Public Policy and Government Relations: Looking Back and to the Future

By John Horton

In the fall of 2002 the New Mexico Building Branch of Associated General Contractors published a list of ten Public Policy Position Statements.  The position statements form a framework of thought intended to ensure the profitability of members of the association and to uphold the professional standards of the commercial construction industry.  Members of the Building Branch include open-shop and union contractors and come from the ranks of general contractors, subcontractors and suppliers to the commercial construction industry.  Our members do not build highways or other “horizontal” structures.  A few members build houses and multi-family dwellings, but most move seamlessly from project to project within an industry that produces strip centers, stand-alone commercial buildings, schools, commercial buildings, and institutional structures such as libraries, hospitals and government buildings.  AGC members employ about 11,000 persons and have combined annual gross revenue which approaches a billion dollars.

AGC’s policy position statements include the following general statements:

• Develop annual, focused and consistent programs of capital outlay spending for state-wide needs.
• Select all state contracts on the basis of the qualifications of the contractor.
• Enable procurement using prequalification of bidders.
• Make New Mexico a better place to live and to do business by changing tax policy and providing for infrastructure needs of business within the state.
• Preserve the Workers Compensation system as the center for the process of treatment, rehabilitation and compensation for disability resulting from accidental workplace injury.
• Strengthen the Construction Industry Division through funding.
• Control the use of Owner-Controlled Insurance Programs.
• Make changes in New Mexico’s lien laws.
• Support prompt payment legislation that gives reasonable time for payment by state agencies, but with significant consequences if payment is late.
• Enact anti-directed surety legislation.

Elevating these issues in New Mexico in 2002 AGC members pressured policy makers to respond.  Following the inauguration of Bill Richardson as governor in January 2003, the capital outlay process was refined.  Annually, the governor takes a larger portion of the capital outlay spending of the state and dedicates it to state-wide needs.  In 2004 the state put in place a funded highway construction plan that will spend nearly $1.7 billion on the state’s highway infrastructure in the next decade.  Each year state agencies continue to move in the direction of reviewing the qualifications of contractors bidding on public works projects in an attempt to match the demands of the project with the capabilities of the bidding contractors.  The business climate in New Mexico continues to improve as policy tools are developed that make it possible for employers to meet the needs of customers and their employees through tax cuts and credits enacted to aid businesses in employing capital in their operations.  Since 2003, the evaluation of the workers compensation system in New Mexico continues with equal input from employers and workers.  Funding for oversight of the construction industry by the state through the Construction Industries Division has increased each year.  In 2003 owner-controlled insurance programs were controlled to limit any detrimental effects upon employers or users of these programs.  A change in New Mexico’s lien law enacted in 2005 opens the door for any involved party to receive compensation for attorney fees and costs in prosecuting or defending a lien.  Since 2001 when the AGC-amended Retainage Act was passed work continues on contract terms and processes in the industry to shorten the time between request for payment and payment on construction projects.  In 2003 passing a bill that prevents a state agency from specifying a supplier of bonds impacted the 2005 requirement that first-tier subcontractors supply a performance and payment bond of certain public works projects.

In 2003 AGC members spearheaded the reform of unfair risk transfer in construction created by broad form indemnity contract clauses and additional-insured status.  2004 saw AGC effective in turning away national laboratory interest in procuring construction services using reverse-auction bidding and joining in a block of construction associations to prevent the use of such auctions of construction projects by state agencies.  2005 was the year AGC amended and clarified the state rules for contractor registration which will reduce bid protests on future public works projects.  Following the 2005 session (and in anticipation of disputes that could arise) AGC lead the industry by promoting a slate of guidelines for public owners to use in implementing the new requirement that certain subcontractors provide a performance and payment bond on public works projects.  This action by AGC resulted in the state attorney general issuing an opinion that can be viewed as supporting the AGC guidelines.  During 2005 AGC supported state law changes intended to prevent the misclassification of construction employees as “independent contractors” and also a provision intended to prevent misclassification and payment of construction employees on public works projects.

The progress to date is not the end of AGC members’ work to build New Mexico.  On the horizon are the on-going efforts to expand project delivery options for procurement of construction by state agencies using a lower design/build threshold; a call to institute the involvement of a qualified contractor earlier in the process of building using a construction manager at-risk contract including a guaranteed maximum construction cost contract and a schedule of construction; and leadership in environmental and energy design and construction of buildings--just to mention a few.

Posted July 13, 2005