Utility & Transportation Contractor February 2022

Utility & Transportation

contracTOR

Atlantic InfraRed

Celebrates 20 Years of Paving the Town Red

february 2022

president’s message

From the desk of: roly acosta “Courage is being scared to death and saddling up anyway.”

7. Ride for the brand.

~John Wayne

9. Remember that some things aren’t for sale.

I’ve been captivated with the Cowboy life since childhood.

Maybe it is because of the cinematic works of Wayne, Bronson, Eastwood, and Costner or maybe it is because of the similarities with the Contractor life. The challenges contractors face today are different than those of the cowboys of yesteryear, but they are still quite alike and daunting.

10. Know where to draw the line.

To manage the challenges of expanding the American frontier and also attempting to curtail the Wild West, Cowboys were committed to The Cowboy Code of Ethics. The terms captured the mystique of a Cowboy, but they also fostered a solid work ethic, loyalty, sense of fair play, honesty, and a shared comradery. I’d say it reads like a list of expectations for UTCA member companies.

The Cowboy Code emphasizes pride in your work and resolution in the face of difficulties. The Code served as a guide to respond to challenges with integrity and good character. Character defined the Cowboy and the code represented their core values. Character defines the Contractor and our core values represent our people, our work, and our legacy.

The Cowboy Code of Ethics 1. Live each day with courage.

2. Take pride in your work.

8. Talk less and say more.

Cowboys were committed to their craft. Wake up early in the morning, get something to eat, and then work non-stop until supper. The schedule should sound familiar to our project managers, trade labor, estimators, superintendents, and management personnel. I fear that the commitment to our craft is slipping. We need to preserve our craft.

Cowboys relied on teamwork and cooperation to get the work done. Acceptance of diversity and inclusion was essential. There were cowboys of every descent-- European, Indian, Spanish, African-American, etc. There were also many cowgirls. Look around your company, note the many cultures, ethnicities, and backgrounds that have your back. Let them know you have theirs as well.

We may not be able to mount a horse and manage a cattle drive, but we can follow The Cowboy Code of Ethics and advance our industry. I look forward to our continued ride on the construction range together.

Lastly, a tip of the Stetson and a swig of white-lightning for our “Lady in Red” and her co-workers at Atlantic InfraRed on reaching their 20th Anniversary. Hard work and dedication realized and recognized. Cheers to another twenty!

3. Always finish what you start.

4. Do what has to be done.

5. Be tough, but fair.

6. When you make a promise, keep it.

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Happy Trails,

Roly

CONTENTS

Cover story 38 atlantic infra celebrates 20 years

38

DEPARTMENTS 2 7 15 25 45 55 65

President’s Message

NEWS

75 evaluating the success of open enrollment

Financial Overview Legal Dig Accounting Corner Legislative News labor relations the pipeline

Published Bimonthly During 2022

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Utility & Transportation Contractor | february | 2022 3

By: Michael H. Meyers, Mountain Hill Investment Partners

B

efore you read this article, call your 401(k)-plan advisor, and ask if your plan participates in revenue sharing. If the answer is yes, follow up with this question: how does this benefit my employees?The correct answer is: It doesn’t benefit employees. I’ll explain why later in this article, but I’d be very interested in any views you hear to the contrary if you’re inclined to share them with me.

If you exercise discretionary control or authority over your 401(k)-plan management, you are a fiduciary; if you have a 401(k)-plan committee, which we strongly advise, the members of that committee are fiduciaries as well. According to the Department of Labor: “The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.”

One of the most important 401(k) fiduciary responsibilities is ensuring that plan fees are reasonable; excessive fees can mean severe consequences for you as a plan fiduciary, including personal liability. This can be a daunting task because fee structures can be very confusing. Typically, 401(k) plans have 3 different expenses – payment for the investment options, to the recordkeeper, and to the advisor. Unfortunately, benchmarking these plan fees can be difficult given the numerous ways 401(k) providers can be compensated; some of these fees are paid directly by plan sponsors, some through plan assets (participant paid), while others are paid indirectly from plan investments in the form of revenue sharing.

If you look at the menu of investment options in your plan, you’ll notice they all have a cost, sometimes referred to as “expense ratio” or “underlying fund net cost” on your fee disclosure. These can range from just a few basis points to as much as 1% and higher. Those fees cover the cost of administration and operating expenses of the fund.

Revenue sharing (typically referred to as a 12b-1 fee or sub-transfer agent fee) is a process of collecting non-investment related fees through a fund’s investment expense and then paying a portion of the collected expense to other plan service providers.

They call these “indirect fees”, though I think “hidden” is more appropriate. Nobody sees the money changing hands because they’re buried in the fund’s expense ratio and very few understand what the total expense pays for (brief description below).

These fees typically don’t go lower, so as plan assets grow, so does the expense. Also, because they are collected through the investment expense, the investment’s overall return is net of revenue sharing fees. Simply put, more revenue sharing equals a lower return for participants. You can spot these fees on your plan’s 408b2 fee disclosure; they’ll be listed as one or both of the following:

Financial overview

uncover the hidden costs within your 401(k) plan:

* 12b-1 fees – 40 years ago, the Securities & Exchange Commission adopted rule 12b-1 under the Investment Company Act of 1940. The rule permitted funds to compensate brokers and advisors for the distribution of fund shares. The idea was the larger a fund got the better it would perform. That’s never been proven, but the fees still exist. It’s a dirty way to get paid in my view and creates a conflict of interest for brokers and advisors when selecting investments for clients. * Sub-transfer agent fees – These are charged to cover administrative expenses and are usually paid to the recordkeeper. I don’t understand the name either.

Keep in mind that these will be listed as a percentage of assets, not a dollar amount, and they won’t necessarily be the same for each fund so calculating the actual expense will be a bit of work.

I would advise engaging a qualified advisor who can review your fee disclosure and unpack any “hidden” fees you could be missing. If your current advisor is the one collecting these hidden fees, they’re the wrong person for the task.

