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On January 14, 2013, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) held that an offeror had standing to challenge the exclusion of its proposal from a competition even prior to a competitive range, despite the offeror’s submission of an incomplete proposal. In Orion Technology, Inc. v. United States, the Federal Circuit clarified that a disappointed offeror that has been eliminated from a competition can show that it has standing as an “interested party.”

To learn more about this, click here to read the client alert that was written by Daniel Herzfeld and Evan Wesser.

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Assembly Bill 2237, which took effect January 1, 2013, confirms that anyone, including a consultant to an owner-builder, who provides or oversees bids for construction, arranges for subcontractor work and schedules, and/or has oversight for a home improvement project is, in fact, acting in the capacity of a contractor and must be state-licensed for any project that is more than $500 in combined labor and material costs. “Consultant” is defined as “a person, other than a public agency or an owner of privately owned real property to be improved, who meets any either of the following criteria as it relates to work performed pursuant to a home improvement contract as defined in [Business & Professions Code section] 7151.2: (A) Provides or oversees a bid for a construction project. (B) Arranges for and sets up work schedules for contractors and subcontractors and maintains oversight of a construction project.” To read A.B. 2237, click here.

The CSLB sponsored the bill as “a valuable consumer protection measure.” CSLB Registrar Steve Sands commented: “All too often, people who don’t have a state contractor license call themselves construction consultants and encourage property owners to take on a home improvement project as the owner-builder. The so-called consultant collects a fee and many times leaves the homeowners with all of the project responsibility and liability.”

The new law addresses to some extent California’s Second District Appellate Court’s decision in The Fifth Day, LLC v. Bolotin, 09 C.D.O.S. 4019 (March 30, 2009), clarifying the definition of “consultant.” The Fifth Day court, in a case of first impression, considered whether an entity that provided construction management services to a private owner was required to be licensed under the California Contractor’s State License Law, Business & Professions Code section 7026. In a 2-to-1 decision, the Fifth Day court concluded that the services contemplated under the agreement in question did not cause the construction management company to fall under section 7026’s definition of “contractor.” To read our Client Alert entitled California Appellate Court Confirms that Certain Construction Managers Need Not Be Licensed Contractors, click here.

For additional information about several other laws affecting consumers, contractors, and the construction industry take that took effect January 1, 2013 click here.

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With the passage of Assembly Bill 1794, effective January 1, 2013, accurately and timely reporting new employees is now even more important. The new law authorizes the Employment Development Department (EDD), until January 1, 2019, to provide the specified new employee information to the Joint Enforcement Strike Force on the Underground Economy, the Contractors’ State License Board (CSLB), and the State Compensation Insurance Fund (SCIF).

Efficient information-sharing among state offices is expected to ensure that employers are accurately reporting their employee payroll to their insurance carriers for establishing their workers’ compensation insurance premiums.

This new law specifically enables the EDD, the CSLB, and the SCIF to establish a memorandum of understanding to audit, investigate, and prosecute those who violate tax withholding requirements and commit premium insurance fraud. With the newly shared information, the CSLB is expected to take disciplinary action against contractors who fail to accurately report new employee information within 20 days of the established hire date, as required by California Unemployment Insurance Code section 1088.5(d). To read the CSLB’s Press Release on A.B. 1794, click here, and to read A.B. 1794, click here.

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On December 7, 2012, the U.S. Court of Appeals for the Federal Circuit issued its first decision determining that government contractors need to challenge any obvious errors, improprieties, or ambiguities on the face of a solicitation amendment before award (extending its previous rule that such challenges to the initial solicitation generally must be challenged before award). In COMINT Systems Corp. & Eyeit.com, Inc., JV v. United States, the Federal Circuit found that Comint missed an opportunity to challenge an obvious – or patent – error in an amendment to the solicitation. By signing the amendment and waiting until after award to protest the allegedly problematic amendment, the government contractor waived any right to challenge the terms of the amendment to the solicitation.

To learn more about this, click here to read the client alert that was written by Daniel Herzfeld.

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The 22nd edition of Pillsbury’s Newsletter: Perspectives on Real Estate features articles on energy consumption data reporting (AB1103 and 531), construction and risk management, new foreign tax withholding forms, chapter 9 and public-private partnerships.

Articles include:

The Fall 2012 Edition of Perspectives on Real Estate is edited by: Laura Hannusch, Peter Freeman, Christine Roch and Noa Clark and can be downloaded in its entirety by clicking here.

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On November 20, 2012, the California Contractors State License Board posted an Industry Bulletin alerting licensees and applicants alike to a recent scam involving fraudulent calls asking licensees or applicants for their credit card information over the phone in connection with renewing their licenses, obtaining continuing education credits, or taking licensing exams. CSLB Registrar Steve Sands has confirmed that at least one “unscrupulous company” has used information from the CSLB’s website to contact licensees or applicants “to mislead and scam them.” The CSLB confirmed that it “will never ask for credit card information over the phone, nor will they process any payment over the phone.” CSLB fees are only payable through the mail via check or at CSLB headquarters via cash, check, or credit card. Moreover, there are no continuing education requirements to renew a CA CSLB license.

