ASA Annual Report (2015-16) by American Subcontractors Association

ASA Annual Report 2015â&#x20AC;&#x201C;16

AMERICAN

SUBCONTRACTORS ASSOCIATION

TABLE OF CONTENTS 2015-16 ASA Board Of Directors & Staff . . . . . . . . . . . . . . . .

2015-16 ASA Committees & Task Forces . . . . . . . . . . . . . . .

Letter from 2015-16 ASA President . . . . . . . . . . . . . . . . . . . .

Letter from ASA Chief Operating Officer . . . . . . . . . . . . . . . .

Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Membership Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Communications Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Advocacy Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

2015-16 ASA BOARD OF DIRECTORS & STAFF Officers President Letitia “Tish” Haley Barker Haley-Greer, Inc. Dallas, Texas Vice President Robert Abney F.L. Crane & Sons, Inc. Southaven, Mississippi Treasurer Jeff Banker Banker Insulation Chandler, Arizona Secretary Courtney Little ACE Glass Construction Corporation Little Rock, Arkansas Immediate Past President Brian Johnson Soil Consultants, Inc. Charleston, South Carolina

Brian Cooper AROK Inc. Phoenix, Ariz. Jason File Les File Drywall, Inc. Albuquerque, New Mexico Gloria Hale Hale Glass Placentia, Calif. Vince Irwin Irwin Products St. Louis, Missouri Shannon MacArthur Marek Brothers Systems, Inc. Houston, Texas Mike McAdams Walker Engineering Irving, Texas Vince Migliazzo Mark One Electric Company Kansas City, Missouri

Directors

Russell O’Rourke Meyers, Roman, Friedberg & Lewis Cleveland, Ohio

Jim Blauch Blauch Brothers Harrisonburg, Virginia

Patricia Peterson Tindall Corporation Petersburg, Virginia

Anthony Brooks Platinum Drywall Maumelle, Arkansas

Jeff VanderLaan Kent Companies, Inc. Grand Rapids, Michigan

ASA Staff Richard Bright Chief Operating Officer Jessica Enochs Membership & Accounting Coordinator Beth Horan Director of Finance & Administration E. Colette Nelson Chief Advocacy Officer Marc Ramsey Director of Communications

2015-16 ASA COMMITTEES & TASK FORCES Standing Committees Executive Committee Chair: Letitia “Tish” Haley Barker Bylaws Committee Chair: Courtney Little Finance Committee Chair: Kerrick Whisenant Nominating Committee Chair: Brian Johnson

Standing Councils Attorneys’ Council Chair: Brian Carroll Chapter Leadership Council Chair: Mary Whitlow Executive Directors’ Council Chair: Francie Dix Rap Council Chair: Denise Mello

Task Forces Task Force on Ethics in the Construction Industry Chair: Shannon MacArthur Task Force on Meetings Chair: Tim Thomas Task Force on Membership Marketing Chair: Jon Marek Task Force on Contract Documents Chair: Brian Cubbage Task Force on the Subcontractors Legal Defense Fund Co-Chairs: Scott Holbrook and Russell O’Rourke Task Force on Government Advocacy Chair: Phil Nevlud

LETTER FROM 2015-16 ASA PRESIDENT Dear ASA Members and Friends It has been such an honor for me to have served as your president during ASA’s commemorative 50th anniversary! During this past year, our Association has taken the opportunity to reflect on our remarkable accomplishments—from our positive impact on legislative and regulatory changes to favorable judicial rulings and improvements in contract terms and conditions! Our Association has continued to collaborate with others in the construction industry, and we have published numerous documents, like the ASA Subcontract Documents Suite and Frequently Asked Questions on topics like OHSA’s rule on crystalline silica, the DOL’s proposed rule on paid leave for workers on federal contracts and subcontracts, and the transfer of casualty risks, to help our members improve their businesses. ASA could not have made such a difference in the construction world without the dedicated chapters and members who volunteer so much of their time and energy on behalf of construction subcontractors, specialty trade contractors, and suppliers. To continue our progress as we enter the next 50 years, our Association will need to depend more than ever on these same chapters and members—as well as new chapters and new members who will carry on our mission and serve as our leaders in the future. That’s why I call on each of you today to recruit construction subcontractors, specialty trade contractors, and suppliers who would benefit from joining our Association and identify individuals who may be rising leaders in our future—even if they themselves may

not recognize their leadership capabilities at the moment! Bring them into our organization. Share our knowledge and experience. Take them under your wings and cultivate the future leaders of ASA! There are so many opportunities within our Association to grow and learn, while participating in something much bigger than ourselves. Working on committees and task forces, for instance, provides tremendous value to our organization, but doing so also gives back in so many ways—from the knowledge we learn, the leadership skills we develop, and the friendships we’ll enjoy over our lifetimes. As ASA has demonstrated, collectively, we CAN make a difference in our industry. With your help, we will accomplish much more over the next 50 years and beyond! Sincerely, Letitia “Tish” Haley Barker 2015-16 ASA President

