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A publication of the Utility Contractors’ Association of New England, Inc.

FEBRUARY, 2015

Challenging Central Street Culvert Project North Reading, MA

• Governor Baker Signs Executive Order to Strengthen Municipal Partnerships • New Administration Outlines Plans to Energize Massachusetts’ Economy


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Years of Excellence 1954-2015

FEBRUARY, 2015

IN THIS ISSUE

OFFICERS President TONY BORRELLI Celco Construction Corp. President Elect JOHN OUR Robert B. Our Co., Inc. Treasurer PAUL SCENNA Albanese D&S, Inc. Secretary RICHARD PACELLA, JR. R. M. Pacella Inc.

BOARD OF DIRECTORS MARCELLA ALBANESE Albanese Bros., Inc. VINCENT BARLETTA Barletta Heavy Division NICK BIELLO J. D’Amico, Inc. KEVIN COLE J. F. White Contracting Co. STEPHEN J. CONNOLLY ATS Equipment, Inc. MAUREEN DAGLE Dagle Electrical Const., Corp. THOMAS DESCOTEAUX R. H. White Const. Co., Inc. ALEX DUNN Travelers GREG FEENEY Feeney Bros. Excavation, LLC JERRY GAGLIARDUCCI Gagliarducci Construction, Inc. PHIL JASSET Honorary Board Member AL MORTEO FED. CORP. JOSEPH PACELLA RJV Construction Corp. BRIAN RAWSTON Jay Cashman, Inc. KENNETH STEVENS A. H. Harris & Sons, Inc. PAUL UMBRO, JR. Umbro & Sons Construction, Corp. CHRIS VALENTI GVC Construction, Inc. DAVID ZOPPO R. Zoppo Corp.

KLAYMAN ANNE Executive Director

3 President’s Message:

Great Expectations for a Successful Year

5 Legislative Update:

• Senate President Rosenberg Makes Committee Appointments • Massachusetts House of Representatives Removes Term Limits on Speaker’s Position • Over 5,000 Bills Filed in 2015-2016 Legislative Session: Legislation to Amend New Paid Leave Law on the Docket • Top Three Finance Leaders Agree to Revenue Forecast for Fiscal Year 2016 • Baker-Polito Administration Temporarily Pauses Promulgation of New Regulations

15 Governor Baker Signs Executive Order to Strengthen Municipal Partnerships 21 Legal Corner:

Beware of Upcoming Significant New Reporting Obligations for Federal Contractors under the “Fair Pay and Safe Workplaces” Executive Order

29 Commission Commits to Expedited Permitting for National Grid 32 Contractor Member of the Month: Tim Zanelli Excavating, LLC

37 UCANE’s Fourth Annual Appreciation Night Trade Show 38 UCANE’s January Dinner Meeting: New Administration Outlines Plans to Energize Massachusetts’ Economy 43 UCANE’s Safety Corner:

One Call Systems are Working: Utility Strikes Show Decline

44 2014-2015 Safety Manuals Now Available 46 Courage on the Job Pays Off 49 UCANE’s 2015 Scholarship Applications Now Available 51 Financial Management: • Renting Versus Buying a Home • Income Annuities in Employer Retirement Plans • When Workers are Independent Contractors Editor: Anne Klayman, Associate Editor: Suzanne Savage, Graphic Designer: Sherri Klayman Construction Outlook Chairman: Tony Borrelli Editorial Board: Tony Borrelli, John Our, Paul Scenna, and Richard Pacella, Jr. CONSTRUCTION OUTLOOK published monthly by the Utility Contractors’ Association of New England, Inc., 300 Congress Street, Suite 101, Quincy, MA 02169; Tel: 617.471.9955; Fax: 617.471.8939; E-mail: aklayman@ucane.com; Website: www.ucane.com. Statements of fact and opinion are those of the authors alone and not necessarily those of UCANE and the Construction Outlook editorial board and staff. Subscriptions are included in dues payments for UCANE members. Presorted Standard postage paid at Abington, MA. POSTMASTER, please send form #3579 to Construction Outlook, Crown Colony Office Park, 300 Congress Street, Suite 101, Quincy, MA 02169.

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Great Expectations for a Successful Year January was an exciting and encouraging first month for me as newly elected UCANE President, and I think for our members as well. The month started off with the inauguration of our new Governor Charlie Baker and Lt. Governor Karyn Polito. The event was attended by UCANE staff and by many of our members. Inaugural speeches clearly indicated an understanding of, and a concern for, Massachusetts small businesses and also the role that infrastructure investment plays in priming the economic engines in the State.

W

ithin hours after the speeches were over, and in one of his first official acts, the Governor ordered the release of $100 million in Transportation funds to Cities and Towns, showing his intent to fulfill pledges made along the campaign trail. Baker also sent a letter to municipal officials informing them of his decision to release the Chapter 90 funds, which communities can use to help pay for needed local road and bridge projects. This was certainly a great kick-start to 2015 for many UCANE members. UCANE’s January dinner meeting was packed. Our members and guests were there not only to see our new Officers and Board being sworn in, but to meet and greet the new Lt. Governor Karyn Polito, who made our Association one of her first post-election visits. Karyn graciously attended the entire meeting and attentively listened to many individual members whether they talked about issues or simply offered her their congratulations. After an introduction from our Executive Director, Anne Klayman, Karyn spoke to our group effortlessly and from the heart. As the daughter of UCANE contractor member Fran Polito and sister of Kenny Polito (J. A. Polito & Sons, Inc.), Karyn grew up in our business. Her knowledge of our industry is second to none. Karyn explained the many obstacles facing the new Administration, not the least of which is an apparent $750 million deficit that they inherited. Nevertheless, she was optimistic that improving our State’s infrastructure would continue to be one of the Administration’s priorities.

FEBRUARY, 2015

Lt. Governor Polito has been quite visible in the early stages of the new Administration. In Governor Baker’s very first Executive Order, Karyn was appointed Chairman of the newly created “Community Compact Cabinet” that will focus on building a closer relationship between municipalities and State Government. January also marks the opening of the new legislative session and, according to our Director of Government Relations, Mark Molloy of Lynch Associates, he will soon be wading through nearly 5,000 pieces of legislation that were filed by the January 16 deadline, in search of potential new laws that could impact our businesses. Already having some good news this month about State and municipal funding, many of our members also got an economic stimulus from Mother Nature via the Blizzard of 2015. It was a top 5 record breaking storm that was handled efficiently through a joint effort between contractors and local and state government. I also commend the Governor and Lt. Governor for being front and center at MEMA Headquarters for several days with their sleeves rolled up coordinating their first State of Emergency.

January was certainly quite a month for both the new Baker Administration and for the new UCANE Administration. It was very busy, but it moved in a positive direction. It had a successful outcome for most of us, and hopefully January will prove to be a harbinger of good things to come in 2015. n

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Senate President Rosenberg Makes Committee Appointments

s first reported by the State House News Service, Senate President Stan Rosenberg announced his leadership team for the 2015-2016 legislative session. With the departure of the previous Senate President, Therese Murray, and other State Senators, the leadership appointments reflect an overall change in the Senate. In making his appointments, the Senate President also created five special Senate committees, including one focused on examining the issue of marijuana legalization and the implementation of the state's medical marijuana law. Other special committees will look at charter schools and innovative education models, housing creation, opioid addiction, and government spending accountability. Senator Harriette Chandler was chosen to fill the Majority Leader position, while the number of Assistant Majority Leaders expanded from one to three, which now includes Senator Cynthia Creem, Senator Brian Joyce, and Senator Mark Montigny. Senator Marc Pacheco, the second longest serving member of the Senate after Rosenberg, will take over as Senate President Pro Tempore. Senator Anthony Petruccelli will move into upper leadership as Majority Whip, as will Senator Kenneth Donnelly, who now assumes the position of Assistant Majority Whip. For one of the most sought after committee chairmanships, Senator Rosenberg appointed Senator Karen Spilka, the former Senate Chair of the Joint Committee on Economic Development. Senator Sal DiDomenico will take over as Vice Chairman of Ways and Means. Senator Jen Flanagan will move over from her former position as Vice Chairman of the Senate Committee on Ways and Means to lead the Joint Committee on Mental Health and Substance Abuse, the Joint Committee on Children and Families, and a new Special Senate Committee on Opioid Addiction. Senator Jason Lewis, who will chair the Special Senate Committee on Marijuana with the potential looming for ad-

FEBRUARY, 2015

vocates to put a question to legalize marijuana on the 2016 ballot, has been appointed the Senate Chair of the Joint Committee on Public Health. Senator Linda Dorcena Forry will chair both the Joint Committee on Housing and the Special Senate Committee on Housing, tasked with examining housing policy and increasing access to low- and moderate-income housing options. Senator Sonia Chang Diaz will remain the Senate Chairwoman of the Joint Committee on Education. Her Senate Vice Chair, Senator Patricia Jehlen, will also lead the Special Senate Committee on Innovative Education. Senator Eileen Donoghue has been named the Senate Chairman of the Joint Committee on Economic Development and Emerging Technologies. The Senate has also created three new standing committees: Intergovernmental Affairs, Redistricting, and Personnel and Administration. Senator Benjamin Downing will chair the new standing Senate Committee on Redistricting, as he also keeps his post from last session as chair of the Committee on Telecommunications, Utilities and Energy. Senator Forry will chair the Intergovernmental Affairs Committee focused on working with the state Congressional delegation to leverage federal dollars, and Senator Michael Rush will chair the Personnel and Administration Committee, as well as the Veterans and Federal Affairs Committee. Newly elected Senators Eric Lesser (Joint Committee on Tourism, Arts and Cultural Development); Senator Barbara L'Italien (Joint Committee on Municipalities and Regional Government); and Senator Ann Gobi (Joint Committee on the Environment, Natural Resources and Agriculture) received their first committee chairmanships in the Senate. Finally, a number of senators retained their chairmanships from last session, including Senator Jim Welch (Joint Committee on Health Care Financing); continued on page 7

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Legislative Update continued from page 5 Senator Dan Wolf (Joint Committee on Labor and Workforce Development); Senator Tom Kennedy (Joint Committee on Consumer Protection and Professional Licensure); Senator Will Brownsberger (Joint Committee on the Judiciary Committee); Senator Thomas McGee (Joint Committee on Transportation) and Senator Michael Rodrigues (Joint Committee on Revenue). At the time of this writing, leadership positions in the Massachusetts House of Representatives have not been announced.

