Key Subcontractor Legislation - What Surety Pros Should Know
ASA Priorities for 2024
By Mike Oscar, ASA Director Government Relations
The American Subcontractors Association (ASA), a pivotal entity in the construction industry, represents over 2,400 construction subcontractors across the United States. Its legislative priorities aim to address critical issues that impact subcontractors and by extension, the broader construction sector, including surety professionals who play an essential role in construction projects.
Promoting Prompt Payments through Legislative Action
A core issue for the ASA in 2024 is the enforcement of prompt payment to subcontractors and suppliers, especially concerning change orders. The organization supports the "Small Business Payment for Performance Act of 2023" (H.R. 2726), which mandates quick payment for contractors following change orders. Timely payments are vital to maintaining cash flow for subcontractors, ensuring they can meet their financial obligations and maintain stability in their operations.
Enhancing P3 Bonding Requirements
The ASA also champions H.R. 1740, which seeks to affirm that existing payment and performance security requirements extend to infrastructure projects financed through the Water Infrastructure Finance and Innovation Act (WIFIA), including Public-Private Partnerships (P3s). This legislation is crucial for surety professionals as it uploads stringent bonding requirements, ensuring that all parties are adequately protected in large-scale infrastructure projects.
Reforming Retainage Practices
Another significant focus is the reform of retainage practices. The ASA advocates for reducing the maximum retainage rate from 10% to 5%. High retainage rates can strain subcontractors who must front the cost of labor and materials, impacting their liquidity and financial health. This change would alleviate financial pressure and improve the economic conditions for subcontractors.
Ensuring Fairness in Bid Listing
The ASA supports the "Stop Unfair Bid Shopping Act" (SUBS Act), which mandates that general contractors on federal construction contracts valued at over $1.5 million list the subcontractors for work valued at more than $100,000. This act aims to curb bids shopping, promoting fairness and transparency in the procurement process, thereby protecting subcontractors from being undercut after bidding.
Streamlining Permitting Processes
The ASA continues to advocate for streamlining project review and approval processes through the "One Federal Decision" framework and other enhancements under the Infrastructure Investment Jobs Act (IIJA). Simplifying these processes can reduce delays and costs, benefiting the entire construction timeline and reducing risks associated with surety bonds.
Supporting Workforce Development
Workforce development remains a priority, with the ASA supporting apprenticeship funding opportunities and opposing the misclassification of workers as independent contractors. Strengthening the workforce is essential for the growth and sustainability of the construction industry.
Encouraging Construction Procurement Reform
Lastly, the ASA supports the House Construction Procurement Caucus, focusing on improving construction procurement policies. This caucus serves as a platform for addressing issues that affect the construction industry and ensuring that procurement practices are equitable and efficient.
These legislative priorities not only address the immediate needs of subcontractors but also have significant implications for surety professionals, who rely on the financial stability and regulatory compliance of the contractors they bond. By supporting these initiatives, the ASA helps create a more predictable and fair business environment for all stakeholders in the construction industry.
About the Author:
Mike Oscar is the Government Relations Director of the American Subcontractors Assocation (ASA). Oscar has been in this role for 14 years, educating, advocating, and collaborating to promote public policies impacting the subcontractor construction industry.
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