The CSLB confirmed that although California Business and Professions Code § 7080.5 requires it to make public the name and address of every accepted application for a license, and that it intends to continue to post this information, it could change its process if applicants continue to be preyed upon by unscrupulous companies. To read a copy of the Industry Bulletin, click here. To read additional CA CSLB 2012 Industry Bulletins, click here.

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In deciding Westfield Insurance Company v. Custom Agri Systems, Inc., 2012 Ohio 4712, the Ohio Supreme Court recently held that defective construction or workmanship is not a covered “occurrence” under a commercial general liability (“CGL”) insurance policy, even if the defective work was performed by a subcontractor of the insured contractor. In that case, a contractor sought defense and indemnity from its insurer related to allegations of damages arising from a steel grain bin which had been defectively constructed by a subcontractor. The insurer argued that the claims against the contractor were not for “property damage” caused by an “occurrence,” or, alternatively, that the claims were removed from coverage by the policy’s contractual liability exclusion.

In rendering its opinion, the court stated that faulty workmanship was not fortuitous and therefore not an accident or occurrence under a CGL policy. Because it held that defective construction was not an occurrence, the court did not address question of whether such claims were excluded by the contractual liability exclusion. The dissent, however, noted a “strong recent trend in the case law” which interprets the term occurrence to include unanticipated or unintentional damage to non-defective property resulting from faulty work. The dissent went on to criticize the majority opinion as being too broad because it foreclosed the possibility of defective workmanship constituting an occurrence under any circumstance.

Courts throughout the country are split on whether defective workmanship is an occurrence under a CGL policy. Ohio is simply latest state to weigh in on the debate. The Westfield decision will not be well-received by contractors but is likely to be celebrated by insurance companies who may rely on it in refusing to defend claims.

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The replacement of the eastern span of the Bay Bridge is a process many here in the San Francisco Bay Area have had a first-hand view of, as the new span is being built next to the old span. According to Caltrans, the new span will be the longest Self-Anchored Suspension span in the world. Here CalTrans explains the fascinating process by which the weight of the new bridge is transferred from the falsework which has supported it during construction to the new suspension cable. The load transfer process is scheduled for completion this month, with the new span slated to open Labor Day 2013.

Wish the election were over already? This little girl does too.

Do parking structure designs account for loads generated by large numbers of dancing people? Maybe they should. [Audio NSFW]

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There is no doubt that Public-Private Partnerships will play an integral role in improving this country’s infrastructure in the coming years. By leveraging private investment, P3s have the ability to bridge the funding gap in many state and local governments. States are slowly recognizing that they can tackle critical infrastructure needs by partnering with the private sector. Some states, however, are still hesitant to commit to P3s.

Pillsbury’s P3 practice has created a chart that lists which states have enacted significant P3 enabling legislation. This P3 Enabling Statutes chart is available on Pillsbury’s P3 practice homepage. The statutes include links to the full text of the enacted legislation so that you can learn more about how you can take advantage of these P3s. In addition to listing the agencies and types of projects authorized, the chart also lists whether the statutes encourage unsolicited proposals. To promote ingenuity and entrepreneurialism, P3 legislation should continue to welcome unsolicited proposals from the industry.

We will of course continue to update this chart as more states pass P3 enabling legislation.

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Last week, the Federal Energy Regulatory Commission (“FERC”) began enforcing Order 1000, a broad and detailed set of guidelines regarding the development of the nation’s power transmission system. The Order, which has been viewed as one of the most significant transformations to the electricity market in recent memory, impacts regional transmission planning and allows for new transmission projects to be competitively bid. As outlined by FERC, Order 1000 consists of three categories of reforms – planning reforms, cost allocation reforms, and nonincumbent developer reforms.

The most controversial aspect of the Order appears to be this third category of reforms, which takes away incumbent utilities’ right of first refusal from any FERC jurisdictional contracts. But not all energy executives are opposed to this reform. Transmission & Distribution World shared the views of several top utility executives, including one who supports the elimination of the right of first refusal because it opens up opportunities for more providers to participate in building transmission lines and allows existing utilities to compete in other parts of the country. Other executives, however, fear that opening up development by letting inexperienced companies bid on transmission may jeopardize reliability.

It is undisputed that the nation’s current power grid is out of date. The American Society of Civil Engineers reports that 70 percent of power lines and transformers are over 25 years old, and 60 percent of circuit breakers are over 30 years old. Clearly, the need for investment and opportunities for development, construction, and business are massive. Bloomberg reports that approximately $673 billion will need to be invested by 2020 to avoid major breakdowns of the power grid. $104 billion worth of new transmission capability will be constructed by 2022, resulting in an estimated $6 billion in profits for developers of power lines.

It is anticipated that the costs of modernizing the power grid will be borne in part by consumers, who will likely face increased rates. But a more efficient power grid should ultimately lead to lower rates. In addition, modernization will help facilitate the use of renewable energy. SmartGridNews.com notes that new transmission lines are essential for energy sources like solar and wind to be incorporated into the power grid.

The true impacts of Order 1000 may not be known for some time, but the need for improving the grid combined with the opportunity for increased competition may provide a much needed economic boost.