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Massachusetts House of Representatives Removes Term Limits on Speaker’s Position

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n deciding its rules for the 2015-2016 legislative session, the Massachusetts House of Representatives voted to adopt a rules package that does not include “term limits” on the position of Speaker of the House. Eleven Democrats joined with all 34 Republicans to support an amendment offered by Republican Representative Geoff Diehl that would have put an eight-year term limit back into the rules for the session. While the amendment failed 45-110, the overall rules proposal was approved 114-40. Representatives Bruce Ayers (D-Quincy), Stephen DiNatale (D-Fitchburg), Diana DiZoglio (DMethuen), Jim Dwyer (D-Woburn), Carolyn Dykema (D-Holliston), Jonathan Hecht (D-Watertown), Denise Provost (D-Somerville), Representative John Rogers (D-Norwood), Dennis Rosa (D-Leominster), Walter Timilty (D-Milton), and Jonathan Zlotnik (DGardner) all voted in favor of keeping term limits. Amendments that would have required members be given at least 24 hours notice prior to voting on a bill after it has been released by the committee, and requiring the House to notify cities and towns no later than March 15 of a minimum level of local aid they can expect to receive from the state, were also rejected. The Massachusetts House unanimously backed amendments to both the House and Joint Rules requiring committee votes to recommend or oppose legislation be posted online within 48 hours. The adoption of rules is completed at the beginning of each session by both the House and Senate at the outset of their respective deliberations. continued on page 9

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Legislative Update continued from page 7

Over 5,000 Bills Filed in 2015-2016 Legislative Session: Legislation to Amend New Paid Leave Law on the Docket

M

assachusetts legislators started the first two weeks of the new legislative session by filing over 5,000 pieces of legislation by the January 16 deadline. While much of the legislation includes many “refiled” matters from previous sessions, new items are introduced every session. Of note, Senator Michael Rodrigues has filed a bill that would amend the “paid leave” law, which was passed through a ballot initiative (Question 4) and effective as of July 1, 2015. The 15 page bill would provide additional protections to employers, allowing them to use stricter sick leave policies and exempting them from certain legal liabilities. Among other concerns to supporters of socalled Question 4, the legislation would delay the law's start date to January 1, 2016. As passed, the new “paid leave” law provides up to 40 hours of paid sick time at all but companies with 10 or less employees. Employees would earn one hour of sick time for every 30 hours worked. The paid sick-time statute, which would be enforced by the Attorney General’s Office, accordingly applies to employers with 11 or more employees, while smaller businesses would be required to provide up to 40 hours of unpaid sick leave. The law

allows time off for employees to attend routine medical visits, care for a family member, or deal with the effects of domestic violence. The proposed legislation exempts top executives and interns from the count of employees that determines whether a business must provide paid sick leave and requires state agencies to study the impact of the law. The bill further allows employers to make stricter requirements for calling in sick, and for providing certification after an absence of 12 consecutively scheduled hours. As well, the legislation would allow employers to determine the increments of time available to be taken off and specifically allow employers to operate attendance incentive policies and would exempt businesses from some legal liabilities. Finally, under the legislation, inadvertent mistakes in sick leave policy would not apply to treble damage awards under the fair wage laws. The Associated Industries of Massachusetts, which worked with Senator Rodrigues to file the proposed legislation, has indicated that it would like to see certain changes made to address technical uncertainties faced by businesses throughout the Commonwealth.

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Legislative Update continued from page 9

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Top Three Finance Leaders Agree to Revenue Forecast for Fiscal Year 2016

ccording to a joint release from Secretary of Administration and Finance Kristen Lepore, Senate Ways and Means Chair Karen Spilka, and House Ways and Means Chair Brian S. Dempsey, a consensus revenue forecast for FY16 of $25.479 billion, representing 4.8% growth, has been reached. The consensus joint revenue forecast represents the basis for which the Baker-Polito Administration, the House, and the Senate will use to make their FY16 budget recommendations.

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Pursuant to Section 5B of Chapter 29 of the Massachusetts General Laws, these three offices convene every year to establish a joint revenue forecast. The projection assumes that another income tax trigger will go into effect January 1, 2016, lowering the state’s personal income tax from 5.15% to 5.10%. Of the forecasted $25.479 billion, an estimated $1.387 billion is projected to come from taxes on capital gains. Approximately $300 million of that revenue would be deposited into the Stabilization Fund, pursuant to the Department of Revenue’s capital gains threshold of $1.087 billion for FY16. In addition, the three bodies reached agreement on statutorily required off-budget transfers that are mandated by current law. These transfers include: (a) $985.2 million for the Massachusetts Bay Transportation Authority (MBTA); (b) $803.9 million for the Massachusetts School Building Authority (SBA); (c) $22.4 million for the Workforce Training Fund; and (d) $1.972 billion transferred to the pension fund, which represents full funding of the scheduled pension contribution for FY16. After $3.783 billion in off-budget transfers and $300 million automatically transferred to the Stabilization Fund, the Secretary and Committee Chairs agree that $21.396 billion will be the maximum amount of tax revenue available for the budget in FY16. All three bodies will base their respective budget recommendations on this projection. As part of the announcement, the three officers noted that, in accordance with Chapter 224 of the Acts of 2012, they had developed a potential gross state product (PGSP) growth benchmark for the ensuing calendar year. The PGSP growth benchmark is to be used by the Health Policy Commission to establish the Commonwealth’s health care cost growth benchmark. The figure for calendar year 2016 is 3.6%, the same as calendar year 2015. The PGSP is a measure of the “full employment” output of the Commonwealth’s economy and reflects long-term trends in the economy rather than fluctuations due to the business cycle and, as a result, is likely to be fairly stable from year to year.

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Legislative Update continued from page 11

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Baker-Polito Administration Temporarily Pauses Promulgation of New Regulations

ecretary of the Executive Office of Administration and Finance Kristin Lepore recently announced that the Baker-Polito Administration would hold off on promulgating new regulations until the end of March 2015. Acknowledging that procedurally all regulations eventually pass through the Secretary’s office for approval, Secretary Lepore’s directive to the other Cabinet Secretaries stated that “[n]o Executive Department agency may send a proposed regulation out for comment nor file a final regulation with the Secretary of the Commonwealth without my express approval. Until the end of March, that approval will be withheld presumptively.” While exemptions to the rule (i.e., public safety, unforeseen circumstances requiring immediate regulation, etc.) will be considered on a case-by-case basis, the regulatory “pause” permits the Administration to develop a process to streamline the regulations of the Commonwealth in a manner that enables rather than encumbers its citizens. For historical perspective, a regulatory delay has

historically been issued when a new Governor assumes office. Practically speaking, a delay allows a new administration to determine whether the pending regulatory action is in line with its stated goals and objectives. n

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Editors Note: The photograph in the January 2015 Legislative Update article titled “Governor Baker appoints Martin Suuberg as MassDEP Commissioner” was incorrect. We appologize for the mistake.

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Governor Baker Signs Executive Order to Strengthen Municipal Partnerships New Executive Order Creates the Community Compact Cabinet to Elevate Municipal Relationships with Governor’s Office

O

n January 23 Governor Bakgives cities and towns a real seat at er signed his first Executive the table in our Administration. State Order, creating the Commuand local government are tightly innity Compact Cabinet, to elevate the tertwined and with Karyn at the helm Administration’s partnerships with of the Community Compact Cabicities and towns in all communities net, our Administration will be better of the Commonwealth. Chaired by equipped to respond to their needs Lt. Governor Polito, the Community and create safer, stronger commuCompact Cabinet will allow the Govnities across the Commonwealth." ernor’s Office to work more closely “This is a critical first step in with leaders from all cities and the right direction for our Administowns. tration,” said Lt. Governor Polito. “I “Karyn and I both served as look forward to championing this efselectmen in our hometowns and fort throughout the Commonwealth clearly understand the important to partner with our hardworking Governor Charlie Baker challenges encountered in our local municipalities and pave the way for communities,” said Governor Baker. better and brighter opportunities in “I am pleased to sign this Executive Order which our schools and communities.”

