PPP Flexibility Act Passes the Senate! This evening the Senate passed the Paycheck Protection Program Flexibility Act. The PPP Flexibility Act was passed by the House last week with bipartisan support. The Senate had a competing bill called the Paycheck Protection Program Extension Act. that ultimately never made it to the floor. The PPP Flexibility act was passed by the senate in its entirety without change, the details of the changes to the PPP are included in this article. The article showed a comparison between the two pieces of legislation that is now no longer relevant, borrowers can just focus on the Flexibility Act. The Act now heads to the President for signature, he has indicated that he is supportive, so we can expect this to pass into law within the next few days.
The changes will be significant and will open the door for many borrowers to have their entire loan forgiven. Withum recommends you review the article which breaks down the changes so you can begin planning out the impact on your loan.
Reminder Section: (what should I be doing):
Call your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
Talk to your payroll company about the Sick Pay Bill (passed prior to the CARE Bill).
Consider speaking with your bank to discuss changes to terms of existing debt facilities. The banking system remains strong.
If you have already applied for the PPP, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.
MCAA members continue to play their part in helping communities cope with the impact of COVID-19, and MCA of Colorado member U.S. Engineering is no exception. The company is leveraging its fabrication capabilities for projects that will serve communities in both Colorado and Tennessee.
Colorado Convention Center Alternative Care Facility
In partnership with Hensel Phelps and the U.S. Army Corps of Engineers (USACE), U.S. Engineering transformed the Colorado Convention Center into an Alternative Care Facility for COVID-19 patients.
Within two weeks, the empty convention center, the size of six football fields, was filled with functional hospital rooms, built out with 1,242 beds, and with the oxygen system infrastructure to complete another 766 beds, for a total of 2,008.
The building required cleaning facilities to support both the patients and the staff. For this, U.S. Engineering fabricated four 7-stall modular showers for patients, two 11-stall showers for staff and 72 dual sink stations strategically located throughout the areas. Additional sinks and modular units originally built for the facility were delivered, but will be used at other Alternate Care Facilities instead. For the staff, locker areas were created at the loading dock, and a 20,000 cfm temporary heating/cooling system was installed for comfort.
John Marlow, Associate Vice President for U.S. Engineering Construction, says, “what this team accomplished in less than 14 days is nothing short of miraculous. The entire construction team met on April 6th and by the 17th, a liquid oxygen plant and O2 piping were installed and certified for 591 beds and another 651 beds on April 24th. This was truly a team effort from all trades involved. Not only did our office and field forces meet the challenge, but our vendors, suppliers and subcontractors did as well.”
Memphis Alternative Care Facility
U.S. Engineering again partnered with the USACE for an Alternative Care Facility in Memphis, Tennessee. That project involved a 7-stall Americans with Disabilities Act (ADA)-compliant shower trailer, a 100-piece custom fin tube order and 16 designed-from-scratch, turn-key restroom pods. The products were designed and fabricated at U.S. Engineering Metalworks’ shop in Colorado and shipped to Memphis in a 14-day period.
The Memphis Alternative Care Facility will have the capacity to accommodate over 400 patients and will be used if Memphis-area hospitals become overwhelmed with COVID-19 patients. U.S. Engineering Innovations, Metalworks and Construction teams combined efforts to fast-track the project.
The team adapted to challenges presented by the pods, Jeff Kiblen, General Manager of U.S. Engineering Innovations, explained, saying, “One of the challenges of this project was that the pods were scheduled for installation on the fourth floor, and no walls or windows could be removed to install them. So our team—and I emphasize team—designed the pods to fit in the dimensions of a freight elevator.”
The U.S. Engineering team designed the pods with removable ceilings, then boat-wrapped the lids and pods separately, four per truck, for the 1,100 mile journey to Memphis. When the pods and lids arrived at the Alternative Care Facility on May 9, the onsite crews unloaded them, packed them into the freight elevator, snapped the roofs into place and installed them on the fourth floor.
MCAA thanks U.S. Engineering for their efforts in helping our communities cope with the impact of COVID-19. We will get through this together.
The MCAA’s “Factors Affecting Labor Productivity” can be an invaluable tool when attempting to prove labor productivity loss, a process that has always been one of the most difficult aspects of change management. John Koontz will explore how to practically apply the MCAA factors to estimate and price losses of labor productivity. He will discuss the dos and don’ts of applying these factors, bridging the gap between theoretical percentages and actual jobsite impacts. When used correctly, the MCAA factors can be an invaluable resource in both forward pricing change orders and retroactively determining cumulative impacts. This webinar will explore best practices for making these factors work for you, helping you to account for additional labor costs resulting from the scope changes and disruption of workflow that occur on jobs far more often than we might like.
