By: Michael H. Payne and Edward T. DeLisle

The U.S. Small Business Administration published a package of final rules on February 11, 2011, that will revise the regulations of its 8(a) Business Development program to better ensure that the benefits flow to the intended recipients and help prevent waste, fraud and abuse. The rules were published in The Federal Register and will become effective on March 14, 2011.

The revisions are the first comprehensive overhaul of the 8(a) program in more than 10 years. The regulations incorporate technical, as well as substantive, changes that mirror legislation enacted since the last revision in June of 1998. The rules cover a variety of areas ranging from clarifications on determining economic disadvantage to requirements on Joint Ventures and the Mentor-Protégé program. Some of the components of the 8(a) program that the revised regulations will affect include:

Joint Ventures - The new rules require that the 8(a) firm must perform 40 percent of the work of each 8(a) joint venture contract that is awarded, including those awarded under a Mentor/Protégé agreement, to ensure that these companies are able to “build capacity.” In other words, the SBA has discarded the vague “significant portion” test in favor of a requirement for a protégé to perform 40 percent of the work performed by the joint venture partners.

Economic Disadvantage – The rules provide more clarification on factors that determine economic disadvantage as it relates to total assets, gross income, retirement accounts and a spouse of an 8(a) company owner when determining the owner’s ability to access capital and credit.

Mentor-Protégé Program – The rules add consequences for a mentor who does not provide assistance to its protégé, ranging from stop-work orders to debarment.

Ownership and Control Requirements – The rules provide flexibility on whether to admit 8(a) program companies owned by individuals with immediate family members who are owners of current and former 8(a) participants.

Tribally-Owned Firms – The rules require firms owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations and Community Development Corporations to report benefits flowing back to their respective communities.

Excessive Withdrawals – The rules amend the regulations on what amount is considered excessive as a basis for termination or early graduation from the 8(a) program.

Business Size for Primary Industry – The rules require that a firm’s size status remain small for its primary industry code during its participation in the 8(a) program.

Other interesting changes include a revision to the prior practice of allowing a mentor-protégé joint venture to only submit bids or proposals on three solicitations in two years. Under the new regulations, instead of being limited to three bids or proposals over a two-year period, a mentor-protégé joint venture is limited to three contract awards. This is a far more reasonable way to limit participation. In addition, the new regulations also make it possible, with SBA approval, for joint venture partners who meet other small business requirements to form a second or a third joint venture, each with the ability to receive an additional three awards.

We will provide a more in-depth analysis of the new rules prior to the March 14, 2011 effective date and will also post a copy of the amended Code of Federal Regulations when it is published. The 8(a) program is a nine-year business development program for small businesses where the owner(s) fits the SBA’s criteria of being socially and economically disadvantaged and the same owners control the firm. The 8(a) program helps these firms develop their business and provides them with access to government contracting opportunities, allowing them to become solid competitors in the federal marketplace. It also provides specialized business training, counseling, marketing assistance and high-level executive development to its participants. In FY09, small businesses received $18.6 billion in 8(a) contract dollars.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters. Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group who represents contractors on a whole range of small business issues including teaming arrangements and compliance with the SBA’s rules and regulations.

Source: http://feeds.lexblog.com/~r/FederalConstructionContractingBlog/~3/NuZVWuWLIm4/

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 By: Edward T. DeLisle

On January 18, 2012, Representative Bill Owens (D.-N.Y.) introduced a bill entitled, “The Small Business Growth and Federal Accountability Act” (H.R. 3779).  The Act is designed to “hold accountable Federal departments and agencies that fail to meet goals relating to the participation of small business concerns.” In order to achieve this goal, the Act goes on to state that “[if] a Federal department of agency does not meet a covered goal with respect to a fiscal year, that department or agency, in the succeeding fiscal year, may not expend for the procurement of goods or services an amount that is greater than 90 percent of the amount expended for the procurement of goods or services…”