About Executive Order: • Empowers Lieutenant Governor Polito to be a champion for municipal issues across state government. • Restructures the Department of Revenue to include a new Senior Commissioner for the Division of Local Services, reporting directly to the Commissioner. • Creates a Community Compact Cabinet that will work toward mutual accountability, work to reduce red tape, promote best practices, and develop specific “community compacts” with local governments. • These community compacts will create clear, mutual standards, expectations, and accountability for both the state and municipalities as we seek to create better government for our citizens. This Executive Order will revoke and supersede Executive Order 537, which was invoked under the previous Administration in September 2011 and relegated municipal affairs to the Executive Office of Administration and Finance. On January 29, Lt. Governor Polito kicked-off a statewide tour to meet with local mayors and address ways to strengthen partnerships in our communities. Polito will discuss the $100 million in new Chapter 90 funding that was released on the Administration’s first day in office to fund local road and bridge repairs for every city and town in the Commonwealth. The Baker Administration has pledged to protect local aid, funding for the homeless and the Department of Children and Families. Governor Baker announced his first Executive Order at the Massachusetts Municipal Association Opening Session in Boston. continued on page 17

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Executive Order continued from page 15 By His Excellency CHARLES D. BAKER GOVERNOR EXECUTIVE ORDER NO. ____ Revoking and Superseding Executive Order 537 CREATING THE COMMUNITY COMPACT CABINET WHEREAS, cities and towns are at the front lines of delivering services to the citizens of the Commonwealth; WHEREAS, cities and towns are vital partners in creating the conditions under which economic development flourishes throughout Massachusetts; WHEREAS, cities and towns face increasing pressures on municipal and school budgets, which impacts those essential services; WHEREAS, cities and towns, through local aid and other programs, are partners with the Commonwealth; WHEREAS, the Commonwealth wishes to recommit itself to a stronger partnership with its cities and towns; WHEREAS, cities and towns have the right to hold the Commonwealth accountable, the Commonwealth has the right to hold cities and towns accountable, and the citizens have the right to hold all levels of government accountable. There should be a new compact between the state and our communities to create more effective, efficient and accountable governments. NOW, THEREFORE, I, Charles D. Baker, Governor of the Commonwealth of Massachusetts, by virtue of the authority vested in me by the Constitution as Supreme Executive Magistrate, Part 2, c. 2, § 1, Art. 1, do hereby revoke Executive Order No. 537 and order as follows: Section 1. There is hereby established within the Executive Office of the Governor, a Community Compact Cabinet to advise the Governor on its areas of responsibility set forth in Section 4 below. Section 2. There shall be, within the Department of Revenue, a Senior Deputy Commissioner, Division of Local Services, who shall report to the Commissioner of Revenue and shall be responsible for the operations and activities of the Division of Local Services. In addition, the new Senior Deputy Commissioner will also be the primary lead on local issues on behalf of the Secretary of Administration and Finance. Section 3. The Community Compact Cabinet shall be chaired by the Lieutenant Governor. The Senior Deputy Commissioner, Division of Local Services shall serve as the Vice-Chair of the cabinet. The cabinet shall also include the Secretary of the Executive Office of Housing and Economic Development, the Secretary of the Executive Office of Education, the Secretary of Transportation, the Secretary of the Executive Office of Energy and Environmental Affairs, the Assistant Secretary for Operational Services, the Chief Information Officer, and any other person whom the Lieutenant Governor may designate from time to time. Section 4. The Community Compact Cabinet shall have the following areas of responsibility: 1. to champion municipal interests across all executive secretariats and agencies; 2. to develop, in consultation with cities and towns, mutual standards of best practices for both the state and municipalities, working toward the creation of community compacts that will create clear standards, expectations and accountability for both partners; 3. to develop ideas to incentivize adoption of best practices at the municipal and school district level; 4. to work with the Local Government Advisory Commission (the “LGAC”) to resolve issues and implement recommendations made by the LGAC and approved by the Governor; 5. to review state regulatory burdens on municipalities and school districts and recommend reforms to lessen the burdens on municipalities and school districts; continued on page 19

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Executive Order continued from page 17 6. to understand the major cost drivers of municipalities and school districts and identify actions that the Commonwealth, municipalities and school districts can take to control them; 7. to identify and remove barriers to economic development opportunities for cities and towns; and 8. to empower cities and towns and school districts by finding new ways for local governments to leverage state resources and capacity. Section 5. All agencies subject to the Governor’s control shall provide assistance to the Community Compact Cabinet by sharing information and expertise, as requested. Section 6. This Executive Order shall continue in effect until amended, superseded or revoked by subsequent Executive Order. Given at the Executive Chamber in Boston this 23rd day of January in the year of our Lord two thousand fifteen and of the Independence of the United States of America two hundred thirty-nine. ______________________________ CHARLES D. BAKER GOVERNOR Commonwealth of Massachusetts ___________________________ WILLIAM FRANCIS GALVIN Secretary of the Commonwealth

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Kirk J. McCormick, Partner Construction & Public Contracts Group, Hinckley Allen, LLP

Beware of Upcoming Significant New Reporting Obligations for Federal Contractors under the “Fair Pay and Safe Workplaces” Executive Order Labor Violations

As you may be aware, on July 31, 2014, President Obama signed an Executive Order that will likely have significant implications for federal government contractors. Once the Order takes effect, most federal contractors on contracts above $500,000 will be required to self-disclose violations of labor and employment laws occurring within the previous three years, and update such reports every six months going forward. Furthermore, this requirement will extend to certain subcontractors, meaning that affected prime contractors will be required to report such violations on behalf of those subcontractors. FEBRUARY, 2015

Among other things, the “Fair Pay and Safe Places” Executive Order will require federal prime contractors to self-report labor violations under a wide range of federal laws and Executive Orders. The list of laws and Orders is as follows: • Fair Labor Standards Act • Occupational Safety and Health Act of 1970 • Migrant and Seasonal Agricultural Worker Protection Act • National Labor Relations Act • Davis-Bacon Act • Service Contract Act • Executive Order 11246 (equal employment opportunity) • Rehabilitation Act of 1973 Section 503 • Vietnam Era Veterans’ Readjustment Assistance Act of 1974 • Family and Medical Leave Act • Civil Rights Act of 1964 Title VII • Americans with Disabilities Act of 1990 • Age Discrimination in Employment Act of 1967 • Executive Order 12658 (President Obama’s recent order setting a new minimum wage of $10.10 for federal contractors) In addition, it will require reporting of violations of “equivalent state laws.” continued on page 23

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Legal Corner continued from page 21 The Order will become effective in 2016 and will encompass all new federal prime contracts and subcontracts, including construction contracts and subcontracts, with an estimated value in excess of $500,000. Although the regulations have not yet been drafted, the Order requires future solicitations to require each offeror to represent: To the best of the offeror’s knowledge and belief, whether there has been any administrative merits determination, arbitral award or decision, or civil judgment, as defined in guidance issued by the Department of Labor, rendered against the offeror within the preceding 3-year period for violations of any of the [laws set forth above]. In other words, for any procurement subject to the Order, prospective contractors must advise the Contracting Officer of any violations of these laws within the previous 3 years.

Subcontractors Under the Order, the self-reporting requirements do not only extend to violations committed by the prime contractor. Instead, the prime contractor is also required to ensure that subcontractors with subcontracts over $500,000 report labor violations, subject

The Order will become effective in 2016 and will encompass all new federal prime contracts and subcontracts, including construction contracts and subcontracts, with an estimated value in excess of $500,000. to certain exceptions. At the solicitation stage, the Order requires a prospective contractor to represent to the procuring agency that the contractor: (A) will require each subcontractor to disclose any administrative merits determination, arbitral award or decision, or civil judgment rendered against the subcontractor within the preceding 3-year period for violations of any of the requirements of the labor laws listed [above], and update the information every 6 months; and (B) before awarding a subcontract, will consider the information submitted by the subcontractor pursuant to subparagraph (A) of this paragraph in determining whether a subcontractor is a responsible source that continued on page 25

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Implications

Legal Corner continued from page 23 has a satisfactory record of integrity and business ethics, except for subcontracts that are awarded or become effective within 5 days of contract execution, in which case the information may be reviewed within 30 days of subcontract award. Stated more simply, the prime contractor will be required to flow down into all subcontracts exceeding $500,000 a requirement that the subcontractor disclose to the contractor any violation of the abovereferenced laws. In addition, the prime contractor will be required to take such violations into account when determining whether to award a subcontract. Affected prime contractors and subcontractors will be required to voluntarily update their reports every six months.

Consequences of Reported Violations Under the Order, contractors who report violations are potentially exposed to a wide range of “actions”: If information regarding violations of labor laws is brought to the attention of a contracting officer pursuant to paragraph (i) of this subsection, or similar information is obtained through other sources, a contracting officer shall consider whether action is necessary in consultation with the agency’s Labor Compliance Advisor. Such action may include agreements requiring appropriate remedial measures, compliance assistance, and resolving issues to avoid further violations, as well as remedies such as decisions not to exercise an option on a contract, contract termination, or referral to the agency suspending and debarring official. As described in the Order, the potential ramifications of reported violations cover everything from “agreements” concerning remedial measures all the way to possible termination of the contract, suspension, or debarment. Furthermore, the Order appears to give extremely broad discretion to the contracting officer to determine what “action” will be appropriate in a given circumstance.

