D.C. Mayor Seeks to Stop Costly Legal Delays to Development Projects

D.C. Politics













An intersection in Washington’s Union Market neighborhood is shown Feb. 9. Advocacy groups have filed eight appeals against various development projects in the gentrifying neighborhood. (Justin T. Gellerson for The Washington Post)


By Paul Schwartzman February 28 at 5:56 PM Email the author


Activists seeking to thwart the breakneck speed of development across the District have turned with greater frequency to the city’s highest court, filing legal challenges that have delayed more than two dozen projects in the past two years and driven up their costs.


“Business proposals to overhaul D.C. paid family leave law are dead — for now” Article by Fenit Nirappil, The Washington Post

Business proposals to overhaul D.C. paid family leave law are dead — for now

By Fenit Nirappil February 9 Email the author


D.C. Council Chairman Phil Mendelson (D) this week announced he was dropping efforts to overhaul the city’s paid family leave law in a more business-friendly fashion, ending some of the uncertainty over a new government program that is among the most generous in the country. (more…)

SB 272, the “Construction Trust Act”




SB 272, the “Construction Trust Act”


ACE is in favor of SB 272, the Construction Trust Act.   SB 272 provides that any moneys paid under a contract by an owner to a contractor, or by the owner or contractor to a subcontractor for work done or materials furnished for or about a building by any subcontractor, shall be strictly accounted for and held in trust by the contractor or subcontractor, as trustee, for those subcontractors who did work or furnished materials, for purposes of paying those subcontractors.


Why is this legislation needed?

  • In today’s competitive construction industry, subcontractors work only for their Owner of Choice. In cases in which the Commonwealth of Virginia is to be an OWNER OF CHOICE, it is imperative that all payments made by state agencies to prime contractors flow into the hands of the subcontractors — subcontractors and suppliers who have properly completed their work. On all other work, the owner is paying for the work completed by the subcontractor and expects the prime contractor to pay the subcontractor for the work.
  • A few General Contractors include in their subcontract document, terms that allow for the General Contractor to utilize funds paid by the Owner on one construction project to offset disputed debt incurred by a subcontractor on another project.
  • If such payments for a project are diverted away from the subcontractor then that project is at risk for delay and disruption. The Owner suffers because of a dispute between the GC and sub on an unrelated project!
  • Construction Subcontracting is risky, and these businesses need to be protected from unfair subcontract provisions that will harm their businesses.
  • A review of “Construction Trust Fund Statutes,” Published by Clark Hill reveals that, unlike Virginia, several other states (Maryland, Texas, South Carolina and Oklahoma, among others) have such trust fund laws.
  • SB 272 will protect the construction subcontractors in Virginia.
  • This Legislation does not add any cost to a project while at the same time providing benefits and protections to the Commonwealth and small businesses.


Who is ACE – the Alliance for Construction Excellence?

  • American Subcontractors Association of Metro Washington (ASA)
  • National Electrical Contractors Association (NECA) – Annandale Virginia
  • Mechanical Contractors Association of Metropolitan Washington (MCA)
  • Atlantic Coast Chapter – National Electrical Contractors Association (NECA)
  • Mechanical Contractors Association, Inc. (MCA)
  • Iron Workers Employers Association of VA, MD, and D.C. (IWEA)
  • Mid-Atlantic Chapter – Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA)

Please visit our Website http://allianceforconstructionexcellence.com/


For More Infprmation Contact:

David Bailey, David Bailey Associates

804-405-8108 or dbailey@capitolsquare.com


Ike Casey, Executive Director of ASA of Metro Washington

571/237-7101 or ike@asamw.org


Andrew Porter, National Electrical Contractors Association and ACE Chairman

(703) 658-4383 or aporter@wdcneca.org


Procurement Transparency = Good Government + Good for Businesses

Public Procurement Reform is an area in which the Alliance for Construction Excellence (ACE), has been active. Within any proposed reform legislation, ACE has and will advocate for inclusion of payment transparency provision in the legislation. The transparency provision calls for the public body to post notices to a website when a prime contractor is paid so subcontractors can validate the payment prior to making legitimate demand for payment. Payment transparency is considered good government and good for businesses. ACE was successful with the inclusion of the provision in the District of Columbia (DC) and hopes legislators in Maryland and Virginia adopt similar procurement transparency regulations.

Subcontractors got greater transparency after the DC City Council passed the Procurement Integrity, Transparency, and Accountability Emergency Amendment Act of 2016 on September 20, 2016. Since the Act’s passage, ACE has been working with the District’s Office of Contracting and Procurement to help implement a payment transparency system that will be most useful to contractors. That system, a website that lists payments to prime contractors, is now live.


Virginia Supreme Court Rules

Prime Contractor’s Lawsuit Is Too Late To Obtain Indemnity From Subcontractors And Their Sureties

In the recent decision of Hensel Phelps Construction Company v. Thompson Masonry Contractor, Inc., Record No. 151780 (November 3, 2016), the Virginia Supreme Court affirmed a circuit court’s dismissal of a prime contractor’s lawsuit against its subcontractors and subcontractors’ sureties for indemnity for defects in work completed at least fourteen (14) years prior to the lawsuit.  The litigation resulted from a 1997 contract between Virginia Polytechnic Institute & State University (“Virginia Tech”) and Hensel Phelps Construction Company (“Hensel Phelps”) for the construction of a student health and fitness center on Virginia Tech’s campus.  Construction began in 1997, and the project was substantially completed a year later, with all work, including repair work by one subcontractor, completed by June 2000.  Several years later though, Virginia Tech discovered defective workmanship and removed, replaced, and repaired those defects.  Then, in April 2012, Virginia Tech asserted a claim against Hensel Phelps for the costs of remedying the defective work, which totaled in excess of $7 million.  Hensel Phelps ultimately settled with Virginia Tech for $3 million, and then Hensel Phelps filed its lawsuit against its subcontractors and their sureties for indemnification and breach of contract.  In response, the subcontractors and sureties sought to dismiss the case against them, arguing that Hensel Phelps’ claims were barred by the statute of limitations.  The circuit court agreed, dismissing the suit.


MD & D.C. Federal Courts Hold Dispute Resolution Clause

Prime Contract Does Not Require Stay Of Subcontractor’s Claim Against Payment Bond

In two recent cases in the U.S. District Courts for the Districts of Maryland and the District of Columbia, the federal courts both held that a dispute resolution clause contained in the contract between the owner and general contractor does not require a subcontractor asserting a payment bond claim to wait indefinitely until the general contractor has resolved its claim with the owner in order to proceed with its Miller Act lawsuit.