When: Tuesday, June 9 at 1:00 p.m. – 2:00 p.m. EDT
Southland Industries and the Integrated Project Delivery (IPD) team at Penn Medicine shaved 15 months from the construction schedule for a portion of a new hospital tower in University City, Pennsylvania, to prepare for the potential influx of COVID-19 patients.
Operationalizing the newly-constructed Pavilion took the team two weeks to bring 120 patient rooms and associated support spaces online. Southland installed a temporary med-vac system, medical gas piping, electric water heaters, medical air manifolds, hot water heaters, temporary plumbing fixtures, and temporary piping and ductwork.
Jim Meacham, Southland’s Mid-Atlantic Division Leader, explained that Southland teams were able to tackle the challenge of accelerating such a critical project through an IPD approach, clear and consistent communication, the willingness to step up, and dividing up the workload between engineers, project teams, and superintendents.
“The IFOA IPD contract method allowed for immediate collaboration amongst all the IPD partners to develop the right design solution to temporarily activate the hospital, with realistic jobsite condition awareness followed by instant decision making,” said Meacham. “Co-location and the collaboration developed early on during the formation stages of this project really paid off with the ability to expedite a solution that met Penn’s and the city’s needs.”
The facility was recently connected to the existing hospital of the University of Pennsylvania (HUP) via a tunnel, which creates a pathway for hospital staff to bring low-risk non-COVID patients over from the existing hospital. Moving the patients prevents existing cases from being exposed to new COVID-19 admissions.
Jim Meacham says, “we are faced with a real crisis and the majority of the state has suffered restrictions and closures. The PennFIRST team did an amazing job bringing this facility on line in the time required. The high level of confidence amongst the entire project team resulted in complete and timely execution, where everyone acted very quickly and decisively, while outlining and tracking each level of detail and associated sequencing required.”
Southland Industries continues to collaborate on COVID-19 facilities. They contributed to the surge facility project at the Walter E. Washington Convention Center that was facilitated in just over three weeks. We are all in this together.
Status of the PPP Flexibility Act: So far there is no news on the status of the changes to the PPP program other than the fact that Mitch McConnell confirmed that the Senate would “take up the bill.” This is significant and we expect to see movement in the next few days. It also seems there may be an effort to merge the two pieces of legislation. The PPP Flexibility Act was passed by the House and the PPP Extension Act originated in the Senate but has not come to a vote. There are subtle differences, but all of them are borrower friendly. Stay tuned.
Status of the Program: The SBA released new statistics on the status of the program via a PowerPoint as of May 30th. The document shows various statistics with respect to the type of borrowers, the average loan size, etc. Notably, it also shows that the program itself still has over $80B of funds available, and apparently negligible remaining demand.
Reminder Section: (what should I be doing):
Call your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
Talk to your payroll company about the Sick Pay Bill (passed prior to the CARE Bill).
Consider speaking with your bank to discuss changes to terms of existing debt facilities. The banking system remains strong.
If you have already applied for the PPP, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.
MCAA’s Virtual Trade Show connects our contractor members with the members of MCAA’s Manufacturer/Supplier Council.
Participating companies highlight and link to new products, product lines, services, solutions or web pages of particular interest. Here are just a few of the recent additions:
Jay R. Smith Mfg. Co.® a Member of Morris Group International Due to Shelter-In-Place and Stay-at-Home orders around the world, many buildings are sitting empty. Those vacancies mean your drains are being used infrequently, if at all, and are likely to emit sewer gases. We have an easy and affordable fix that takes just a minute or two to implement, and no special tools are required.
Seton Since 1956, we’ve been providing contractors with quality service and products designed to meet your critical project requirements. Our complimentary services allow you to free up resources to work on other critical aspects of the project.
Visit the Smart Solutions Case Studies area of our website to learn how other mechanical contractors found their win-win with cost-saving and productivity-enhancing applications from members of MCAA’s Manufacturer/Supplier Council.
This section of our website also includes tips and ideas to help your company save money and enhance your productivity. Don’t miss it!
In this Beyond the Classroom video, you will meet Harry Bederian, a Senior Project Engineer at ARB, Inc. The past MCAA Student Chapter President talks about how his involvement with both CPMCA and MCAA helped open the door to his career.
He also discusses how MCAA GreatFutures can be a pathway for other students’ careers and helps showcase the vast opportunities available in the mechanical contracting industry.
Alston & Bird have released their June 1 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.
PPP Flexibility Act of 2020: On Thursday, May 28, the House passed the PPP Flexibility Act. with a vote of 417-1. This is clearly a bipartisan piece of legislation that now goes to the Senate for the next phase in the process. The President has indicated his support for the bill. Based on what we are seeing it appears likely this bill will pass in some form. The changes proposed in this bill were largely included in the HEROS Act, which stalled in the Senate. This bill attempts to “carve out” changes to the PPP into a standalone bill to allow it to be pushed through without delay.