Having a revenue sharing arrangement in place makes your job as a fiduciary very challenging and brings with it a few glaring negatives:

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Financial overview

* Unfair Fee Allocation – Not all funds collect the same in revenue sharing. Participants with similar balances and investment selections, but different allocations to those investment, will incur a different level of fees. Some providers can level the amount of revenue sharing across the plan, but not all do. One of the more recent 408b-2 fee disclosures I’ve reviewed did not have a level schedule of revenue sharing, so it was clear that the participants were not all being charged in the same way. * Lack of Transparency – These fees are difficult to understand without having clear guidance. It may seem to participants that they’re not being charged at all because of the way the fees are buried within the fund expense ratios. Paying the indirect way through revenue sharing forces participants to seek out fee disclosures and back into dollar figures; this is far to0 opaque and unnecessary in my view. * Conflicts of Interest –When a broker or advisor can receive 12b-1 fee compensation, they have a financial incentive to recommend that a client use funds with this feature, rather than other potentially better performing and cheaper options.

401(k) plans do come at a cost and not all fees are bad; there’s simply more transparent ways to pay them. The good news is that you have options as a plan sponsor when paying fees, none of which involve revenue sharing: * Plan sponsor paid - Fees for services like recordkeeping, third-party administration, and investment advisors are invoiced to the plan sponsor and the company directly pays each service provider. This option is certainly the most transparent and is tax deductible. Investment option fees can only be paid by the holder of the investment, however.

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* Participant paid - Plan fees can still be paid through plan assets without using revenue sharing. Fees can be either deducted from participant accounts as a dollar amount, percentage of assets or a combination of both. With this method, fees are not hidden inside the investment expense; instead, fees are line-itemed out on participant statements and fee disclosures making them easier to identify. * A combination of both - Plan sponsors have the option to share plan costs with plan participants as well. This is a more affordable option for plan sponsors and helps reduce the amount of fees coming out of plan participant accounts.

As we begin a new year, make it a priority to review your 401(k) plan in detail. My firm works as an advisor and co-fiduciary to corporate 401(k) plans, specializing in the construction industry. We work with many UTCA firms to enhance their 401(k) offering by vetting service providers, lowering costs, and building employee education programs. A 401(k) plan is an employee benefit, make sure employees who put their hard-earned money into your plan are treated fairly.

Contact me, Mike Meyers, at (732) 291-3338 or mikemeyers@ mhipartners.com for more information and to schedule a plan review.

Disclaimer: Mountain Hill Investment Partners is an SEC Registered Investment Adviser. We have a clearing and custody relationship with Fidelity Brokerage Services LLC, Member NYSE/SIPC.

practical steps to take to seek relief under surety payment bonds

C

ontractors and subcontractors are generally aware that surety bonds are required on all public contracts and may provide protection for securing performance of the project and payment of amounts owed. Knowing the coverage requirements and conditions for filing claims that must be fulfilled to secure the benefits of the bond is critical so that best practices are built into your business.

Surety bonds may be required for both public and private projects.

Bonds that must be secured for public jobs are governed by statute.

Bonds that must be secured on private jobs are governed by the contractual terms.

Federal projects bonding requirements: The Miller Act, 40 U.S.C. 3131-3134, applies to contracts awarded for the construction, alteration, or repair of any public building or public work of the United States federal government. While the Act provides that the bonds must be posted on contracts exceeding $100,000, Federal Acquisition Regulation (FAR) Part 28 requires the bonds only on contracts that exceed $150,000. Upon award of the contract, the prime contractor must furnish a performance bond and a payment bond to protect “all persons supplying labor and materials carrying out the work provided for in the contract.” The payment bond generally must equal the total amount payable by the terms of the contract.

A subcontractor or material supplier that has not been paid may, within 90 days of the day on which they last furnished labor or materials for which the claim is made, bring a civil action on the payment bond for the amount unpaid. The suit must be brought no later than one year after the day on which the last of the labor was performed or material was supplied by the bond claimant.

The agency issuing the contract is required to provide a copy of the payment bond, which identifies the surety, upon presentation of any affidavit indicating that the person requesting the copy has not been paid for labor or materials furnished under the contract.

The parties that may assert a claim under the Miller Act are limited to: (1) first-tier subcontractors (those who contracted directly with the prime contractor); (2) second-tier subcontractors (those who contracted with the first-tier); (3) first-tier material suppliers (those who contracted with the prime contractor); and (4) second-tier material suppliers (those who contracted with the first-tier subcontractors). The Miller Act does not protect suppliers of suppliers. The determination of whether a first-tier entity is considered a subcontractor or supplier is critical in determining whether a second-tier supplier is covered by the Miller Act.

To recover for unpaid work under the Miller Act, the subcontractor’s work must: (1) be performed “in the prosecution of work provided for in a contract for which a payment bond is furnished”; and (2) qualify as “labor” within the meaning of the Act. Federal Courts have wrestled with this issue, and there is still no bright line test to determine what constitutes “labor” under the Act. Federal courts have held that labor must include physical work, but may also include supervisory work, so long as the superintending, supervision, or inspection is done on-site.

Legal Dig

By: adrienne l. isacoff, esq., florio, perrucci, steinhardt, cappelli, Tipton & Taylor LLC

A design firm that provides professional services to a prime contractor on a federal project will not have rights under the Miller Act to make a claim against the prime contractor’s payment bond unless the designer performs on-site supervision or inspection duties in addition to off-site design services.

First-tier subcontractors and suppliers are not required to provide any notice to the prime contractor prior to filing a civil action. A person having a direct contractual relationship with a subcontractor, but no contractual relationship with the contract furnishing the payment bond, may bring a civil action on the payment bond by giving written notice to the contractor within 90 days from the date on which the bond claimant performed the last of the labor, or furnished the last of the material for which the claim is made.

