NC Construction Office/Carolinas AGC Joint Committee Meeting Minutes

December 08, 2008

The meeting was called to order at 10 a.m. on Monday, December 8, 2008 at the Raleigh Carolinas AGC office. The 17 attendees were:

Co-Chair John Thompson, J. M. Thompson Co.; Co-Chair Greg Driver, State Construction Office; Brent Hartness, Blue Rock Structures, Inc.; Cleve Paul, D. S. Simmons, Inc.; Alan Demaske, Streamline; Preston Nisbet, Turner Construction Co.; Bridget Wall-Lennon and Sheryl Cromedy, Department of Administration, HUB Office; Shella Farrior, Dixie General Contractors; Anthony Howerton, R. L. Casey, Inc.; Bob Garren, McCarroll Construction; Ed Widman, N.C. Monroe Construction Co.; Latif Kaid, State Construction Office; Bob Glusenkamp, Rodgers Builders; Damon Jones, Daniels and Daniels Construction Co.; Shari Harris, UNC System; and Dave Simpson, Carolinas AGC.

Mr. Thompson, a member and immediate past chairman of the State Building Commission, said the purpose of the committee is to continue to maintain strong contacts with the State Construction Office/N.C. Department of Administration (DOA) and to exchange related information affecting the construction industry. The minutes for the last meeting, held October 31, 2007, were approved. The following items were discussed:

HUB Certification: Ms. Wall, director of the DOA's Office for Historically Underutilized Businesses (HUB), and Sheryl Cromedy, certification specialist for the office, reviewed the status of the statewide uniform certification program. The purpose of the program is to streamline the process of minority and women business enterprises, provide uniform standards and procedures and provide a single database. The program is expected to "go live" by July 1, 2009.

Under the new program, there will be more stringent certification requirements, including site visits for firms applying for HUB certification. There will be four-year reapplication cycles with annual renewals. The statewide program will grandfather in existing certifications with local governments before the program takes effect. The new statewide uniform certification program will have some exceptions including the City of Charlotte's Small Business Enterprise Program, the City of Durham's Equal Business Opportunity Program or the N.C. Department of Transportation's Disadvantaged Business Enterprise Program.   

Ms. Wall encouraged input on the draft statewide certification program. The proposal can be reviewed online at www.doa.nc.gov/hub, then click on "Statewide Uniform Certification Program Plan." She also informed the group that a public hearing on the proposed rules for Statewide Uniform Certification will be held on January 14, 2009.

Mr. Simpson noted that CAGC had provided input on the program and that it also was discussed in the last SCO/CAGC meeting, where it was generally agreed by contractors that it is extremely important to maintain a current list of HUB vendors that is easily accessible online and that clearly spells out capabilities, capacity and experience of those vendors. Such a list could help insure that the HUB vendors are qualified and that they have good track records.

Ms. Wall mentioned to the attendees at the Dec. 8 meeting:  "I know that one of the main concerns of contractors is having a database that works for you." She said information that will be included in the database will include whether the HUB firm has a general contractor's or mechanical license.

It was noted that HUB participation numbers on state and university work are not as high as they could be because some minority-owned companies chose not to be certified. "There is clearly a benefit in being certified in that you will be contacted for work as a minority-certified company," Preston Nesbit said.

Mr. Thompson commended Ms. Wall and Ms. Cromedy for their ongoing efforts: "All of your hard work will be a great benefit to the construction industry."
 
UNC System/CAGC Joint Efforts: Shari Harris of the UNC System reported on quarterly meetings of the UNC System/CAGC Joint Committee. She said that a big issue for UNC is sustainability and the impact it will have on building "green buildings" in the future.

2009 State Construction Conference: Mr. Driver said current plans are to have the conference March 24-25, 2009 at the McKimmon Center in Raleigh. Mr. Thompson said that the new break-out sessions that were tried this year were successful in that attendees had a wide range of choices about specific topics instead of one main session with no break-out sessions. Topics that Mr. Driver said were likely to be discussed in the break-out sessions would be bonding and insurance requirements, HUB participation and new sustainability requirements.

Ms. Wall suggested that a topic include immigration. Mr. Simpson said that the AIA NC/CAGC Joint Committee would like to offer a panel discussion on integrated practices for the construction and design team. It was agreed that the HUB networking session at each conference has been successful, resulting in increased HUB attendance. Ken Simonson, chief economist for AGC of America, also is a possible speaker.