LETTER FROM ASA CHIEF OPERATING OFFICER Dear ASA Members and Friends As you will see under “Membership” in the following pages of this report, ASA has seen a 12 percent increase in company members over a three-year period ending June 30, 2016. This net growth of 230 company members has come on the heels of a major restructuring of our Association and the worst recession since the Great Depression. This growth signifies—and confirms—the value our organization provides members. In 2015-16, ASA placed significant focus on adding new programs and services of value to our members, on providing enhanced support and service to our chapters, and on adding chapters throughout the country. For example, ASA has welcomed new sponsors—including Foundation Soft, NES Rentals, and SDC & Associates—which provide significant added value to members, and ASA has expanded its ASAdvantage affinity program with new participants, including Benefit Solutions Today, Business & Legal Resources, FMI’s Compensation Interactive, BuilderPro Fleetcard by Comdata, and eMeasure. These participating companies offer big discounts and exclusive savings for ASA members. ASA is committed to providing best-in-class customer service and support to its chapters. For example, 21 ASA chapters now utilize our Direct Collect Program, and it is streamlined and approved every year. Under this program, ASA devotes its resources to the dues invoicing process. Thus, a participating chapter’s volunteers and staff are able to dedicate increased resources to making

personal contact with endangered members and to the new member recruitment process. We have also added chapter leadership training programs during our annual convention, SUBExcel, giving leaders, and up-and-coming leaders, the knowledge and resources they need to expand, or develop, their leadership skillsâ&#x20AC;&#x201D;skills they can use in their professional careers as well as in leadership roles with ASA. And, to further assist these leaders with ongoing education opportunities throughout the year, we have also added complimentary, quarterly leadership webinars. ASA has also assisted several chapters by helping to recruit new executive directors, alleviating much of the financial and human resources burden such extensive searches require. Furthermore, we are providing management and operational services to several chapters in need of such support. Finally, ASA also welcomed the return of the New Jersey Subcontractors Association, adding almost 100 new individual members to our Association. The addition of the chapter, led by Executive Director Buddy Freund, is the first of what promises to be a wave of additional new chapters throughout the country! The progress our Association has made this year, and during the previous couple of years, has been astounding, and ASA is excited to build on this momentum as we enter the next era of our promising future! Sincerely, Richard Bright ASA Chief Operating Officer

FINANCIAL REPORT

AMERICAN SUBCONTRACTORS ASSOCIATION, INC. AND ITS AFFILIATES CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORSâ&#x20AC;&#x2122; REPORT June 30, 2015 and 2014

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INDEPENDENT AUDITORS’ REPORT To the Board of Directors American Subcontractors Association, Inc. and its affiliates We have audited the accompanying consolidated financial statements of American Subcontractors Association, Inc. and its affiliates (collectively, the Organization), which comprise the consolidated statements of financial position as of June 30, 2015 and 2014, and the related consolidated statements of activities and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

__________________________________________________________

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Subcontractors Association, Inc. and its affiliates as of June 30, 2015 and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matter Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements as a whole. The supplemental information on pages 17 â&#x20AC;&#x201C; 22 is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

HAN GROUP LLC McLean, Virginia February 9, 2016

AMERICAN SUBCONTRACTORS ASSOCIATION, INC. AND ITS AFFILIATES Consolidated Statements of Financial Position June 30, 2015 and 2014 _____________________________________________________________________________________

Assets Cash and cash equivalents Accounts and other receivable Investments Prepaid expenses Property and equipment, net Total assets Liabilities and Net Assets Liabilities Accounts payable and accrued expenses Deferred membership revenue Mortgage note payable Other liabilities

2015

2014

571,931 90,490 1,478,293 36,583 163,055

606,603 63,184 1,474,447 28,197 186,869

2,340,352

2,359,300

89,449 260,741 112,430 81,312

82,017 301,112 151,037 76,568

Total liabilities

543,932

610,734

25,597

15,568

Net Assets Unrestricted Temporarily restricted Permanently restricted

1,452,042 253,564 65,217

1,393,998 273,783 65,217

Total net assets

1,770,823

1,732,998

Non-Controlling Interest

Total liabilities and net assets

See accompanying notes.

2,340,352

2,359,300

AMERICAN SUBCONTRACTORS ASSOCIATION, INC. AND ITS AFFILIATES Consolidated Statements of Activities Years Ended June 30, 2015 and 2014 _____________________________________________________________________________________

Change in Unrestricted Net Assets Revenue Membership dues Meetings, conventions, and seminars Sponsorship Investment income Contributions and fundraising FASA manuals and workshops Other revenue Net assets released from restrictions Total unrestricted revenue

2015 $

828,119 124,060 107,269 5,326 5,000 3,918 20,723 57,599

2014 $

788,586 125,853 86,366 5,564 117,329 3,548 18,393 73,521

1,152,014

1,219,160

292,323 106,646 75,926 9,763 3,257 2,503 2,288

249,834 111,430 71,068 13,008 192 6,512 2,488

Total program services

492,706

454,532

Supporting services: Management and general

591,235

614,519

Total supporting services

591,235

614,519

1,083,941

1,069,051

68,073

150,109

Expenses Program services: Chapter and member services Meetings, conventions, and seminars Government and industry relations Publications and saleable items Communication ASA-PAC expenses Education

Total expenses Change in unrestricted net assets

See accompanying notes.