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The Order and its implementing regulations will likely add considerable complexity to the process of bidding on and performing federal projects. At the bidding stage, contractors will need to carefully ensure that any violations are accurately reported or potentially risk disqualification from consideration for award. During performance, contractors must update their reports every six months, and must also ensure that their qualifying subcontractors and suppliers do the same. Ultimately, these requirements will almost certainly increase compliance costs, and it is possible that the new requirements may drive some firms continued on page 27

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Legal Corner continued from page 25 to forego government contracts entirely. In addition, the Order’s reporting requirements could lead companies to modify their strategies for addressing employment disputes. Because the Government is allowed to consider a whole host of labor issues during the procurement stage, companies may feel compelled to settle weak employee claims simply to avoid the risk that a negative outcome could jeopardize future federal work.

Unanswered Questions Obviously, much will need to be addressed in the regulations. In the meantime, the Order leaves several unanswered questions. For example, after a violation is disclosed, what impact will that have on the contractor? Can it be the basis for a negative performance evaluation, even if the work itself was performed to the satisfaction of the contracting agency? Can it be used against a contractor by a competitor in a subsequent bid protest setting? Under what circumstances can violations lead to a termination for default? When will suspension or debarment be considered? In addition, it is unclear who from the Government will bear primary responsibility for enforcement. Generally, violations of labor laws are the province of the Department of Labor, but the new Order will

require that each agency create a “labor compliance advisor.” Between the labor compliance officer and the Department of Labor, who will take the lead on enforcement and punishment?

Conclusion As discussed, the Order leaves many questions to be answered and gaps to be filled as the implementing regulations are drafted. Regardless of the regulatory language ultimately adopted, however, it is clear that the Order will significantly impact most federal contractors and subcontractors performing work on contracts or subcontracts exceeding $500,000 in value. Also, although the Order does not apply to federally assisted contracts, President Obama has recently issued several Executive Orders concerning federal contractors. Once this Order’s regulations have been implemented, a future Executive Order could apply those regulations to federally assisted projects, so it is important that contractors continue to pay close attention to this issue. n

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Commission Commits to Expedited Permitting for National Grid

F

ollowing the decision by National Grid to halt new natural gas connections between Dennis and Eastham, the Cape Cod Commission committed to an expedited permitting process. The Commission also expects to take a lead role in facilitating communication. National Grid’s announcement followed more than nine months of assessment and replacement of critical connections and pipeline welds. In the end, the company determined that the only safe way to restore adequate capacity to the lower Cape is replacement of 21 miles of pipe. Pressure in the pipeline was reduced to ensure safety, but also limits the ability to supply enough natural gas to meet more than existing demands. National Grid estimated it could take five to seven years for such a replacement to be completed. “We’re looking at the critical planning tools at our disposal to consolidate regulatory reviews and expedite permitting,” Commission Executive Director Paul Niedzwiecki said. “A five- to seven-year delay in new gas connections creates an unacceptable hardship to economic development opportunities. We can do better.” The Commission will convene a taskforce of industry professionals, as well as local, regional and state officials to follow and assist in the process. The Commission will provide the task force with technical and communications assistance as necessary. The situation highlights the need for a comprehensive approach to regional capital planning at all

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levels, which is a focus of the five-year Regional Policy Plan update initiated by the Commission in early December. The immediate priority is restoration of new gas connections through expedited planning, permitting and construction of a new gas pipeline. The Commission participated in a December 9 meeting with National Grid, the Cape Cod Chamber of Commerce, members of the Cape’s Legislative delegation and representatives from the Cape’s building and real estate communities. Among other sentiments expressed at the meeting was a desire for all parties to work together to shorten the pipeline replacement timeline. Those attending the meeting also asked that National Grid maintain open communications with elected officials, government entities and affected industries, especially with respect to the timeline. National Grid’s supply pipeline extends from the canal to Eastham. Outer Cape towns currently have no access to natural gas and rely on other fuel and energy sources. Among the concerns during the moratorium period is National Grid’s winter demand contingency, which calls for connection of liquefied natural gas trucks in Chatham and Eastham to maintain adequate system pressure. The pipeline project approved by the Commission in February 2013 was the second of a three-part continued on page 31

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Commission continued from page 29 pipeline reinforcement program for the western portion of Cape Cod started under the pipeline’s previous owner in 2005. That 4.4-mile segment was reviewed as a Development of Regional Impact (DRI) and approved by the Commission in February 2013. The pipeline deficiencies related to the connection moratorium were first discovered by National Grid in January 2014 for more-easterly segments not considered in the earlier decision. Reprinted with permission the Reporter, newsletter of the Cape Cod Commission. n

FACTS • January 2014 – As a result of a leak report, a substandard connection (200psi to 60psi) was discovered and corrected. • June 2014 – Further investigation uncovers 30 substandard connections that are corrected, but also finds issues on welds in the 21-mile distribution mainline from Yarmouth east to Brewster and to the edge of Chatham. • The 21-mile mainline (first run in 1964) was originally designed for 99psi, but at some point the pressure was increased to 200psi. • The welds on the mainline do not meet current standards for 200psi, so the mainline pressure was brought down to 125psi. • The initial plan was to fix the issues with the mainline to allow it to return to 200psi, but replacement of the entire 21-mile mainline was required. • The 125psi operating pressure reduces winter peak day capacity, which prompted National Grid’s sales moratorium. • No new service connection or added load will be allowed in the red areas on the map and applications would be reviewed on a case-by-case basis in the yellow areas on the map. • The NGID Winter Contingency Plan will be in effect using LNG tanks in Chatham and Eastham as needed to maintain pressure. • Applications filed by October 1, 2014 will be honored, but no new connections or loads after that.

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Moving the massive 40-foot pipe at the Central Street Culvert Project in North Reading, MA.

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How many of us can say we’ve followed our dream and are making a career out of something we love to do? Tim Zanelli, president of Tim Zanelli Excavating LLC, is the third generation of his family in the construction excavating business, and is doing what he always dreamt of doing. When Tim was a young boy his father taught him how to run the machines. He loved operating the machinery, and would practice digging holes in his backyard after school. As he got older, he worked in the family construction business and later worked for some larger excavating companies, where he honed his operating skills and learned about running a business. In 2005, he founded Tim Zanelli Excavating LLC, with a small amount of money and a dream. Today, after only a relatively short time in business, the company is a successful utility excavating company specializing in water and sewer projects with many standing municipal contracts. The company not only works in the utility field, but they also specialize in water main tapping, fire hydrant repair and valve exercising, and much more. In 2012, Tim expanded his business and opened TZE Contractor Supply, which is a retail store geared at businesses in the same field, offering quality tools and equipment as well as rentals and repairs. Tim has taken on many challenging projects, which is why many turn to him when they have a difficult job. The following tells about a recent job his company has completed for the Town of North Reading. continued on page 34

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Tim Zanelli Excavating continued from page 33

W

Central Street Culvert Project

hen the Town of North Reading decided that their Skug River culvert, located on Central Street, needed to be rehabilitated, they put it out to bid with the hopes that whomever won would be able to get the job done right and quickly for them. Well, they got the right man for the job. Tim Zanelli from Tim Zanelli Excavating LLC was awarded the job and jumped right in with both feet. Zanelli, along with Plastic Pipe Fabrication, a Division of E. J. Prescott, Inc., took charge of this immense project. The Skug River has an interesting history. It’s 4.9 miles long and flows from the wetlands just south of Boston Hill in the Harold Parker State Forest, and makes its way through North Andover, Andover, and into North Reading’s Martin’s Pond. From there it flows into the Ipswich River Watershed via Martin’s Brook. Over 200 years ago it was dammed for use as a sawmill and gristmill. Although the dam and the mills are no longer there, the large stone walls where the dam once stood are a staple in the Harold Parker State Forest and the Andover Village Improvement Society Skug River Reservation. The culvert relining project had to be completed before it posed a serious danger to the many cars that use Central Street daily to get from Andover to the other

Tim Zanelli smiling proud after maneuvering the massive pipe into the culvert at the Skug River.

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side of North Reading to avoid Route 28. The first order of business for Zanelli was to control the flow of the river. This was no small task. The normal depth of the water for the Skug River is about 4 feet, but it had rained a tremendous amount the week before the start of the job, raising the depth to approximately 8 feet, making the water flow much swifter. Zanelli and his crew deployed a large diesel pump and three trash pumps, in addition to multiple extra-large super sacks full of sand, in combination with rocks and boulders. After more than 12 hours of non-stop pumping, they got the water level down from 8 feet to about 2 inches, and began the difficult lining project. The pipe used for this job, supplied by UCANE member E. J. Prescott, Inc., was a massive 40-foot long Snaptite pipe measuring 73 inches by 107 inches, which was ovalized to meet the engineer’s specification. The pipe was custom built one piece and extended beyond the flatbed trailer by 10 feet. Using a Hyundai 220LC excavator, Zanelli was able to maneuver the large pipe into the existing culvert, without shutting down the road to traffic. But the job was far from over. After the pipe was placed into the culvert it was time for the bulkheads to be constructed. Again, not an easy

Installation of the new pipe into the existing culvert.