If enacted, the bill would essentially penalize a federal department or agency by slashing its budget by 10% if that department or agency fails to hit its established small business procurement goals. As it currently stands, federal departments and agencies are required to expend 23% of their annual procurement dollars on small business awards. The problem, however, is that there is no penalty if an agency fails to meet this goal. If this bill becomes law that would certainly change. The question becomes: How would federal agencies react to it? The bill does state that “[t]o meet a covered goal, the head of a Federal department or agency may give preference to a small business concern when procuring goods or services.” While it does not define the type of preference that may be given, this concept opens the door to any number of possibilities that could impact the procurement process. For example, will a system emerge during the bill review process that is akin to the 10% price preference currently in existence for the HUBZone program?  We will simply have to wait and see.  The bill is currently being reviewed by the House Small Business Committee.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

Source: http://feeds.lexblog.com/~r/FederalConstructionContractingBlog/~3/LAi03nBLXQo/

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Two companies worthy of mentioning are Modern Cabana and Modern Sheds.  Both start ups are products of the west coast and specialize in energy efficient prefab design that focuses on environmentally friendly products.   Modern Cabana prices start around 85 dollars/ sq. ft., while Modern Shed pricing is generally 100 dollars/sq. ft.  

(Top to Bottom: Modern Shed, Modern Cabana)

Source: http://www.sustainableconstructionblog.com/renovations/prefab-home-additions

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If are thinking of doing a kitchen renovation and need some ideas of where you can go green, look no further.  The HGTV green dream home giveaway consisted of a green home in California that features many sustainable materials and products.  Some highlights of the kitchen include quartz countertops, engineered wood flooring, energy star appliances, and glass tile back splash. 

Okay, so the Green Dream Home is not the most sustainable house featuring the most sustainable kitchen but it was built with good intentions and with the environment in mind.  And unfortunately I?m sure HGTV built it with money in mind as well.  Most of the features are donated by companies looking to get their products showcased in the home.  With this in mind, I will highlight further sustainable alternatives in the captions of these photos.

Here are some pictures to hit you with some ideas for your sustainable kitchen renovation.

Engineered wood flooring throughout gives the kitchen a sustainable and unique look.  Other popular alternatives include cork or bamboo flooring. 

CeasarStone quartz countertops are made by an ?eco-friendly? company but are not the most sustainable countertop.  Quartz countertops still come from mined rock.  See several more sustainable alternatives here.   The Kenmore ?smart? dishwasher shown here saves water by detecting how much it will need first.

Stainless Steel Kenmore cook top and oven is Energy Star rated.  This electric cook top turns on only when a pot or pan is detected on it.  It also turns off automatically, saving more energy.

Kenmore also produces a line of sink hardware with low flow aerators installed to conserve more water in your kitchen.

Source: http://www.sustainableconstructionblog.com/renovations/sustainable-kitchen-inspiration-and-ideas

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The sun's energy is one of the most overlooked contributors to the high energy costs that homeowner's face every month. Solar heat gain is used to refer to heat from the sun that enters your home through windows and skylights even when they are closed.  This heat must be removed by your air conditioning making it work harder and costing you more money.  A very cost effective way to control this heat and help keep your energy bills down is to use residential low E window films. 

These easy, sustainable, DIY protective coatings use the same spectrally selective glass technologies that are used in some of the most energy efficient skyscrapers and commercial buildings.  Spectrally selective window films help to manage the sun's energy all year round; keeping 55% of winter heating in your home and reflecting 70% of solar heat gain in the summer.  At a negligible investment compared to new windows, you can see the return on your investment through lowered utility costs in as little as a few months!

One of the best and most affordable window films is the Gila LES361 Platinum window films.  In addition to energy savings, this low E residential window film can offer several other priceless benefits.  By reflecting 99% of harmful UV rays you are protecting your interior furnishings from fading.  The Gila window film also rejects 67 percent of glare, filling your interior spaces with more pleasant natural light that does not heat up your home and drive up energy costs.

Remember to be smart when installing your low E window films!  It is possible that protective coatings are not necessary for every window in your home to see results.  In the northern hemisphere the south facing sides of homes are responsible for most of the solar heat gain.  Coating these windows will allow effective natural light in, while rejecting unwanted heat gain.  North facing windows will not see much if any direct sunlight and therefore may not need to be coated.  Realizing this will help cut down the initial investment without reducing savings in energy costs!

The Gila window film is a great product for your next sustainable DIY renovation project. This product is manufactured and packaged in the USA to ensure that it is produced to the highest standards in sustainablility and quality.