AMERICAN SUBCONTRACTORS ASSOCIATION, INC. AND ITS AFFILIATES Consolidated Statements of Activities (continued) Years Ended June 30, 2015 and 2014 _____________________________________________________________________________________

2015

Change in Temporarily Restricted Net Assets Contributions Net assets released from restrictions

2014

37,380 (57,599)

55,081 (73,521)

Change in temporarily restricted net assets

(20,219)

(18,440)

Net Change in Net Assets before Non-Controlling Interest

47,854

131,669

Non-controlling interest

(10,029)

Net Change in Net Assets Net Assets, beginning of year Net Assets, end of year

See accompanying notes.

(9,445)

37,825

122,224

1,732,998

1,610,774

1,770,823

1,732,998

AMERICAN SUBCONTRACTORS ASSOCIATION, INC. AND ITS AFFILIATES Consolidated Statements of Cash Flows Years Ended June 30, 2015 and 2014 _____________________________________________________________________________________

Cash Flows from Operating Activities Change in net assets Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Net realized and unrealized gains from investments Net earnings attributable to non-controlling interests Change in operating assets and liabilities: Increase in accounts and other receivable (Increase) decrease in prepaid expenses Increase (decrease) in accounts payable and accrued expenses Decrease in deferred membership revenue Increase in other liabilities

2015 $

37,825

2014 $

122,224

23,814 (797) 10,029

27,581 (1,723) 9,445

(27,306) (8,386) 7,432 (40,371) 4,744

(943) 9,863 (23,338) (49,868) 45,725

6,984

138,966

880,000 (883,049)

842,691 (845,212)

(3,049)

(2,521)

Cash Flows from Financing Activities Principal payment on mortgage note payable

(38,607)

(37,077)

Net cash used in financing activities

(38,607)

(37,077)

Net (decrease) increase in cash and cash equivalents

(34,672)

99,368

Cash and Cash Equivalents, beginning of year

606,603

507,235

Net cash provided by operating activities Cash Flows from Investing Activities Proceeds from sales of investments Purchases of investments Net cash used in investing activities

Cash and Cash Equivalents, end of year

571,931

606,603

Supplemental Cash Flow Information Cash paid for interest

8,181

10,121

See accompanying notes.

AMERICAN SUBCONTRACTORS ASSOCIATION, INC. AND ITS AFFILIATES Notes to Consolidated Financial Statements June 30, 2015 and 2014 ____________________________________________________________________________________

Nature of Operations American Subcontractors Association, Inc. (the Association) is a not-for-profit organization incorporated under the laws of the District of Columbia. Founded as a national association by local subcontractor groups in 1966, the Association is devoted to the business issues that affect all specialty trades. Through business management education, industry liaison efforts, and government relations, the Association provides subcontractors greater control over their business destinies. Foundation of the American Subcontractors Association, Inc. (the Foundation) is related to the Association through common management and members of the Board. Its purpose is to further the education of subcontractors. The Foundation is the majority owner of a for-profit entity, A.S.A. Limited Partnership (the Partnership). The Partnership was formed for the purpose of purchasing the office building in which the Association and its affiliates (collectively, the Organization) are headquartered. The Foundationâ&#x20AC;&#x2122;s partnership interest was approximately 61% both at June 30, 2015 and 2014. The political action committee of American Subcontractors Association, Inc. (ASA-PAC) is related to the Association through common management and its purpose is to support federal candidates.

Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Association, the Foundation, the Partnership and ACA-PAC (collectively, the Organization). All significant intercompany accounts and transactions have been eliminated in the consolidation. Basis of Accounting and Presentation The accompanying consolidated financial statements of the Organization have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). Consequently, revenue is recognized when earned and expenses are recognized when the obligation is incurred. Cash and Cash Equivalents For the purpose of the consolidated financial statements, the Organization considers as cash equivalents all highly liquid investments, which can be converted into known amounts of cash and have a maturity period of ninety days or less at the time of purchase. Excluded from this definition of cash equivalents are such amounts that represent funds that have been designated by the Board of Directors for investment reserves, and amounts subject to withdrawal restrictions. 7

Summary of Significant Accounting Policies (continued) Investments Investments are reported at fair value. Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See note 5 for discussion of fair value measurements. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. All realized and unrealized gains and losses are included in investment income in the accompanying consolidated statements of activities. Accounts and Other Receivable Accounts and other receivable include membership dues and other amounts due from the members and chapters. The entire amount of accounts and other receivable is expected to be collected within one year and is recorded at net realizable value at June 30, 2015 and 2014, which approximates fair value. Management considers accounts and other receivable to be fully collectible; accordingly, no allowance for doubtful accounts is recorded. Also included in accounts and other receivable is accrued interest receivable of $1,897 and $1,755 at June 30, 2015 and 2014, respectively. Property and Equipment Property and equipment with a projected useful life exceeding one year and in excess of $2,000 are capitalized and recorded at cost. Depreciation is computed using the straight line method over the estimated useful lives of the individual assets, ranging from three to ten years for office furniture and equipment and 40 years for the building. Major renewals and betterments that extend the useful life of the building are capitalized and depreciated over the remaining life of the building. Expenditures for maintenance and repairs are expenses as incurred. Classification of Net Assets Net assets are classified as unrestricted, temporarily restricted or permanently restricted based on the existence or absence of donor-imposed restrictions.