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Water level before and after draining the pipe. Zanelli and PPF discussing the pipe placement. task when you have a body of water to tame. Another passing rainstorm caused the water level to rise just enough for it to overtop the sand bags. They continued pumping in an effort to keep the water level low, but the river had other plans that day. Additional pumps were brought in and the crew worked tirelessly throughout the night, constantly checking on the water level. Finally, the crew was able to get the river under control again and continue the job. Through perseverance and the hard work of his employees, Zanelli was finally able to form and pour the concrete bulkheads. The next step was to pump 29 yards of grout to fill the annular space between the pipe and the existing culvert pipe to make sure a sinkhole did not occur in the street above. The grouting operation went smooth and the pipe installation was secured. With the pipe installation com-

FEBRUARY, 2015

plete it was time for a new guardrail to be installed and the riprap placed, putting this project to rest once and for all. In the end, even with all the obstacles Mother Nature threw at them, the project was completed in just five days, ahead of the proposed time schedule. The Town of North Reading was extremely satisfied and Zanelli chalked up another win for his company.

UCANE is proud to count Tim Zanelli Excavating LLC as a respected member of our Association and wishes the Zanelli family continued growth and success. n

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UCANE’s Fourth Annual Appreciation Night Trade Show Wednesday Evening • March 11, 2015 Prior to our Annual Forecast Dinner Meeting Sheraton Four Points Hotel • Norwood, MA

Trade Show booths offered at NO COST to Construction Outlook Magazine Advertisers only. If you are not currently advertising in Construction Outlook, we hope you will consider placing an ad. Our monthly magazine showcases your products and services to contractors who use them. Our Trade Show is a great opportunity to meet with UCANE members and guests face-to-face. For more information call Suzanne at the UCANE office for advertising rates.

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New Administration Outlines Plans to Energize Massachusetts’ Economy Guest Speaker

Lt. Governor Karyn Polito

In

her opening remarks, UCANE’s Executive Director Anne Klayman made clear the hopes and feelings of many citizens and businessmen and women across Massachusetts. “We’ve been waiting a long time for an Administration that has the business background and experience to understand the critical role small businesses, especially construction and construction related companies, play in providing good paying jobs and ultimately expanding our state’s economy.” These remarks were a fitting introduction to our special guest, Lt. Governor Karyn Polito, who was the keynote speaker at UCANE’s first Dinner Meeting of 2015 held at the Sheraton Four Points Hotel, Norwood, MA with close to 200 members and guests in attendance. Anne went on to say, “Karyn’s family story is similar to thousands of others whose grandparents immigrated to the United States with very little, but with high hopes of making a better life for their family. Over the years, the Polito family started a small underground utility construction company located in Shrewsbury, MA, and built it into a very successful business. Later, as new opportunities arose in the Worcester and Shrewsbury area, her family expanded into real estate development.” Anne continued, “From everything I know about Karyn…her intelligence…her belief in giving back to her community…her ability to listen and relate to everyone she meets… all are characteristics that are both unique and necessary to help accomplish all that she and Governor Charlie Baker have planned for the citizens of Massachusetts.

Installation of UCANE’s 2015 Officers & Board

Officers & Board Members in attendance: (L-R) David Zoppo, R. Zoppo, Corp.; Tony Borrelli, Celco Const. Corp.; Al Morteo, FED. CORP.; Paul Scenna, Albanese D&S, Inc.; Phil Jasset, Honorary Board Member; Richard Pacella, Jr., R. M. Pacella, Inc.; Stephen J. Connolly, ATS Equipment, Inc.; Chris Valenti, GVC Const., Inc.; Kevin Cole, J. F. White Contracting Co.; Paul Umbro, Jr., Umbro & Sons Const. Corp.; Kenneth Stevens, A. H. Harris & Sons, Inc.; Nick Biello, J. D’Amico, Inc.; Vincent Barletta, Barletta Heavy Division; Brian Rawston, Jay Cashman, Inc.; Maureen Dagle, Dagle Electrical Const., Corp.; and Joseph Pacella, RJV Construction Corp. Officers & Board Members not in attendance: Marcella Albanese, Albanese Bros., Inc.; Thomas Descoteaux, R. H. White Const. Co., Inc.; Alex Dunn, Travelers; Greg Feeney, Feeney Bros. Excavation, LLC; Jerry Gagliarducci, Gagliarducci Const., Inc.; and John Our, Robert B. Our Co., Inc.

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Her educational background is equally impressive. Karyn holds a Bachelor’s Degree from the Boston College School of Management, and a Juris Prudence Degree from New England School of Law.” Anne went on to say, “What some of you may not know is that Lt. Governor Polito has reached this milestone in her professional career through years of dedicated service to the people of her district and Massachusetts, and by championing the issues that are important to them. She began her public service as a Shrewsbury Town Meeting member, and a member of the Board of Selectmen, and later served on the State Lottery Commission. She entered state politics in 2001 with a successful campaign running for State Representative from the 11th Worcester District…a seat that she held for five terms.” Karyn’s signature legislation was “Jessica’s Law” which established tough minimum sentences for child sex offenders. She fought and supported laws promoting good government, ending our state’s growing debt burden, improving job creation, and spurring economic growth. Anne continued, “But now, she and Governor Baker are in a position to blend Massachusetts’ diverse industries into an economic powerhouse.” Lt. Governor Polito then spoke about the vision that both she and Governor Baker have for Massachusetts. The first order of business was addressing the projected budget shortfall, upwards of $750 million, remaining from the preceding administration pointing out that our state’s budget problems were a spending issue and not a tax revenue issue.

FEBRUARY, 2015

She then outlined some of the Governor’s commitments which include: to foster better relationships with municipalities; to maintain local aid; and to streamline the red-tape that hampers start-ups, stifles small businesses, and holds back business expansions. She talked about her knowledge of clean water and drinking water issues and the absolute necessity of maintaining our underground infrastructure in order to foster our state’s economic growth and business expansion. The Lt. Governor then told attendees that the Administration had only a few key positions left to fill but they were moving ahead with policy changes as quickly as possible. In making this point, she mentioned that the first order of business by Governor Baker was to place a hiatus on introducing any new state agency regulations unless they had first been cleared by his Administration. His second and third orders came in quick succession. The $100 million in Chapter 90 funds was released immediately to help cities and town with road and bridge repairs. Next, the Governor assigned Lt. Governor Polito to continued on page 41

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Dinner Meeting continued from page 39

Outgoing UCANE President Al Morteo (FED. CORP.) be the Administration’s liaison with cities and towns across the state, signaling that the Lt. Governor will play an important role in the new Administration. By this action, the Governor provided a new forum where mayors and elected officials of municipalities would be brought into the Administration’s inner circle where their local needs and ideas would receive a fair hearing. The Lt. Governor concluded her remarks by thanking UCANE members for their support of the Baker/Polito campaign and for their warm welcome this evening. Following the Lt. Governor’s presentation, Anne Klayman honored our outgoing Board Members, Jeff Bardell, Daniel O’Connell’s Sons, Inc.; Steve Comoletti, P. Caliacco Corp.; Marco Gioioso, P. Gioioso & Sons, Inc., who just completed two years on our Board as Immediate Past President; and Bill Irwin, C.J.P. & Sons Construction Co., Inc. She then went on to honor our outgoing President Al Morteo of FED. CORP. Al served as UCANE President for the past two years, at a time when our Association was faced with some of the most difficult issues confronting our members. He did an outstanding job, and has earned the respect of everyone he has worked with. Anne went on to introduce the 2015 Officers and

FEBRUARY, 2015

Board Members who were then sworn in. She then introduced UCANE’s new President Tony Borrelli of Celco Construction Corp. Tony stepped up to the podium and thanked our members for their vote of confidence in electing him President. He went on to say that he would be remiss if he didn’t thank his father-in-law, Joe DiPietro for encouraging him to get involved in UCANE. He then outlined some of the critical issues for the coming year, which include securing increased SRF funding to assure that a maximum number of projects are put out to bid; assisting cities and towns to obtain necessary funding for much needed water and sewer projects; and continuing to press for passage of our two bills, Interest on Retainage and Dig Safe, which we refiled in early January. Tony also emphasized the importance of strengthening our Association by increasing membership, citing his goal to enlist 20 new members in the first six months of 2015. In closing, he encouraged our Contractor Members to do business with our Associate Members whenever possible saying, “It is important that we support our Associate Members who so generously support UCANE.” Anne then concluded the program by thanking everyone for coming, and encouraging attendance at UCANE’s upcoming safety seminars. n

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This month’s article was submitted by: Dick Hughes, Excellence in Safety Inc.

One Call Systems are Working: Utility Strikes Show Decline The Common Ground Alliance (CGA) is a stakeholder’s run organization dedicated to protecting underground utilities and the people who dig near them. Started in 2000, CGA’s goal is to improve public awareness with the national one call system (811) in order to reduce utility strikes. In addition, CGA collects data across the country from their 1,500 members and others in order to evaluate causes of the utility strikes, and to recommend improvements to current damage prevention practices. CGA recently announced findings from its most current Damage Information Reporting Tool (DIRT) report. According to the report, when an excavator notifies a one call center before digging, damage occurs less than 1% of the time. Damages remain a problem with 335,000 events estimated nationwide. The estimate represents an 8% decrease from the 350,000 incidents during the prior year. A lower rate of claims combined with an increase in construction activity suggests that damage prevention education and utilization of the reporting system may be leading to fewer utility strikes. Major claim causes were: • Excavation Practices not sufficient (50%) • Notification not made (26%) • Locating practices not sufficient (16%) The report also notes that private property owners and farmers account for two thirds of damage claims due to being the most likely groups not to call 811 prior to digging. FEBRUARY, 2015

As a contractor member of UCANE, excavators have already exhibited their professionalism and concern for safety when it comes to excavating. Calling Dig Safe at 811 before digging, and premarking excavation areas, etc. is nothing new to UCANE members. continued on page 45

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43


Your Company Must Have A Comprehensive Safety Program! This year’s Safety Manual includes information on: • OSHA’s New Cranes & Derricks Standard (1926.47) • State and Federal Posting Requirements • OSHA’s Updated Trenching & Excavation Safety • New Cell Phone/Distracted Driver Federal Ruling • OSHA’s Changes to the Penalty Calculation Limit • Field Responsibility — Competent Person • Recordkeeping Requirements — Employee Reporting on Fatalities & Hospitalizations • OSHA 10-Hour Training Requirements

Promote A Safe Working Environment It should be your company’s policy to provide a safe place to work, with the prevention of accidents being your ultimate goal. Your Insurance/Bonding carrier requires a Safety Program. State and Federal Agencies require a Safety Program.

