Welcome to 2018!
We hope everyone had a wonderful Holiday season and are finding 2018 to be off to a better start than 2017. AHCC works hard to accommodate our members’ needs. We heard you. Seeing that our members are located in various parts of Maryland, we took to heart your issues with traffic when trying to attend meetings. With this in mind, we are pleased to announce that we are launching our first Webinar on February 6th. You should by now have an invitation in your inbox to the Contract Negotiation webinar; in the meantime, for details click on the URL below. We look forward to servicing you in this new format.
We have many exciting events in the works. Soon, we will be posting events on project management, safety, estimation, the new tax laws, and more. Vanessa Lopez our co-founder will be repeating her financial accounting series, and, back by popular demand, the bonding seminar will be in the mix, as well. Please check our calendar of events for updates and as always, if you have any suggestions for other training seminars please let us know.
For new AHCC members as well as renewing members, starting in 2018 the cost of your membership will include four free sessions annually. With the introduction of webinars, our costs are reduced and we are thrilled to pass these savings on to you our members. Please click here for more information regarding memberships.
While we are introducing the new format of webinars, all members continue to have the option of attending sessions in person assuming the presenter is able to be on-site. In addition, many of our members expressed the need for the presentations to be in both English and Spanish so their key employees and spouses can attend. We will gladly comply, and any translation needs can be accommodated on an individual basis. For those who request it, presentation material will be emailed in advance in Spanish.
For this legislative session, the Alliance for Hispanic Commercial Contractors has requested key supporters to drop in legislation. Senator Barbara Robinson has graciously dropped Senate Bill 243. After AHCC and Dream Management could not persuade MDOT to change its contract language to require annual bonds on a five-year contract, Senator Robinson stepped in. With the Senator’s assistance MDOT changed their language, accordingly.
Without posting collateral or using a big business teaming partner to provide bonding support, small business cannot satisfy the surety bonding requirements to bond a five-year contract. However, if the bond could be renewed annually then small business can comply and bid and win such work.
The issue is that there is only one bond form in the Maryland’s regulatory procurement code and only applies to fixed priced contracts. This bill will allow the state to have another bond form that is annually renewable for service type contracts. Associated General Contractors of Maryland said they would support the bill. The first hearing is on February 1st. We hope to have AHCC supporters providing testimony.
Also, Karen Barbour is working with Senator Hershey and others to change the beneficial ownership rule from 5% to 25%. At present, if a 5% owner fails to comply with certain reporting requirements they could be subject to fines and criminal sanctions. Owners at this level rarely guaranty contracts or lines of credit for their company. Therefore, 5% owners should not be considered beneficial owners. In May 2018, the federal government is changing beneficial ownership to 25%. Soon a bill will hopefully be dropped by Senator Hershey to mirror the federal guidelines below:
Under the new rule, a “beneficial owner” includes two types of individuals:
1. Any individual who, directly or indirectly, owns 25 percent or more of equity interest in the legal entity customer; and
2. A single individual who has “significant responsibility to control, manage, or direct a legal entity.”
The other bill that may be dropped by Senator Hersey will reinstate the amendment AHCC was able to secure on House Bill 426 of the 2017 session thanks to Delegate Joseline Pena-Melnyk. AHCC was able to secure this amendment and have the House pass the amendment to increase the payment bond penalty under the Little Miller Act to 100%. The Senate, however, did not pass the amendment due to misinformation. The federal government increased the payment bond penalty from 50% to 100% decades ago. Maryland has not reflected that increase.
Surety bonds are mandated for projects $150,000 and higher by the federal government per the Miller Act. The states adopted this law, known at the state level as the Little Miller Act. Since a contractor cannot file a lien on a public project, it is important to have a 100% payment bond in place so all contractors working on a particular state project can recover their costs.
With minority and small business firms working mostly as subcontractors to large primes on state funded projects, it’s important that they ALL have the recourse to recover costs by filing a payment bond claim in the event the prime defaults or simply does not pay. With a 50% payment bond, many subcontractors, vendors and laborers will be precluded from filing a claim.
In Maryland, it is void against public policy to waive your lien rights. So, no contract can ask or enforce a contractor to waive your lien rights. With a 50% payment bond, the state is violating public policy as they are precluding the ability for many contractors, vendors, etc., from pursuing their ability to file a lien (on the payment bond). Senator Hershey’s bill, if dropped, should remedy this issue.
Details to follow. For more information go to Maryland General Assembly. Click on Legislators tab and then on the key legislators mentioned above. You can pull up a list of bills they have dropped/sponsored for this session.