Illinois Construction Stuff and Stuff (11)
A few years I snuck into another trade group that was not affiliated with NACM.
Shhh, I’m not cheating on NACM. Our marriage is still safe. I’ve been in many other groups over the years, like the Association of Credit Executives, the Society of Childrens Book Writers and Illustrators, Masters Swim and the Bald People of America (motto: God loves some people’s heads, the rest He covers with hair).
But it was somewhere else I needed to be. That group is ASA, the American Subcontractors Association. It’s different than my NACM group in that instead of hanging with my awesome competitors, I’m in a group that would more likely include my customers, who are mostly subcontractors, and definitely not allowed into my electrical distributor’s trade group, other than, well, you know, on an aging spreadsheet.
Why would I go there? None of our competitors are in ASA. And why did they let us in, since we are a distributor, not a subcontractor? Well, because that isn’t quite true. Under the Lien Statutes, a fourth-tier supplier is defined as a subcontractor, even if we aren’t actually doing any construction.
So, they let me in, and of course the first thing I did was jump into their Government Relations Committee, because they are very active in mechanics lien legislation. You know, one of my favorite things after mint meltaway ice cream.
ASA teams with another agency, IMSCA, to talk to legislators, create, and push for legislation and practices that can make the construction world safer for subcontractors. Sometimes this means teaming with or fighting the banking industry, prime contractors, title companies and the Girl or Boy Scouts, depending on the action.
A couple years ago, we passed legislation that required retention on private projects to be reduced to no more than five percent when a project is fifty percent finished. This benefits both the subcontractor and its suppliers, because more money is freed up quicker. This is working like a breeze.
Last year we tried to do something similar for public projects with SB 133, which, to be honest, I had reservations about when it was first proposed. The original plan was to eliminate retention altogether on public projects, because everything was already covered by payment bonds. My argument is this would make collecting more expensive and difficult, because if you filed a claim on funds and the bond, the claim on funds would often pay much quicker than the claim on bond, because bonding companies will usually fight much harder than the governmental agency. This is because the bonding company would have to pay you, and then go after their own customer to collect. With a claim on funds, the governmental agency doesn’t suffer those loyalties, and it’s money they would have spent anyway.
So for me, yeah, I want there to be funds available.SB 133 didn’t completely eliminate retention, but merely capped it at 5%, so there would be funds available in a lien action, just not as much. It seemed fair enough to me, so I reluctantly supported it.
A few years ago, I proposed my own legislation. My goal was to address terms in a General Contractor’s terms and conditions where they require waivers of lien to accompany the invoices for payment. You know, waivers. A document that clearly states you already received payment. In other words, you bill them for something, and at the same time you give them a document that says they already paid for it.
My legislation would have enabled the party furnishing the waiver to give a conditional waiver rather than an unconditional one, which more accurately states the waiver is valid only once payment is actually received. I met with and convinced my local legislator to introduce my bill, but unfortunately, instead of using my clear, really well written bill (If I say so, myself, which I do), the attorney copied some gobbledygook from another state, which I wouldn’t have even supported, and it got shot down in the legislature.
Why’d I bring this up? Well, because in this morning’s meeting, conditional waivers were brought up again, along with some other topics we want to address, including ‘pay if paid’ contracts and termination for convenience, both terms that are painfully unfair to subcontractors. If you do your work, you deserve to have a contractual right to collect from those whom you have privity of contract, whether they are paid or not by their customer. Otherwise, it’s like saying you have to make your house payment unless you lose your job, and if that happens, the mortgage company does not have a right to enforce their lien.
Yeah, I see the banking industry going for that. So why is it fair in construction contracts where one party has to perform, but the other party has an out?
Don’t answer this. You have no argument.
Anyway, stay toned, er, tuned. We’re working on more things.