Summary of Significant Accounting Policies (continued) Classification of Net Assets (continued) Temporarily Restricted Net Assets 

Legal Defense Fund represents the funds restricted for the advocacy of subcontractors’ rights in the courts. Investment earnings on the fund are unrestricted.



FASA Contractor’s Knowledge Quest represents the funds restricted for commissioning and funding research on issues of importance to construction subcontractors and specialty trade contractors. Interest earned on these funds is unrestricted. These funds also include contributions restricted for reverse auction and additional insured research.



FASA Subcontractors Legal Research Fund represents the funds restricted for establishing a body of authoritative research that construction attorneys can reference in cases where an academic perspective can make up for uncertain legislative and case history. Investment income earned on these funds is unrestricted.



Scholarship Fund represents the funds restricted for assisting chapter leaders and staff to take advantage of the Association leadership development and training opportunities. Investment income earned on these funds is unrestricted.



PAC Administrative Fund represents the funds restricted for administrative costs supporting ASA-PAC. Investment income earned on these funds is unrestricted.



FASA Wrap Ups represents the funds restricted for research on wrap ups.

Permanently Restricted Net Assets 

Capital Club Fund represents the funds to be held in perpetuity in support of the Organization’s legislative activities. Investment income on the corpus is temporarily restricted to fund legislative expenses.



Perpetuation Fund represents the funds to be held in perpetuity. The funds are intended as permanent reserve funds. Investment income earned on the corpus is added back to the original corpus.

Property and Equipment The Organization held the following property and equipment at June 30: 2015 Land Building and improvements Computer hardware and software Furniture and equipment

Total property and equipment Less: accumulated depreciation Property and equipment, net 7.

2014

30,000 568,532 283,480 70,051

952,063 (789,008) $

163,055

30,000 568,532 283,480 70,051 952,063 (765,194)

186,869

Mortgage Note Payable The Partnership has a mortgage note payable (the Note) to a financial institution and is secured by the land and building held by the Partnership and is guaranteed by the members of the Partnership including the Foundation. The Note bears an interest rate of 5.0% with maturity date of Febraury 12, 2018 and has a monthly payment due in the amount of $3,773. The total interest paid during the years ended June 30, 2015 and 2014 was $8,181 and $10,121, respectively. At June 30, 2015, the principal payments due on the mortgage note payable by year, and in aggregate, are as follows: Years ending June 30: 2016 2017 2018 Total

40,557 42,632 29,241

112,430

Net Assets Temporarily Restricted Net Assets Temporarily restricted net assets at June 30, 2015 and 2014 consist of the following: 2015

2014

Legal Defense Fund FASA Contractorâ&#x20AC;&#x2122;s Knowledge Quest FASA Subcontractors Legal Research Fund Scholarship Fund PAC Administrative Fund FASA Wrap Ups

92,535 91,123 52,430 12,103 4,138 1,235

121,289 91,123 47,130 8,868 4,138 1,235

Total temporarily restricted net assets

253,564

273,783

Permanently Restricted Net Assets Permanently restricted net assets at June 30, 2015 and 2014 consist of the following: 2015

2014

Capital Club Fund Perpetuation Fund

56,000 9,217

Total permanently restricted net assets

65,217

Pension Plan The Organization maintains a defined contribution 401(k) profit sharing plan (the Plan) for all employees who meet certain eligibility requirements. The Organization voluntarily contributed 4% of eligible participantsâ&#x20AC;&#x2122; compensation to the Plan for each of the years ended June 30, 2015 and 2014. Employer contributions to the Plan for the years ended June 30, 2015 and 2014 was $3,497 and $3,549, respectively.

10.

Income Taxes The Association and the Foundation are exempt from the payment of income taxes on their exempt activities under Section 501(c)(6) and 501(c)(3), respectively, of the Internal Revenue Code (the IRC). The Foundation has been classified by the Internal Revenue Service as a publicly supported organization under Section 509(a)(1) of the IRC. For the years ended June 30, 2015 and 2014, no provision for income taxes was required as there was no material unrelated business income. 15

10.

Income Taxes (continued) The Partnership files its income tax return as a partnership for federal and state income tax purposes. As such, the Partnership will not pay income taxes, as any income or loss will be included in the tax returns of the individual members including the Foundation. The Foundation’s portion of any income or loss from the Partnership is reported on its tax return as an exempt business activity. The Organization follows the authoritative guidance relating to accounting for uncertainty in income taxes included in Accounting Standards Codification Topic 740-10, Income Taxes. These provisions provide consistent guidance for the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribe a threshold of “more likely than not” for recognition and derecognition of tax positions taken or expected to be taken in a tax return. The Organization performed an evaluation of uncertain tax positions for the years ended June 30, 2015 and 2014, and determined that there were no matters that would require recognition in the consolidated financial statements or that may have any effect on its tax-exempt status. At June 30, 2015, the statute of limitations for tax years ended June 30, 2012 remains open with the U.S. federal jurisdiction or the various states and local jurisdictions in which the Organization files tax returns. It is the Organization’s policy to recognize interest and/or penalties related to uncertain tax positions, if any, in income tax expenses.

11.

Subsequent Events In preparing these consolidated financial statements, the Organization has evaluated events and transactions for potential recognition or disclosure through February 9, 2016, the date the financial statements were available to be issued. There were no subsequent events that require recognition of, or disclosure in, the financial statements.