The notice must: (1) be in writing; (2) state with “substantial accuracy” the monetary amount claimed; (3) name the party to or for whom the labor or material was furnished; and (4) be delivered by any means that provides written verification of delivery or personal service. The notice requirement is important because it provides the prime contractor with a firm date after which it may pay its subcontractors without fear of future liability to laborers or suppliers of those contracts. Accordingly, the notice requirement is strictly enforced, and the failure to comply with such requirement precludes a Miller Act claim.

Although the Act only requires payment bond claimants to deliver notice to the prime contractor, subcontractors and suppliers may forward the notice to the surety as well. Thereafter, the surety will typically investigate the claim, and either the prime contractor or the surety may pay the claim without the need for litigation. Therefore, best practice is for anyone filing a payment bond claim to serve written notice on each entity in the contract chain, as well as on the surety. Notice should be provided in a manner that provides written verification of delivery (certified mail; courier with signature required).

A waiver of the right to pursue a payment bond action under the Act by a person supplying labor or materials is void unless it was execut-

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ed in writing, signed by the person whose right is to be waived, and executed after the labor or materials have been supplied.

Legal Dig

State and Local Government Contracts – “Little Miller Act” When a project involves the construction of public works, or other improvements to a school district, municipal, county, or a state property, a payment bond must be furnished by the general contractor for the project, pursuant to the Bond Act, N.J.S.A. 2A:44-143.

The bond must be in the statutory form required by the Bond Act. The furnishing of a payment bond is critical on State jobs because there is no right to file a lien claim against the State, although a lien claim may be filed against municipalities, counties and county authorities under the Municipal Mechanics’ Lien Law, N.J.S.A. 2A:44125 et seq.

The Bond Act covers the same tiers of entities within the contract chain as under the Miller Act. In New Jersey courts, issues regarding suppliers often center on whether the materials were incorporated into the project. For example, a supplier that sold liquid asphalt to an asphalt company, which in turn sold the asphalt to a paving company, was found not to be covered by the Bond Act, because it was as supplier to a supplier, not as supplier to a subcontractor. West Bank Oil, Inc. v. Hartford Acc. and Indem. Co., 205 N.J. Super. 56 (App. Div. 1985).

By contrast, our courts have held that while on-site work may be a factor in determining whether a material supplier performed definite and substantial amount of work called for in the original contract, for purposes of determining whether a supplier is a “subcontractor” within the meaning of the Bond Act, on-site work is not a prerequisite to subcontractor status. Unadillo Silo Co., Inc. v. Hess Bros., Inc. 123 N.J. 2 68 (1991).

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Prior Notice The Bond Act provides strict pre-claim notice requirements for second tier subcontractors and suppliers: Any person who may be a beneficiary of the payment bond . . . and who does not have a direct contract with the contractor furnishing the bond shall, prior to commencing any work, provide written notice to the contractor by certified mail or otherwise, provided that he shall have proof of delivery of same, that said person is a beneficiary of the bond. If a beneficiary fails to provide the required written notice, the beneficiary shall only have rights to the benefits available hereunder from the date the notice was provided.

It is critical for every second tier subcontractor or supplier to adopt a business practice of ascertaining the name and address of the contractor on the project as soon as the subcontract or purchase order is signed. Then immediately provide notice to the contractor before work is commenced or materials are delivered. Only then will you be fully protected under the Bond Act. Bear in mind, however, that if you failed to provide such notice prior to commencement of your work, you will still be able to file a payment bond claim, but the amount covered by the bond will be limited by amounts already paid out by the owner to the contractor.

Time Limits A suit to enforce a Bond Act claim against a surety may not be filed until the expiration of 90 days after providing to the sureties and the contractor a statement of the amount due, but suit must be filed within one year from the last date of work. Consult with an attorney knowledgeable about surety law in order to be certain that your rights are being protected.

accounting insights: top 2021 trends, 2022 predictions, and what steps to take now By: jack callahan, cpa, partner, cohnreznick

As we embark on this new year, here’s a quick recap of what we at CohnReznick saw, heard, and learned “in the field” and across the industry in 2021; a look ahead at how we think the sector will move forward in 2022; and what steps your business should consider now to set yourselves up for continued success.

Top 2021 trends 1. Continued remote work We are now preparing to face the third year of performing a portion of our audit work remotely. It seems hard to fathom, but in March 2020 we pulled out of the field altogether, and in January 2022, we were still only able to work in our clients’ offices on a sporadic basis. The technology investments we as a firm had made, combined with our clients’ technology enhancements, have made our audits effective, if not optimal. While we have gotten better each year, we all look forward to the day we can return to our clients’ offices. In the meantime, work with your auditors and your team to create as much interaction and “face time” as possible.

Take advantage of digital meeting platforms and other opportunities to connect.

2. Federal relief programs In 2020 and 2021 we all embarked on the new reality of Paycheck Protection Program (PPP) loans and Employee Retention Credits (ERCs).

For most of our UTCA clients, these proved to be essential cash flow support through unsettling and challenging times. The rules and requirements around both of these programs changed often, and we spent a great deal of time working with our clients (and the UTCA) to stay abreast of the modifications. We helped clients apply for both relief initiatives, and in the case of PPP loans, secure forgiveness for both Round 1 and Round 2 loans. The ERC credits continued into the third quarter of 2021, before being discontinued for Q4 by the infrastructure legislation. While our clients have received forgiveness from the SBA for their PPP loans, I continue to remind everyone that there remains a six-year audit period and all documentation needs to be maintained. The federal government in the past has shown their propensity to execute audits up to the last minute on these types of programs. Stay vigilant and document well not just the use of PPP funds, but also any and all funds the company has spent on tools, technology, and labor to remain competi-

tive and benefit your workforce in these challenging times.

3. Workforce We have all had to face an amazing transformation of our workforces.

The “Great Resignation” has impacted our clients, as well as our own workforce. Workers have taken early retirement, others have taken lateral positions, and many have used these times to leave the profession or the region. It has been incumbent on all of us to be as creative and as engaged as possible to assure our workers of their value to our businesses and that management recognizes and rewards its key workers.

