Federal Legislative and Regulatory Overview

Federal Legislative and Regulatory Overview AGC of Washington November 1, 2017 Jordan Howard Director of Federal & Heavy Construction Associated General Contractors of America

No. 5, 1948 by Jackson Pollock Sold: $140 million Taken from Art Market Watch.com

Spin Art by Jordan Howard Sold: Not Yet

Broad Overview of D.C. Enviroment Trump is shaking things up without developing a clear plan. Spin Art Politics The regulatory machine is being retooled. Agencies are generally in listen mode. Congress has rolled back regulations. Ex: Volks and Blacklisting regulations.

Being run like a family owned small business Autocratic style of leader Family members with no accountability; internal criticism discouraged. No coordinated messaging Unconventional candidate is unconventional President Resulting in.. Sending conflicting messages/undermining credibility Ex: FBI firing; tweets on travel ban Making GOP Congressmen wary of being abandoned Ex: House healthcare bill is mean Risk putting House of Representatives in play for Democrats GOP holding 23 seats in congressional districts Clinton won Democrats only need 24 for control

AGC of America Advocacy Goals for 2017 Convince agencies to revise and/or retract regulations & Executive Orders or convince Congress to block them. Based on timeliness, achievability, and impact on industry: Comprehensive Tax Reform Increase Infrastructure Investment Environmental Streamlining Addressing Workforce Shortage

Policy Issues for 2017-2018 Top priority issues: Comprehensive Tax Reform Infrastructure Investment Environmental Permitting Reform Workforce Prior Approval for PAC Other issues: Civilian BRAC Composite Plans Contractor Blacklisting Paid Sick Leave EO Procurement Reform Project Labor Agreements Regulatory Reform Silica

Advocacy Challenges Thin Republican majorities Freedom Caucus U.S. system built to force compromise Checks and balances Senate filibuster requires 60 votes. Polarization on left and right makes compromise difficult. Lack of delegation from President Trump Trump reviews applicants for 3 rd tier employees. Only 30% of confirmable posts nominated.

Tracking how many key positions Trump has filled

Congressional Calendar House in session Senate in session Both Chambers in session Holiday November December 1 2 3 4 1 2 5 6 7 8 9 10 11 3 4 5 6 7 8 9 12 13 14 15 16 17 18 10 11 12 13 14 15 16 19 20 21 22 23 24 25 17 18 19 20 21 22 23 26 27 28 29 30 24 25 26 27 28 29 30 31 11/7 Virginia Election Day: Governor Continue Debate: Tax Reform Infrastructure 12/8 Government Funding Expires Flood Insurance Expires 12/12 Alabama Senate Election End of the Year Tax Reform

Tax Reform

Effective Tax Rates by Industry 35% 30% 25% 20% 15% 10% 5% 0% 23.3% 30.3% Source: Department of Treasury

Key Players in Tax Reform HOUSE OF REPRESENTATIVES SENATE ADMINISTRATION Speaker Paul Ryan Majority Leader Mitch McConnell National Economic Council Gary Cohn President Donald Trump Ways & Means Kevin Brady Finance Orrin Hatch Treasury Steven Mnuchin

Key Players in Tax Reform House Committee on Ways and Means U.S. House of Representatives 30 159 50 17 106 70 Freedom Caucus Republicans Tuesday Group Progressive Caucus Democrats Blue Dog Coalition Senate Committee on Finance U.S. Senate Republicans 46 52 Democrats Independents 46-2-52

AGC Priorities for Tax Reform Reduce tax rates for corporations and pass-through businesses Simplify the tax code Repeal the Alternative Minimum Tax Raise the small contractor exemption Increase the availability of cash accounting Eliminate look-back rules for long-term contracts Promote infrastructure investment in the tax code Maintain tax-exempt status of municipal bonds

Infrastructure Investment & Tax Reform? AGC is pushing to link tax reform and infrastructure investment; Infrastructure enjoys broad bipartisan support and could help move tax reform through Congress Multiple letters with bipartisan support; infrastructure bills pass overwhelmingly Combining tax reform and infrastructure investment is a win for the economy A dollar invested in infrastructure provides greater economic output than tax cuts Tax reform and infrastructure investment are already connected Our nation s infrastructure needs are well documented

Infrastructure Investment Surface Transportation Current Funding $941 B Solutions Gap Total Needs: AGC Solutions $1.1 T $2.042 T $545 to 613B Highway Trust Fund: Increasing the gas tax by 20 cents would raise $340 billion over 10 years. Private Activity Bonds (PABs): Increasing the volume cap for transportation PABs by $5 billion would result in an additional $19 billion in investment. Dedicate Partial Revenue from Repatriation to Surface Transportation $125 billion Dedicate 15% of Customs Revenue to Infrastructure Investment $58.3 billion $100 Annual Registration Fee on Electric Cars, $50 on Hybrid Electric $2.971 billion One Cent Car and Four Cent Truck Vehicle Mile Traveled Fee $408 billion

Reform Environmental Permitting AGC message: Performing sequential and duplicative environmental reviews after the NEPA Record of Decision results in massive schedule, budget, and legal hurdles Merge the NEPA review process and the Clean Water Act Section 404 permitting process A reasonable and measured approach to citizen suit reform could prevent misuse of environmental laws

Reprisals Against Bidders on Border Wall 23 state and local jurisdictions considering penalties. Ban on future contracts Divest in state pensions Concerned similar contractor discrimination on future federal construction projects. Examples: military bases, pipelines, healthcare clinics, etc. Seeking federal preemption.

