General Assembly Update March 14, 2022

General Assembly Updates,

We are near the end of the 2022 General Assembly Session. Most Committee work is complete and the focus is on the state budget.

Last week there were several issues of interest:

  • PLA Guidelines HB1091 – This bill heard in the Commerce & Labor Committee late Monday afternoon. The 2020 Legislature cleared the way for use of PLA’s on public construction projects and can be used by state or localities at any time. While no government agency has since attempted to mandate a PLA onto a project, we know out-of-state labor unions are now pushing for the work. The purpose of the PLA guidelines is to model 7 other states (AK, MA, MN, NV, OH, PA and RI) where courts in those states held PLA’s to be valid as long as the state agency has concluded that a PLA is necessary for the timely and cost-efficient completion of the project and is consistent with the principles of underlying the state’s procurement code. Without the establishment of guidelines, PLA’s are discriminatory and implemented in an arbitrary and capricious manner and is not in line with public policy. As VTCA discussed the merits of the bill, even President Joe Biden issued his Executive Order on PLA’s on federal projects with guidelines very similar to our own proposal. At the end of the night, Chairman Dick Saslaw led the Democrats on the committee to oppose guidelines on PLA’s and the bill died on party line vote of 12-3.
  • Term Contracts for Engineers HB427 – With a slight change added by VDOT to not take effect until after July 1, 2022, this bill provides that the sum of all projects performed in an architectural and professional engineering contract term shall not exceed $10 million and allows a contract for multiple architectural or professional engineering projects to be renewable for up to three additional terms at the option of the public body for a maximum term of four years.
  • Pay if Paid SB550 – VTCA did not take a position on this bill since it did not include state agencies, yet it impacted many firms (primes and subs). This would require contracts awarded by a non-public owner to include a payment clause that obligates the contractors to be individually liable for the entire amount owed to any subcontractor with which it contracts. Payment by the party contracting with the contractor shall not be a condition precedent to payment to any lower-tier subcontractor.

    “Owner” means a person or entity, other than a public body as defined in § 2.2-4301, responsible for contracting with a general contractor for the procurement of construction services. 

    In any construction contract between an owner and a general contractor, the parties shall include a provision that requires the owner to pay such general contractor within 45 days of the receipt of an invoice following satisfactory completion of the portion of the work for which the general contractor has invoiced. An owner shall not be required to pay amounts invoiced that are subject to withholding pursuant to the contract for the general contractor’s noncompliance with the terms of the contract. However, in the event that an owner withholds all or part of the amount invoiced by the general contractor under the contract, the owner shall notify the general contractor, in writing, of his intention to withhold all or a part of the general contractor’s payment with the reason for nonpayment, specifically identifying the contractual noncompliance, the payment amount being withheld, and the lower-tier subcontractor responsible for the contractual noncompliance. Failure of an owner to make timely payment as provided in this subsection shall result in interest penalties consistent with § 2.2-4355.

    The Department of General Services will review this legislation next year to determine what if any adjustments need to be made. We will watch this legislation and the impacts carefully.

The remainder of this week will focus on Judicial interview and a final state budget. It is clear the legislature has no stomach to address the revenue loss from elimination of Governor Youngkins’ signature campaign effort to eliminate the Grocery Tax. This will equate to about an $800 million loss to every six-year finance plan going forward. VTCA is working to ensure the Commonwealth Transportation Board continues to look for alternative revenue sources to fill this $800 million hole every six years.

Next week, we will send you a full write up of all the issues impacting transportation construction from the 2022 Legislative Session.