MEMBERSHIP REPORT

Membership (by Companies)

Membership (by Chapters)

Demographics

COMMUNICATIONS REPORT

ASA in the News 1. Memphian to lead American Subcontractors Association, The Commercial Appeal, June 14, 2016. 2. Robert Abney F.L. Crane & Sons, Inc., Elected 2016-17 President of ASA, C onstruction Equipment Guide, June 13, 2016. 3. USA TODAY exclusive: Hundreds allege Donald Trump doesnâ&#x20AC;&#x2122;t pay his bills, USA TODAY NETWORK, June 9, 2016. 4. American Subcontractors Association - The Leading Voice for Construction Subcontractors, F ire Protection Contractor Magazine, June 2016, page 36. 5. ENR Specialty Contracting Today I: Meeting Challenges, Engineering News-Record, May 23, 2016. 6. Role-Playing Exercises: Another Immersive Element for Meetings, A ssociations Now, May 20, 2016. 7. Construction, Manufacturing Groups Challenge OSHA Silica Rule, E nvironmental Leader, April 29, 2016. 8. Business groups ask court to review OSHAâ&#x20AC;&#x2122;s new silica dust exposure limits, T he Business Journal, Washington Bureau, April 5, 2016. 9. Construction trade groups take first legal shot at OSHA silica rule, B usiness Insurance, April 4, 2016. 10. Construction Industry Voices Concerns With Silica Rule, RealEstateRama, March 25, 2016. 11. AWCI Members Recognized by ASA for Excellence in Ethics, AWCI News, March 9, 2016. 12. ASA publishes exclusive subcontract documents suite for its members, World Fence News, March 2016, page 38. 13. Construction Roundup: Illinois, California, Nationwide P3s, NACM eNews, Feb. 11, 2016.

14. Learn how to spot unfair lien waiver tactics with new FASA video-on-demand, World Fence News, January 2016, page 7.

15. Learn how employment regulations may affect your business with new FASA video-on-demand, World Fence News, January 2016, page 25. The Cost of Doing Business, Central Penn Business Journal, Dec. 4, 2015. 16. ASA, NASBP and SFAA Update P3 Guide, C onstruction Executive Risk Management, Nov. 30, 2015. 17. Texas Glass Contractor Tackles Toughest Projects, ENR Contractor Business Quarterly, Fall 2015. 18. American Subcontractors Association to celebrate 50th anniversary at SUBExcel 2016 in Miami, World Fence News, November 2015, page 26. 19. FASA publishes 2015 Anti-Forum Selection Clauses in the 50 States, World Fence News, November 2015, page 74. 20. Subcontractors ‘cannot be strictly liable’ for installing material that complied with specifications, ASA tells California appeals court, W orld Fence News, November 2015, page 85. 21. Those Who Are Defending Subcontractors, Industry Victories: Subcontractors Celebrate Advancements in the Field and Office, E NR Specialty Contracting Today II, September 28/ October 5, 2015. 22. Pro-Supplier Bill Supported in Congress, Faces Possible Veto, NACM eNews, Oct. 15, 2015. 23. Lien and Bond Roundup: California Installation Liability, Illinois Roofing Act, NACM eNews, Oct. 1, 2015. 24. ASA and ASA of Texas file brief in major insurance coverage court case, World Fence News, September 2015, page 3. 25. ASA and FASA offer tools and resources to help subcontractors succeed in today’s business world, World Fence News, September 2015, page 86. 26. ASA Files Brief in Major Insurance Case, Construction Equipment Guide, August 14, 2015.

27. Time for Change: Why the practice of retainage is in need of significant reform, Ohio Construction Law, August 10, 2015. 28. U.S. Appeals Court ruling in Alabama CGL case a ‘big win’ for subcontractors, W orld Fence News, August 2015, page 40. 29. Bill To Strip VA Of Construction Authority Moves Forward, U.S. Representative Mike Coffman Press Release, July 22, 2015. 30. Editor’s Corner: Interesting series of ‘videos-on-demand’ offers valuable business tips, W orld Fence News, July 2015, page 5. 31. New ASA video-on-demand explores cash flow, W orld Fence News, July 2015, page 14.

Web Site

Social Media

ADVOCACY REPORT

Subcontract Payment

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Successfully had enacted legislation to improve payment protections for subcontractors and suppliers on federal construction by prescribing the type of assets that are acceptable and requires the individual surety to deposit those assets with the federal government. The new law was part of a several-year effort that included the introduction of stand-alone bills and a provision in a broader construction procurement reform bill. Ultimately, the provision was included in the National Defense Authorization Act for 2016. The new law takes effect on Nov. 25, 2016.

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Initiated, in collaboration with AGC, an amendment concerning approval and payment of change orders on construction by the U.S. Department of Veterans Affairs.

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ASA, in collaboration with AGC, called on federal agencies to improve the usefulness of the information they collect related to change orders, in a joint letter to the FAR Council. The two associations proposed that the agencies collect data regarding the timeliness of action by the government contracting officer regarding unilateral change orders with respect to an ongoing construction project.

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Worked with the Construction Procurement Coalition to conduct a survey of contractors about their experiences with change orders on federal construction.

