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Summary

On December 5, 2023, Seyfarth’s Amy Hoang will be a panelist on a Strafford Webinar detailing Build America, Buy America (BABA) requirements. This 90-minute CLE presentation (1:00 PM – 2:30 PM ET), will guide construction counsel through the BABA final guidance with notable revisions from the interim guidance. The panel will discuss how the final rule impacts construction contractors, including sourcing compliant materials, dealing with supply chain issues and increased costs, ensuring subcontractor compliance, and recordkeeping requirements. The panel will also discuss when and how to request a waiver and best practices for compliance. Those interested in attending may contact Ms. Hoang directly at ahoang@seyfarth.com or register here.

Continue Reading Seyfarth’s Amy Hoang to Speak on Build America, Buy America Webinar
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Less than a month after taking effect, the Department of Labor’s (“DOL”) broad changes to the regulations implementing Davis-Bacon and Related Acts (“DBRA”) are facing legal challenges in two federal courts. These newly-filed lawsuits could change things for those trying to navigate the new regulatory landscape. Contractors on DBRA-covered contracts should keep an eye out for developments.

On October 23, 2023, DOL’s final rule updating the regulations implementing DBRA became effective. The first major overhaul of its kind in forty years, the final rule made sweeping changes to the regulations governing payment of prevailing wages on most federally-funded construction contracts.

One of the more high-profile changes was the reintroduction of the “30-percent rule” that DOL abandoned in the early 1980’s. For the last forty years or so, DOL has deemed a wage “prevailing” for a classification only if it was paid to the majority of workers in that classification; if no majority wage existed, DOL determined prevailing wage using a weighted average of wage rates. The final rule adds a third option: if no majority wage exists, the governing prevailing wage is the wage paid to the greatest number of  workers in a classification, so long as that wage is paid to at least 30 percent. DOL used this three-step process for the first fifty years following Davis-Bacon’s enactment and, in DOL’s view, the 30-percent rule is more faithful to the concept of “prevailing wage” than the weighted-average fallback method.

Other key changes in the final rule clarified the circumstances in which prevailing wages must be updated, allowed DOL to adopt wage rates set by state and local governments in certain circumstances, strengthened DBRA enforcement by making DBRA requirements effective by operation of law, and added new anti-retaliation provisions to the Davis-Bacon contract clauses.  

Because the final rule is forward looking, contractors may not feel its effects for some time. But the prevailing view among federal contractors is that DOL’s updates to the DBRA regulations will complicate compliance, increase regulatory burdens, and drive up contractor costs.

And so, less than a month after taking effect, the final rule is facing an existential legal threat. In a pair of cases filed in Texas federal district courts this month, two sets of industry-group plaintiffs challenged most of the key changes contained in the final rule. While the cases differ somewhat on legal theory, the gist of both is that DOL’s final rule exceeded DOL’s statutory authority and violated the Administrative Procedure Act. And both cases seek orders barring implementation of the final rule.

At this early stage, it is hard to say what these cases will mean for contractors working their way through the new regulatory scheme. But these cases could lead to significant changes to the newly-enacted regulations and their effects on covered contracts. Contractors performing DBRA contracts should certainly pay close attention. 

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On August 8, 2023, the U.S. Department of Labor (DOL) announced its final rule related to the Davis-Bacon Act (the “Act”), entitled “Updating the Davis-Bacon and Related Acts Regulations.”  However, the official final rule must be published in the Federal Register – likely by week’s end – before going into effect 60 days after publication.

DOL issued its notice of proposed rulemaking (“NPRM”) in March 2022 and received more than 40,000 comments from interested stakeholders. Evaluating and addressing those comments took the better part of a year, as DOL did not send the rule to the Office of Information and Regulatory Affairs (“OIRA”) for White House approval until December 16, 2022.  After languishing for months, OIRA has now concluded its review, allowing DOL to move forward with its final rule.

