  Significant in the revisions are the specifications on the distribution of emission allowances under the bill.  Free emission allowances are highly prized by affected industries seeking to keep their costs lower under the cap and trade bill.  The revised bill proposes to distribute up to 75 percent of the total allowances for free, with the biggest chunk set aside to electric utilities to keep consumer electricity costs affordable.  The revised bill would also set-aside about 3 percent of auctioned allowance revenue for "clean" transportation projects.  Additional auction proceeds would be available for states to fund energy-efficient retrofits of existing buildings. 

Friday, the U.S. Environmental Protection Agency (EPA) estimated that the average household cost of S. 1733 would be about $100 per year.  In contrast, the Heritage Foundation has estimated that a family of four's average household expenses would increase by about $4,600 per year. 

The U.S. House of Representatives passed its comprehensive energy and climate change legislation, H.R. 2454, the American Clean Energy and Security Act, in June. Proponents of climate change legislation in the Senate are coordinating at least five committees with jurisdiction over the issue and have signaled their intent to bring a comprehensive bill to the Senate floor as soon as possible following the debate on health care legislation.  The Senate Energy and Natural Resources Committee approved its energy provisions in June.

AGC has been working with stakeholders in the real estate, design, and construction industry to communicate the industry's concerns with energy and cap and trade legislation.  AGC is largely concerned that cap and trade would increase the cost of construction and that its impact on the economy would reduce demand for construction services.  AGC has prepared a document Top Ten Things Contractors Need to Know about Climate Change that summarizes AGC's concerns with energy and climate change legislation. 

AGC and several transportation stakeholders sent a letter to Senate Environment and Public Works Committee Chair Boxer and Ranking Member Senator Jim Inhofe (R-Okla.) Wednesday outlining concerns with the transportation planning provisions in s. 1733 that would make planning for and building highway capacity projects more difficult.

AGC encourages members to express their concerns with the Senate climate change bill by contacting their senators using AGC's Legislative Action Center.

Today the House of Representatives approved the conference report providing appropriations for the Environmental Protection Agency, Department of the Interior and other agencies. The Department of the Interior, Environment, and Related Agencies Appropriations Act, 2010 passed on a party line vote (247-178) and included significant increases for EPA programs, including a $2 billion increase over FY09 SRF programs.  

The bill provides $3.6 billion federal assistance for communities' water infrastructure programs including $1.38 billion for the Drinking Water State Revolving Loan Fund and $2.1 billion for the Clean Water State Revolving Fund, which will be allocated to states under existing distribution formulas. In addition, $157 million was earmarked for specific municipal projects.

Similar to the Recovery Act, this bill requires that 30 percent of funds be distributed in the forms of grants, loan principal forgiveness or negative interest loans for communities with the greatest needs. Additionally, 20 percent of the funds must be used by the states for projects to address green infrastructure, water or energy efficiency improvements, or other environmentally innovative activities. The bill also includes Davis-Bacon prevailing wages under a compromise agreement that will apply these wages for a period of one year. The bill does not include Recovery Act "Buy American" requirements.

AGC has long advocated for increased appropriations and authorization levels to meet the nation's unmet needs for water infrastructure.

The Senate is expected to vote on and pass the conference report in the near term. To view a complete copy of the conference report click here.

In a final series of directives issued by the Office of Management and Budget (OMB) on October 27, the administration said that the civilian agencies should increase their acquisition workforce by at least five percent by 2014. In addition, the agency called for a limit on the use of noncompetitive and other "higher-risk" types of contracts.

A second memo released by OMB, Increasing Competition and Structuring Contracts for the Best Results, provides agencies with a series of guidelines to help Chief Acquisition Officers (CAOs) and Senior Procurement Executives (SPEs) evaluate the effectiveness of their agency's competition practices and processes for selecting contract types. The guidelines focus around three key questions:

1) How is the agency maximizing the effective use of competition and choosing the best contract type for the acquisition?

2) How is the agency mitigating risk when noncompetitive, cost-reimbursement, or T&M/LH contracts are used?

3) How is the agency creating opportunities to transition to more competitive and lower risk contracts?