Our overall first reaction to this bill is that it is extremely borrower friendly. Congress appears to be attempting to open several doors to borrowers to allow for full forgiveness of the loan. The bill is without question a game changer.
Here is what we know:
Covered Period Extension: The covered period would be extended from 8 weeks to 24 weeks. There is some discussion that the Senate may want to shorten this to 16 weeks but that is not yet clear. This change is significant because it provides borrowers enough time to use all of the funds to obtain max forgiveness. Perhaps more importantly, if you have an FTE or wage reduction, that could be mitigated by a substantial increase in forgivable expenses incurred during the longer covered period. For example, if you had a $100k loan, spent all $100k and suffered a 50% FTE reduction, you would only have $50k of the loan forgiven. If the covered period is extended and you now have spent $200k on forgivable expenses, even with the 50% FTE reduction, you could have all $100k of the loan forgiven.
75% Rule Relaxed: The bill would change the ratio of forgivable nonpayroll costs to payroll costs from 75%/25% to 60%/40%. This will allow borrowers to get a much higher benefit for non-payroll costs like rent, utilities, interest, etc. This is a nice win for borrowers who operate with low overhead or with limited staff.
FTE Rule Relaxed: Borrowers will have a new, fifth potential safe harbor from the FTE rule. If the borrower can demonstrate (1) they were unable to rehire individuals who were employed on 2/15 (i.e., the original safe harbor rule), (2) they could not re-hire employees of similar skill sets or (3) they are able to document that they were unable to return to a similar level of activity when compared to 2/15 as a result of social distancing guidelines or other restrictions put in place by federal or local governments (e.g., capacity restraints put on restaurants), they will be allowed to ignore FTE reductions during their covered period.
Payroll Deferral Program Extended: The IRS ruled that borrowers could take advantage of the employer payroll tax deferral provision until the date they received loan forgiveness. This bill would extend that through December 31st regardless of the status of the loan.
Term of Loan Extended: The repayment term of the portion of the loan proceeds that are not forgiven would be extended from 2 years to 5 years. In addition, repayment does not need to begin until 1 year after the origination of the loan (rather than the current terms which require loan payments to begin 6 months after origination).
Reminder Section: (what should I be doing):
Call your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
Talk to your payroll company about the Sick Pay Bill (passed prior to the CARE Bill).
Consider speaking with your bank to discuss changes to terms of existing debt facilities. The banking system remains strong.
If you have already applied for the PPP, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.
This year, $500 MCAA Internship Grants are being offered to students who accept internships or full-time positions thanks to funding from the John R. Gentille Foundation (JRGF). MCAA members can use these grants to help them attract much-needed talent, and interns will appreciate the investment in their success. This small gesture may be the beginning of a great future with your company.
Internship Success
MCAA members are leveraging the internship grants for their interns this summer.
Enginuty LLC presented Matthew Lawrence and Andrew Clancy with MCAA student internship grants at the start of their internships this summer. Matthew is working as a service department sales assistant and Andrew is a project assistant.
Bryce Danielson, this year’s Alan O’Shea Memorial Scholarship recipient is continuing his internship for MCA of Omaha member Ray Martin Company. “I have been challenged with many tasks which include estimating and preparing bids, writing purchase orders and subcontracts, and helping with project management duties. They gave me opportunities that no other company would give a first-year intern.”
The MCAA member company will first ensure a prospective intern is in good standing at an accredited two- or four-year college, university or technical school. While MCAA encourages its members to give priority to students from the MCAA Student Chapter Program, this is not a requirement to receive a grant.
Each MCAA member company can submit up to two internship grant applications per year. Once an application is reviewed and accepted, MCAA will send a $500 gift card to the member company so it can present the gift card to the student at the start of their internship.
MCAA will follow-up with each company and intern to ensure the process and overall internship was successful.
Start Your Search for Top Talent Today
MCAAGreatFutures.org gives members access to student profiles and resumes. The profiles are searchable by university, desired location, and even a specific skill set, like BIM or AutoCAD. A keyword filter allows users to zero in on students who fit the bill.
Not finding a match? Try reaching out to our 60 MCAA Student Chapters. The chapter advisors are a great resource to help find the right person. And, MCAA members have exclusive access to post job openings on our job board.
Help build our industry’s GreatFuture – apply for a grant!
Alston & Bird have released their May 29 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.
IFR addressing “owner-employees”: Last Fridays’ Interim Final Ruling came with an interesting Q&A that could have a meaningful impact on borrowers.
The Q&A was as follows:
Question: Are there caps on the amount of loan forgiveness available for owner-employees and self-employed individuals’ own payroll compensation?