Continue Reading Break out the Neon: ‘80s Era Davis-Bacon “Prevailing Wage” Definition Restored in DOL Final Rule
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On July 21, 2023, President Biden designated July 23-29, 2023, as “Made in America Week.”  This proclamation builds on the Biden Administration’s efforts to bolster domestic manufacturing through evolving policies attached to government funds that require contractors and suppliers to feature varying amounts of U.S.-made content in their products and services. To commemorate this week, here is a refresher on “Made in America” and what it means for government contractors and suppliers.

What does “Made in America” mean?

Under Executive Order 14005, the Administration defined “Made in America” laws as “all statutes, regulations, rules, and Executive Orders relating to Federal financial assistance awards or Federal procurement, including those that refer to “Buy America” or “Buy American,” that require, or provide a preference for, the purchase or acquisition of goods, products, or materials produced in the United States, including iron, steel, and manufactured goods offered in the United States.” Generally speaking, “Made in America” or “Buy American” requirements refer to:

  • The Buy American Act (BAA) of 1933, establishing domestic sourcing preferences for unmanufactured and manufactured articles, materials, and supplies procured by the federal government for public use, including those used on federal construction contracts;
  • The Trade Agreements Act (TAA) of 1979, permitting, in certain circumstances, the waiver of certain BAA domestic sourcing requirements for “designated countries”;
  • The Berry and Kissell Amendments, relating to Department of Defense (DOD) purchases of food, clothing, textiles, and tools;
  • The Specialty Metal Restriction, relating to DOD purchases of “specialty metals” and items that contain “specialty metals”;
  • The Balance of Payment Program, relating to DOD’s application of BAA policies outside of the U.S.;
  • The American Recovery and Reinvestment Act of 2009, relating to construction materials procured using funds under the Recovery Act;
  • The Department of Transportation (DOT) Buy America Act, relating to grants provided to states, localities, and other nonfederal entities for projects funded by the DOT; and
  • The Build America, Buy America (BABA) Act of the Infrastructure Investment and Jobs Act (IIJA), expanding domestic content requirements to all federal infrastructure projects. For more on BABA requirements, see coverage here.

When do “Made in America” requirements apply?

Many government contracts or federally-funded projects include “Made in America” requirements, though the requirements will differ depending on project type, product type, source of funding, and contract value.  For instance, in the case of Federal Acquisition Regulation (FAR)-based federal contracts, the BAA generally applies to contracts between the micro-purchase threshold of $10,000 and the TAA threshold of $183,000 (for supplies) or $7,023,000 (for construction materials). Above the relevant threshold, the TAA typically applies, which contains similar domestic sourcing requirements but includes exceptions to permit the use of products from many U.S. trading partners. 

What companies must comply with “Made in America” requirements?

Prime contractors as well as their supply chains are impacted by “Made in America” requirements. While the applicable “Made in America” regulations do not always mandate inclusion of “Made in America” clauses in lower-tier subcontractor and supplier contracts, oftentimes prime contractors must include those requirements in order to ensure that the products or construction materials they deliver or use in a project are compliant with the applicable “Made in America” laws.

How do companies comply with “Made in America” requirements?

Any company performing a federal contract or federally-funded project, or acting as a supplier for such projects, should be cognizant of potential “Made in America” requirements.  Companies should review their contracts to confirm applicable requirements and identify any certifications that they may be making with regard to the origin of project materials.  Communicate with customers if the requirements are unclear.  Prime contractors may want to establish procedures to obtain, archive, and update country-of-origin information from suppliers and include annual updates to ensure compliance throughout the life of a contract.

Have there been any recent updates to “Made in America” requirements?

