Capitol Update 9/12/2022
Feds won’t enforce contractor COVID-19 vaccine mandate
The Biden administration will not enforce its mandate for federal contractors to be vaccinated against COVID-19, despite a recent ruling which blocked a previous injunction against it in half the states. According to a post on the General Services Administration’s COVID-19 Safer Federal Workforce website, the federal government will take no action to implement or enforce Executive Order 14042, which was issued on Sept. 9, 2021 and required federal contractors to get the vaccine. In order to comply with previous court rulings in ongoing litigation, the administration also said it wouldn’t enforce clauses in existing contracts to implement the requirements of the order “absent further written notice from the agency.”
The California Division of Occupational Safety and Health issued a heat advisory for parts of the state and ramped up inspections around the state, reminding businesses to implement protections for workers. “Those protections are making sure they have access to water, encouraging employees to take a cool-down rest break in the shade to drink water, and then having emergency procedures in place in case somebody does get ill,” said David Hornung, district director for Cal/OSHA. Full Story: KFSN-TV (Fresno, Calif.)
Adebayo Ogunlesi, chairperson and CEO of Global Infrastructure Partners, will lead President Joe Biden’s list of intended appointees for his National Infrastructure Advisory Council. Maria Lehman, a 40-plus-year veteran in the transportation and building industry and the incoming president of the American Society of Civil Engineers, will serve as vice chair. Full Story: The White House
Public projects keep nonresidential construction spending positive, overall sector falls
Nonresidential construction spending ticked up by 0.8% in July, led by publicly funded projects in the highway and public safety categories, but prevailing headwinds will keep private sector development muted, according to an analysis of government spending data released by Associated Builders and Contractors. Spending on highways and streets was up 4.4% in July, and 4.6% from a year ago, while public safety gained 2.3% but was still down 4.7% over the previous 12 months, according to the U.S. Census Bureau. While 13 of the 16 nonresidential categories showed gains from last month, the water supply and healthcare categories were the biggest losers, shrinking 0.5% and 1.3%, respectively. Indeed, the boost in public construction spending helped keep the nonresidential sector in the black for the month, even though overall construction spending fell 0.4%, dragged down by a 1.5% slump in residential spending in July. Public nonresidential spending gained 1.5%, while private nonresidential spending eked out a 0.4% gain
Healthcare construction spending surges despite soaring expenses
Healthcare construction remains strong despite surging costs, with spending in the sector near all-time highs, according to a recent Federal Reserve Bank of St. Louis healthcare construction report.
- St. Louis Veterans Administration Health is planning a $1 billion renovation at John Cochran Veterans Hospital in St. Louis.
- The University of California, San Francisco received a $500 million donation to accelerate plans to build a new hospital at its Parnassus Heights campus, which will cost an estimated $1.5 billion.
- Long Beach, California-based Tibor Rubin VA Medical Center is planning $387 million worth of renovations, including a new mental health facility and community living center.
Inflation is about to launch a second wave of increases in construction costs, according to Albert Manifold, CEO of CRH. Manifold cites ballooning energy costs driven by the conflict in Ukraine that are putting “pressure on the cost of living and that is what is now driving wage inflation.” Full Story: Financial Times (subscription required)
The 11.5% surge in construction costs last year will be eclipsed by a 14.1% rise this year, the biggest gain since Coldwell Banker Richard Ellis began tracking costs in 2007. The latest surge is attributed to a combination of factors including general inflation, labor shortages and supply chain problems, but CBRE predicts the upward trajectory will abate somewhat with gains of 4.3% in 2023 and 2.9% in 2024. Full Story: Global Construction Review (UK)
SEC charges Granite with fraud, firm pays $12M
In the culmination of an investigation that caused Granite Construction to restate three years of its financial results, the Securities and Exchange Commission charged the California-based contractor and a former executive with financial reporting fraud. Granite agreed to pay $12 million to settle the SEC’s charges against the company. The agency named Granite and former senior vice president Dale Swanberg in its Thursday announcement. It alleged Swanberg, who oversaw Granite’s heavy civil group, hid cost increases and manipulated profit margins in the flagging unit beginning in 2017. The alleged scheme unraveled in mid-2019 when several projects neared completion, and the recognition of increased costs could no longer be deferred. In separate administrative proceedings, the company’s former CEO, James H. Roberts, and former CFOs, Laurel Krzeminski and Jigisha Desai, while not charged with misconduct, agreed to return more than $1.4 million, $327,000, and $176,000, respectively, in bonuses and compensation to Granite, according to the SEC
California poised to strengthen pay transparency, reporting mandates
California lawmakers passed Tuesday a law, SB 1162, that would require employers in the state to provide pay ranges when they announce, post, publish or otherwise make known an available job.