President Barack Obama on October 28 signed into law $33.5 billion spending bill to fund government energy and water programs for the 2010 fiscal year.

The final piece of legislation includes funding for the Corps of Engineers of $5.4 billion, $43 million above FY 2009 and $320 million above the administration's 2010 request. The agreement includes $2.4 billion, $198 million above 2009, to address more than $1 billion in the backlog of operations and maintenance for navigation infrastructure that is critical to the U.S. economy.
The bill also includes $2 billion for construction projects, $313 million above the request, and $160 million for investigations, $60 million above the request, "to plan and design America's next generation of water resource infrastructure."

Finally, the bill provides $1.13 billion to the Interior Department, $67 million above the request and $12 million above 2009, to continue to support and improve the nation's water infrastructure, including $1.1 billion for the Bureau of Reclamation for dams, canals, water treatment and conservation, and rural water projects.   The full text of the law can be accessed here.

Further details are included in the Conference Report.

U.S. Small Business Administration on October 28 announced a notice of proposed rulemaking that would substantially revise contracting rules for firms benefiting from the 8(a) Business Development program. The proposed changes are the result of the first comprehensive review of the 8(a) program in several years. The rules cover a variety of areas of the program, ranging from providing further clarification on determining economic disadvantage to requirements on Joint Ventures and the Mentor-Protégé program. The public comment period on the proposed changes is open for 60 days.

Some of the components of the 8(a) program that the proposed changes will affect include:

• Joint Ventures - qualifying that 8(a) firms are required to perform a significant portion of the work to ensure that these companies are able to build capacity;
• Economic Disadvantage - providing more clarification on economic disadvantage as it relates to total assets, gross income, retirement accounts and a spouse of an 8(a) company owner in determining the owner's access to capital and credit;
• Mentor-Protégé Program - requiring that assistance provided through the Mentor-Protégé relationship is directly tied to the protégé firm's business plan;
• Ownership and Control Requirements - providing flexibility in admitting individuals of immediate family members of current and former 8(a) participants;
• Tribally-Owned Firms - seeking public comments on the best way to determine whether a tribe meets the criteria of being economically disadvantaged for the 8(a) program;
• Excessive Withdrawals - amending regulations on what is considered excessive as a basis for termination or early graduation from the 8(a) program; and
• Business Size for Primary Industry - requiring that a firm's size status remain small for its primary industry code during its participation in the 8(a) program.

AGC is currently reviewing the proposed rule and will prepare formal comments to the SBA. In addition, AGC will work with SBA and Small Business Congressional Leaders on Capitol Hill to continue advocating common-sense contracting reforms that will benefit contracting for the construction industry.

Comments to this proposed rule are due on or before Dec. 28, 2009 and may be submitted to www.regulations.gov, where they will be posted or mailing them to 409 3rd St. SW, Mail Code: 6610, Washington, DC 20416 or via e-mail at:8aBD2@sba.gov.

On October 29, the House Education and Labor Committee held a hearing on "Nevada's Workplace Health and Safety Enforcement Program: OSHA's Findings and Recommendations." The Committee was highly critical of Nevada's State OSHA and the deficiencies cited in federal OSHA's review of their program (available here). The review was conducted after public attention was drawn to a number of fatalities over an 18-month period between 2006 and 2008.

Mr. Jordan Barab, Deputy Assistant Secretary for OSHA and Acting Assistant Secretary, testified that the review conducted of Nevada is only the first. OSHA plans to conduct simultaneous reviews of all the rest of the states that have State Plans, complete recommendations for improvement, and set deadlines for those recommendations to be put in place. OSHA plans to start conducting these reviews soon, and has set April 2010 as the target for release of these reviews. Barab also testified that, since all State Plans are required to "at least as effective" as Federal OSHA in protecting worker health and safety, federal OSHA will be reviewing the statistical benchmarks it uses to determine if a State Plan has met this burden. AGC will continue to monitor these developments.

Failing once again to pass a substantive extension or the six-year authorization, the House and Senate have decided to include a short extension of SAFETEA-LU in the Omnibus appropriations bill.