4. Supply chain Discussions around supply chain have drastically changed. We went from a decade or more of discussions about “Just in Time” inventory practices to a “Just in Case” philosophy. We have engaged with our clients in discussions about the cost and options of floor planning key materials and supplies to entering into creative and innovative procurement arrangements. We have seen owners be willing to waive delay penalties for supply chain challenges, but have seen little willingness to engage in discussions about the increase in material costs, which in some cases have been significant. We continue to urge all of our clients to take a hard look at their costs-to-completes and at their material pricing on all new contracts. Inflation has not been a concern for a decade now, and some of your procurement team have not lived through an inflationary cycle. It is time to revisit the past and document lessons learned.

Accounting Corner

T

he traditional contractor challenges of labor, material, and equipment have been compounded over the last few years as the construction industry has navigated its way through the downstream impacts of a global pandemic. With economic indications pointing toward growth and recovery, 2022 appears poised to be bountiful for those who are well prepared to address a complicated regulatory, operational, and competitive landscape.

5. Cybersecurity Cyber attacks and their crippling effect on contractors became more prevalent in 2021, as the quick move to a remote environment left some with insufficient safeguards and thus vulnerable to attacks. We have worked with our clients to perform IT and cybersecurity assessments and urged them to make upgrades while working with their insurance agents to review key cybersecurity coverage provisions. Every company can be a target of cybercriminals. If you haven’t done your assessment and built in new protections, you will be at greater risk of potentially crippling attacks. Have a plan in place not only to defend your business, but also to report and disclose any incidents to the appropriate authorities and stakeholders. And don’t just stop with your company; assess the security of your vendors and other third parties you work with, too.

6. Infrastructure 2021 became the Year of infrastructure. President Biden and his administration’s $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) was passed into law with bipartisan support and the president’s signing on Nov. 15. Like with all legislation, the devil is in the details. Once

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peeled back, the IIJA represents $550 billion in new appropriation on top of the renewal of an existing $650 billion in appropriations. The term “infrastructure” was expanded to include new categories such as broadband and electric vehicles. Despite its limitations, it remains a significant boost for the construction industry. For UTCA members specifically, roads and bridges are the biggest beneficiary, with $351 billion, while water infrastructure is targeted with $60.4 billion in much-needed investment. Investments in rail, ports, and airports are also included.

Accounting Corner

The details on how and when the funds will be allocated are also a political art form. The funds will be allocated to the states, and then the states will allocate to specific agencies where the projects will be decided upon. Active participation and tracking by UTCA and other construction advocacy groups will be essential to see the funds make their way to the needed projects.

It will also be essential to know that as with PPP and any federal program, be cautious when the government comes offering money. With these projects being funded by federal grants, there will be a whole new set of compliance standards. We already see the “Buy America” and “Buy American” provisions being implemented, and there is a commitment by the president to be the “most pro-union president.” How these provisions will play out and the impact of this will need to be tracked by each of you. There is also a clear focus on the IIJA benefitting underserved communities, so look for an increase in diversity requirements, and make sure that you have the technology solutions you need to track your compliance.

To take full advantage of the infrastructure opportunities ahead, it is incumbent on your organization to: 1) Work with your trusted advisors to perform a SWOT analysis, identifying your organization’s strengths, weaknesses, opportunities, and threats in capitalizing on infrastructure opportunities.

2) Identify where the federal dollars will flow and determine if your company is well aligned to benefit.

3) Determine if you have the people, processes, purpose, and technology to meet the regulatory and compliance requirements almost certain to come.

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Predictions for 2022 While the themes above contribute to rewriting the strategies required to operate within the construction industry forever, below are my top predictions for how the sector will fare and additional major forces we’ll see in 2022: 1) Construction economists I’ve listened to have generally projected a slow start with a strong finish to the year. Projects have been delayed waiting for the IIJA rollout – thus the slow start – but, as the dollars flow, so too should earnings, with a strong carry into 2023.

2) Supply chain concerns and inflation are a reality that will need to be closely watched and built into your bids as best you can.

3) Interest rates will increase. Years of zero interest rates have ended.

Be certain you have appropriately sized your debt.

4) The labor market will remain volatile.

5) All tax increases were deferred and included in the proposed Build Back Better plan. While that legislation had been sidetracked as of this writing, the results of midterm elections may well see it revived, and the tax increases with it to pay for the spending.

6) Your 2022 financial statements will require implementation of the new Lease Accounting Standards requiring contractors to capitalize operating leases. You need to prepare now for how this will impact your balance sheet and your bank covenant formulas as well as your prequalifications.

While the year ahead is likely to be full of its own surprises, there is much your business can do now based on what we know so far to be better ready for whatever comes next. Work with your team of trusted advisors to make sure you are aligned to capitalize on what has the makings to be a very strong five-year run.

Cover Story

atlantic infra celebrates 20 years of painting the town red By: dan kennedy

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eeing red while driving through New Jersey construction sites is a good thing – it means Atlantic Infra is on the job, with every employee’s uniform and company vehicle easily recognizable by its bright hue. It also means the team will be Responsive, Efficient, and Diverse, as these are the core values of the revolutionary infrared repair and paving company.

“We stand by the seamless quality and permanence of our work – plus, it is completed quicker and more cost-efficiently than other traditional methods,” said Marilyn Grabowski, owner, and president of Atlantic Infra. Unofficially known as the “Lady in Red” in the male-dominated field of construction for 20 years, Grabowski proudly displays her first pair of worn-in work boots at Atlantic Infra’s corporate office in Wall Township.

“We have always been the benchmark in the utility industry for women-run businesses,” said Grabowski. “On-site visibility and hands-on expertise are the only way to build credibility.” Credibility is how she and her team at Atlantic Infra grew from a single desk in Grabowski’s walk-in closet in 2002 to the multimillion-dollar company it is today.

Tom Grabowski adds new asphalt to a perfect infrared repair.