Fighting Regulations AGC of America is tracking over 30 different regulations and pushing back through comprehensive comments, agency meetings, congressional oversight and litigation in some cases. Some of the most significant regulations include: Safety Silica Drug Testing Volks Rule Labor Relations Persuader Rule Quickie Elections Joint Employer Employment Practices EEO-1 Forms Overtime Affirmative Action Environment WOTUS Permit Streamlining Tax Death Tax Technology Drones Transportation Local Hire Greenhouse Gas Measurement Hours of Service Electronic Logging Devices Federal Contractors Blacklisting Project Labor Agreements Paid Sick Leave Cybersecurity Requirements

Source: Project On Government Oversight

Important Regulations for Federal Contractors 1. OSHA Silica Standards Webinar: Available now 2. Paid Sick Leave Webinar: November 8 th at 2-3pm 3. Cybersecurity Requirements Webinar: November 9 th at 2-3pm

Silica October 23, 2017, the U.S. Occupational Safety and Health Administration (OSHA) began full enforcement of its respirable crystalline standard for construction. The standard has established a new exposure limit of 50 micrograms of respirable crystalline silica per cubic meter of air as an 8-hour Time- Weighted Average (TWA) Along with a host of ancillary provisions such as establishing a written exposure control plan, housekeeping requirements, record-keeping, and medical surveillance. This is arguably one of the most complex standards the construction industry has faced. Washington is one of the 26 states that operate under OSHA state-plans.

Paid Sick Leave Paid Sick Leave under Executive Order 13706 (signed by President Obama on September 7, 2015) Requires 1 hour of PSL for every 30 hours worked with annual accrual of up to 56 hours. Became effective for certain types of contracts, and subcontracts from solicitations issued, or contracts awarded outside the solicitation process, on or after January 1, 2017. Current contracts may be amended by contracting agency through bilateral modification for renewal, option or extension.

4 Major Categories of Covered Contracts The federal contractor paid sick leave requirements apply to the following types of contracts, and subcontracts: 1. Procurement contracts for construction covered by the Davis-Bacon Act; 2. Service contracts covered by the Service Contract Act (SCA); 3. Concession contracts, including any concessions contract excluded from the SCA by DOL s regulations at 29 CFR 4.133(b); 4. Contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public (this includes leases).

Who Gets Paid Sick Leave? Any worker who: (1) Performs work On a covered contract OR In connection with a covered contract AND (2) Whose wages are governed by the SCA, DBA (including independent contractors), or FLSA (including employees who are exempt under the FLSA).

Source: Jackson Lewis P.C.

NIST 800-171 Cybersecurity Requirements History: It s not a new rule. It has applied to federal agencies since at least 2013. 2015 to contracts. Then gave a two year extension. Baseline requirements as soon as possible, but not later than December 31, 2017 Deadline: December 31, 2017 deadline to apply to contractors on Department of Defense contracts. DFARS Clause 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting Not Retroactive: It is not required to be applied retroactively, but a contracting officer may modify an existing contract to add the clause. Purpose: To ensure that unclassified DoD information residing on a contractor s internal information system is safeguarded from cyber incidents, and that any consequences associated with the loss of this information are assessed and minimized through cyber incident reporting and damage assessment processes.

DFARS 252.204-7012 (Safeguarding Covered Defense Information & Cyber Incident Reporting) Requires Covered Contractor Information Systems to comply with NIST 800-171 (Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations) in effect at the time the solicitation is issued. NIST = Department of Commerce s National Institute of Standards and Technology. Requires implementation of NIST 800-171 by no later than December 31, 2017.

15 Security Requirements 1. Limit access to authorized users. 2. Limit information system access to the types of transactions and functions that authorized users are permitted to execute. 3. Verify controls on connections to external information systems. 4. Impose controls on information that is posted or processed on publicly accessible information systems 5. Identify information system users and processes acting on behalf of users or devices 6. Authenticate or verify the identities of users, processes, and devices before allowing access to an information system 7. Sanitize or destroy information system media containing Federal contract information before disposal, release, or reuse. 8. Limit physical access to information systems, equipment, and operating environments to authorized individuals. 9. Escort visitors and monitor visitor activity, maintain audit logs of physical access, control and manage physical access devices. 10. Monitor, control, and protect organizational communications at external boundaries and key internal boundaries of information systems. 11. Implement sub networks for publicly accessible system components that are physically or logically separated from internal networks. 12. Identify, report, and correct information and information system flaws in a timely manner. 13. Provide protection from malicious code at appropriate locations within organizational information systems. 14. Update malicious code protection mechanisms when new releases are available. 15. Perform periodic scans of the information system and real-time scans of files from external sources as files are downloaded, opened, or executed. FAR 52.204-21(b).

Covered Defense Information (CDI) means: Unclassified Controlled Technical Information or Other information described in the Controlled Unclassified Information (CUI) registry published by the National Records and Archives (NARA); and that Requires safeguarding or dissemination controls and is: Marked or otherwise identified in the contract; or Collected, developed, received, transmitted, used, stored, etc. by the contractor.

Overview on DFARS 252.204-7012 Implementing NIST 800-171 NIST 800-171, Rev. 1 (Dec. 2016) emphasized role of: System Security Plans (SSPs) and Plans of Action/Milestones (POAMs) Individual, isolated, or temporary deficiencies should be managed through [POAMs]. Identify gaps in 800-171 compliance and identify corrective action plan Sept. 2017 DOD Memo (Shay Assad) Some comfort for DFARS 252.204-7012 compliance

Questions, Comments, Advice? Jordan Howard Email: Jordan.Howard@agc.org Phone: 703-837-5368