A&E Quarterly Regulatory Round Up Q4 2021
We are pleased to share with you our Architecture and Engineering (“A&E”) Quarterly Regulatory Round Up. This quarterly report highlights regulatory developments and insights that are important to the A&E firm sector.
Our 4th Quarter 2021 report includes a legislative update on where the Infrastructure Investment, the Jobs Act and the Build Back Better Act stand today, an update on PPP loan forgiveness and its impact on overhead rates for A&E firms, and an evaluation of the impact of President Biden’s Executive Order to raise the federal contractor minimum wage on current & future contracts.
Legislative Update: Where the Infrastructure Investment, the Jobs Act and the Build Back Better Act Stand Today
Late on Friday November 5, 2021, the House of Representatives passed the $ 1.2 trillion Infrastructure Investment bill, leaving a vote on President Biden’s larger social and climate package or Build Back Better Plan until centrists in the Democratic Party receive estimates on its full cost. The Infrastructure Investment and Jobs Act was signed on Monday, November 15th by the President while the larger Build Back Better legislation, which contains many of the Tax Increases and Renewable Energy Provisions being considered, is in significant question until the Congressional Budget Office estimate the Revenue Cost – likely greater than the $ 1.75 Trillion reported.
The Build Back Better (“BBB”) Act has cost estimates of $1.75 to $2 trillion. However, a group of five centrists in the Democratic Party released a statement late Friday night that they would vote for the bill once the Congressional Budget Office confirmed the cost figures are in line with White House estimates. “We commit to voting for the Build Back Better Act, in its current form other than technical changes, as expeditiously as we receive fiscal information from the Congressional Budget Office – but in no event later than the week of November 15, 2021,” said the statement.
The House plans to take the next step in passing the social spending plan. The chamber will try to approve the bill during that week once it returns from a weeklong recess. However, with no Republican support expected, Democrats can lose no more than three votes for the package.
It would then go to the Senate. To pass the bill under special budget rules, all 50 members of the Democratic caucus will have to support it.
Senator Schumer will have to win over conservative Democratic Sen. Joe Manchin of West Virginia, who has not yet blessed a framework agreement on the legislation. The House could also send the Senate a bill that includes four weeks of paid leave for most American workers — a provision Manchin has opposed. Once the Senate irons out any objections from Manchin or other Democrats, in addition to any constraints budget reconciliation rules put on the bill, it could approve a different version of the plan than the House does. The House would then need to vote on the Senate plan or go to a conference committee with the upper chamber to hash out disparities.
In an overview, Democrats will have to navigate a series of obstacles to get the bill to Biden’s desk in the coming weeks. Pulling it off will require cooperation and trust between centrists and progressives who have disparate views about how large of a role the government should play in boosting households and combating climate change.
Further, on Sunday, November 7, 2021, House Speaker Nancy Pelosi expressed confidence that the centrists will honor their side of the deal. “As has been agreed, when the House comes back into session the week of November 15th, we will act with a message that is clear and unified to produce results,” she wrote to House Democrats. The nonpartisan CBO could take weeks to release a cost estimate for the sprawling plan. However, the centrist holdouts in a Friday statement committed to voting for the legislation “in no event later than the week of November 15, 2021.”
If Democrats can push the bill through Congress in November, they will still have another big lift on their hands before the end of the year. Lawmakers need to raise or suspend the debt ceiling sometime in December — or risk the first-ever default on U.S. debt.
PPP Forgiveness Impact on Overhead Rates for A&E – Where It Stands Today
As you know, we’ve continued to keep our eye on the Paycheck Protection Program (“PPP”) forgiveness impact on overhead rates for A&E firms. In September, the U.S. House Rules Committee attached the Brown-Katko Amendment to the National Defense Authorization Act (“NDAA”). This amendment was grouped with several bipartisan amendments and that group of amendments passed in the House of Representatives. The amendment was co-sponsored by three Republicans and two Democrats, illustrating the bipartisan support for addressing the challenge facing firms that work with State and local Department of Transportations.
The Brown amendment states that “no cost reduction or cash refund shall be due to the Department of Transportation or to a State transportation department, transit agency, or other recipient of assistance” related to forgiveness of payroll costs under a covered PPP loan.
Senate leaders have drafted their own version of the NDAA and are now discussing differences in the versions to reach consensus on an agreement that can pass both chambers.
We will continue to monitor the situation and provide updates as applicable.
Evaluating the Impact of Biden’s Executive Order to Raise the Federal Contractor Minimum Wage on Your Current & Future Contracts
By: Eric Poppe, Senior Manager, Government Contracting & Professional Services Industry practices and George Faux, Senior Associate, Government Contracting Industry practice
On January 30, 2022, the new federal contractor minimum wage will go into effect. The change in wage determination was one of President Biden’s executive orders on April 27, 2021. To learn more about the impact of President Biden’s Executive Order to raise the federal contractor minimum wage on current & future contracts read our recent article: Evaluating the Impact of Biden’s Executive Order to Raise the Federal Contractor Minimum Wage on Your Current & Future Contracts.