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The Lady in Red visits an infrared crew.

Grabowski, inspired by her late grandmother, Florence DeRosa (an entrepreneurial residential builder), and her talented husband, Tom (an operations expert), seized an opportunity to market the use of infrared technology for innovative asphalt repair.

Atlantic InfraRed’s first yard was a rented tractor trailer space in Kearny with a single piece of infrared equipment. Today, still in Kearny, its fleet of 15 infrared trucks, 3 sets of paving equipment, and dozens of other heavy equipment machinery operates from a 20,000 sq. ft. command center with a yard the size of ten tractor trailer spaces.

In 2015, Atlantic Infra joined two unions and quickly began developing a key team of managers so the company could operate more like a corporation than a small business, while still encompassing “RED family” values. EOS, an entrepreneurial operating system which provides simple concepts and practical tools to run a business efficiently was integrated into daily life. With the assistance of Fred Stansfield, general superintendent, and his background in paving, the company grew Atlantic InfraStructure into a full-service milling and paving operation. Steve Tague, risk manager, has added safety protocols and compliance. Nicole Federico, a Construction Industry Advancement Program of New Jersey intern in 2016 and current project manager, also contributed greatly to Atlantic Infra’s growth – and its rare employee diversity rate of 53 percent.

“We’ve got a very bright future with all the improvements New Jersey will be making to its infrastructure,” said Randy Mabie, vice president of Atlantic Infra. “And that’s in no small part due to Marilyn’s invaluable mentorship – I’ve never experienced any-

paving is required, the Atlantic InfraStructure team is responsive and efficient at coordinating all aspects of work.

Atlantic’s success is a result of unwavering dedication to hard work and commitment to building strong relationships. The Grabowski’s have attended networking events such as the UTCA Annual Convention since 2004. During a 7-year timespan the company purchased a vendor booth and was able to educate the members on the use of infrared restoration. As a result, they

thing like it anywhere else I’ve worked.” Mentorship is near and dear to Grabowski. In her mind, she is only giving back what was generously given to her by her mentors Frank Evans of Skoda Contracting, Fletch Creamer and the beloved Joe Walsh of J. Fletcher Creamer & Son.

Atlantic InfraStructure paving in Rahway.

have done business with over 60 UTCA member companies.

Marilyn and Tom have also attended six Executive Seminars over the years: always returning home with new innovative ideas, a stack of business cards and lifelong friends.

Inside Atlantic's shop - getting ready for winter maintenance.

The lead improvement projects around New Jersey are one example of a great opportunity for Atlantic. Several of the water utilities have specified infrared restoration as their choice for restoration. With many of Atlantic InfraRed’s team having over 10 years of expertise in their craft, and a robust proprietary software that allows for extensive digital capabilities including pre and post construction pictures; each crew is fully equipped to deliver safe and seamless service to their customers. When curb to curb

Cover Story

An early morning safety talk at Atlantic's new facility in Kearny.

Marilyn is passionate about evoking positive and lasting change in the community. The team gathers in Asbury Park for the American Heart Association walk. She is a Board Member of the Greater Monmouth YMCA and the Wall Business and Finance Academy. In 2021 Marilyn was elected to serve on the New Jersey Asphalt Pavement Association board and she will be on a Women of Asphalt panel at the World of Asphalt in Nashville this March.

Her dedication to everyday learning and educating a more diverse industry is not the only thing that hasn’t changed over the past 20 years: “We still send out Valentine’s instead of year-end holiday cards to celebrate our official business anniversary,” Grabowski said.

The RED team looks forward to a bright future as New Jersey’s leading diverse restoration contractor.

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good riddance 2021 and a warm welcome to 2022 By: dave rible, EXECUTIVE DIRECTOR

A

ator Sweeney did not post bills that were initiatives of Governor Murphy that could have been harmful to the taxpayer or small business owner. I can assure you that Senator Sweeney will still be a voice of influence here in NJ and he is not walking away like most who lose an election.

Governor Phil Murphy will be taking on his second four-year term. The Senate and General Assembly will be starting a new session with new faces and new leadership and a smaller advantage within the majority party. The Democrats now hold a slimmer 2416 advantage in the Senate and a 46-34 advantage in the General Assembly.

The new Senate Minority Leader is a friend to the UTCA who understands infrastructure and fiscal responsibility, and that is Senator Steve Oroho. Senator Oroho and I worked very closely on the last TTF renewal, amongst other issues, and I’m looking forward to working with him on upcoming issues and a TTF renewal. We would like to wish Senator Tom Kean the best of luck as he leaves the Senate to run for Congress in the 7th district against Congressman Malinowski.

As for the new leadership of the Senate, we welcome the new Senate President Senator Nick Scutari. I have known Senator Scutari for many years while serving in the legislature. I believe that he is someone who will take the time to understand our issues and help us in our efforts to construct a better NJ. We will miss the presence of Senator Sweeney as he was a great voice for our industry. I know there were bills in the past that he introduced that frustrated some of our members, but at the end of the day he was a voice for the in-

The General Assembly leadership did not change much. Assemblyman Craig Coughlin was re-elected as the Speaker of the Assembly and Assemblyman John DiMaio was elected as the Minority Leader. He replaces Jon Bramnick who was elected to serve in the Senate to replace Senator Kean. Both assemblymen are former colleagues of mine in the assembly and are very good people. I look forward to working with them on behalf of the UTCA and the industry.

frastructure industry who understood our concerns, and he was a wall between the Governor and the business community and taxpayers. It’s very clear that if legislation does not pass in the Senate, it never makes it to the Governor’s desk. On many occasions Sen-

Legislative News

s we say good riddance to 2021, we ring in 2022 with the same Governor and a slightly different legislature. I think we all are excited to see what 2022 will bring us considering the past two years have robbed us of any normalcy as we knew it. 2022 can bring us prosperity and a fruitful infrastructure budget thanks to the new federal infrastructure bill that will spread out work here in New Jersey over the next five years. Also, many of us hope that season five of Yellowstone is not too far away. Constructing a better NJ while rooting for the Dutton family can make for a great year.