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Filed a “friend of the court” brief in the Appellate Court of Illinois, Second Judicial District, in the case of AUI Construction Group, LLC, vs. Louis J. Vaessen, et al. objecting to a lower court ruling that ASA said unduly erodes mechanics lien rights. ASA is still awaiting a decision.

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Filed comments with the FAR Council that would provide federal contractors and subcontractors with new tools to assure full and prompt payment, including reviewing the prime contractor’s payment history and placing such information in the Federal Awardee and Integrity Information System.

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Filed comments on a FAR Council proposal concerning subcontracting plans. ASA’s comments focused on how the rule could be modified in order to better protect subcontractor payment and bidding on federal construction.

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Joined forced with the National Association of Surety Bond Producers and The Surety and Fidelity Association of America in calling on the Federal Highway Administration to include in its proposed rule related to the construction manager/general contractor method of contracting that surety bonds be provided on projects financed through public-private partnership agreements.

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Joined SFAA and NASBP in a letter to the Federal Highway Administration contending that the U.S. Department of Transportation should include performance and payment bonds as a best practice on public-private partnerships in guides it is preparing for state and local governments.

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Contacted legislators and filed comments on issues state issues of high interest to subcontractors in states without ASA chapters. This included: ■■

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A letter to Connecticut Gov. Dannel Malloy asking him to sign retainage reform legislation. A letter to Indiana Gov. Mike Pence concerning subcontractor payment assurances in P3 legislation. A letter to key Kentucky legislators concerning subcontractor payment assurances in P3 legislation. A letter to key Minnesota legislators concerning retainage reform and suspension of work legislation. A letter to New York Governor Andrew Cuomo asking him to sign retainage reform legislation. Comments on a West Virginia proposed rule on change orders on public work, and a letter.

Risk Allocation ■■

Filed a “friend of the court” brief before the Texas Supreme Court in U.S. Metals, Inc. v. Liberty Mutual Group, a case that addressed whether contractors can depend on their commercial general liability insurance policies coverage for defective construction and installation of particular parts, products, and equipment into construction projects. The court eventually ruled that limited commercial general liability coverage for contractors and manufacturers where a defective component is incorporated into a project, resulting in no physical damage, but nevertheless having to be replaced due to failure to meet specifications or applicable industry standards.

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Filed a “friend of the court” brief with the California Supreme Court in the case of Joel Hernandezcueva vs. E.F. Brady Company, Inc., arguing that a subcontractor should not be held “strictly liable” for installing material on a project that complied with specifications which the subcontractor did not write, and which was approved by the architect. Eventually, the court ruled against the ASA position.

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Adopted a new policy to “support legislation to clarify that an ‘occurrence’ under a commercial general liability policy includes the work of a construction professional that results in property damage, including damage to the work itself or other work, is an accident unless the property damage is intended and expected by the insured.”

Human Resource Issues

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Joined forces with other construction and business associations to ask Congress to block OSHA publication and implementation of its final rule on crystalline silica.

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When OSHA filed its final rule, prepared and published materials to help ASA members prepare for enforcement, including a Fact Sheet on OSHA’s Rule on Respirable Crystalline Silica (one page) and a Frequently Asked Questions on the OSHA Standard on Respirable Crystalline Silica (five pages).

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In collaboration with a coalition of 22 other construction associations, filed a petition for review of OSHA’s final crystalline silica rule, saying the rule is “technologically and economically infeasible.” The lawsuit currently is pending in the D.C. Circuit.

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In collaboration with 24 other construction industry associations, submitted comments on the management of hazardous chemical exposures in the workplace and strategies for updating permissible exposure limits in response to a Request for Information from OSHA.

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Filed comments with the U.S. Department of Labor on its proposed rule to update the definition of exempt v. nonexempt employees under the Fair Labor Standards Act, frequently known as the DOL overtime rule.

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Published Frequently Asked Questions on DOL proposed overtime rule to help ASA members begin to understand their potential obligations and to begin to prepare for compliance.

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When DOL published its final rule, published the new ASA Special Report on the DOL Overtime Rule to help ASA members understand the impact on their businesses and prepare for compliance.

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In coalition with more than 100 other associations, called on Congress to block, modify or extend the enforcement date of DOL’s overtime rule.

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Filed comments on the DOL and the FAR Council’s proposed “Fair Pay/Safe Workplace” rules that would, among other things, require federal contractors and subcontractors to certify that they are in compliance with 14 federal labor laws and their state equivalents.

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Worked with a coalition of business associations to pursue an amendment to National Defense Authorization Act 2017 to at least partially block implementation of rules that would require prime contractors and subcontractors on federal contracts to report violations of 14 federal labor laws and their state equivalents.

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Filed a comment letter with DOL calling for sweeping changes in its proposed rule requiring federal contractors to provide their employees with up to seven days of paid sick leave annually, including paid leave allowing for family care.

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Submitted comments to OSHA concerning a proposed update to its voluntary “Safety and Health Program Management Guidelines.” OSHA eventually announced that it would publish a separate document for construction.

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Provided comments to OSHA concerning a draft document intended to help employers develop a program to protect employees from retaliation when they raise concerns about workplace conditions or activities that could harm workers or members of the public.