Bonding, Insurance Issues: The N.C. Department of Insurance can now begin regulating bonding companies as a result of Senate Bill 738. Mr. Driver said that the State Building Commission is helping provide input on the issue. Damon Jones said that a big problem is that the State Construction Office and the DOI are coming in at the end of the project requiring items to be done that were not in the contract, delaying close-outs. Mr. Driver said he has discussed the issue with Insurance Commissioner-elect Wayne Goodwin. "We are working on that issue and hopefully that will get better," Mr. Driver said.

Mr. Simpson noted that CAGC recently made a presentation to a legislative committee about the importance of the state specifically requiring wind and flood insurance for the tier-one counties along or near the North Carolina coast. Mr. Driver said the state could impose such requirements without legislation and that he and the DOI will look at perhaps offering state coverage. Shella Farrior said that Builder's Risk insurance should not be required for site and utility work.

Alternates: Mr. Thompson noted that the State Building Commission has suggested that alternates be prioritized at a time when many projects are having a large number of alternates, a development causing problems for contractors at bid time. "We can do that in house," Mr. Driver said, adding that some state projects are having 20-30 alternates on them. "We are looking at prioritizing alternates so that the owner can't go from selecting the number one low bidder to the number 30 low bidder with an alternate." Ed Widman said: "It's a very good idea."

Informal Bids, Bonding Ceilings: While recently changed legislation allows informal bids to go from a $300,000 to a $500,000 ceiling, the N.C. General Assembly has not approved raising the bond ceiling requirements from $300,000 to $500,000. Mr. Driver said that likely would not change, as legislative fiscal staff has said that the $300,000 current threshold is high when compared with other states, some of which have a ceiling of $50,000.

Capital Projects Outlook: A CAGC analysis shows that before adjourning on August 2, 2007, lawmakers approved about $1.5 billion for construction work. That includes $1,120,973,072 for state construction projects -- $599,292,072 for total state capital and special indebtedness and $276,681,000 for UNC self-liquidating projects that will be funded through dormitory and other fees. Also authorized was $100 million for water and sewer projects. Lawmakers approved $145 million for repairs and renovations, of which 54% will go to state agencies and 46% to the UNC system. However, except for the self-liquidating projects for the UNC System, much of that work is being delayed because of the state's grim economic outlook in which lawmakers next year could face a shortfall of $3 billion or more.

Meantime, Gov. Mike Easley in January 2008 will ask the Council of State to approve $742,034,944 for construction and land acquisition for state and university projects (See Attachment). However, Mr. Driver noted that some of the larger projects in this funding do not have design work done. Such design would normally take about a year to do. He said the state and university will work on speeding design of those projects.

"It's not all gloom and doom," Mr. Driver said. "The Legislature understands that construction is a huge driver of the economy."

Federal military work -- $5 billion projected over the next five years in eastern North Carolina – also was discussed. Mr. Driver said Duke University plans to spend about $5 billion in construction over the next five years.

Legislative Issues: Mr. Simpson said that CAGC's top legislative priority continues to be badly needed infrastructure funding for transportation; public schools, university and other building work; and water and sewer repairs and expansions. He said the new retainage legislation (Senate Bill 1245) seems to be working well. He said CAGC is meeting with the N.C. Department of Revenue about what CAGC considers the unfair new practice of the department applying franchise taxes to amounts that are overbilled. Other issues likely to surface after the Legislature convenes on January 28, 2009 will include the environment, immigration and attempts to unionize. Stringent new crane certification requirements will put some operators out of business.
 
State Building Commission Developments: An Innovation Committee, chaired by former commission member and architect Paul Boney, is looking at spreading bonding requirements over phases of the job. The committee is looking at other ways to expedite state construction work.

New Contractor, CM Evaluation Forms: Mr. Driver discussed the new forms, which he said are simpler and are more objective. For a look at the new forms and related info, go to:

http://www.nc-sco.com/Forms/Contractor%20Evaluation%20Form.doc
http://www.nc-sco.com/Des_Evaluations/Blank_Form-Download.xls
http://www.nc-sco.com/Forms/CMR%20Prelim%20GMP%20form.doc

Mr. Driver encouraged contractors to recommend companies, including their own, that might be eligible for certificates of merit that would be recognized at the State Construction Conference. Ms. Wall said similar HUB-utilization merit awards are planned for the conference next year.

Asphalt Index: Mr. Driver said the state has looked into applying the N.C. Department of Transportation's asphalt index to building work. But he said with gasoline prices dropping and differences between building and highway construction, that likely would not happen.

Before adjourning, the committee agreed to have the next meeting after the long session of the Legislature adjourns.

Respectfully Submitted,
Dave Simpson, CAE