VB CGC Practice Group

VB CGC Practice Group
Vandeventer Black's Construction and Government Contracts Practice Group focuses on serving our business clients in the construction industry. We currently have offices in Norfolk and Richmond, VA, the OBX and Raleigh, NC, and Hamburg, Germany. For more information about Vandeventer Black, clink on the VB logo.

Thursday, July 2, 2015

New Minimum Wage Requirements under FAR 52.222-55

Below is a summary of the new minimum wage requirements of FAR Part 52.222-55 prepared by my law partner, Mike Sterling. The new requirements apply to all prime contractors and subcontractors working on new federal contracts after January 1, 2015.
Minimum Wages Under Executive Order 13658

You need to be aware of the new minimum wage requirements of FAR 52.222-55. This clause applies when it is included in a contract or modification by the agency as directed by FAR 22.1906. If the agency fails to include it there is a provision for retroactive application of the clause. FAR 22.1905(d)(4).

FAR 52.222-55 applies to almost all prime contractors and subcontractors working under “new” federal contracts after 1/1/15. The minimum wage is generally not retroactive to “old” contracts. However, it appears that the government views a bilateral modification extending a contract more than 6 months to be a new contact. Likewise, the government may also apply the clause to IDIQ contracts with more than 6 months of task or delivery orders remaining.

If you believe that the agency improperly included the clause you may ask the agency to remove it, but if included you must comply with it.  

If FAR 52.222-55 is included you must flow it down to subcontractors at every tier, and if added after award by modification you should take steps to obtain an equitable adjustment for you and your subcontractors. You should not sign a modification that waives your right to an adjustment.

The minimum wage applies to all contractor employees that spend more than 20% of their weekly hours working in “connection” with a federal contract, and regardless of the contractual relationship. Therefore, it may apply to someone in general administration or a 1099 independent contractor.

The minimum wage takes precedence over lower rates in wage determinations, collective bargaining agreements or apprentice programs. You cannot make up short wages with fringe or other benefits.

You must notify all workers of the requirements of the clause.

Monday, June 22, 2015

Asking about union affiliation deemed unlawful interrogation by NLRB

The word interrogation may give one the visual image of something akin to a police interrogation; but in a recent NLRB decision, the NLRB held that when a non-union shop subcontractor asked individual union member workers about their union affiliation in discussions about hiring those workers, the subcontractor violated the National Labor Relations Act. That decision is Euro Buildings, Ltd and International Union of Bricklayers & Allied Craftsworkers, Ohio-Kentucky Administrative Council, Local 22 Ohio, 2014 WL 5410010 (N.L.R.B. Div. of Judges 2014, adopted 2014 WL 6969677 (N.L.R.B. 2014).

The NLRB discussed that whether discussions amounted to interrogation required the NLRB to consider whether all of the associated circumstances of the discussions reasonably tended to evidence restraint, coercion, or interference with rights guaranteed by the Act. The NLRB identified related factors as including the identity of the questioner, the place and method of the questions, the background of the questioning, the nature of the information sought, and whether the employee is an open union supporter.

For that case, the NLRB judge found that the non-union subcontractor's questions of the applicants about their union affiliation and membership was clearly coercive in nature and reasonably tended to coerce the applicants, and as such interfered with their rights under the Act. His decision seems to suggest any inquiry during the interview process about affiliation would similarly qualify as an coercive interrogation - the indirect threat being if you say you are affiliated as an applicant then you can't get the job.

Friday, June 5, 2015

Insurance Coverage For Subcontractor Non-complaince With Prevailing Wage Laws? - One Court Says There's At Least a Duty to Defend

Subcontractor non-compliance with prevailing wage laws is unfortunately not uncommon. But might that be covered by the General Contractor's insurance? For one design-build project that included coverage for professional liability a federal court in Washington has said there's at least a duty to defend on the part of the insurer under that particular policy. The case is Bayley Constr. v. Great American E & S Ins. Co. 980 F. Supp. 2d 1281 (W.D. Wash. 2013). In reaching its conclusion, the court noted that the duty to defend was governed by liberal construction principles and that under those principles the General Contractor's obligation to ensure subcontractor compliance with prevailing wage laws required professional skill and judgment, and so within that particular policy's coverage. While results will necessary vary depending upon each policy, this case suggests any General Contractor required to address subcontractor prevailing wage law non-compliance should consider triggering policy coverage, and when in doubt timely notify its carrier of related claims per the terms of the contractor's insurance policy or policies.