The Biden Administration has used “Made in America” requirements as a vehicle to increase U.S. jobs and manufacturing in several key industries, including construction and electric vehicle (EV) charging infrastructure. The following updates highlight recent developments in “Made in America” requirements:

  • Office of Management and Budget (OMB) Guidance on BABA Application: On February 9, 2023, OMB issued a proposed rule and notice of proposed guidance for infrastructure projects that will be subject to BABA, building on its preliminary guidance from April 2022.  The new guidance provides additional color on how the government will interpret terms and concepts in BABA, including how the government will distinguish between a manufactured product and a steel/iron product, and how the government will define the requirement that “all manufacturing processes” for construction materials occur in the United States.
  • Federal Highway Administration (FHWA) Updates to EV Charger Waiver Guidance: On February 12, 2023, FHWA released a limited waiver that, in a series of steps, created a domestic sourcing requirement specific to EV chargers, to be implemented on a phased timeline.  On July 11, 2023, FHWA released updated Q&A’s for the new EV charger domestic sourcing requirements.
  • DOD Updates to Procurement Regulations: On June 9, 2023, DOD proposed an amendment to the Defense Federal Acquisition Regulation Supplement (DFARS) to enact domestic sourcing requirements outlined in Executive Order 14005, including updates to the definitions of “domestic end product”, “qualifying country end product”, and “domestic construction material” to reflect the increase of domestic content thresholds from 55 percent to 60 percent in calendar year 2023, then to 65 percent in calendar year 2024, and to 75 percent in calendar year 2029.

“Made in America Week” showcases all of the opportunities available to contractors and suppliers willing to comply with the federal government’s domestic sourcing requirements.  However, the complexity of the existing statutory scheme and the evolving, agency-specific nature of the requirements can make compliance seem like a daunting task. Seyfarth Shaw continues to monitor these changes and can lend its extensive expertise to contractors and suppliers currently in the federal procurement space, or those interested in taking advantage of the business opportunities that exist within that space.

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Seyfarth Shaw’s Construction group have achieved a top tier ranking in the highly regarded Legal 500 United States 2023 edition, solidifying their reputation as one of the nation’s top legal teams. This recognition reaffirms Seyfarth’s unwavering commitment to excellence in Real Estate Construction and Construction Litigation.

The Legal 500 United States guide recognizes Seyfarth’s Construction practice as having a “very deep team with extensive construction knowledge as well as experts in related fields such as government contracting and business organization.” Our team is regarded by clients and peers as “collegial, intelligent, direct and adaptable.” The guide specifically recognizes the firm’s former Construction group chair, Bennett Greenberg, in their Hall of Fame. Alison Ashford, the firm’s current Construction group co-chair, is named a Leading Lawyer and Washington, DC Associate, Michael Wagner, made the Rising Stars list. Other notable mentions include, Michael McKeeman, Construction group co-chair, Jason Smith, Meghan Douris, and Ryan Gilchrist.

Renowned for its comprehensive coverage of legal services, The Legal 500 United States is an esteemed and independent guide that offers authoritative assessments of law firms. Its rigorous research conducted over the past 12 months recognizes and rewards outstanding in-house and private practice teams and individuals. The inclusion of Seyfarth Shaw’s Construction group in these rankings reflects their status as trusted authorities in Construction law. Through their unwavering dedication to providing exceptional legal counsel, clear communication, and efficient service, Seyfarth continues to serve as a valuable partner for companies seeking comprehensive Construction and Construction Litigation service offerings and strategic guidance in today’s fiercely competitive business landscape.

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Under the Miller Act, 40 U.S.C. §§ 3131 et seq., contractors hired to work on federal construction projects are required to furnish payment bonds in order to ensure payment to certain persons that provide labor for the project. The United States Court of Appeals for the Fourth Circuit recently issued a published decision clarifying the type of work that qualifies as “labor” under the Miller Act.  Elliot Dickson v. Fidelity and Deposit Company (issued April 26, 2023).

