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Information for Construction Contractors Operating Under the Federal Government Shutdown The fiscal year 2013 appropriations law expired October 1, 2013, the beginning of FY 2014.  The failure by lawmakers to reach an agreement on funding for the new fiscal year resulted in a federal government shutdown.  The shutdown has left contractors wondering how or even if they can continue to perform their federal contracts.  Construction contracts awarded on a fixed-price basis will be substantially unaffected by the shutdown.  However, for most cost-type contracts, time and materials contracts, IDIQ/MATOC/MACC contracts, and those contracts that have yet to be awarded, the shutdown will likely suspend operations completely.  Therefore, it is important for contractors to prepare for the consequences of a government shutdown.

The House and Senate were unable find compromise and pass a continuing resolution (CR) by last night’s 12:00 a.m. deadline. Congress failed to enact any of the twelve appropriations bills that annually are necessary to fund government functions. Therefore, as of today, the federal government has been shutdown, furloughing about 800,000 federal workers and suspending most non-essential federal programs and services. For direct federal construction contracts, the vast majority of ongoing and already awarded contracts are not impacted by the shutdown. However, pending solicitations and awards, including task orders for existing multiple award contracts, will be delayed until the shutdown is over. In addition, agency action on permitting and project management decisions will likely face delays.

This week, the Senate Environment and Public Works (EPW) Committee held another hearing to monitor implementation of the Moving Ahead for Progress in the 21st Century (MAP-21) legislation. The focus of this week’s hearing was the project delivery and environmental streamlining provisions in the law. Representatives of the U.S. Department of Transportation (DOT), the Fish and Wildlife Service (FWS), and the Council on Environmental Quality (CEQ) each testified. DOT reported that the law requires between 50-60 different rule makings and that it has issued guidance on all of the provisions and is focused on finalizing the priority rules first. DOT also noted that the new categorical exclusion (CE) provision for emergency projects was extremely helpful in moving forward with the repair of the Skagit river bridge in Washington state that partially collapsed after being hit by an oversized truck last year. MAP-21 expanded the types of projects that can be included as a CE, a designation that allows for a more abbreviated and speedy environmental review.

Last year, the Occupational Safety and Health Administration (OSHA) issued a compliance directive (CPL 02-01-054) to provide guidance to its compliance officers addressing the safe inspection of work sites where workers performing construction work on and/or near roadways or highways are exposed to hazards from vehicular traffic. This is the first time that OSHA has detailed how compliance officers should go about inspecting highway road construction projects. The directive states that highway construction work zone inspections have two focuses-inspections of construction work, and inspections of temporary traffic controls.

In its continuing effort to lay the groundwork for next year’s need to reauthorize the highway and transit programs, the Senate Environment and Public Works (EPW) Committee held a hearing Wednesday to address the status of the Highway Trust Fund and examine options for providing the revenue needed to keep the trust fund operating. EPW chairwoman Sen. Barbara Boxer (D-Calif.) opened the hearing by reading from a statement submitted by �鶹��Ƶ, which highlights the dire situation facing the HTF at the end of FY 2014 – when there will be an insufficient balance to allow for new federal funding obligations, again calling for continued support for increasing the traditional motor fuels tax, including allowing for inflation adjustments and identifying new revenue sources. Sen. Boxer suggested that she is looking at the idea of replacing the 18.4 cents per gallon tax on gasoline purchases with a sales tax fee paid by oil wholesalers, she believes the option would help close an approximately $20 billion annual shortfall in transportation funding. There was not unanimous support for this idea among Committee members present and Senator Boxer pointed out that this decision is in the hands of the Senate Finance Committee, but is a concept she will encourage the committee to look at.