What do the election results mean for the NJ taxpayer and business owner? The answer should be compromise and patience.

There was a clear mandate in a very blue state that the average voter is not happy with NJ business as usual which brought the “Red Wave” into NJ. They don’t want to see NJ as the next California.

A clear message was sent to all the people in Trenton to wake up and pay attention to the people you are representing. I do think that our statewide elected officials will think twice, if not three times, before voting on legislation that is raising taxes, burdening business owners, and making unfair mandates. Considering that the Democrats control the Governor’s office and both legislative chambers, but not by large margins, I would hope that there will be careful deliberations on statewide policy and a true spirit of bipartisanship. It’s been said that elections have consequences. Let’s hope that for all taxpayers and business owners here in NJ the consequences bring long awaited relief.

So, as we watched the dust of the election disappear, we saw the much-anticipated Federal Infrastructure Bill pass in DC and

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sideration. We worked closely with Senator Greenstein to improve language of the bill to be sure there were no bidding incentives to use the low carbon concrete. The bill was eventually passed in both houses. Another bill that we opposed was S2407 which tightened the rules for apprenticeship programs and held the contractor liable if there were any issues with their apprenticeship program.

That bill also has passed both houses and they are both being sent to the Governor for his consideration. When Dan Kennedy testified in both houses opposing the bill, he did a great job representing the UTCA. The UTCA was hopeful to get stricter language in the bill that would NOT hurt the contractor who unwittingly filed paperwork or had a bad practice that put them in violation. The UTCA made it clear that we would not protect bad actors in the industry, and we fully support a level playing field.

Finally, as we leave 2021 behind, the legislature’s “Lame Duck” session did not prove to be too harmful for our industry. First, we saw the long-awaited low carbon concrete bill come up for con-

So, as we say good riddance to 2021, the staff here at UTCA will be working tirelessly for a very productive 2022 for all our members and the industry we represent.

Legislative News

signed by President Biden on November 15th. This was much welcomed news as NJ will be receiving $13.5 billion over the next five years to support all aspects of our infrastructure. This is great news for our industry as well as UTCA members. However, it’s very important to note that while we are receiving a generous amount of money for infrastructure, it means nothing if we are not getting projects out for bid. Please know that the UTCA is working very closely with the Governor’s office and all state agency leaders to promote ways to get the jobs shovel ready. The Governor’s office has been very receptive to working with us on this critical achievement. It’s very important now more than ever that we are working together with all our association partners as well as labor partners to educate the Governor’s office as well as agency leaders of their ability to get the much-needed projects out for bid large and small.

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new apprenticeship program bill creates new liabilities for contractors By: Othiamba n. lovelace, esq., tobia & lovelace, esqS.

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Now, contractors that desire to perform public work in New Jersey must submit a certification and supporting documentation to the Commissioner sufficient to establish “to the commissioner's satisfaction” that the contractor is enrolled in an apprenticeship program that meets all of the federal requirements for an apprenticeship program to be eligible for approval and registration pursuant to 29 C.F.R. ss. 29.3, 29.4, 29.5, 29.6 and 29.7 (the “Federal Standard”). The Federal Standard for apprenticeship program eligibility is very detailed and requires apprenticeship programs to provide a base level of training in order to be eligible for Federal approval. For example, according to the Federal Standard, apprenticeship programs should typically provide 2,000 hours of on the job training and a minimum of 144 hours of technical class-room style instruction. The requirement that contractors submit documentation sufficient to establish that their apprenticeship programs satisfy the Federal Standard is an additional burden that contractors will have to navigate moving forward.

The additional paperwork and administrative problems created

by S-4207could be significant since contractors will need to have apprenticeship programs for all of the trade classifications they list on their certified payrolls.

Contractors should be mindful that if the Commissioner determines that the apprenticeship program they are enrolled in does not satisfy the Federal Standard, the Commissioner may deny, revoke, or suspend their certificates of registration to perform public work in New Jersey. Furthermore, contractors determined to

be in non-compliance could also face criminal penalties ranging from at least $2,500 to a max of $25,000, in addition to being disqualified from bidding on or engaging in public work for a period of three years. It must also be noted that corporate officers and employees can face criminal penalties if they are responsible for causing false and deceptive or fraudulent statements to be included in applications submitted to the Commissioner and the resulting criminal penalties can include fines and jail time lasting up to six months.

S-4207 also provides contractors with an opportunity to request a hearing to challenge any negative determination reached by the Commissioner, however, there are strict time limits that must be followed if contractors want to challenge the Commissioner's determination, so contractors are advised to immediately seek legal counsel upon receiving notice from the Commissioner informing them that their apprenticeship program does not satisfy the requirements of S-4207.

Since the new law appears to hold contactors responsible for deficiencies in the apprenticeship programs they are enrolled in, even if they do not know the program is deficient, contractors should take proactive steps to verify that the apprenticeship programs they are enrolled in satisfy the Federal Standard. One way for contractors to protect themselves is by signing up with a well-established union that already offers an apprenticeship training program that satisfies the Federal Standard. Another option for contractors is to sign up with an independent association that provides apprenticeship training programs that meet the rigorous Federal Standard. Lastly, contractors can establish their own apprenticeship training programs, however, that is a costly option that may only be viable for larger contractors or for smaller contractors that utilize only one trade. Larger contractors may be able to carry the additional costs associated with running multiple apprenticeship programs, but it would be economically impossible for many contractors to maintain multiple apprenticeship programs. One issue contractors will face is that they must continuously keep at least one active apprentice in each apprenticeship program they have, this requirement could be difficult for smaller contractors to satisfy since they may not have enough apprentices or enough money to consistently have multiple training programs operating at the same time.