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Filed comments on OSHA’s proposed rule concerning an employer’s continuing obligation to make and maintain an accurate record of each recordable injury and illness throughout the five-year period during which the employer is required to keep the records.

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Repeatedly asked OSHA to delay enforcement of its rule on confined spaces in construction, until the agency issued additional guidance.

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Filed comments with the Equal Employment Opportunity Commission on a proposed revision to the Employer Information Report (EEO-1) to include pay data from employers with more than 100 employees beginning with the September 2017 report. EEO-1 data provides the federal government with workforce profiles from private sector employers by race, ethnicity, sex and job category.

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When the Office of Federal Contract Compliance Programs published a final rule updates its sex discrimination rule for the first time in 40 years, published OFCCP Rule on Sex Discrimination: Frequently Asked Questions to help ASA members comply.

Federal Acquisition ■■

Worked with the ASA/AGC-founded Construction Procurement Coalition to have bills introduced that would require federal agencies to use an existing standard in the Miller Act to make sure that performance and payment bonds issued by an individual surety are backed by assets that are real, adequate, and readily available; prohibit federal agencies from using reverse auctions for awarding contracts for federal construction and design services; and encourage more efficient use of the design-build method on federal construction by requiring that the first step in the acquisition process is qualifications based followed by a second step that is price based

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Filed comments with the FAR Council on a proposed rule to eliminate references to DUNS and provide appropriate references to the Web site where information on the unique entity identifier used for federal contractors will be located.

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Filed comments with the SBA on a proposed rule intended to allow an other than small prime contractor that has an individual subcontracting plan for a contract to receive credit toward its small business subcontracting goals for subcontract awards made to small business concerns at any tier.

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Filed comments on the FAR Council’s proposed rule to revise its standard surety bond forms that prime contractors are required to use on federal construction projects.

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Filed comments with the SBA supporting the agency’s proposed rule to simplify guidelines for determining affiliation for eligibility based on size for its Surety Bond Guarantee Program and four loan programs.

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Filed comments with the FAR Council on a proposed rule that that would prohibit a federal agency from contracting with an entity that requires employees or subcontractors to sign an internal confidentiality agreement that restricts such employees or subcontractors from lawfully reporting waste, fraud or abuse to the federal government.

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Filed comments with the FAR Council on an interim rule that would prohibit the federal government from entering into a contract with any corporation having a delinquent federal tax liability or a felony conviction under any federal law.

Economic and Tax Issues

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As part of a business-wide coalition, successfully lobbied to make permanent the reduction in S-corporation recognition period for built-in gains tax; the modification of employer wage credit for employees who are active duty members of the uniformed services; a 15-year straight-line cost recovery for qualified household improvements, qualified restaurant buildings and improvements and qualified retail improvements; and the extension of permanent extension and modification of research credits.

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Worked with a coalition of other construction associations to modify or repeal the so-called “Cadillac tax” under the ACA. Congress posted the effective date to 2020, which will reduce the pressure on employers to make changes now to their benefit plans to give ASA and other business, as well as organized labor organizations, additional time to repeal the tax.

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Prepared and published a special report on the new law making permanent numerous tax provisions that impact construction firms.

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In coordination with other construction associations, successfully lobbied Congress for a long-term authorization of funding for the nation’s transportation program.

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Worked with a business coalition to amend the Affordable Care Act to allow states the option to maintain the current definition of a small group market as an employer with 50 or fewer employees. President Obama signed the law on Oct. 8, 2015.

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ASA joined other associations in calling on Congress to enact legislation to allow small businesses with fewer than 50 employees to offer employer payment plans and HRAs to employees for the payment of premiums or qualified medical expenses

associated with insurance coverage without facing fines. The House has approved the legislation, which is now awaiting a Senate vote. ■■

As part of a coalition of more than 100 other associations, offered three principles to help guide Congress’ consideration of tax reform. Continued to work with the Congressional committees of jurisdiction to create an outline for future tax reform.

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Confirmed its long-standing policy in support of the authorization for a White House Conference Small Business. Worked with a coalition of more than a dozen associations representing principally small businesses to seek legislation authorizing such a conference.

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Joined forces with other business associations to support legislation to modernize the Administrative Procedures Act, the law that governs how federal agencies develop and publish regulations.

General ■■

Continued to monitor federal and state legislative and regulatory activities that impact subcontractors. Alerted members and chapters to trends and opportunities for action.

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Prepared and published A Guide to Establishing and Maintaining a Government Advocacy Program in Your ASA Chapter. The 32-page guide addresses a myriad of topics, including working with advocacy volunteers, preparing the sales tools for a government advocacy issue, developing a grassroots program, identifying and joining coalitions, building relationships with policymakers and taking political action.

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Involved ASA members in the association’s public policy activities through the meetings of the Task Force on Government Advocacy and the Task Force on the Subcontractors Legal Defense Fund.

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Hosted a South Beach Culinary Tour as a fundraiser for the ASA-PAC, in conjunction with SUBExcel 2016.

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Published “Questions for Candidates for State Office 2016” and “Questions for Candidates for Federal Office 2016,” designed to give ASA members a tool to educate candidates about subcontractor issues.

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Helped ASA members learn about the conflicting pressures on legislators, through a workshop titled “The Race for Re-Election,” during SUBExcel 2016.