Source: http://www.sustainableconstructionblog.com/renovations/low-e-residential-window-films

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This article is the eighth, and final, in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

1. Tverberg v. Fillner Construction, Inc., 49 Cal. 4th 518 (June 2010)

The peculiar risk doctrine is a judicially created exception to the common law rule that a person hiring an independent contractor to perform inherently dangerous work is generally not liable to third parties for injuries resulting from the work. Courts initially used the peculiar risk doctrine to impose upon landowners vicarious liability for the acts of their independent contractors when certain third parties – innocent bystanders or neighboring property owners – were injured by the contractors' work. It was not until courts expanded the doctrine to include another category of third parties, the employees of the independent contractors, that the Supreme Court stepped in to curtail the exception. In Privette v. Superior Court, 5 Cal. 4th 689 (1993), the Supreme Court held that a hirer of an independent contractor is not vicariously liable to the employees of the independent contractor for injuries caused by risks inherent in the work the contractor was hired to perform.
 

In Tverberg, the Supreme Court seized the opportunity to resolve a conflict within the Courts of Appeal regarding whether the hirer of an independent contract is vicariously liable to the contractor for the contractor's own injuries resulting from a risk inherent in the work. The Court of Appeal in Michael v. Denbeste Transportation, Inc., 137 Cal. App. 4th 1082 (2005) held that the hirer was not liable to the independent contractor for the contractor's own injuries, while the Court of Appeal in Tverberg reached the opposite conclusion. The Tverberg court reasoned that the justification for the Privette decision was the availability of workers compensation for the injured employee. Because workers compensation would not always be available to the independent contractor, the Court of Appeal in Tverberg concluded that the independent contractor could seek recovery for injuries from the hirer.

The California Supreme Court reversed the Court of Appeal and barred the independent contractor's claim against the hirer for injuries caused by the inherently dangerous jobsite conditions. The Supreme Court explained that the outcome in Privette and other decisions disallowing claims was not determined by the availability of workers compensation to the injured person. Instead, the analysis depended on the delegated responsibility for maintaining jobsite safety. A hired independent contractor who is injured by risks inherent in the hired work, after having assumed responsibility for all safety precautions reasonably necessary to perform the work safely, is not an innocent third party deserving of compensation under the peculiar risk doctrine. The doctrine of peculiar risk does not apply when the injured independent contractor seeks to hold a hirer vicariously liable for injuries caused by risks inherent in the work over which the independent contractor has been granted control.

1. Miranda v. Bomel Construction Co., 187 Cal. App. 4th 1326 (4th Dist. July 2010)

The plaintiff worked in an office next to a vacant lot, which for several months was used as the location of an uncovered stockpile for dirt excavated from a nearby construction project. Plaintiff contracted Valley Fever and filed a complaint for negligence against the general contractor that created the stockpile. The plaintiff alleged the contractor failed to cover the stockpile or otherwise contain dust from it, and that fungal spores carrying the pathogens that caused Valley Fever were released from the excavated soil that the contractor had negligently stored. The contractor successfully moved for summary judgment on the ground the plaintiff could not establish that the contractor had proximately caused the plaintiff's injury.

The Court of Appeal affirmed. While plaintiff produced ample evidence that the fungal spores that cause Valley Fever are contained in dirt throughout Southern California, can become airborne, and can be inhaled after dirt is excavated, plaintiff had no evidence that dirt from the stockpile contained the fungal spores or was the source of plaintiff's exposure to the disease. While plaintiff could speculate that the dirt stockpile was the source of the fungal spores that caused him to contract Valley Fever, he could not produce evidence that the stockpile (rather than all the other sources of airborne dust in Southern California) was a substantial factor in causing the disease.

Authored By:

Candace L. Matson, (213) 617-5489, is a partner in Sheppard Mullin's Los Angeles office where she specializes in construction law.  Harold E. Hamersmith, (213) 617-4255, is a partner in the firm's Los Angeles office specializing in design and construction contracts, claims, and defects litigation, and public contract law.  Helen J. Lauderdale, (213) 617-4138, is a special counsel specializing in construction litigation in Sheppard Mullin's Los Angeles office.