 The outlook for Congress to pass a Continuing Resolution (CR) to keep the government operating past Sept. 30, 2013 remains uncertain as House and Senate Republicans continue to disagree on including a provision in the CR to defund Obamacare. A CR is necessary because Congress failed to enact any of the twelve appropriations bills that annually are necessary to fund government functions. While the transportation appropriations bill is included in this group, the impact on the Federal-aid highway program will be minimal. Because the Federal Highway Administration (FHWA) is funded out of the Highway Trust Fund, and since MAP-21 authorized funding through the end of FY 2014 (September 30, 2014), FHWA will not be shut down. There will also be no impact on on-going contracts or on state bid lettings because MAP-21’s contract authority allows states to obligate funds through the end of FY-2014. States will also be reimbursed for payments for ongoing work. (The situation is of course reversed at the end of FY 2014 if MAP-21 is not reauthorized, FHWA would shut down and states would not be able to obligate funds for any new contracts.)

The U.S. Department of Transportation (DOT) announced that it is seeking further comments on its proposed changes to its Disadvantaged Business Enterprise (DBE) program regulations disadvantaged-business-enterprise-program-implementation-modifications, which were initially released on Sept. 6, 2012.  A “listening session” (public hearing) has been scheduled for Oct. 9, 2013, in Washington, D.C. and the opportunity to comment has been reopened until Oct. 30. When the proposed rule changes were released last year, DOT claimed that they were minor in nature and intended to adopt them as quickly as possible.  �鶹��Ƶ of America submitted detailed comments, as did 18 �鶹��Ƶ chapters and more than 125 individual �鶹��Ƶ contractor members. In addition, �鶹��Ƶ has had several high level meetings with DOT to discuss the ramifications of the rule change. As a result, DOT decided the rule change was a “significant” rule and, therefore, more input and analysis was necessary.The “listening session” will be held on Oct. 9, 2013, at the U.S. Department of Transportation (1200 New Jersey Ave SE, Washington, D.C.).  There will also be an opportunity to participate as a witness by phone. (NOTE: Space and phone lines are limited, so seats/phone lines will be granted on a first-come, first-served basis).  ALL Participants MUST register by Oct. 2, 2013, at www.dot.gov/osdbu. �鶹��Ƶ of America will have a spokesperson participate in the listening session. �鶹��Ƶ chapters have also been encouraged to have a representative at the hearing, listening in by phone and/or submit comments.

What You Need to Know Now: Preparing for a Possible Government Shutdown The fiscal year 2013 appropriations law currently funding government operations, including many federal contracts, will expire on October 1, 2013, the beginning of FY 2014. A failure by lawmakers to reach an agreement on funding for the new fiscal year will result in a federal government shutdown. The possibility of a shutdown has left contractors wondering how or even if they can continue to perform their federal contracts. Construction contracts awarded on a fixed-price basis will be substantially unaffected by the shutdown. However, for most cost-type contracts, time and materials contracts, IDIQ/MATOC/MACC contracts, and those contracts that have yet to be awarded, the shutdown will likely suspend operations completely. Therefore, it is important for contractors to prepare for the consequences of a government shutdown.

�鶹��Ƶ submitted comments to the Federal Highway Administration (FHWA) concerning the continuation of waivers from Buy America requirements for manufactured products that are not substantially made of steel or iron and for the minimal use of foreign steel products. Current FHWA regulations require that steel and iron products permanently incorporated into Federal-aid highway construction projects must be domestically produced. Starting in 1983, FHWA waived this requirement for manufactured products that are not substantially steel (traffic signals, its equipment, etc.), even if some components of the manufactured product are made of steel.

This week, the House Appropriations Committee introduced a continuing resolution (CR) to fund the daily activities of the federal government, from the start of the fiscal year (FY) 2014 on Oct. 1 through Dec. 15, 2013.  The CR will fund the government at current post-sequestration levels. The CR is necessary because the House and Senate have failed to enact any of their 12 annual appropriations bills, including the transportation funding bill.  The length of the CR is intended to allow congressional leaders and the president time to deal with the need to raise the nation’s debt ceiling and other budget issues without the threat of a government shutdown. However, an attempt by House republicans to cut off funding for enforcement of the Affordable Care Act (aka Obamacare) will be a major issue as the legislation moves forward and could lead to a government shutdown.