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Michael E. Purdy Associates guides public agencies and contractors in managing the complex world of public contracting by developing and implementing strategic contracting approaches and practices…creatively solving challenging procurement and contracting problems…and providing clear, comprehensive, and focused training on a wide variety of public contracting issues, including prevailing wages…Mike Purdy also helps businesses with market development, responding to public solicitations, and interview coaching. Mike has been meeting the needs of satisfied public agencies and contractors since 2005, drawing on 30 years as a public sector contracting manager for the largest public agencies in the State of Washington. For more information, visit their website at www.mpurdy.com.
Also be sure to read and sign up for a free e-mail subscription to Mike Purdy’s Public Contracting Blog (http://PublicContracting.blogspot.com), a great information resource on public contracting issues.
When a contractor works on Federal and/or state funded construction projects and fails to pay the appropriate “prevailing wages” or overtime to their employees and/or fails to submit the required “certified payroll reports” to the appropriate agencies —- well it’s pretty serious business.
The following article from SouthCoastTODAY.com will give you a little insight into just how serious it can be.
New Bedford drywall firm settles wage problem
By Staff Report
June 17, 2009
BOSTON — Attorney General Martha Coakley’s Office has reached a settlement with a New Bedford drywall company resolving allegations that the company failed to pay employees the prevailing wage rate, the correct overtime rate and failed to keep proper payroll records for work performed at four Massachusetts public works job sites.
Garcia Drywall Inc. and its president, Emanuel Garcia, have agreed to pay more than $41,600 in restitution to the affected employees and more than $18,000 in fines for intentionally violating the Prevailing Wage, and Overtime and Record Keeping Laws, Coakley’s office said in a press release.
In addition, Garcia Drywall has agreed to a one-year debarment, which prevents them from bidding on any public construction projects, as well as from accepting any contracts for public work for a one-year period in the commonwealth, the Attorney General’s Office said.
In an e-mail to The Standard-Times, the owners of Garcia Drywall wrote that they “truly regret the past errors in interpretation applied in our prevailing wage and overtime payment practices. Upon notification of a complaint, Garcia voluntarily came forward to resolve the aforementioned errors and are in the process, with the Attorney General’s Office, of making restitution to the affected past and current employees.”
The company owners went on to say they “regret any hardship that this may have caused to those affected employees and (we) are committed to complying with the laws of the commonwealth now and in the future.”
In January, the Attorney General’s Office received a complaint alleging that Garcia and his company failed to pay the prevailing wage rate to employees at public construction projects. Investigators from the Attorney General’s Fair Labor Division reviewed a self-audit prepared by the company and discovered that the company had misclassified 26 employees at four public construction sites, including two separate projects at UMass Dartmouth; the Massport State Police Station at Logan Airport; and the Prattville Apartments in Chelsea.
Additionally, according to the press release, Garcia Drywall failed to submit certified payroll records to the awarding authorities at these job sites. Investigators also discovered that the company failed to pay time and a half to employees for working more than 40 hours in a work week.
(from Public Works Online)
Almost 20% of the $787 billion American Recovery and Reinvestment Act will be spent on improving the nation’s infrastructure, this means that their will be more and more “public works” construction projects that require certified payroll.
Will you be ready? Will you be in compliance? Do you know what a certified payroll report is or how to fill one out? Check out our Free (upon request) Certified Payroll Training Guide http://www.sunburstsoftwaresolutions.com/component/option,com_performs/formid,5/
Interested in finding out how this money will be spent? Check out Public Works Online Economic Recovery Resource Center at http://www.pwmag.com/industry-news.asp?sectionID=0&articleID=878887
From Construction Business Owner.com
– written by Russ Roy – February 2oo9 edition
Note from Nancy Smyth: Monte TenEyek, the consultant noted in this article, obviously didn’t do his homework regarding QuickBooks. QuickBooks Pro/Premier has the ability to handle 25 active payroll wage items per employee and the Enterprise Solutions version can handle 100 per employee. If you add QuickBooks Enhanced Payroll you can track worker’s compensation.
Read our own article on “Making the Move to Public Works Construction” from our December 2008 QuickBooks for Contractors Newsletter, by clicking here.
With the burst housing bubble and tighter private financing guidelines, more and more contractors are considering public works projects as a new source of revenue. On the surface, this seems like a great idea. Talks of a possible federal stimulus package aimed at public works and infrastructure development means there could soon be more government work to go around.