Source: http://feeds.lexblog.com/~r/ConstructionInfrastructureLawBlog/~3/jLkjHd4fFBA/

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As we bring in the New Year, there are several trends that will define the construction industry in 2011.  As in recent years, the industry is undoubtedly headed in a sustainable direction focusing on environmentally friendly materials, energy efficiency, and alternative energy sources.  The outlook for the industry in 2011 considers these same principles, but we will see a stronger more informed focus in several areas.

Achieving net-zero energy has become the driving force behind many sustainable projects both commercially and residentially.  Net-zero energy is a term that defines the outcome of a buildings performance due to its energy efficiency based on super-insulation properties combined with alternative energy sources. 

Sustainable construction developments over the past few years have brought us new innovations and technologies that have prepared the industry to take a more feasible approach to redefining building standards.  While the USGBC?s LEED certification standards have been a strong notion to spark the green building revolution, they have also faced a fair share of adversity in 2010.  Adopting energy efficiency and alternative energy guidelines from the LEED standards, and then taking these standards one step higher, leaves us with a new industry wide focus that becomes more budget friendly in an otherwise economically suffering industry.
 
Since net-zero energy is merely a concept; it fundamentally defines an achievable goal that allows architects and engineers to decide how this goal will be reached without being bound by a scorecard of standards.  One set of standards that can be used as a general guideline for super insulation is Passive House.  The Passive House standards are not as complex or demanding as LEED but provide a more beneficial result; one which is crucial in achieving net-zero energy.  Its main goal is to decrease energy loads in the building and meet the new alternative energy technologies halfway for a net-zero energy building performance. 

Looking back on 2010, this outlook can be justified by recalling what the majority of investment and research activity focused on.  The U.S. government, under the American Recovery and Reinvestment Act (ARRA projects), invested in energy reducing electrical and mechanical systems, window and wall insulation research and development, and many photovoltaic products and projects.  As ARRA funding runs out this year, the construction of new bridges and highways will slow down; however, residential and commercial projects are expected to increase.  It will be an exciting year for the construction industry to see these new technologies implemented into state of the art, net-zero projects that will set a new precedent for years to come.

Source: http://www.sustainableconstructionblog.com/construction/a-sustainable-construction-outlook-for-2011

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This article is the first in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

1. Centex Homes v. Financial Pacific Life Insurance Co., 2010 U.S. Dist. LEXIS 1995 (E.D. Cal. 2010)
 

After settling numerous homeowners' construction defect claims – and more than ten years after the homes were substantially completed – a home developer brought suit against one of the concrete fabrication subcontractors for the development seeking indemnity for amounts paid to the homeowners, as well as for damages for breach of the subcontractor's duties to procure specific insurance and to defend the developer against the homeowners' claims. The subcontractor brought a motion for summary adjudication on the ground the developer's claims were barred by the ten year statute of repose contained in Code of Civil Procedure Section 337.15.
 

The District Court agreed the developer's claim for indemnity was barred by Section 337.15. And it held that because the damages recoverable for breach of the subcontractor's duty to purchase insurance are identical to the damages recoverable through the developer's indemnity claim, the breach of duty to procure insurance claim also was time-barred. The District Court, however, allowed the claim for breach of the duty to defend to proceed. The categories of losses associated with such a claim (attorneys' fees and other defense costs) are distinct from the damages recoverable through claims governed by Section 337.15 (latent deficiency in the design and construction of the homes and injury to property arising out of the latent deficiencies).
 

2. UDC – Universal Development v. CH2M Hill, 181 Cal. App. 4th 10 (6th Dist. Jan. 2010)

Indemnification clauses in construction agreements often state that one party to the agreement – the "indemnitor" – will defend and indemnify the other party from particular types of claims. Of course, having a contract right to a defense is not the same as actually receiving a defense. Any indemnitor attempting to avoid paying for defense costs can simply deny the tender of defense with the hope that when the underlying claim is resolved the defense obligations will be forgotten. In the past, when parties entitled to a defense – the "indemnitees" – had long memories and pressed to recover defense costs, indemnitors attempted to justify denying the tender by claiming their defense obligations coincided with their indemnity obligations and neither arose until a final determination was made that the underlying claim was one for which indemnity was owed.