Additionally, large employers in the state with 100 or more employees would need to submit a pay data report supplementing existing annual EEO-1 reporting requirements. The proposal is part of a package of legislation which Gov. Gavin Newsom must decide whether to sign by Sept. 30, local media outlet CalMatters reported. The bill would strengthen existing pay transparency requirements in the state. In 2018, California enacted a law requiring employers to provide the pay range for a given position to job applicants upon an applicant’s request and after the applicant completes an initial interview with the employer. Currently, 10 state or local jurisdictions require some form of pay transparency in recruiting. Workers aggrieved by a violation of California’s proposed pay transparency statute would be entitled to injunctive relief or any other relief that the court deems appropriate, per the bill. The state’s labor commissioner also may employers that violate the statute to pay a civil penalty of up to $10,000 per violation. Separately, the proposal’s pay data reporting requirements would require covered employers to submit a report including the total number of employees broken down by race, ethnicity and sex who fall within each pay band used by the U.S. Bureau of Labor Statistics’ Occupational Employment Statistics survey.
Payroll employment increases by 315,000 in August; unemployment rate rises to 3.7%
Total nonfarm payroll employment increased by 315,000 in August, and the unemployment rate rose to 3.7 percent. Notable job gains occurred in professional and business services, health care, and retail trade.
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Construction planning numbers fall
Nonresidential construction planning dipped in August, providing a further sign that rising interest rates and fear of a pending recession is stalling upcoming projects. The Dodge Momentum Index, which broadly measures activity in the planning stages for new nonresidential building projects and leads spending in the sector by a full year, fell 1.2% in August. It was weighed down by a 5.2% decline in the institutional sector, which includes education, healthcare, transportation and public and religious buildings. Compared to a year ago, however, the index was still significantly positive, up 14% from August 2021. The commercial component, which includes retail, warehouses, office, hotels and parking garages, was 16% higher than 12 months earlier, with institutional projects 10% higher.
Most end markets in construction have fared well during the pandemic, supply chain and other challenges the industry has faced recently, according to Erin Roberts from EY. Roberts assesses the state of the industry as summer comes to a close and looks ahead to the possibility of a recession period with a different dynamic that may buoy construction in a downturn, particularly with help from the bipartisan infrastructure law. Full Story: Construction Dive
The pace of growth in the American Institute of Architects’ Architecture Billings Index slowed a bit in July at 51.0 but remained in positive territory for the 18th straight month. The rate of increase has slowed steadily over the past four months after an initial surge amid a perceived easing of the pandemic in what AIA characterizes as “stable” business conditions. Full Story: The Architect’s Newspaper
Women in construction earn roughly 95% of a male counterpart’s median salary, and the number of women in the industry has risen 54.7% to 1.2 million since 2012, according to the Bureau of Labor Statistics. That increase can be attributed in part to a digital recruitment campaign from the Associated General Contractors of America, which believes women are “absolutely an untapped market” in the fight against workforce shortages. Full Story: CBS News
Lack of construction workers threatens infrastructure efforts: AGC
Construction firms are struggling to find workers to such a degree that it’s threatening the success of federal investment in infrastructure and manufacturing projects, the Associated General Contractors of America said Wednesday. Citing its annual construction workforce survey of nearly 1,300 employers commissioned with tech provider Autodesk, AGC said 93% of construction firms have open positions, and 91% are having trouble filling them, particularly among the craft workforce that performs the bulk of onsite construction work. The shortages ran the gamut of firms, from contractors who exclusively use union craft labor and those that operate as open-shop employers; from companies making $50 million to $500 million in revenue; those in all four regions of the country and ones that focus on building construction, highway and transportation projects, federal and heavy work or utility infrastructure.