But making the shift to prevailing wage jobs takes preparation. Without proper planning, contractors run the risk of underbidding jobs-and, subsequently, losing money-or getting slapped with steep penalties for improper recording keeping. Establishing protocols for certified payroll and AIA progress billings and having solid audit trails for each transaction are vital if you want to succeed in the government-financed construction market.
There are many things you can do to prepare your company for a shift to government work. Following, three key steps are outlined to prepare your company for prevailing wage work. By following these initial first steps, and building on them as you grow your public works portfolio, you will position your company to not only survive the current economic downturn, but thrive when the market conditions improve.
Step No. 1: Get Educated
The first thing you should do is get educated about prevailing wage law. Find out what payroll, accounting and reporting requirements are necessary to meet state and federal regulations. Most states have some information posted on their website, which is a great place to start. But taking a class or workshop from your local industry association or CPA may provide more detailed how-to information.
Don’t be hesitate to hire a consultant to show you the ropes. An up-front consulting investment will often deliver a high return on investment by shortening the learning curve and saving you money down the road. A financial services firm with construction experience, for instance, can assist you in establishing things like a bona-fide fringe benefits program that lowers your taxable employee wages. This can help you control cash flow, lower your bid rate and increase your profit margin.
Your accounting software vendor can also provide a wealth of knowledge and experience around meeting your prevailing wage requirements and should be an integral part of your public works transition team. If the products (or support professionals) can’t address your questions, it’s probably time to upgrade to a more complete, construction-specific solution.
Step No. 2: Automate Your Accounting Processes
Managing prevailing wage jobs using generic accounting software and spreadsheets requires multiple data entry that is both time-consuming and at-risk for human error. “Programs like QuickBooks may be adequate when contractors have a single pay rate and no need for actual labor burden, but if you want to compete for prevailing wage work, you’ll need a more robust accounting program,” said financial consultant, Monte TenEyek. “When you perform public works projects you need to have payroll software that supports multi-rate capabilities and different worker’s compensation rates for different jobs.”
Veronica Calderon, office manager for Ro’s Precise Painting, a commercial painting contractor in California, knows first-hand how challenging it is to stay in compliance without the right software tools. “This seems crazy now,” said Calderon, “but our old software couldn’t handle multiple pay rates. For each employee we would cut a separate paycheck for each job so that our certified payroll report would be accurate. One employee might get five or six paychecks each pay period!”
After upgrading to software with strong certified payroll tools, Calderon couldn’t believe the difference. “We were in shock because certified payroll reporting was so easy and accurate. Plus, we gained checks and balances that keep us from making mistakes. Having the right software makes a world of difference when you’re doing government work.”
TenEyck couldn’t agree more. “Make the decision to put procedures in place before going after prevailing wage work,” he recommends. “If you get solid advice up front, and have construction-specific software in place to automate prevailing wage processes and establish compliance consistency, you’ll have the peace of mind to focus on securing government work.”
Step No. 3: Bid on Projects Based on Your Strengths
On public works projects, the job is awarded to the lowest qualified bidder. And the competition can be tough. Bid too low and you might win the work-but bankrupt your business. Bid too high and you’re wasting your time. “It’s not uncommon to see twenty or thirty contractors bidding on the same public works job,” says TenEyck, “and according to contractors I’ve talked to, they estimate that it costs them $3,000 to bid on a single job.”
Since every contractor bidding on a prevailing wage job has to pay their employees the same rate of pay, the wage itself can’t be your competitive edge. Because of this, it makes sense to identify your strengths before going after projects. What types of projects do you excel at? What’s more, which of your crews perform the fastest? When making the shift to government work, identify the projects that, based on your strengths, will most likely put you in the lowest bidder spot while still turning a profit.
Moving Forward: Cultivating Relationships
After getting educated, automating your accounting processes and modifying your bidding process based on your strengths, you should have a solid foundation for making the shift to public works projects. The next thing you should focus on is building relationships with the people in charge of awarding you jobs.
“Unanswered questions are a barrier to public works projects,” states TenEyck. “If you have lingering questions about a job, you’re probably not going to submit a bid.” Getting to know the director of facilities management at your local university, for example, can be very advantageous. Not only will you have an “in” to discover what work is coming up, but you’ll have a specific contact to call if you have questions about the bidding process.
In the competitive world of public works construction, prevailing wage planning isn’t an option-it’s a necessity. Even if you already perform government work, it’s not a bad idea to revisit your software solution and processes, and consult with a financial planner to modify your fringe benefits structure to take advantage of every possible tax incentive.