OSHA Inspectors Will Be Enforcing: • Overall Construction Safety (29 CFR 1926) • Excavating Standards • Written Safety and Health Plans

• Hazard Communications Programs • Drug Free Workplace • OSHA 10-Hour Training Requirements

Examine The UCANE Pocket Directory When ordering Company Safety Manuals, the Safety Manual section only, in the back of UCANE’s Pocket Directory, will be made up into an individual Employee Pocket Safety Manual with Your Company Name & Logo printed on the cover. Employee signature cards verifying compliance with safety manual procedures are included. When signed, these cards should be placed in each employee’s file.

Employee Pocket Safety Manual Order Form Company Name:_________________________________ Authorized By:______________________ Pocket Manuals w/ Signature Cards: Qty.__________________ x $3.25 Ea. = $________________ 55.00 Printing and Set Up Charge for Personalized Covers: $________________ 10.00 $________________ Total: $________________

Postage and Handling: Date:____________ ❏ Company Logo Enclosed

❏ Company Logo to be mailed

❏ My check is enclosed

Employee Pocket Safety Manuals are available to UCANE members only. PAyMENT MUST ACCOMPANy ORDER. Utility Contractors’ Association of New England, Inc. • 300 Congress Street, Suite 101 • Quincy, MA 02169


Safety Corner continued from page 43 What might be coming on the horizon is a utility damage control measure that is currently being adopted in parts of Canada. Under this system, several large gas companies are working with local police departments to have routine patrols include observation of homeowners who might be excavating on private property without calling Dig Safe and without obtaining the proper permits. Although this might sound like a little too much government overkill, it might save an unsuspecting homeowner from a disaster or serious injury. In Massachusetts, “big brother” is already in your yard, if you are thinking about digging a hole for a mailbox or a shrub. Dig Safe laws require homeowners to call 811 prior to digging on private property.

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Courage on Pays Off

the

Job

Doing Business the Eleanor Roosevelt Way By Jen Lawrence

Eleanor Roosevelt wrote, “You must do the thing you think you cannot do.” While she was encouraging personal boldness, the message is also applicable to corporate life. In 2010, Audi stated its bold goal of “becoming the leading brand worldwide in the premium car segment.” They aimed to overtake BMW, who has held the No. 1 sales position for the last decade, by 2020. This audacious goal has helped increase their overall performance significantly. In short, courage pays off. Here are six ideas for bringing Roosevelt’s sense of bravery to the job:

1

Differentiate between smart risk and silly risk. Being courageous at work does not mean challenging the boss to a dual at the next board meeting. We would never recommend that you walk into a meeting unprepared, take an overly aggressive trading position, or give your boss an ultimatum. While these are risks, they are not smart ones. A smart risk pushes you slightly out of your comfort zone without pushing others out of theirs. Smart risks include asking for the sale, asking for the promotion, or asking for more responsibility. A manager, coach, or mentor can be very helpful in encouraging you to take smart risks.

2

Have a strong vision of what you want. I used to be terrified of needles and would do everything in my power to avoid them. Then, when I wanted to have children, I had to have needles almost every day. Suddenly they were not as scary, as my clear vision of family life trumped my fear. The same thing happens at work. You might be terrified of public speaking, but if you want to take on more interesting work in your field, the opportunity to keynote at a conference will help you get over your fears. Have a clear vision of what you want, write it down and tape it someplace prominent. The daily risks you must take to get you where you want to go will not seem as scary.

46

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

FEBRUARY, 2015


3

Practice makes perfect. You can practice courage by taking small risks on a regular basis. This could mean anything from asking to be part of a new project, to writing an article for an industry publication, to offering to mentor a new employee. Take on small stretch goals and then climb, jump, or borrow a ladder in order to reach them on a regular basis. You’ll get used to feeling brave.

4

Courage can be borrowed. In a third century B.C. parable from Zhan Guo Ce, a fox is caught by a hungry tiger. The fox, trying to figure out a way to save himself, tells the tiger that he is king of the beasts and should not be eaten. The tiger does not believe the much smaller animal so the fox challenges him to follow him through the forest and see how the other animals react. The two set off together and the other animals, seeing the tiger, run away in fear. The fox takes full credit for their fearful response and the tiger, believing him, spares his life. While this parable mainly seems to be about the gullibility of tigers, it also shows how we can borrow courage. Surrounding ourselves with courageous people can help us to feel bolder. We can attend conferences with like-minded people, join a mastermind group, or invite someone we admire for lunch. There are lots of people out there who are taking risks and doing interesting things. Spend more time with them and you will find their courage is contagious.

5

Practice courage in your personal life. If you are nervous taking risks at work because the stakes feel too high, start building those courage muscles at home. Take the microphone on karaoke night, volunteer for that school committee, or sign up for

FEBRUARY, 2015

zip lining. If you learn the benefit of taking calculated risks in your personal life, you’ll be more comfortable taking them at work.

6

Assess the risk. Part of what makes bold actions scary is the inherent downside. Before doing something brave, it can be helpful to contemplate what might go wrong. It’s useful to look at the potential problems (what might go wrong) and the potential causes (why it might go wrong.) You can look at preventing these problems and minimizing the impact should the problem still occur. As an example, perhaps you are contemplating buying a house but are terrified it will burn down. As a way to prevent fire, you can make sure the electrical system and stove are in good working order. As a way of minimizing the damage of a fire, you can install an alarm system and sprinklers. Assessing risk can help you to be more courageous, as it’s easier to take a leap of faith when you are fairly certain it won’t lead to disaster.

So, do something today to flex your courage muscles. It makes your job more interesting, and can inspire others. Most people regret what they don’t do more than what they do, so take a page from Eleanor Roosevelt’s book, and do that thing that scares you just a bit. Jen Lawrence is the author of Engage the Fox: A Business Fable About Thinking Critically & Motivating Your Team. n

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“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK� FEBRUARY, 2015 56 “BUY FROM THE ADVERTISERS IN CONSTRUCTIO


2015 Scholarship Applications Now Available UCANE to Award Twelve $2,000 Scholarships WHO MAY APPLY? Any high school student who is the son or daughter of a UCANE member or an employee of a member who will be enrolling full time in an accredited four year academic institution for the year beginning in September 2015. IMPORTANT: In the event the applicant receives a full first year scholarship from the college of his/her choice, or from any organization, civic group, etc., the UCANE scholarship will be awarded to another applicant.

HOW WILL THE APPLICATION BE JUDGED? This year there will be twelve $2,000 scholarships awarded. Selections for the awards will be based upon: 1. scholastic achievement 2. interest and effort in preparing for your vocation 3. extra curricular activities at and away from school, including community service 4. personal recommendations 5. personal essay 6. financial need

HOW WILL THE CONFIDENTIALITY OF THE APPLICATION BE PROTECTED? Each applicant is assigned a number. When completed, page 1 of the application with the name of the applicant must be detached and sealed in the accompanying envelope. The applicant’s name must not appear on pages 2-4 of the application or attached transcripts and recommendations. After the winning applications have been selected, the envelopes with corresponding numbers will be opened to identify the award recipient.

WHAT MUST ACCOMPANY THE APPLICATION? 1. A transcript of high school grades through the latest period prior to April 15 must accompany application. 2. A letter of recommendation from the principal or faculty advisor. The letter should include the number of students in the class and the standing of the applicant or equivalent must accompany application. 3. Additional recommendations from people familiar with the applicant’s ability and character, and from responsible members of the community, (optional, but recommended). 4. Please indicate the UCANE company by which you or your parent is employed. NOTE: The name of the applicant must be deleted entirely from pages 2 through 4 and all accompanying correspondence, and your application number must be inserted in its place.

WHEN MUST I APPLY? All applications must be submitted no later than April 15, 2015.

FOR AN APPLICATION, PLEASE SEND YOUR WRITTEN REQUEST TO: Utility Contractors’ Association of New England, Inc. 300 Congress Street • Suite 101 • Quincy, MA 02169 Tel: 617.471.9955 • Fax: 617.471.8939 • Email: aklayman@ucane.com

FEBRUARY, 2015

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John E. Merchant, CPA

Cullen, Murphy & Co., P.C.