In that case, the U.S. Department of Defense hired Forney Enterprises (Forney) as the prime contractor on a renovation project at the Pentagon. Forney retained Fidelity and Deposit Company of Maryland (Fidelity) to provide the required Miller Act payment bond. Forney then entered into a subcontract with Elliott Dickson (Dickson), a professional engineer, to work as a project manager on the contract.  Dickson primarily supervised labor on the site, but also performed other tasks, including logistical and clerical duties, taking various field measurements, cleaning the worksite, moving tools and materials, and sometimes even watering the concrete himself.  Dickson’s work required him to be onsite on a daily basis.

In December 2018, the Government terminated its contract with Forney, and directed Forney to stop work and cleanup the site. Dickson assisted Forney in this regard, and his last day on site was February 8, 2019, when he performed a materials inventory. On January 10, 2019, Dickson submitted a claim to Fidelity for approximately $400,000 for his work on the project.  Over a year later, on January 14, 2020, Fidelity denied the claim because Dickson had not performed “labor” as required for recovery under the Miller Act. Fidelity asked Dickson to resubmit his claim and to remove all hours worked “off-site, as well as those performed on-site relating to clerical and administrative tasks.” Dickson did not submit a  revised claim, and instead sued Fidelity under the Miller Act on February 5, 2020. The District Court granted summary judgment for Fidelity holding that Dickson’s work did not qualify as “labor” under the Miller Act because supervisory work is generally not “labor.” The District Court also found that the one-year statute of limitations under the Miller Act barred the claim because the lawsuit was brought more than one year after Dickson last performed “labor” on the project, and that Fidelity’s offer to Dickson to resubmit the claim did not extend that deadline.

After reviewing the history of the Miller Act and its predecessor, the Heard Act, the U.S. Court of Appeals for the Fourth Circuit determined that the supervisory work performed by Dickson did qualify as labor under the Miller Act because the bulk of Dickson’s work involved both direction and supervision of manual labor and occasional performance of manual labor.  Dickson’s supervisory work, which continued through January 2019, was therefore characterized as Miller Act “labor.” However, the Fourth Circuit agreed with the District Court that the statute of limitation barred Dickson’s claim. The Miller Act statute of limitations runs “one year after the day on which the last of the labor was performed.” § 3133(b)(4) (emphasis added). The Fourth Circuit concluded that the only on-site work performed by Dickson within one-year of filing suit was taking a final inventory in February 2019, which did not involve any supervisory work, and thus did not constitute “labor” under the Miller Act. In reaching its decision, the court drew a distinction between “work of a professional character” and “manual labor”, and stated that it is not enough that an act is technically “physical,” but must rise to “exertion” or “toil.”  The court also rejected Dickson’s argument that Fidelity should be estopped from enforcing the one-year limitations period because of Fidelity’s invitation for Dickson to submit a revised claim, finding that there were no promises to pay by Fidelity or negotiations on the claim.[1]

[1] Judge Floyd wrote a dissenting opinion in which he concluded that the definition of “labor” should be more liberally construed to include “mental exertion,” and thus the final inventory taken by Dickson should have been considered “labor,” thus making the lawsuit timely.

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More than a year has passed since Congress enacted the Build America, Buy America Act (“BABA”)—a sweeping change to domestic sourcing requirements for federally funded infrastructure projects. BABA, which was included as part of the November 2021 Infrastructure Investment and Jobs Act (“IIJA”), materially changes the way many companies must source supplies for federally-funded projects; however, implementation has not happened overnight. With a phased approach, piecemeal guidance from the federal government on how to interpret certain requirements, and a host of waivers that vary by agency, the implementation of BABA can be difficult to track. This post provides a refresher on BABA’s  requirements and a status update on how these requirements are being implemented on federally-funded infrastructure projects.

Continue Reading What’s the Status of Buy American Requirements for Public Infrastructure Projects?

