ALEXANDRIA, Va. — On June 11, 2013, the Connecticut Supreme Court officially released a ruling confirming that Commercial General Liability insurance policies do insure property damage that unintentionally results from defective work. The decision supports the American Subcontractors Association’s position that insurance companies must deliver what they promise in their CGL policies.

“Insurance policies … are designed to cover foreseeable risk, including negligent acts,” the Connecticut Supreme Court wrote in Capstone Building Corp. and Capstone Dev. Corp. v. American Motorists’ Insurance Companies. “For the same reason, the mere fact that defective work is in some sense volitional does not preclude it from coverage under the terms of the policy.”

In the case, the contractor, Capstone Building, entered into a construction contract with the University of Connecticut for work, coordinated and supervised by Capstone Development. Under the prime contract, the university was required to purchase CGL insurance for itself, the insured contractor and “subcontractors of all tiers.” The university obtained an owner-controlled insurance program policy underwritten by American Motorists. The project was completed in 2001, but in 2004, the university discovered construction defects that caused damage and filed a claim against the contractor. The contractor tendered the claim to American Motorists, which denied the claim, and the contractor sued, asking a court to declare that the CGL policy in question provided a defense and indemnity to the contractor.

In an amicus brief, filed on May 2, 2012, ASA argued that, under Connecticut law, the CGL policy provided on the construction project covered property damage to non-defective work, despite the insurer’s denial of coverage. “Insurance plays a critical role for the members of ASA in managing the serious risks inherent in the construction industry, and those members have a significant interest in being able to rely on their insurers to provide coverage for risks for which they paid substantial premiums,” ASA wrote.

Further supporting ASA’s position, the Connecticut Supreme Court quoted in its decision a 2007 case, Lamar Homes, Inc. v. Mid-Continent Casualty Co., in which ASA also filed an amicus brief in support of coverage: ‘‘[A] deliberate act, performed negligently, is an accident if the effect is not the intended or expected result; that is, the result would have been different had the deliberate act been performed correctly. ... Accordingly, because negligent work is unintentional from the point of view of the insured, we find that it may constitute the basis for an ‘accident’ or ‘occurrence’ under the plain terms of the commercial general liability policy.”

The Connecticut Supreme Court decision follows the growing national trend that construction defect claims resulting in unintended property damage are a covered CGL policy occurrence.

The state Supreme Court added that CGL policies do not insure claims to repair or remove the faulty workmanship itself. “If a subcontractor’s defective work unintentionally damages non-defective property, the damage can be insured by CGL policies through an exception to the ‘your work’ exclusion, though the ‘your work’ exclusion prohibits coverage of damages arising from the insured contractor’s own defective work,” explained Eric Travers, Esq., of ASA-member law firm and ASA general counsel, Kegler, Brown, Hill and Ritter, Columbus, Ohio.

ASA’s Subcontractors Legal Defense Fund paid the fees associated with the filing. The SLDF supports ASA’s critical legal activities to protect the interests of all subcontractors and is funded solely by contributions. SLDF funds are invested in precedent-setting cases across the country. To learn more about the SLDF, visit www.sldf.net.

Founded in 1966, ASA amplifies the voice of, and leads, trade contractors to improve the business environment for the construction industry and to serve as a steward for the community. ASA’s vision is to be the united voice dedicated to improving the business environment in the construction industry. The ideals and beliefs of ASA are ethical and equitable business practices, quality construction, a safe and healthy work environment, and integrity and membership diversity.

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ALEXANDRIA, Va. — In a committee hearing of the U.S. House of Representatives on May 23, 2013, the American Subcontractors Association urged “targeted Congressional intervention” to address several obstacles that specialty trade contractors and subcontractors continue to face to participation on federal construction projects.

Two of the biggest obstacles are the bidding/proposal process and slow payment or nonpayment for work properly performed, ASA Chief Advocacy Officer E. Colette Nelson told the Subcommittee on Contracting and Workforce of the U.S. House Committee on Small Business during the “Hearing on Building America: Challenges for Small Construction Contractors.”

