When Associated General Contractors of America (AGC) speaks, government and industry listen.
AGC has been a voice of construction for 87 years.
Headquartered in Arlington, VA, outside Washington, D.C., and with chapters from the Atlantic to the Pacific, AGC advocates contractor positions on issues ranging from liability during disasters to permanent repeal of the Estate Tax.
It has its hands full. Construction continues to boom and contractors have a lot of concerns.
“Being the voice of industry is more valid and critical today than ever.” said Marco Giamberardino, AGC’s senior director of its Federal and Heavy Construction Division, “Our members recognize our advocacy as a huge priority, whether it’s working with members of Congress, federal agencies, private owner groups, various other construction-related groups, subcontractors, bonding associations, architects or others.”
Here are some of the main contractor concerns and issues, as described by Giamberardino, during an interview with Construction Equipment Guide (CEG).
Cost of Materials
“The cost of materials, and price increases of materials, is a huge concern right now,” Giamberardino said. “It’s not just attributable to one particular item; it cuts across all types, whether it’s steel, concrete, sheet rock or anything else. I think steel and concrete are probably showing the biggest increases.
“There is a huge hunger in China, and other countries as they modernize, for supplies of materials. The demand in China alone has caused a spike in the cost of materials across the board, starting with steel.”
AGC issued a Construction Alert on Oct. 25, declaring that “construction costs have risen dramatically in 2004, 2005, or both, after having moved similarly to the overall producer price index (PPI) in the previous three years.”
The Alert said major construction materials all showed price spikes, many in the double digits, in the past two years. It blamed the global building boom as well as Hurricanes Katrina and Rita, which “struck especially hard at the supply of construction inputs ranging from diesel fuel to plastics to cement … Katrina also interfered with imports of cement and natural rubber, and the hurricane damaged plants that produce gypsum, lumber and plywood, and liquid hydrogen for galvanizing steel.”
Hurricane Katrina Cleanup
“One of the hottest issues we’re concerned with right now is the cleanup from Hurricane Katrina, making sure [national] contractors are able to work down there and that local contractors have opportunities as well. We are advocating contractor liability legislation that would provide very limited liability relief for contractors during the cleanup on the Gulf Coast.”
Giamberardino said this limited liability protection should apply both for Katrina contractors and — in the future — for any federal response of more than $15 billion.
“It would not apply, for instance, to less-expensive efforts like fighting forest fires in California or to lesser storms like Hurricane Wilma,” he pointed out. “However, we think it’s critical for a cleanup of Katrina’s scope. We base this on the 9/11 experience when over 5,000 lawsuits were filed against four contractors for doing what they were asked to do by the government, at the direction of the government.”
AGC is urging Congress to pass the Gulf Coast Recovery Act and give first-response contractors more protection against the risk of future litigation.
Meeting Critical Infrastructure Needs
Giamberardino said that the cost of materials and Katrina’s cleanup are AGC’s two most important issues during the current session of Congress. The association is calling attention to other problems as well. One is the nation’s infrastructure needs.
“We are facing multiple infrastructure challenges in this country and are at the point where the need for infrastructure investment is at an all-time high, whether it’s highways, bridges, waterways, or water infrastructure,” he said. “Our infrastructure system has been in place for as long as 150 years in some cases, depending on the structure. In New Orleans, for instance, we have asked for additional investment in that type of infrastructure for years. It took a situation like Hurricane Katrina to call additional attention to it.”
AGC recently declared that the Highway Trust Fund (HTF) is “on the verge of bankruptcy” and called for short-term solutions, such as indexing the gas tax to inflation to guard against future erosion of the fund’s purchasing power. It also expressed concern to Congress about proposed across-the-board cuts in discretionary spending that would include reductions in federal infrastructure investment.
Against Reverse Options
Another big concern is the government’s use of reverse options to procure construction.
“A reverse option is almost like a reverse e-bay,” Giamberardino said. “Contractors have to bid on-line on their computers. Within a half-hour, or limited time period, they bid down on a job as opposed to just doing sealed bidding, which is your one-time best shot. There are a lot of dangers, especially when you go to the federal market.
“According to federal rules, you’re not allowed to reveal price, but you have to reveal price if you’re on the computer system,” he added. “Reverse options don’t give general contractors a reasonable method of calculating what their real bids will be. How can they account exactly for all their subcontracts and build that into the price when they’re sitting on-line and the clock is ticking?
“We really think reverse options open up the doors to a lot of bad relations, not only with our subs, but with the owners, so we don’t think the federal government should be in that position. Other federal agencies, who have looked at this procedure, don’t want to play with it, either.”
Many Other Issues
Other actions high on AGC’s priority list include:
• Making tax cuts, including the Estate Tax, permanent;
• Expanding water resource navigation and flood control funding;
• Expanding federal drinking water and wastewater funding;
• Increasing school construction;
• Supporting legislation to increase availability of health insurance; and
• Responding to workforce needs with effective immigration reform.
Optimistic About Future
When asked how AGC will do its job in the future, as it soon passes into its second century, Giamberardino said: “We will keep doing what we do best, especially advocacy. I see us going strong, absolutely. We have a nice mix of general contractors, specialty contractors, subcontractors and suppliers. They cut across every type of construction except for single family. In discussing issues, and promoting our positions, this is a wonderful networking opportunity, not only among members but also with other industry groups.”
AGC 2006 Annual Convention is coming up soon – March 19 to 22, in Palm Springs, CA.
Further information on AGC is available on www.agc.org. CEG