The week of March 5-11, 2023 marks the 25th annual Women in Construction Week, which celebrates and promotes the role of women in the construction industry. Seyfarth is proud to co-sponsor a networking event on March 9th. The event is hosted by Women in Construction, Inc. and National Association of Women in Construction (NAWIC). More details about the event are available here.

Seyfarth takes great pride in the women of our Chambers and Legal 500 ranked Construction group, many of whom chair or co-chair sub-practices. These include transactional, litigation, international dispute resolution, and public procurement.

Transactional Construction

Our firm routinely represents both developer and contractor clients on a wide variety of industrial, commercial, retail, residential, infrastructure, entertainment, hospitality, and energy projects. Between Alison Ashford (current chair of Construction), Sara Beiro Farabow (former chair of Construction), Wendy Wendrowski, and 11 other women, we offer deep experience and sophisticated transactional advice, drafting, and negotiation on a variety of projects across the country.

Construction Disputes and Litigation

We offer a powerful team of litigators, who are prepared to advocate zealously for our clients. Seyfarth’s women comprise a formidable practice of advocates on the East Coast (Rebecca Woods and Elizabeth Harraka), the West Coast (Meghan Douris, Ashley Sherwood, and Loni Hinton), and everywhere in between (Suzanna Bonham and Kay Hazelwood).

International Construction & Dispute Resolution

Headed by Sara Beiro Farabow, our International Dispute Resolution Group is devoted to counseling clients on international arbitration and other cross-border dispute resolution proceedings. Building upon our top-ranked construction, product liability, intellectual property, trade secrets, employment, international corporate, and complex commercial practices, Seyfarth’s international dispute resolution and arbitration group represents clients across the globe in cross-border disputes.

Seyfarth is a proud signatory of the Equal Representation in Arbitration Pledge. This Pledge seeks to increase, on an equal opportunity basis, the number of women appointed as arbitrators in order to achieve a fair representation as soon as practically possible, with the ultimate goal of full parity.

Government Contracts in the Construction Industry

Between Amy Hoang, Stephanie Magnell, Erica Bakies, Sarah Burgart, and others, we offer some of the finest advisors and counselors in the country. Whether it is advising on complex regulatory issues, pursuing bid protests, or prosecuting and defending claims on state and federal construction projects, there are virtually no client needs we cannot meet.

Seyfarth’s Women Leaders in Construction

Alison Ashford is the co-chair of Seyfarth’s Construction group and Seyfarth’s Infrastructure & Project Finance team. From a public project perspective, Alison has represented clients in the procurement of projects, including via public-private partnership; in the sectors of economic infrastructure (rail, aviation, transportation, waste water, and desalination projects); and in social infrastructure (education, housing, and health projects).

Sara Beiro Farabow is the leader of Seyfarth’s International Dispute Resolution group and former co-chair of the Construction practice group. Her practice is devoted to counseling clients on international arbitration and other cross-border dispute resolution proceedings, as well as complex domestic and international procurement issues, contract administration, claims, insurance, cross-border transactions, risk management, and project finance.

Rebecca Woods chairs the Seyfarth Atlanta Litigation group and co-chairs the Commercial Litigation practice group. She “majors” in three overlapping areas: real estate (joint ventures, residential and commercial leases, boundary lines, development agreements, and purchase and sale agreements), construction (design and construction defects, including in commercial and manufacturing settings), and insurance (advice and counseling regarding CGL, professional liability, errors and omissions, representations and warranties, D&O, and property coverage).

Meghan Douris assists clients through the unique legal complexities in the construction industry, particularly the challenges associated with constructing heavy civil infrastructure and high-rise buildings. She also helps organizations understand and secure government contracts in the construction and service industries, including a focus on AbilityOne providers.

Ashley Sherwood represents general contractors, subcontractors, and developers of all sizes on complex private and public construction projects at the state and federal level, as well as internationally.

Suzanna Bonham partners with clients to develop practical approaches and strategies to meet their corporate goals and needs. Commercial clients in health care, energy, construction, real estate, transportation, and many other industries trust Suzanna with high-stakes litigation.