IN THIS ISSUE: • Renting Versus Buying a Home • Income Annuities in Employer Retirement Plans • When Workers are Independent Contractors

Smart Tax, Business & Planning

Renting Versus Buying

S

Renting Versus Buying a Home

hould you buy or rent your home? This decision can include financial as well as nonfinancial factors. Even if the nonfinancial aspects are extremely important, you should not overlook the financial side. Crucial Ratio

One key to choosing between buying or renting is to determine the annual rent-to-purchase price ratio in the housing market you’re considering. The higher this ratio, the greater the advantage of buying a home. Example 1: Art Smith is considering buying a home that is priced at $200,000. He can rent a comparable home in the same neighborhood for $800 a month, which is $9,600 a year. The rent-to-purchase ratio is $9,600 to $200,000, or 4.8%. Example 2: In a different area of the U.S., Beth Jones also is eyeing a $200,000 home. A comparable home would rent for $1,200 a month. Thus, the rent-to-price ratio for Beth is $14,400 to $200,000, or 7.2% a month. A recent study from Morningstar’s HelloWallet unit indicates that renting might be a better choice when the rent-to-price ratio is below 5%, while buying may be preferable if that ratio is over 7%. That is, the more you’ll have to pay to rent a desirable home, relative to home prices, the greater the chance that the numbers will favor a purchase. Assuming the rent-to-purchase price ratio is favorable, young taxpayers with relatively low early career incomes might do well to rent rather than buy a

FEBRUARY, 2015

home. The same may be true for relocating retirees who haveyou modest theyhome? stop working. Should buyincomes or rentafter your high-income might ThisConversely, decision can includetaxpayers financial as enjoy considerable tax savings from home ownership, aswell as nonfinancial factors. Even if price. suming they are comfortable with the purchase Today’s low interest rates make financing a home the nonfinancial aspects are extremely purchase appealing, and the leverage can add to any important, you price should not overlook the profits from home appreciation.

financial side. Thinking About Taxes Homeowners may enjoy multiple tax benefits that

are not available Crucial ratioto renters. Mortgage interest and property tax payments generally are tax-deductible.

One key toprofits choosing between buying orenjoy Moreover, on a sale of a home often an exemption from capital the gains tax. Assuming renting is to determine annual rent-to-the home was owned and occupied at least two of the purchase ratioupinto the housing market preceding price five years, $250,000 of gains are untaxed for married couplesthis filingratio, a jointthe tax you’ re ($500,000 considering. The higher return). greater the advantage of buying a home. Of course, there is no way for a home buyer to know if a home eventually willisbe sold at a profit. Example 1: Art Smith considering on page 53 buying a home that is pricedcontinued at $200,000. He can rent a comparable home in the same “BUY FROM THE ADVERTISERS IN CONSTRUCTION neighborhood for $800OUTLOOK” a month, which is 51 $9,600 a year. The rent-to-purchase ratio is

Ar HelloW might to-pric may b That i rent a prices, numbe Ass ratio is relativ do wel The sa retiree they st Con might from h are com Today a hom leverag home

Think

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Financial Management continued from page 51 What’s more, the deductions for mortgage interest may not generate any actual tax savings. That’s because those savings are available only to taxpayers who itemize deductions. Homeowners who take the standard deduction get no tax benefit from their mortgage interest or property tax deductions. Example 3: Craig and Diane Emerson bought a house for $200,000, taking out a $160,000 mortgage. At a 4% mortgage rate, their interest payments this year are $6,400 (4% of $160,000). The Emersons also pay $4,000 in state and local taxes and make $2,000 in charitable donations, for a total of $12,400 in possible itemized deductions. In 2015, the standard deduction is $6,300 for single filers and $12,600 for married couples filing jointly. (Taxpayers who are blind or at least age 65 have higher standard deductions.) Thus, the Emersons will choose the standard deduction and get no tax benefit from paying mortgage interest or property taxes.

Tax Bracket Truths Now, what happens if the Emersons had $14,200 in itemized deductions instead of $12,400? If so, they would itemize and deduct their mortgage interest and property tax payments. In this scenario, $14,200 of

itemized deductions is $1,600 greater than the standard deduction for couples, so the Emersons’ net tax deduction from home ownership would be $1,600. Assuming an effective marginal income tax rate of 20%, that $1,600 in net deductions would save them $320 in tax this year. Example 4: Assume the same financial information as in example 3, but assume the Emersons have a higher income and, thus, have an effective marginal tax rate of 40%. Then that same $1,600 in net tax deductions from home ownership would save the Emersons $640 in tax. With a higher income, owning a home saves more tax.

Other Issues The decision about whether to rent or buy a home involves more than the purchase price, rental rates, and tax savings. Buying a house means saving up a great deal of cash for a down payment and putting that cash into an illiquid asset. Renting may leave you with more easily accessible cash, but will that cash be invested wisely or spent imprudently? It’s also important to decide if the responsibility of home ownership is for you. Nevertheless, financial concerns are vital to residential decisions. continued on page 55

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Financial Management continued from page 53

I

Income Annuities in Employer Retirement Plans

n the private sector, employers have been moving away from traditional pensions, known as defined benefit plans. These plans, funded by employer contributions, often pay long-time employees (and usually those employees’ spouses) lifelong regular cash flow. Instead, many companies now provide defined contribution plans, such as 401(k)s, which are funded largely by workers’ salary deferrals. The actual retirement benefit will vary, depending on how the chosen investments perform. National Security Last year, the Treasury Department and the IRS took steps to encourage the use of substitute traditional pensions by retirees. Deferred income annuities (DIAs), which are mainly held in IRAs, were given fa-

vorable tax treatment, if certain requirements are met (see the Financial Management, December 2014 article). Later in 2014, the Treasury and IRS issued Notice 2014-66, which made it more likely that target date funds, mainly held in 401(k) plans, will purchase DIAs, which can offer pension-like cash flow to retirees.

Setting the Date Target date funds offer a predetermined asset allocation that gradually becomes less aggressive and more conservative, as its target date approaches. Example 1: Fawn Grant, age 50, plans to retire in her mid-60s. She invests her 401(k) contribution in a 2030 target date fund. Now, that fund has a balanced mix of equities, for appreciation potential, and fixed income, for stability and cash flow. As this fund approaches its 2030 target date, its asset mix will shift to fewer equities and more fixed income. Many plan participants like the idea of having professional investment strategists automatically continued on page 57

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• • • •

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neglect to mak while the empl liability for any

Financial Management continued from page 55 make these asset allocation decisions.

Enter Deferred Annuities

How 401(k) work

Notice 2014-66 clarifies that target date funds in employer sponsored retirement plans can hold DIAs. A DIA is purchased today; the resulting income stream will not begin until years later. The longer the time between the investment and the start of annuity payments, the greater the amount of periodic cash flow an annuitant will receive. Example 2: Hugh Jordan purchases a DIA at age 55. If Hugh defers lifelong income payments until age 65, he will get more monthly income than he would get by starting immediately. Hugh will get even larger annuity payments by waiting until age 70, or age 75. The recent federal notice explains that target date funds offered through employer plans will be able to include DIAs among their fixed-income holdings for participants who are nearing retirement age. If those DIAs meet certain criteria, some technical issues won’t arise. Similarly, target date funds are considered qualified default investment alternatives (QDIAs), which helps to explain their popularity in 401(k) plans. Employers who make the proper explanation can use

Here is an exam could provide l a target date fu employer-spon plan. Such fund participants of target date fun be available on 1967, 1968, or of periodicofcash flow an who employees will QDIAsthe foramount the contributions employees neglect to make investment choices, while the employ-Beginning in annuitant will receive. ers generally avoid 2: liability forJordan any investment losses. Example Hugh fund participan purchases a DIA at age 55. If Hugh How 401(k) Pensions Might Work the target date defers lifelong income payments until purchase DIAs Here is an of howmonthly DIAs could provide age 65, heexample will get more income allocati lifetime income from a target date offeredyears, by the fund income than he would get by fund starting an employer-sponsored retirement plan. Such funds immediately. Hugh will get even and more DIA might be limited to participants of similar ages. A 2033 larger annuity payments by waiting allocation to su target date fund, for instance, might be available only until age 70, or age 75. the fund’s targe continued on page 58 The recent federal notice explains dissolve. that target date funds offered through At this poin employer plans will be able to include will learn what DIAs among their fixed-income are. They can s holdings for participants who are income right aw nearing If those DIAs until a later tim Palmer Paving is an industry leading heavyretirement highway civilage. engineering meet certain criteria, some technical increase the an construction firm, serving both public private sector clients. With issuesand won’t arise. assets of the no Similarly, target date funds date fund, besi our own HMA and aggregate processing plants, we are fully integrated are considered qualified default reinvested elsew as a materials producer and roadway contractor for projects of any size. investment alternatives (QDIAs), retirement plan We welcome your inquiries and look forward to to helping you solve which helps explain theiryour The federal popularitychallenge. in 401(k) plans. example, so no next site, road construction or infrastructure Employers who make the proper holding DIAs i explanation can use QDIAs for the will look exactl contributions of employees who they’re structur

Dedicated to exceeding your expectations.