Monday, May 18, 2015

Virginia "Independent Agencies" Now Covered by Virginia's Public Procurement Act

Among other changes adopted by Virginia's General Assembly last session, the scope of coverage of the Virginia Public Procurement Act has been expanded to include the various "independent agencies" in Virginia. Currently, those independent agencies include the Virginia State Corporation Commission, the State Lottery Department, the Virginia College Savings Plan, the Virginia Retirement System, the Virginia Worker’s Compensation Commission, and the Virginia Office for Protection and Advocacy. Presumably those independent agencies will be evaluating and adopting implementation plans, and their inclusion within the VPPA will help provide guidelines and clarity in the implication of procurement process and administration. The adopting bill was SB 1371. Below is a link to the legislation:


Monday, May 11, 2015

VB's Mike Sterling Part of PPP Live Webcast Speaker Team - Thursday, June 18, 2015 @ 12pm - 2pm (ET)

VB is pleased to announce that one of our Construction and Government Contracts Team Members, Mike Sterling, is one of the speakers at the upcoming Live Webcast discussing Payments-Based Public-Private Partnerships on Thursday, June 18, 2015 from 12pm to 2pm. Below is more information about the program:

Monday, March 30, 2015

Pre-contract Bond, Contract or Mechanic's Lien Claim Waivers Nearing Statutory Extinction in Virginia

Virginia Governor McAuliffe proposed amendments on March 27, 2015 to Senate Bill 891S2 relating to lower tier claim rights, and their waiver.

First, he's proposed adding a new provision in Title 11, dealing with contracts generally, to add a new code section, Code Section 11-4.1:1, to void pre-waivers of payment bond claims and contract claims executed prior to providing any labor, services, or materials.

Second, he's proposed a similar pre-provision waiver of mechanic's lien rights to Code Section 43-3 that further, similarly, voids any such pre-waivers executed prior to providing any labor, services or materials.

Below is a link to the current proposed amendments of the Governor:

Whether there is an intended distinction between the "in advance" and "prior to" language various used, as well as other interpretive aspects to the pre-waiver limitations, such as implications upon other contract payment terms, will remain to be seen if, as expected, the amendments are adopted to law.

Monday, January 19, 2015

Teaming Agreement: Richmond Circuit Court Concludes More than Mere Agreement to Try and Agree

Teaming agreements are regularly used for collaborative bids or proposals. A significant related issues has increasingly been the enforceability of the teaming agreement, and in particular whether it is merely an agreement to try and agree or whether it creates an obligatory requirement to contract if the team successfully obtains award. Judge Hughes of the Richmond Circuit Court recently considered related questions in the context of a suit by a scorned teaming subcontractor. As framed by Judge Hughes, the lead question for him on summary judgment was whether the teaming agreement was merely an agreement to agree.

Defendant's main contentions for the proposition were 1): no duration for the prospective subcontract was set in the teaming agreement; 2) the plaintiff subcontractor was not a Local Small Business or Local Small Business Enterprises as called for in the teaming agreement; and 3) the teaming agreement included a provision that provided: "Nothing herein shall be deemed to create a presumption that the parties have agreed to exclusively respond with the other." Noting the case was before him on summary judgment, Judge Hughes rejected all three arguments.

Regarding the first, he held that the subcontract duration could be implied; that is, duration would be tied to the nature of the teaming prime's contract with the owner - or, as he noted in his opinion, "In other words, the duration of the parties' sub-contractual undertaking will be determined by the length of defendant's general contract."

Regarding the second, he held that, based on the wording of the LSB / LSBE requirement in the teaming agreement (e.g., "throughout the term of the Contract"), the compliance requirement did not arise until when and if the parties themselves contracted, and so the LSB / LSBE requirement did not come into play until the underlying contract itself came into play; and so the team subcontractor's not meting those requirements for the teaming agreement was not fatal.

Finally, regarding the third, he held that the provision relied upon merely expressed the parties' agreement that the teaming agreement did not create any presumptions, and that nothing about the provision excluded the existence of a contractual relationship as alleged in the complaint; only that exclusivity existed between those parties relating to the project.

In ruling on the summary judgment motion, Judge Hughes noted that the enforceability of the teaming subcontract would be subject to later proof; however, he concluded the defendant's arguments were insufficient, as argued, for him to grant summary judgment and preclude the scorned subcontractor from presenting that proof. This is a helpful case for teaming agreement drafters, or litigators; although the outcome seems strongly tied - as are all of these cases - to the wording of the particular teaming agreement.