Wendy Wendrowski prepares, negotiates, and assists with the implementation of construction contracts and other related agreements for entities involved with or impacted by construction projects. She also advises clients about potential claim matters and other disputes arising during the construction process, so they may be effectively resolved, prosecuted, or defended.

Kay Hazelwood advises companies and individuals in a constantly expanding and diverse range of industries including health care, energy, insurance, and construction.

Amy Hoang is co-chair of Seyfarth’s Government Contracts practice group, and is renowned in the market for her exceptional ability to represent contractors in bid protests and internal investigations, as well as provide compliance counsel. She advises her clients on federal procurement matters, with a focus on bid protests at the US Government Accountability Office and Court of Federal Claims, corporate ethics and compliance, internal investigations, and required disclosures under the FAR Mandatory Disclosure Rule.

Stephanie Magnell specializes in representing government contractors in bid protests before the Government Accountability Office (GAO), the Court of Federal Claims (COFC), and state courts, where a nuanced framing of the bid protest is essential.

Future Women in Construction Leaders

Loni Hinton is a “dirt to done” construction attorney who helps her clients find cost-effective legal solutions that mitigate risk and avoid expensive, time-consuming litigation.

Elizabeth Harraka brings a passion for nuance to construction matters involving litigation and alternative dispute resolution.

Erica Bakies advises clients on complicated compliance issues, such as classified contract requirements under the National Industrial Security Program, supply chain risk management, access restricted information like Controlled Unclassified Information, cybersecurity requirements, and SBA small business requirements and disputes.

Sarah Burgart focuses on US national security matters, bringing together her government contracts and international trade work.

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Seyfarth Synopsis: On January 10, 2023, the Equal Employment Opportunity Commission (EEOC) released for public comment its draft 2023-2027 Strategic Enforcement Plan (“SEP”)—a document that will guide the Commission’s enforcement priorities for the next five years. The EEOC’s prior Strategic Plan described how it would pursue its enforcement goals. (See our earlier blog on the Strategic Plan here). The Strategic Enforcement Plan, on the other hand, describes what the EEOC’s enforcement priorities will be. Earlier actions by the EEOC suggested that it might be turning its attention to the construction industry. In the SEP, the EEOC makes its intentions explicit, putting the construction industry—and especially those receiving federal funding—squarely in its sights.

History of the SEP

The EEOC’s first SEP covered Fiscal Years 2013-2016 (the EEOC’s fiscal years begin on October 1) and identified six broad subject-matter priorities. The EEOC’s second SEP set the course for enforcement priorities for FY2017-2022. The latest proposed SEP, published in the Federal Register for comment for the first time, provides notable additional details that put the employer community on notice of the Commission’s intentions for FY2023-2027.[1]

Continue Reading The EEOC Targets Construction Industry For Heightened Enforcement
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In Cell-Crete Corp. v. Fed. Ins. Co., a California court awarded a surety attorneys’ fees and costs that its principal incurred defending the surety against a claim on a public-works payment bond.[1] This is good news for sureties and their principals, who commonly defend sureties against such claims pursuant to a general indemnity agreements (“GIA”). 

The payment bond and related litigation

Granite Construction Company (“Granite”) entered into a contract with the County of Riverside to complete a roadway project (“Project”). Granite subcontracted with Cell-Crete Corporation (“Cell-Crete”) for installation of light weight concrete at the Project. Granite obtained a payment bond (the “Bond”) from Federal Insurance Company (“Federal”) pursuant to the California Little Miller Act,[2] which requires payment bonds for any public project in excess of $25,000. As Granite’s surety, Federal required that Granite sign a GIA obligating it to defend, indemnify, and hold Federal harmless against claims made against the Bond. 

Continue Reading California Court Confirms Surety’s Right to Recover Attorney Fees and Costs Incurred by Its Principal