Congressional Action in Fall 2021 - What You Need to Know

What's completed: 

Budget Resolution – House and Senate passed. This is the blueprint for the fiscal year and Presidential signature is not required. Important action: Set spending targets for appropriators to do their work.  Required authorizing Committees to report suggested program changes by September 15. 

What’s half completed: 

Infrastructure – Passed by Senate by a wide margin. Needs House action. 

FY22 Appropriations – House has completed 9 of 12 of the bills. Senate has passed 0. A likely scenario is that spending bills will be combined into groups (called minibuses) or one gigantic bill known as the Omnibus appropriations bill. 

What’s not completed: 

Budget Reconciliation– A special bill which can be used once a year to overcome filibusters and requires only a majority vote. It is limited to spending and tax provisions rather than policy only. This bill is the one to watch. Look for many program and tax changes, reflecting the Democratic majority’s priorities. 

Raising the Debt Ceiling- Secretary Yellen warned Congress that the debt ceiling needs be raised in October. Delays have negative consequences for the economy, including consumer confidence. Failure to raise it can result in a default on US fiscal obligations. See her letter to Speaker Pelosi here.

Continuing Resolution- Since appropriations for FY22 are unlikely to be completed by the beginning of the fiscal year (October 1), a continuing resolution must be passed to keep the government operating until the 12 appropriations bills are passed and sent to the President. If a continuing resolution is not passed by October 1, expect a government shutdown. 

National Defense Authorization Act (NDAA) – This annual “must pass” bill determines defense spending for the Fiscal Year. It contains new initiatives, changes in programs and direction for the distribution of funding. The House and Senate will consider this bill when returning to Congress in September. 

How to Follow These Actions 

Federal contracts and grants depend on appropriations levels and program changes that Congress. The timetable for grants are also affected by delays in funding. And, on a personal note, the stock market is responsive to Congressional actions. If you are a client of Madison Services Group, we send out a daily communication, Today in Washington, that follows major bills like those listed above. In addition, you should familiarize yourself with Congressional websites such as appropriations.house.gov, and Congress.gov. Knowledge is power. Get ahead of your competition by tracking Congress and the programs that provide revenue to your business. 

MSGI Congressional Hearing Recap - House Small Business Committee Hearing “Utilization of Small Contractors in the Infrastructure Plan”

 

MSGI Congressional Hearing Recap

Committee: House Small Business Committee, Subcommittee on Contracting and Infrastructure

Hearing Title: “Utilization of Small Contractors in the Infrastructure Plan”

Subcommittee Chair: Representative Kweisi Mfume (D-MD)

Ranking Member: Representative Maria Salazar (R-FL)

Date: June 10, 2021

Witnesses

Ms. Sheila Ohrenberg

National President, Women Construction Owners and Executives (WCOE)

President, Sorella Group

Testimony

Mr. Ralph Thomas III

Executive Director Emeritus, National Association of Minority Contractors (NAMC)

Attorney, Law Offices of Ralph C. Thomas III PLLC

Testimony

Mr. Josh Bone

Executive Director

ELECTRI International

Testimony

Dr. Annie Mecias-Murphy

Co-Owner & President

JA&M Developing Corp.

Testimony

Main Issues Discussed

Participation of Minority-Owned and Women-Owned Small Businesses 

• Chair Mfume (D-MD) Questions:
• Mr. Thomas, please detail your experience with Amtrak.
• Response: We were working through the Department of Transportation’s (DOT) DBE program on the project.  We performed within budget and on time, the goal was 15% actual action was 17%. The excuse of “we can't find minority businesses” no longer and should never apply.
• Mr. Boon, do recruitment strategies change based on the segment of the population you are trying to attract? How can we attract women and minorities more effectively?
• Response: We must use different methods. Women bring a lot of new skill sets, there are a lot of misconceptions that construction is male driven. We need to educate young girls that this industry is changing, such as shifting to off-site construction and is increasingly driven by technology.
• Mr. Thomas, what are the biggest obstacles that need to be addressed in the infrastructure bill to reach minorities?
• Response: We need a stronger approach to compliance and enforcement. The DOT has a 10% contracting goal for disadvantaged small businesses. However, 23/50 states do not comply or hit this goal, they ask for waivers. Organizations should be funded for the purpose of identifying small, disadvantaged contractors, since many people are unaware.  If Sole source threshold was higher, it would create more opportunities, smaller companies would like this.

Timely Payment to Contractors 

• Ranking Member Salazar (R-FL) Question: 
• Mr. Boon, I am concerned about delays in payments to subcontractors. Can you expand on your suggestion on getting paid on time?
• Response: Capital is king, small businesses have limited funds. When you are a subcontractor of a subcontractor of a subcontractor, it takes a long time to get money. I suggest expanded opportunities for these businesses to work directly with the large companies.
• Response from Dr. Macias-Murphy: Paid when paid clause, can be 60, 90, 120 days – very detrimental to small businesses who don’t have large reserves of money. Prompt payment is a theory rather than a reality. 
• Ranking Member Salazar (R-FL) Question: 
• Mr. Boon, how can Congress help? 
• Response: The paperwork, the bureaucratic part is the problematic – there needs to be a quicker way of going through the leaps and hurdles.

