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Women Construction Owners & Executives, USA (WCOE) is a national association representing women owners and executives in the construction industry. Women business owners face additional barriers of socio- economic stereotyping, which inhibit their ability to obtain capital, contracts, bonding, and access to market opportunities. This is especially true in nontraditional fields, such as construction. We continue to advocate for laws and regulations that help all small businesses, particularly those that will create a level playing field for women business owners.
WCOE proposes that size standards in the construction industry be calculated based on number of employees within a company by using a FTE (full time equivalent) and not based on a company’s gross receipts. Currently, the manufacturing and telecommunications industries’ size standards are calculated by the number of workers employed by the company and not the gross revenue. With construction material costs doubling and tripling in recent years, increased gross revenue primarily reflects increased material costs, but not significantly enhanced income to a small business. The small business size standard for construction should be changed to be based on FTE hours of workers employed.
Although government contracting programs for small businesses are essential to getting government business, no federal program exists to support small companies who have achieved growth beyond the small business size standards but are not considered large companies. These companies, known as mid-tier companies, have struggled with building on their success in the federal contract arena. WCOE supports the creation of a mid- tier contracting pilot program to fill the gap that currently exists between small contractors and very large contractors. We believe mid-tier businesses would greatly assist small businesses by becoming mentors in a mid-tier program.
In 2011, the Women Owned Small Business Procurement Program (WOSB) was finally implemented, eleven years after passage of the law. WCOE is dedicated to its success but finds the dollar limits on the set-asides under the program prohibitive. The current program allows contract set-asides of $4 million on goods and services and $6.5 million for manufacturing. WCOE calls on Congress to abolish the limits on eligible contracts for this program to conform to other SBA programs that restrict competition.
Under the current WOSB program, an EDWOSB may not have a personal net worth in excess of $750,000. Government construction contracts require a surety bond. These bonds must be secured by personal assets of the business owner. If an EDWOSB is restricted to a net worth of $750,000, this will limit the very business opportunities the program was designed to create. This requirement is not placed upon small businesses, HUBzone or SDVOSB in order for these other categories of contractors to be awarded set-aside contracts.
WCOE proposes to raise the personal net worth cap to $1.32 million consistent with US DOT DBE requirements.
Bonding is unique to the construction industry. Bonding is not an insurance policy, but a guarantee of performance on a project which the owner of the construction company must collateralize with business and personal assets, often restricting capital needed to grow the business. WCOE urges federal agencies to address the challenges of bonding small businesses.
The practice of holding back a certain percentage of payment from a contractor or subcontractor on a construction project until full completion, acceptance and payment by the owner is known as retention. Retention dollars withheld for long periods of time create a significant drain on capital for the contractor and subcontractors. Federal contracts do not require a set percentage of retention and contracting officers are required to only withhold funds for cause; yet, some agencies routinely set retention at 5%-10% of the price. Contractors and subcontractors should not have funds withheld as retention unless the work for which they are responsible is not accepted as complete. If a bond is required, no retention should be withheld.
The federal government’s recently implemented policy, known as QuickPay,
There are a number of tax deductions and credits that are helpful to small business owners yet WCOE supports simplification of the tax code. The SBA Office of Advocacy found that small business owners spend three times more per employee on tax compliance than do their larger counterparts. WCOE also rejects any effort to change the tax treatment of pass through entities, such as S Corporations and LLCs, as significantly detrimental to small and mid-tier businesses. Since businesses make long-term projections and plan well in advance, in order to sustain profitability and growth Congress needs to provide certainty with respect to the tax code. Without certainty, investors will not invest, lenders will not lend and businesses will not grow.
President Obama signed Executive Order 13514 urging Federal agencies to improve the efficiency of buildings for both new construction and remodels. By FY 2030, new federal buildings must achieve a “zero net energy” level as laid out in Executive Order 13514 and reinforced in the President’s “Blueprint for a Secure Energy Future.” Additionally, according to IRS Section 179D, a tax deduction is available for designers and contractors who retrofit federal buildings to become more energy efficient. Currently, a $1.80 per square foot deduction is allocated to the designer for the energy efficient commercial building property placed in service between 1/1/2006 and 12/31/2013. It is up to the discretion of the agency to designate who receives the deduction. WOCE encourages Contracting Officers to distribute the tax deduction to all the designers and contractors on a project. Congress needs to find a way to extend the tax deduction beyond 2013 given the recommendations in the “Blueprint for a Secure Energy Future” and Executive Order 13514.