Labor Relations

his year is still in its infant stage, but the New Jersey State Legislature has already taken strong and decisive steps to increase the requirements necessary for contractors to establish that they are participants in approved apprenticeship programs, as required for all contractors that want to work on public projects in New Jersey. Not only has the NJ Legislature increased the requirements, but it has also created criminal penalties designed to punish contractors that fail to meet New Jersey’s newly established requirements. Specifically, on January 10, 2020, New Jersey Legislative Bill S-4207 (“S-4207”) was approved and for the first time introduced a new standard that requires contractors to prove to the Commissioner of the Department of Labor (the “Commissioner”) that the apprenticeship programs they participate in satisfy not only the New Jersey standard (as previously required) but also the Federal standard for apprenticeship training programs.

Once S-4207 is signed by Governor Murphy (an event that is

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likely to occur within the next few weeks), contractors will need to be ready for the rapidly changing legislative landscape concerning apprenticeship programs in New Jersey. Contractors should be prepared to prove, with documentation, that the apprenticeship programs they are enrolled in satisfy the Federal Standard, because their ability to continue working on public projects in New Jersey will depend on that proof.

Labor Relations

If you have any questions about the topics raised herein or about any other labor relations matter, please do not hesitate to contact the attorneys at Tobia & Lovelace Esqs., LLC at 973-746-6000 for further information.

About The Author...... Othiamba (“O.T.”) N. Lovelace is a partner at the law firm of Tobia & Lovelace, Esqs., LLC. His practice focuses on commercial litigation, ERISA related disputes, withdrawal liability claims, collective bargaining agreement negotiations, disputes arising out of alleged violations of union collective bargaining agreements, litigating disputes before the National Labor Relations Board, defending companies charged with safety violations by the Occupational Safety and Health Administration, counseling companies during hostile union elections, New Jersey prevailing wage claims and disputes resulting from federal and state contract compliance audits.

He has extensive experience handling complex arbitrations before the American Arbitration Association. He also has direct experience negotiating and resolving federal and state contract compliance issues resulting from audits brought by various government agencies like the New Jersey Department of Labor and the U.S. Department of Labor’s Office of Federal Contract Compliance Programs.

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replacement of lead service lines accelerated by funding and new rules By: dan kennedy, director of environmental & utility operations

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hen the Biden-Harris Administration was coming into power, I penned a column with the title “Will the Incoming Biden Administration Prioritize Water Infrastructure?” UTCA members have heard a lot of talk on both sides of the aisle in terms of more work for water infrastructure, so it was a fair question. Protecting water has long been a top priority and in regular polling of environmental issues, water pollution and the safety of drinking water are routinely the top two issues of concern.

After a lot of talk and no action, those that were reading the crystal ball and seeing dollar signs were right. The next reasonable question is – what projects will hit the streets first? My outlook is that phases of lead service line replacement programs will move fast in 2022. Here is why.

Problem Statement – Pre 2021

Keeping it simple, the problem to date in my mind is twofold.

Prior to last year there was 1) limited federal / state funding focused on these projects and 2) the federal and state rules governing these assets did not require any replacement as long there were no community wide exceedances of lead-based drinking water standards and other water quality parameters.

Though this has been billed as an “urban” issue by many, it is really an “older community” issue. Another misnomer is that it is an issue of public water systems. It’s not. For example, Suez serves about 870,000 residents in Bergen and Hudson counties and has an incredible number of lead service lines. It has sent more than 20 construction crews into 57 towns in Bergen and Hudson counties to remove a total of roughly 8,000 lines and has spent an estimated $100 M in doing so.

Big Shift #1 – Funding After passage in the Senate and House of Representatives, President Biden signed the long-awaited infrastructure funding legislation known as the Federal Bipartisan Infrastructure Framework Act (BIF) on November 15, 2021. The UTCA and all of our association allies as well as labor partners have been vocal advocates for this action for years.

In a hopeful signal that the federal government is serious about getting funding from the recent Bipartisan Infrastructure Framework (BIF) to work, EPA put out a notice last month to all states to be prepared to advance water infrastructure projects and urges them to begin prioritizing now and encourages states to leverage the new Lead Service Line Replacement funding sources, including ARPA ("Recovery Act") money. UTCA is also pushing for the State to use its discretion to apply upwards of $900M of "Recovery Act" funding for priority water infrastructure projects like lead service line replacement programs.

We know that the large water mains that run beneath streets do not contain lead. Instead, the smaller, old service lines, about the width of a garden hose, that connect the mains to homes and businesses, contain lead. These are what need to be replaced to

The Pipeline

An estimated 350,000 lead service lines are scattered across New Jersey, the fifth-highest total in the nation. The projected cost of completely replacing them is $2.3 billion, a daunting cost given tight state and local budgets. This is a classic “out of sight / out of mind” issue. Then came Flint, Michigan and other explosive public health emergencies that hit national news and sparked attention and focus on this issue. Bottom line, there is no safe level of lead in drinking water from a public health perspective, especially when it comes to children.

eliminate lead from drinking water.

The EPA communication includes breakdown of state allotments of the BIB money that will go through SRFs. NJ first-year allotment of SRF funds is $168,949,000 with additional funds for Lead Service Line Replacement. This year, NJ will see a 250% increase in federal support. This funding will be leveraged sev-

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eral fold by the NJ Infrastructure Bank. Funding will increase every year for the next 5 years under the BIF and additional “lead only” SRF program will be funded with little to no repayment of the traditional loans.

Big Shift # 2 – Rules Last year, Governor Murphy signed a law that requires public community water systems to inventory and replace lead service lines within 10 years. This legislation also provides for recoupment of costs by investor-owned public water systems. This was a major legislative victory that was supered and supported by the UTCA. The legislation maps out how the state will go about taking inventory of the pipes and replacing them. Within 30 days, unknown pipes and lead water pipes need to be catalogued in an initial inventory and the inventory must be submitted to New Jersey’s Department of Environmental Protection within six months. A more thorough inventory would be submitted a year later.