Project Labor Agreements (PLAs), the PRO Act, Unions

• Ranking Member Salazar (R-FL) Question: 
• Dr. Mecias- Murphy, explain the issue of favoring unionized workers over non-unionized workers. What would this look like?
• Response: It would completely take us out from being able to bid on these projects. 80% of the workforce is not part of a union, we would not qualify. 
• Chair Mfume (D-MD) Question: 
• Mr. Boon, can you talk about the importance of unions?
• Response: Electri is not affiliated with unions, but National Electrical Contractors Association (NECA) has no issues - we haven’t seen strikes. 
• Representative Meuser (R-PA) Question: 
• I am favorable to trades. Unions have great apprenticeship programs. However, PLAs are not inclusionary. This is the reason companies have issues with them. The PRO Act removes state rights, states should be able to determine such things on their own. Dr. Mecias-Murphy, how would the PRO Act effect your business?
• Response: The increase in taxes would be harmful. It would impact us financially in a huge way. There was a 3–4-month delay of projects during COVID, we went 4-6 months with no new projects. 
• Representative Newman (D-IL) Question: 
• More than 80% of the time when there is a PLA in place it is beneficial. PLAs require a very specific payment chronology on top of the federal law. PLAs don’t exclude non-unions; they just protect unions and promote safety. Dr. Mecias-Murphy, what are the top 3 things that frustrate you about PLAs?
• Response: First, PLA’s restrict businesses like a “merit-based company” if the certain provisions in the PLA aren’t in place. Second, is the issue of protesting. I will be the one who had to deal with the strikes from labor unions. Third, the increased cost for having unions on the jobs, I have seen this in Florida.

Tax Increases in the American Jobs Plan

• Ranking Member Salazar (R-FL) Question: 
• Dr. Mecias-Murphy, how did the Tax Cuts and Jobs Act help you?
• Response: We experienced a lot of cash flow; my employee was able to purchase their first home.

Labor Shortage & Workforce Development

• Representative Newman (D-IL) Question: 
• Mr. Thomas, can you share what would be helpful to you with workforce training and development?
• Response: We were happy to see more funds for workforce development projected in the American Jobs Plan, but the focus must be on diversity. There hasn’t been a move towards workforce development in DOT since 2017.
• Representative Hagedorn (R-MN) Question: 
• Labor shortage is a huge problem. We must encourage our Governors to forgo extra unemployment benefits – people need to be pushed into the workforce. I have introduced H.R. 2691, a bill that would permit 529 plans (tax advantage savings plan for saving for future education costs) to be used for certain non-degree technical training certificate programs and apprenticeship programs. Dr. Mecias -Murphy, how have you encouraged workforce development?
• Response: We have been able to go into Boys and Girls clubs and expose the students to our industry. We have seen that working with middle and high school students is very important, it exposes students to the future of work. From this effort, close to 40 students have been hired by one of our member companies.

Organizational Protesting

• Representative Stauber (R-MN) Question: 
• Currently there is a pipeline replacement project in Minnesota. This project will supply jobs for small contractors and should be celebrated. However, Democrats are bussing in protestors from large cities and disrupting the process. Dr. Mecias-Murphy, what are the dangers of protestors showing up? What would this do to your small businesses?
• Response: Safety is important to us. People don’t realize that a day of delay can be catastrophic. It can delay you two or four weeks sometimes. It also disrupts cash flow for small businesses -workers cannot go into work, then they cannot get paid. The Biden Administration has cancelled Keystone Pipeline project, ruining many small business contracting opportunities.

COVID-19 Fatigue – What About All the Other Issues

By Ann Sullivan

WIPP Works in Washington June 2020

The newness of COVID-19 has worn off and, although little attention has been paid to other issues Congress must address, they haven’t gone away. Although congressional staff and Members are working remotely, business is still being conducted. I would be remiss if I did not mention the potential for social justice reform, due to protests over the weekend. However, there has been no federal action as of this writing. Here’s what to expect:

Funding the Government for FY21.The government calendar for funding has not changed. The fiscal year still ends on September 30 and Congress must pass appropriations legislation to continue to fund the government. Although the schedule has been pushed back due to the pandemic, House leadership says it plans to pass all of its appropriations bills by August. As usual, the Senate schedule is less ambitious, but the Senate Appropriations Committee plans to start deliberations in late June. 

Authorizing Defense Department Programs. The National Defense Authorization Act (NDAA) guides every defense program and sets priorities for the following fiscal year. It doesn’t fund the programs—it leaves that to the appropriators but authorizes and recommends the funding levels. Often Included in this bill are changes to small business contracting programs that are deemed important to the defense supplier base. The Senate Armed Services Committee expects to have completed its bill by the end of June/early July. The House Armed Services Committee schedule follows roughly the same timeline.

