Capitol Hill Update

Congress Recesses With Few Accomplishments

SummerCapAlthough Congress has adjourned for the month of August, it faces a considerable amount of work upon its return. While there were high hopes that first half of the 114th Congress would include enacting such major initiatives as healthcare, tax, and infrastructure reform, unfortunately, very little was accomplished. When Congress reconvenes after the Labor Day recess, its heavy workload will include passing an omnibus spending bill or an extension to fund the federal government and raising the debt ceiling so the U.S. does not default on its debts before September 30. While the House passed a “minibus” spending bill of nearly $800 billion prior to adjournment, it only addressed funding for the military and $1.6 billion dedicated to constructing a border protection wall. It is unlikely that the Senate will agree with this proposal.

After Congress has funded the government it will move on to reforming the U.S. tax code. The last time Congress was able to pass a major tax reform package was in 1986 when Speaker Tip O’Neil and President Ronald Reagan were able to broker a deal among conservatives and liberals. The “big six,” which includes U.S. House of Representatives Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Senate Finance Chairman Orrin Hatch, House Ways and Means Chairman Kevin Brady, U.S. Treasury Secretary Steve Mnuchin, and the President’s top economic advisor, Gary Cohn will be tasked with making this happen. While specific language has yet to be determined, the tax reform bill will likely include a reduction in tax rates for individuals and corporations, which includes lowering the corporate tax rate from 35% to 20-25%. Senate Republican leaders will use the budget reconciliation procedural maneuver, which will require a simple majority vote, in order to enact a tax reform package. The House is expected to take up a tax bill sometime in late September, while the Senate is scheduled to approve its package in November, which sets up a final vote sometime in December. This aggressive schedule does not consider the potential policy disagreements that may occur even within the same party, which is exactly what transpired during the health care debate—repeal or replace.

National Defense Authorization Act

On July 14, the U.S. House of Representatives passed H.R. 2810, the FY 2018 National Defense Authorization Act (NDAA). Representative Nydia Velázquez (D-NY-7th) offered an amendment that appears in Section 860A, of Title VIII—Acquisition Policy, Acquisition Management, and Related Matters. Ms. Velázquez’s amendment exempts the Federal Miller Act from threshold increases due to inflation as set forth under 41 USC § 1908, “Inflation Adjustments of acquisition-related dollar thresholds.” For the past several years, NASBP and Surety & Fidelity Association of America have sought to amend Title 41 asserting that any adjustment to the Federal Miller Act should be done through a deliberative legislative process, so Congress would understand the impact of any adjustments on small construction businesses acting as subcontractors and suppliers, which may not have payment bond protections on federal construction projects. NASBP and SFAA, along with members of the Construction Industry Procurement Coalition which includes the American Council of Engineering Companies, American Subcontractors Association, American Institute of Architects, Associated General Contractors of America, Design-Build Institute of America, and National Electrical Contractors Association, submitted a support letter to Velázquez asking that she consider offering language to FY 2018 NDAA to exempt the federal Miller Act from the Title 41 indexing requirements. The Senate is expected to debate on its version of the NDAA sometime after the August recess. Historically, both bills are reconciled in conference committee in late fall with the final bill delivered to the President for signature before the end of the year.

Federal Aviation Administration Reauthorization

Another item that Congress needs to pass is legislation to reauthorize the Federal Aviation Administration (FAA), which expires on September 30, 2017. This will be U.S. House Transportation & Infrastructure Committee Chairman Bill Shuster’s final piece of major legislation to pass before he relinquishes his role as committee chair due to term limits. However, the House bill, H.R. 2997, varies a great deal on policy matters from the Senate’s FAA version, S. 1320. The major difference between the two competing bills is that H.R. 2997 seeks to privatize air traffic controllers (ATC). The general aviation (GA) community is adamantly opposed to privatization of ATCs. Furthermore, the GA industry seeks language in S. 1320 to give local airports more flexibility to build and repair their infrastructure. Specifically, the Senate’s FAA bill includes a provision establishes a pilot program for Public-Private Partnerships (P3s) for the construction of private hangars, business hangars, and GA airports.

NASBP has met with staff from the Senate Commerce, Science, and Transportation Committee to advocate that language be added to statutorily require payment and performance bonds for these P3 GA agreements, and NASBP and SFAA have offered language to address this issue. However, given that the House and Senate remain far apart on the ATC issue, it is likely that Congress will pass a short-term extension to fund FAA until early 2018. NASBP will continue to work this issue with both committees charged with reauthorizing the FAA.