“Contractors at all tiers need to be assured that the bidding and contract award process is clear and efficient, or the most qualified contractors will avoid federal projects,” she said. “Once awarded a contract, subcontractors need assurance that they will be paid promptly for work properly performed.”

Specifically, ASA recommended that Congress:

• Deter bid shopping and bid peddling by prohibiting the use of reverse auctions for construction and construction-related services at both the prime and subcontract levels.
• Deter bid shopping at the subcontract level by requiring the prime contractor to submit with its bid a list of the subcontractors it intends to use.
• Encourage small business participation on design-build contracts by requiring the use of the two-step method for the procurement on all but the smallest contracts.
• Increase access to surety bonds by small firms by increasing to 90 percent the guarantee available to sureties under the SBA Surety Bond Guarantee Program.
• Assure subcontractor and supplier payment by applying to individual sureties the same standards currently applied to corporate sureties.
• Assure subcontractor and supplier payment on the construction components of projects financed by public-private partnerships by requiring surety bonds on such contracts.
• Assure payment to the smallest of subcontractors and suppliers by exempting the Miller Act from periodic inflation adjustments.

The ASA “Statement for the Record” is available on the ASA Web site.

Founded in 1966, ASA amplifies the voice of, and leads, trade contractors to improve the business environment for the construction industry and to serve as a steward for the community. ASA’s vision is to be the united voice dedicated to improving the business environment in the construction industry. The ideals and beliefs of ASA are ethical and equitable business practices, quality construction, a safe and healthy work environment, and integrity and membership diversity.

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ALEXANDRIA, Va. — The American Subcontractors Association is accepting applications for its 2013 Excellence in Ethics Awards. Construction subcontractors that earn the award will be able to proudly display the award as leaders recognized for their commitment to ASA values like quality construction and a safe and healthy work environment.

“The ASA Excellence in Ethics Awards are a great way for subcontractors to let their clients, employees, and others in their community know that their company is committed to professionalism and sound business practices,” said Shannon MacArthur, MEMCO, Spring, Texas, chair of the ASA Task Force on Ethics in the Construction Industry, which developed the awards.

Subcontractors should start planning now to apply for the awards. The application deadline is Dec. 6, 2013. Each applicant is required to respond to questions concerning the firm’s corporate ethics policies and procedures, its construction practices, and its general business practices. Each applicant also is required to submit detailed documentation, including sealed letters of recommendation from a customer, a competitor, and a supplier.

Applicants can learn about the judging criteria and submission requirements in the awards brochure, which includes the application form. ASA also provides a Resource Guide to help firms prepare and submit applications. This guide contains model documents, such as sample recommendation letter requests and model policies on topics ranging from competition and conflicts of interest to internal procedures and whistle blowing. In ASA’s ethics video, ASA-member subcontractors discuss the reasons why they implemented ethics programs in their companies and how ASA’s Excellence in Ethics Awards program has helped them promote ethics within and outside their companies.

For help preparing an awards application or developing an ethics program, subcontractors are invited to join ASA’s Excellence in Ethics Awards Program Q-and-A LinkedIn group. More information about the awards is available under “Education & Events” on the ASA Web site.

Founded in 1966, ASA amplifies the voice of, and leads, trade contractors to improve the business environment for the construction industry and to serve as a steward for the community. ASA’s vision is to be the united voice dedicated to improving the business environment in the construction industry. The ideals and beliefs of ASA are ethical and equitable business practices, quality construction, a safe and healthy work environment, and integrity and membership diversity.

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ALEXANDRIA, Va. — When it comes to managing their construction firms, subcontractors want to be up-to-date on the issues that most impact their businesses, and they want to continue to learn how to do better. ASA’s webinars for 2013-14 are designed to help subcontractors and specialty trade contractors achieve better business results.