Infrastructure Funding. In addition to roads, trains and ships, water infrastructure is also on the list to fund and authorize. Although it was initially thought to be a massive recovery initiative, it now appears the Congress may tackle this piece by piece. Either way, a number of the programs expire unless Congress takes action by September 30. 

Tax Extenders. Tax deductions and credits have expiration dates. Unless Congress extends them, they expire. Action is necessary to keep them intact and the list of expiring tax cuts since 2018 is pretty long. The Joint Tax Committee publishes the list here.

Although COVID-19 related actions will continue to be front and center for the Congress, it cannot neglect its other duties. Let’s not forget that there is an election coming in November which includes the entire House of Representatives, 1/3 of the Senate and the Presidency. The Congress, adapting to the ban of large group gatherings, will spend a significant amount of time campaigning for the November elections. In the end, the government still needs to be funded, the need for a strong defense and services taxpayers expect from their government do not go away in a pandemic. Despite the public disheartening partisan rhetoric, the Congress will quietly work together to get things done.  

Stopping An “Extinction-Level Event” for Small Businesses

By MSGI Policy Analyst Andrew Lautz

Two hearings on Capitol Hill this week focused on what one expert called “extinction-level events” for small businesses: cyberattacks. Congress is looking to get aggressive in helping small employers and entrepreneurs both respond to and defend against online breaches. Senators and Representatives introduced no less than 4 small business cybersecurity bills in the last 7 days alone.

The House Small Business Committee’s hearing covered online issues at large, but witnesses and Members ended up spending a large part of their time looking for ways to help mitigate the devastating impact of cyberattacks.

Why so much time on just this one aspect of digital entrepreneurship? Consider these takeaways from the hearing:

• Entrepreneurs generally don’t have dedicated information technology (IT) or cybersecurity staff
• The cost and time burden of becoming cyber-secure is often too high for smaller businesses

The Senate, for its part, devoted its entire hearing to cybersecurity. Witnesses from the Small Business Administration (SBA) and the National Institute of Standards and Technology (NIST) discussed ways they’re looking to prepare entrepreneurs and small contractors for 21st-century online threats. Private-sector witnesses challenged Congress to ensure their cybersecurity efforts don’t also impose new burdens on small business owners and staff.

More important than the hearings is what Congress does next. The top-ranking Members of both the House and Senate Small Business Committees are supporting bills that could help.

• Senate Chair Marco Rubio (R-FL), Senator Jeanne Shaheen (D-NH), House Chair Nydia Velazquez (D-NY), and House Ranking Member Steve Chabot (R-OH) have proposed bills that would increase small business access to cyber training through SBA’s Small Business Development Centers
• House Chair Velazquez and Ranking Member Chabot also support legislation that would enhance the ability of small businesses to communicate with the Federal government about cybersecurity and cyberattacks

These bills are worth watching, especially given the importance assigned to cybersecurity at this week’s hearings. As one witness put it, they may make the difference between survival and extinction for small businesses. 

The 1 Glaring Question in Every Congressional Hearing on Infrastructure

By MSGI Policy Analyst Andrew Lautz

There were no less than three hearings on Capitol Hill last week concerning the great white whale of this era, for Congress and the White House: an infrastructure bill. These were not the first hearings of the 116th Congress on infrastructure either. Numerous Committees have spent hours discussing how to invest the trillions of dollars needed to update the nation’s roads, highways, bridges, and tunnels. 

This week’s hearings were held by Committees with different focus areas, underscoring just how many aspects of the American economy would be impacted by an infrastructure package:

1. The House Small Business Committee held a hearing on how to include small businesses and contractors in an infrastructure bill
2. The Senate Environment and Public Works Committee considered how to balance the need for fast permitting of Federal projects with the need to protect the environment
3. It was the House Ways and Means Committee, though, that pondered the central question hanging over these and all other infrastructure hearings: how to pay for it?

There is still quite a gap between Republican and Democratic Congressional leaders over just how to pay for an infrastructure bill that could cost over $1 trillion, without putting more debt on the nation’s credit card.

Republicans, who control the Senate and White House, are wary of proposals to increase the Federal gas tax. House Transportation Committee Ranking Member Sam Graves (R-MO) is proposing a new kind of tax, on Vehicle Miles Travelled (VMT). Graves has yet to get his party on board, though, and there are privacy concerns about how to actually track and collect a VMT tax.

Some prominent Democrats, like House Transportation Committee Chair Peter DeFazio (D-OR), are behind a gas tax hike, but he doesn’t have consensus in his party either. Ways and Means Committee Chair Richard Neal (D-MA) has not committed to any one idea to raise money for an infrastructure bill, but where he falls on the issue could end up being a major signal to other House Democrats.

It seems that President Trump, the Republican-led Senate, and the Democratic-led House all agree that infrastructure spending is a necessity, not an option, for the 116th Congress. Until a consensus develops on how to pay for infrastructure, though, there will be more questions about what emerges from this Congress than answers.