Construction unemployment climbed to 3.9% last month from 3.5% in July even as the industry added 16,000 jobs, according to the Bureau of Labor Statistics. Gains were experienced across the board except for in heavy and civil engineering construction, where the job total was down 2,000 in August. Full Story: Engineering News-Record (tiered subscription model)
Construction unemployment rose in August, and that’s good news for contractors
The construction unemployment rate rose to 3.9% in August, a significant jump from July’s near record low of 3.5%, providing evidence that the sector’s overheated jobs market is beginning to cool without cratering. According to an analysis of Bureau of Labor Statistics data by Associated Builders and Contractors, nonresidential construction employment rose by a net 4,300 positions. Nonresidential specialty trades added 5,600 new jobs, while nonresidential building added 700. Heavy and civil engineering employment fell by 2,000 positions. After declining for several months, the labor force participation rate — a measure of people working or looking for work — rose meaningfully, according to Basu, from 62.1% to 62.4%. With wages expanding 5.2% in all industries over the last year, and 5.3% in construction, it’s an indication that a combination of inflation and rising pay rates have induced workers back to their jobs, after the exodus of the Great Resignation.
Demolition is underway on Sleep Train Arena in the Natomas residential community of Sacramento, Calif., to clear the way for the city’s Innovation Park project. Construction is expected to begin this year and when completed, the project will offer a medical campus and teaching hospital, as well as homes, retail space and parks. Full Story: KOVR-TV (West Sacramento, Calif.)
Opposition grows to Santa Clara Valley Water District’s plans for a dam
A lawsuit filed against Santa Clara Valley Water District now has two more plaintiffs. The groups say they’re against the proposed Pacheco Dam because they believe it will destroy the environment and sacred land. The Stop the Pacheco Dam Coalition filed the lawsuit back in June, claiming Valley Water is trying to avoid following state guidelines before building the dam. Now the Sierra Club and the Amah Mutsun Tribal Band say they agree with the coalition and are joining the lawsuit. Valley Water says the Pacheco Reservoir Expansion Project is a long-term investment that will reduce water shortages during droughts and protect the drinking water supply. But those who oppose the project say Valley Water hasn’t properly analyzed the environmental impact of the dam. “All we’re trying to say is they must follow that process the same as any other development approvals that are given,” said Valentin Lopez, Chairman of the Amah Mutsun Tribal Band .
BART San Jose Extension on Track to Begin Heavy Construction in 2024: Officials
BART and the Santa Clara Valley Transportation Authority are on track to begin construction of BART’s downtown San Jose extension by 2024, officials with the two transit agencies said Friday. Design and construction officials with BART and the VTA said in a joint meeting that tunnel boring and other heavy station construction activities are likely to start in earnest within the next two years, barring unforeseen delays. The six-mile, four station extension will add four new stations at 28th Street in San Jose’s Little Portugal, near the intersection of Santa Clara and Market streets in downtown San Jose, the San Jose Diridon rail depot and a ground-level station near PayPal Park in Santa Clara. The extension will include more than four miles of rail tunnel under downtown San Jose along Santa Clara Street. BART and VTA officials plan to bore under the city to construct the tunnel rather than cut open Santa Clara Street to build the tunnel and then reseal the roadway, a method known as “cut and cover.” “What we deeply care about is building the best project, the most equitable project ever that connects the Bay Area and our communities together in a way that we would have never believed possible,” said BART Board Director Janice Li.
A route that avoids crossing a lake and disturbing wetlands is the preferred alternative out of six that the California High-Speed Rail Authority has indicated for a section between Palmdale and Burbank. The section will run between 31 and 38 miles, depending on which of the options is selected, and the preferred route would be tunneled underground through Acton, the Angeles National Forest and the San Gabriel Mountains National Monument. Full Story: Railway Track & Structures
The Port of Los Angeles has received a $20 million federal to address traffic congestion at the San Pedro port complex. The funding will go toward construction of a four-lane, rail-roadway grade separation, giving trucks access to a Terminal Island marine support facility. Full Story: The Maritime Executive
Terminal updates and construction of an automated people mover train system are among the projects that make construction seem constant at Los Angeles International Airport. Lukas Souza gives a rundown of progress on major work at LAX, including the $2.3 billion modernization of Terminals 2 and 3. Full Story: Simple Flying
With a multiyear preconstruction process in the rear view, Mortenson Construction and McCarthy Building have broken ground on the 1,600-room Gaylord Pacific Resort Hotel & Convention Center south of San Diego. The estimated $1.3 billion project is expected to be completed in 2025. Full Story: The Construction Index (UK)
Flatiron is part of two joint ventures that will take on $800 million worth of recently contracted work in Los Angeles. One project with Myers & Sons will convert two Interstate 105 lanes into “ExpressLanes” under a construction management/general contractor procurement arrangement, and another project with Stacy and Witbeck will improve the G-Line Bus Rapid Transit service. Full Story: Global Construction Review (UK)