Each of these live, Internet-based programs addresses the business management education needs of subcontractors and specialty trade contractors. The schedule for 2013-14 is:

• Sept. 10, 2013: “Liens and Bonds: Keeping Up with the Changes to Protect Your Rights to Collect Your Money” (Item #WEB063).
• Oct. 8, 2013: “Collection Strategies for Subcontractors” (Item #WEB064).
• Nov. 12, 2013: “All Work and No Pay Making You Crazy? Best Practices for Suspending Work Without Getting Fired” (Item #WEB065).
• Dec. 10, 2013: “Business Succession and Transfer Planning” (Item #WEB066).
• Jan. 14, 2014: “Prequalification Management” (Item #WEB067).
• Feb. 11, 2014: “Preparing for a Changing Work Force” (Item #WEB068).
• April 8, 2014: “Strategic Planning: Looking Forward from the Downturn” (Item #WEB069).
• May 13, 2014: “Navigating Contract Revisions” (Item # WEB070).

Each ASA webinar will take place from 12:00 p.m. to 1:30 p.m. Eastern time on the second Tuesday of the month. The registration fee for each webinar is $99 for ASA members and $179 for nonmembers and allows access with one Internet connection. Participants can project the webinar onto a screen or wall and listen to it on a speakerphone for a group training event.

After the program, registrants will receive a link to a recording of the webinar, and an ASA Certificate of Completion that can be downloaded and printed for each person who watched. Individuals who have earned the Associate Constructor or Certified Professional Constructor designation from the American Institute of Constructors Constructor Certification Commission are eligible to receive 1.5 Continuing Professional Development credits for participating in each ASA webinar.

Learn more and register at www.asaonline.com under “Register for an Event.”

Founded in 1966, ASA amplifies the voice of, and leads, trade contractors to improve the business environment for the construction industry and to serve as a steward for the community. ASA’s vision is to be the united voice dedicated to improving the business environment in the construction industry. The ideals and beliefs of ASA are ethical and equitable business practices, quality construction, a safe and healthy work environment, and integrity and membership diversity.

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ALEXANDRIA, Va. — ASA hailed legislation introduced by Rep. Carolyn Maloney, D-N.Y., on May 9, 2013, as a significant step to improve the management of the federal government’s construction projects.

By requiring contractors to use the subcontractors identified in the contractors’ bids, the Construction Quality Assurance Act of 2013 (H.R. 1942) would promote open competition among subcontractors and ethical bidding practices and ensure that the highest quality subcontractors bid and work on projects paid for with federal taxpayer dollars.

“As the federal government continues to tighten its belt, taxpayers deserve to get absolutely the best construction projects for their tax dollars,” said ASA Chief Advocacy Officer E. Colette Nelson. “Under the current acquisition system, federal contracting officers must accept prime contractor bids without any assurance of which subcontractors will actually perform the work. This lack of oversight diminishes the quality of and threatens the security of federal construction. Taxpayers deserve better, and mandatory bid listing is the responsible solution.”

Rep. Maloney’s bid listing legislation would require prime contractors that bid on federal construction projects over $1 million to list each subcontractor they plan to use for $100,000 or more work. After the contract award, if a prime contractor replaced a listed subcontractor without the permission of the contracting officer, the prime contractor would be subject to penalties in an amount equal to the greater of: 10 percent of the amount of the subcontractor’s bid; the difference between the amount of the list subcontractor’s bid and the replacement subcontractor’s bid; or the difference between the amount of the bid by a substituted subcontractor and the dollar value specified by the contractor to self-perform the work. A subcontractor that knowingly participates in the prime contractor’s failure to comply with the bid listing requirements also would be subject to penalties.

“The bid-listing requirement would eliminate post-award price negotiations between contractors and subcontractors that can lead to corner cutting and wasteful spending, and can drive quality contractors and subcontractors out of federal construction markets,” Nelson said. “And, by requiring contractors bidding on federal agencies’ construction projects to inform agencies of the major subcontractors they would use on projects and the types of work that those subcontractors would perform, the bill would add a welcome measure of protection to the nation’s infrastructure.”

Founded in 1966, ASA amplifies the voice of, and leads, trade contractors to improve the business environment for the construction industry and to serve as a steward for the community. ASA’s vision is to be the united voice dedicated to improving the business environment in the construction industry. The ideals and beliefs of ASA are ethical and equitable business practices, quality construction, a safe and healthy work environment, and integrity and membership diversity.

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