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Continued to represent construction subcontractors on the board of directors of the Small Business Legislative Council, including serving as chair of an SBLC task force on federal regulations.

Industry Advocacy and Contract Documents ■■

Updated ASA’s model contract documents and published them in a consolidated ASA Subcontract Documents Suite 2016. This suite includes: ■■

ASA Subcontractor Bid Proposal

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ASA Wrap-up Insurance Bid Conditions

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ASA Subcontract Addendum

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ASA Wrap-up Insurance Subcontract Conditions

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ASA Short-Form Subcontract Addendum

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Prepared and published a new white paper, Contract Changes and Claims: Contractual and Legal Basis of Entitlement to Subcontract Adjustment, to help educate subcontractors about how to obtain full adjustment for the impact of changes and changed conditions. The topics addressed by the white paper include directed changes: adjustment under contract provisions, constructive changes, response to disputes, entitlement from outside the contract documents, and special considerations regarding delay and disruption.

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Introduced a new addition to its 50-state law review by publishing 2015 Anti-Forum Selection Clauses in the 50 States (2015),” to help subcontractors understand how forum-selection clauses are treated in the 50 states and the District of Columbia.

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In collaboration with NASBP and SFAA, updated and published, “Public-Private Partnership Laws in the States, including Surety Bond Requirements” (2015 Edition), will help subcontractors determine whether they have payment protections before they bid on a P3 project. “

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Updated and published Retainage Laws in the 50 States 2016 summarizes retainage laws in the states and the District of Columbia. Each state entry reviews critical factors in retainage laws for public and private work, including the rate permitted, release milestones and any options to provide alternative securities in lieu of retainage.

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Updated and published Lien and Bond Claims in the 50 States, which provides a summary of the basic requirements of each state’s lien and bond laws, including who is covered; critical deadlines for notices, claims and suits; filing procedures; and more.

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Introduced a new Frequently Asked Questions that reviews the type of contingent payment clauses a subcontractor is likely to encounter and provides general guidelines on how to deal with them.

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Introduced a new Frequently Asked Question that Subcontractors Report that reviews the casualty risk transfer clauses that a subcontractor is likely to encounter and to show the way out of the risk transfer dilemma: Accept the risk or lose the work.

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Involved ASA members in the association’s program to engage in the development of equitable model subcontract documents and to educate subcontractors and other members of the construction team about equitable risk allocation through the meetings of the Task Force on Contract Documents and the Attorneys’ Council.

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Represented the subcontractor perspective on a panel concerning payment on public-private partnerships at P3 Connect, a conference sponsored by the National Conference for PublicPrivate Partnerships.

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Conducted a telephone workshop for Division 7 (Insurance and Surety) of the Construction Forum of the American Bar Association concerning subcontractor payment assurances on public-private partnerships.

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Made a presentation to Division 9 (Subcontractors) of the Construction forum of the ABA concerning legislative and regulatory trends impacting construction subcontractors.

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Solicited nominations for and prepared and published articles concerning ASA’s Subcontractors Are Prey (SAP) Awards, tongue-in-cheek awards recognize achievements in the use of predatory contract language in the construction industry

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Continued to represent ASA and subcontractor interests on the National Construction Dispute Resolution Board of the American Arbitration Association.

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Continued to represent ASA on the advisory council of American Jobs for American Heroes, a nonprofit entity seeking to place veterans in private sector jobs. AJAH published two reference guides, one for large employers and one for smaller employers, to help them establish procedures for hiring veterans. In addition, ASA worked with AJAH to conduct a nationwide survey on employers’ obstacles to hiring of veterans.

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Continued to publish in ASAToday a series of weekly articles on contract changes and claims providing tips for the management of changes and changed conditions and how to realize full adjustment to the contract price or contract time. The articles are designed to be assembled into a series of white papers as certain themes are covered.

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Initiated a series of weekly contract and management education articles in ASAToday.

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Conducted a series of workshops for members of the Door and Hard Institute on key subcontractor issues, including contingent payment, retainage and improving cash flow.

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Met with the AGC officers to discuss top industry and public policy issues, including workforce development, ConsensusDocs, federal procurement reform including change orders, challenges with owner payment to prime contractors, OSHA’s rule on crystalline silica, Web-based project management systems, LEAN construction and building information modeling.

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Continued to play a leadership role in ConsensusDocs, a coalition of more than 40 construction associations, committed to incorporate best practices and fairly allocate risk to help reduce costly contingencies and adversarial negotiations in the construction environment. ConsensusDocs published three new documents: Form 842 Owner and Energy Consultant Agreement; Form 300, Standard Multi-Party Integrated Project Delivery Agreement; and the related Form 396, Joining Agreement for Integrated Project Delivery. In addition, ConsensusDocs updated the Form 301, Building Information Modeling Addendum. During 2015, ASA CAO served as chair of the ConsensusDocs Business Management Advisory Council.

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Continued to represent construction subcontractors on the board of directors of the American Institute of Constructors Constructor Certification Commission.

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Represented construction subcontractors on a job task analysis task force that will help to determine the requirements for the Certificated Construction Manager (CCM) certification examination for the next five years for the Construction Management Association of America.

AMERICAN

SUBCONTRACTORS ASSOCIATION

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