In addition, this past December, the EPA announced their next steps to strengthen the regulatory framework on lead in drinking water. Following the agency’s review of the Lead and Copper Rule Revisions (LCRR) under Executive Order 13990, EPA has concluded that there are significant opportunities to improve the rule to support the overarching goal of proactively removing lead service lines and more equitably protecting public health.

The Pipeline

Definitive federal and state regulations will require replacement of these lines with consequences no mayor or investor-owned utility manger will want to face.

Early Wins Prove Its Possible The City of Newark has essentially met its goal of replacing every single lead pipe that pumps water into homes in New Jersey's largest city: replacing more than 22,000 lead service lines with copper pipes.

The entire project was completed in less than three years after the city broke ground on the project. The historic achievement comes years after the city’s water crisis exploded and drew comparisons to Flint, Michigan. No one I know would have bet this would have been the outcome, including me.

The general contractors for the multiple phases of this work include UTCA members Montana Construction, Underground Utilities Corp. and Roman E&G Corp. This work involves careful coordination and frequent communication between our contractors, the City of Newark, the Newark Dept. of Water & Sewer, the project engineer CDM Smith, residents and state / federal representatives.

Trenton Water Works (TWW), the 200-year-old public water system operated by the City of Trenton, recently announced it hit the mark of 25 percent of lead service lines replaced. TWW began removal in February 2020 with an inventory of 31,791 lead services in the system. Since then, TWW used four vendors and six publicly awarded contracts to replace 8,008 lead services with safer copper lines in its system and at private homes in Trenton,

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Hamilton Township, Lawrence Township, and Ewing Township.

TWW funds its Lead Service Line Replacement Program (LSLRP) with state grants and loans featuring forgivable principal from the N.J. Infrastructure Bank (I-Bank), which enables municipalities to make critical investments in public infrastructure.

To date, TWW’s LSLRP has received $50 million to fund the program’s five phases, $21.5 million of which will be forgiven by the I-Bank. TWW estimates completion of the LSLRP to cost $150 million more over six years.

After a rocky start, TWW is now proceeding with UTCA contractors South State and Spinello Companies, Inc working in the City of Trenton as well as Hamilton, Ewing and Lawrence Townships.

UTCA contractors, subcontractors and associates involved in this project and our partners in labor need to be credited for their roles in the success of these program to date.

My Crystal Ball Says…

Lead service line replacement projects will be accelerated in 2022 because there is 1) funding coming 2) rules that require replacement on a schedule and 3) public pressure and no excuses because places like Newark have proven its possible. Once there is a solid inventory, these projects can move quickly through reviews and procurement. We also expect an aggressive bidding environment.

Please know that UTCA is working with the Governor’s Office and all relevant state agencies receiving infrastructure funding so the industry can compete for the work as soon as possible.

By: Tim Fitzpatrick, Senior Vice President – Employee Benefits, IOA

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s we enter 2022, many employers are just completing their annual employee benefits renewal and facilitating the employee communication period referred to as Open Enrollment. This timeframe typically occurs somewhere between 30 – 60 days prior to the effective date of renewal.

From an employer perspective, it is the opportunity to present the company’s overall benefits package for the upcoming year. This not only creates a great opening for education but can also serve as a crucial component in attracting, retaining, and rewarding employees. From an employee perspective, it is an opportunity to review these options and potentially modify the benefit elections that have been made in the past. Outside of a qualifying life event (marriage, birth of a child, loss of coverage, etc.) this is the one time of year that an employee is typically permitted to make changes to their enrollment status or add additional benefits.

Although the specifics of Open Enrollment will vary amongst companies, based on their unique needs and demographics, there are a few key areas worth evaluating for every organization. The method of communication, data collection, and documentation are all important components to proactively plan for and then later assess when measuring the success of Open Enrollment.

• Method of Communication – because this process is typically a once-a-year educational opportunity, it is important to plan how this information will be delivered to employees. Does it make sense to hold meetings? Should those meetings occur in person or virtually? If virtual, does it make sense to provide a recorded session or host a live event that can be interactive? Another consideration is the type of collateral material that will be provided to employees.

How will the benefits and costs for each plan be presented? Options

NEWS

evaluating the success of open enrollment range from benefit summaries provided by carriers to more customized benefit enrollment guides, to leveraging technology platforms.

• Data Collection – once this information is communicated, it is equally as important to consider how the decisions made by employees will be collected, documented, and relayed to each insurance carrier and payroll vendor for implementation. Will this be done manually through paper applications or captured digitally through a technology platform? If manual, who will be in charge of collecting this information and how will it be sent to the carrier? If digital, does the technology platform have the ability to communicate these changes directly to the carrier or will the employer need to take additional steps, such as downloading a spreadsheet report showing a summary of elections?

• Documentation – while the collection of data is central to an Open Enrollment’s success, it is also vital to have a strategy for documenting the benefit elections made by employees. Similar to the collection of data, will this be a manual (paper) process or digital (technology platform)? If an employee is currently enrolled in benefits, will it be assumed that current elections will remain the same unless otherwise advised (passive) or will employees need to actively confirm their elections, even if they will be making no changes? When an employee decides to decline or opt out of a particular benefit how is the decision to waive coverage memorialized? It is also necessary to consider the need to document ancillary information tied to a benefit election, such as beneficiary designations for life insurance.

Open Enrollment plays a critical role in the relationship between a company and its employees. Employee benefits are typically one of the top line expenses for both parties, so the manner in which they are presented each year can prove essential to building and maintaining strong culture. The COVID factor has also dramatically changed the way employers operate their business and continues to drive the employee benefits world to adapt and evolve. For these reasons, it is crucial for organizations to not only develop a proactive plan of action for Open Enrollment, but to subsequently evaluate its effectiveness and make any necessary changes to adjust moving forward. This process can be a complex undertaking for many companies, so it may be prudent to enlist the expertise of trusted professionals, such as insurance brokers, technology specialists and enrollment teams to help develop a successful strategy each year.

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