When Workers Are Indep Palmer Paving Corporation, Inc 25 Blanchard Street, Palmer, MA 01069 413-283-8354

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23 Arthur Street Easthampton, MA 01027 413-527-6900

As business owners know all too well, hiring an employee costs www.palmerpaving.com more than just paying a salary. Employers provide 1000 Page Boulevard 43 Old Coldbrook Road generally benefits to employees, which can Springfield, MA 01104 Barre, MA 01005 413-737-4020 413-283-8354be expensive. Moreover, employers must pay a share of Medicare,

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Social Security unemployment None of the when your com independent co publicist to get name in the ne 57


Financial Management continued from page 57 to employees born in 1967, 1968, or 1969. In 2033, those employees will be 66, 65, or 64. Beginning in 2023, when the fund participants are 56, 55, or 54, the target date fund can begin to purchase DIAs as part of its fixed income allocation. For the next 10 years, the fund will purchase more and more DIAs, increasing the allocation to such annuities. In 2033, the fund’s target date, the fund will dissolve. At this point, the participants will learn what their DIA options are. They can start to receive lifetime income right away, or they can wait until a later time to start, in order to increase the annuity payments. Other assets of the now-dissolved target date fund, besides the DIAs, can be reinvested elsewhere in the company retirement plan. The federal notice provides one example, so not all target date funds holding DIAs inside company plans will look exactly like that. However they’re structured, the idea is to provide employees with predictable cash flow after retirement through income annuities. continued on page 59

Trusted Advice Withdrawal Rules • It’s possible for target date funds in defined contribution plans to hold deferred income annuities and satisfy nondiscrimination requirements. • Among other conditions, the deferred annuities cannot provide a guaranteed lifetime withdrawal benefit (GLWB) or a guaranteed minimum withdrawal benefit (GMWB). • With a GLWB, the participant is guaranteed to receive a specified lifetime stream of income, regardless of the investment performance of the account, while still retaining access to the funds in the account. • A GMWB is similar to a GLWB, but a stream of income is guaranteed for a specified period rather than for the lifetime of the contract owner or annuitant. • The Treasury Dept. and the IRS are considering whether to provide guidance relating to GLWB and GMWB features in defined contribution plans.

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Financial Management continued from page 58

A

When Workers are Independent Contractors

s business owners know all too well, hiring an employee costs more than just paying a salary. Employers generally provide benefits to employees, which can be expensive. Moreover, employers must pay a share of Medicare, Social Security, and state unemployment taxes. None of the above applies when your company hires an independent contractor—a publicist to get your company’s name in the news, for example, or a freelance website designer. You pay these people the agreed-upon amount and let them worry about funding their retirement or handling payroll tax. If that’s the case, why not just use a group of independent contractors to work for your company and do with few or even no employees?

Did You Know?

A

mong people who buy individual life insurance policies at their workplace, 75% belong to either Generation X or Generation Y (now ages 20-48). Of those buying life insurance through an offer from work, 36% apply for the coverage online or via email, more than any other application method. Source: LIMRA Defining the Difference

The answer is that the IRS is well aware of the advantages of using contractors. Therefore, the IRS has established rules governing how independent contractors are classified, as opposed to employees. Drilling down, the major difference is a matter of control. Hiring an independent contractor to do a specific task is fine. You tell the contractor what you want done, and you pay for results. Water Works Specialist However, if you the Inc. worker how John Hoadley andtell Sons Water Works Specialist Tel:781-878-8098 Fax:781-878-5298 and when and where the work is Water Works Specialist Tel:781-878-8098 Fax:781-878-5298 Tel: 781-878-8098 Fax: 781-878-5298 to be done, you risk having that worker re-cast as an employee by “Our Products the Most Trusted NamesNames in theinIndustry” “OurIndustry” Products Are the Most Trusted “OurAre Products Are the Most Trusted the the IRS. Names in the Industry” � U.S. Pipe ● Cultec Chambers � U.S. Pipe ● Cultec Chambers � Mueller Fire Hydrants ●InNational & Plasticscommon sense somePipe cases, • U.S. Pipe • Cultec Chambers Mueller Tapping Sleeves & Valves ● ADS Pipe & Chambers � Mueller Fire Hydrants Pipe & Plastics will apply. If that freelancer works • Mueller Fire Hydrants ● National • National Pipe�� &Smith Plastics Blair Clamps & Couplings ● General Foundry Castings � Mueller Tapping Sleeves & Valves ● Valves ADS Pipe Chambers onServices your website while doing other • Mueller Tapping Sleeves & • &ADS Pipe & Chambers Mechanical � Tapping Sleeves paying & Gates Installed / Cut for other companies, jobs • Clamps Smith & Blair Clamps & Couplings • General Foundry Castings � Smith Blair Couplings ● General Foundry Castings � Line Stop / EZ Valves chances are the IRS will go along Mechanical Services � Cutting of Chilled Water Lines & Steam Lines Mechanical Services independent contractor clas� Pressure Testingwith & Disinfection of New Mains � Tapping Sleeves & Gates Installed / Cut � Installation & Testing of Backflow Preventers Hours • Tapping Sleeves & Gates Installed / Cut sification. On the 24 other hand, if Sales& Service � Large Diameter Hydraulic Pipe Cutting � Line Stop EZ Valves Serving all of • Line Stop / EZ/ Valves you have a person who works from � Hydrant Installation & Repair New England � Cutting ChilledWater WaterLines Lines&&Steam SteamLines Lines � Electronic Leak home Detection as a freelancer but works • Cutting of of Chilled “Water-Sewer-Drain Supplies at on a Competitive Price” does it more • Pressure Testing &&Disinfection only your website, � Pressure Testing DisinfectionofofNew NewMains Mains www.hoadleyandsons.com • Installation && Testing ofof Backflow or less MA full 02370 time, and takes direction � Installation Testing BackflowPreventers Preventers 24 24Hours Hours672 Union Street Rockland, • Large Diameter Hydraulic Pipe Cutting from your IT people, you may have Sales& Service Sales & Service � Large Diameter Hydraulic Pipe Cutting • Hydrant Installation & Repair a difficult time treating him or her as Serving ofof Servingallall � Hydrant Leak Installation & Repair New • Electronic Detection NewEngland England a contractor. � Electronic Leak Detection If you have been misclassify“Water-Sewer-Drain Supplies at Supplies a Competitive Price” Price” “Water-Sewer-Drain at a Competitive ing employees as contractors, the penalties can be steep. www.hoadleyandsons.com www.hoadleyandsons.com Reprinted from CPA Client 672 Union Street MA Rockland, 672 Union Street Rockland, 02370MA 02370 Bulletin. n

John Hoadley and Sons Inc. John Hoadley and Sons Inc.

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E.H. Perkins Construction, Inc. & Subsidiaries P.O. Box 301, Wayland, MA 01778 (508) 358-6161 • (781) 890-6505

-PLANT LOCATIONSQUINN-PERKINS S & G CO. Burlington (781) 272-0200 PANDOLF-PERKINS CO. Sterling (978) 422-8812 • (800) 339-3389 KANE-PERKINS CO. Hudson (978) 562-3436 • (800) 287-3436 GRAVEL • SAND • STONE FILL AND LOAM BITUMINOUS CONCRETE (PAVING) READY-MIX CONCRETE PRECAST CONCRETE PRODUCTS

E

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Equal Opportunity/Affirmative Action Employer

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Advertisers’ Index ATS Equipment, Inc. ...........................................................20 Adler Tank Rentals...............................................................45 American Shoring, Inc..................................... Ins. Back Cvr. Aon Construction Services Group........................................25 Boro Sand & Stone Corp......................................................31 Dennis K. Burke, Inc............................................................54 Concrete Systems, Inc............................................................4 Dagle Electrical Construction, Corp................................... 24 Darmody, Merlino & Co., LLP............................................54 DeSanctis Insurance Agency, Inc. .......................................19 Dig Safe System, Inc............................................................55 The Driscoll Agency ............................................................56 EJ......................................................................................... 40 Eastern Insurance Group, LLC............................................10 Eastern States Insurance Agency, Inc..................................27 T. L. Edwards, Inc................................................................54 Ferguson Waterworks.............................................................9 Foley Carrier Services, LLC................................................52 Geod Consulting, Inc............................................................58 L. Guerini Group, Inc...........................................................11 HD Supply Construction & Industrial White Cap ................8 HD Supply Waterworks..........................................................2 A. H. Harris & Sons, Inc. ....................................................48 Hinckley Allen, LLP............................................................28 John Hoadley & Sons, Inc....................................................59 P. A. Landers, Inc.................................................................11 Lawrence-Lynch Corp..........................................................23 Lorusso Corp........................................................................13 Lorusso Heavy Equipment, LLC.........................................26 Mabey, Inc............................................................................52 Mass Broken Stone Company...............................................45 Milton CAT...........................................................................12 Norfolk Power Equipment, Inc.............................................52 North East Shoring Equipment, LLC...................................56 Northland JCB........................................................................7 NorthStar Insurance Services, Inc.......................................22 Ocean State Oil.....................................................................48 Our Outhouses, Inc...............................................................58 Palmer Paving Corporation..................................................57 E. H. Perkins Construction Co., Inc.................................... 60 Podgurski Corp.....................................................................50 E. J. Prescott, Inc..............................................Ins. Front Cvr. Rain For Rent-New England.................................................18 Read Custom Soils ...............................................................48 Rogers & Gray Insurance Agency, Inc.................................14 Schmidt Equipment, Inc.......................................... Back Cvr. The Scituate Companies.........................................................6 Shea Concrete Products........................................................42 Smith Print............................................................................50 Starkweather & Shepley Ins. Brokerage, Inc.......................50 Ti-SALES, Inc. ....................................................................31 Albert J. Tonry & Co., Inc......................................................7 United Concrete Products, Inc. ............................................53 United Rentals Trench Safety...............................................30 C. N. Wood Co., Inc. ............................................................36 Woodco Machinery, Inc.......................................................16

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February 2015 co web  
February 2015 co web