The California Supreme Court rejected this justification for denying an immediate defense obligation in Crawford v. Weather Shield, 44 Cal. 4th 541 (2008). And in UDC – Universal Development vs. CH2M Hill, 181 Cal. App. 4th 10 (2010), the Sixth District Court of Appeal followed the Supreme Court's lead, repeating that the right to a defense is separate and distinct from the right to indemnity under a typical indemnity clause, the right arises immediately upon assertion of a claim, and the right exists regardless of whether the claim is ultimately proven.

UDC was the developer of a condominium project. It contracted with CH2M Hill to provide engineering and environmental planning services for the project. Their agreement called for CH2M Hill to indemnify UDC for all claims "that arise out of or are in any way connected with any negligent act or omission" of CH2M Hill. It also required CH2M Hill to provide UDC with a defense to any action brought on any claim covered by the indemnity obligation. After the project was completed, the homeowners' association filed suit against UDC for defective conditions at the project due in part to negligent planning and design of open spaces and common areas. The complaint did not attribute negligence to any particular subcontractor but instead contained general allegations of deficient services by architects, engineers, and consultants.

UDC filed a cross-complaint for equitable, comparative, and express contractual indemnity against numerous subcontractors on the project, including CH2M Hill. It also tendered the defense of the homeowners' association's lawsuit to all cross-defendants. CH2M Hill declined the tender. UDC succeeded in settling all of the cross-claims except those asserted against CH2M Hill.

At trial, the parties agreed the jury would decide the factual issues of negligence and breach of contract and the court thereafter would apply the contract's indemnity provisions. The jury concluded CH2M Hill had not been negligent and had not breached its contract with UDC. With these favorable conclusions in hand, CH2M Hill argued to both the trial and appellate courts that it had no duty to defend UDC. According to CH2M Hill, such a duty could only arise after a finding that CH2M Hill had been negligent.

Both the trial and appellate courts rejected CH2M Hill's argument. Instead, they ruled that a duty to defend is separate from a duty to indemnify, and the duty to defend necessarily occurs before the duty to indemnify arises and before any negligence determination is made. CH2M Hill also unsuccessfully urged the courts that it owed no duty to defend the developer because the homeowners' association's complaint did not specifically allege that CH2M Hill was negligent. The appellate court concluded that the developer's right to a defense did not turn on whether the plaintiff named a particular subcontractor in its complaint. The plaintiff's general allegations of deficient design services by engineers for the project, together with the developer's cross-complaint for indemnity attributing responsibility to CH2M Hill for the plaintiff's damages, were sufficient to trigger CH2M Hill's duty to defend.

The UDC and Crawford decisions eliminate any lingering uncertainty about when the obligation to provide a defense arises: under a typically worded indemnity clause, the duty to defend requires immediate action by an indemnitor after the defense of a claim is tendered. But whether these decisions will alter real world conduct by indemnitors and result in their taking an active responsibility for the defense of claims from the outset is far less certain.
 

3. Great Lakes Construction, Inc. v. Jim Burman, et al., 186 Cal. App. 4th 1347 (3d Dist. July 2010)
 

After a homeowner posted unfavorable comments about two contractors on the internet, the contractors sued the homeowner for libel. The contractors' complaint prompted a predictable series of pleadings, starting with the homeowner's cross-complaint for breach of contract and negligence against the contractors and designers for substandard work, followed by the contractors' cross-complaint against one of its subcontractors for breach of contract and indemnity. In the ensuing litigation, the homeowner and subcontractor were represented by the same attorney. The contractors successfully moved to disqualify the lawyer for the homeowner and subcontractor based on the conflict that existed in the lawyer's joint representation of them. The Court of Appeal reversed. No legally protected interest of the contractors was violated by the joint representation of their opponents by a single lawyer; the lawyer owed the contractors no duty of loyalty. Therefore the contractors did not have standing to seek the lawyer's disqualification.

Authored By:

Candace L. Matson is a partner in Sheppard Mullin's Los Angeles office where she specializes in construction law.  Harold E. Hamersmith is a partner in the firm's Los Angeles office specializing in design and construction contracts, claims, and defects litigation, and public contract law.  Helen J. Lauderdale is a special counsel specializing in construction litigation in Sheppard Mullin's Los Angeles office.

Source: http://feeds.lexblog.com/~r/ConstructionInfrastructureLawBlog/~3/dR4jSnA0bCA/

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