Answer: Yes, the amount of loan forgiveness requested for owner-employees and self-employed individuals’ payroll compensation can be no more than the lesser of 8/52 of 2019 compensation (i.e., approximately 15.38 percent of 2019 compensation) or $15,385 per individual in total across all businesses. In particular, owner-employees are capped by the amount of their 2019 employee cash compensation and employer retirement and health care contributions made on their behalf.
This is significant – lets break down the issues:
There is no formal definition of an “owner-employee” in any of the guidance that we have – for example, does it apply to C corporations, S corporations, partnerships, or all of the above. In the absence of a definition, borrowers may need to take a conservative view of this, meaning “any” ownership in a company would preclude forgiveness in excess of $15,385 for both Cash compensation AND the non-cash items listed. Keep in mind, a non-owner can have up to $15,385 of cash compensation forgiven AS WELL AS employer paid health and retirement benefits. This could limit total forgiveness for a population of employees that had not been considered in the past.
If you have an employee stock incentive plan (or Profits Interest Plan), or an employee has RSUs, profits interests or has exercised a stock option, that could potentially make them “owner-employees” and thus limit the forgiveness on their cash/non-cash compensation.
This will present accounting issues, for example, the need to “carve out” health benefits paid to these specific employees from total benefits paid (often in one bulk check).
This calculation also limits forgiveness to “the lesser of” 2019 compensation or $15,385, so this logic will need to be factored into the calculation.
What if an employee only became an owner in 2020 (e.g., through exercise of an option in 2020), do we still need to look at 2019 to determine compensation amounts?
What if they only worked for a short period in 2019 and had significantly less compensation in that period? If we have to use “the lesser of,” will the borrower be unduly penalized in the calculation?
The Q&A within this IFR certainly can create some complexities when it comes to the forgiveness calculation, and unfortunately it has created more questions than answers. Hopefully we will have more guidance soon. For now, though, we recommend adjusting calculations for all owners and hope that some sort of de minimis threshold is announced in the future.
Reminder Section: (what should I be doing):
Call your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
Talk to your payroll company about the Sick Pay Bill (passed prior to the CARE Bill).
Consider speaking with your bank to discuss changes to terms of existing debt facilities. The banking system remains strong.
If you have already applied for the PPP, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.
Returning to work during the COVID-19 pandemic will require many employers to screen their workers regularly, including taking body temperatures. Ideally, all employers would hire 3rd party companies to perform the screening. However, there will not be enough qualified 3rd party companies to go around. Since body temperature screening involves complicated legal issues the screenings must be performed consistently, professionally, and with proper training for those performing the screening. Long-time MCAA friend and attorney, Brad Hammock, from Littler law firm walks employers through the legal traps and make recommendations for properly navigating employee COVID-19 screenings.
Milwaukee Tool will lead a health & safety conversation on tool cleaning and disinfecting for your tools to help prevent the spread of COVID-19. This presentation will discuss tool sharing protocols, length of virus stability, EPAs List N, and how to properly disinfect tools, batteries, and gear. Raffi Elchemmas, AEP, CHST, is a subject matter expert in construction health & safety. He is an authorized OSHA Outreach Trainer with board certification in professional ergonomics.
Episode 2: This Project Is On Fire! Friday, June 5 at 2:00 p.m. EDT
Have you ever had a nightmare project that just won’t end? Join John as he chats with his old friend from the City of Angels, Shaabini Alford (VP of Southern California Operations, Murray Company) about the practices and pitfalls of “crisis” project management. Tune in to hear Shaabini’s advice and lessons learned about surviving horrible projects, based on her ongoing real-life experience!
PPP funds available: It has been widely reported that the demand for PPP funds is “drying up.” After the first tranche of funds ran out, there was an enormous outcry from the middle market who attempted to participate and could not do so. The second tranche funds was accompanied by a consistent narrative from several parties around evaluation of eligibility. The effort of creating doubt around eligibility combined with a large cash infusion into the PPP seems to have resulted in the overall demand being met. Over the last week, there has apparently been a net increase of PPP funds available, meaning more companies returned previously-issued funds than companies requested loan proceeds. In the end we think this is a positive as it will quell concerns that the program failed to reach the companies that needed the cash.
EIDL hiccup: Several companies have reported being approved for an EIDL loan but have not received the funds. One client alerted Withum today that its loan was not funded because one of their partners or investors did not see (or it went into their spam folder) the DocuSign email requiring it to finalize the loan agreement. If you are in the camp of having received approval for an EIDL loan but have not received the funds, check to make sure that all parties have actually signed the loan agreements!
Reminder Section: (what should I be doing):
Call your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
Talk to your payroll company about the Sick Pay Bill (passed prior to the CARE Bill).
Consider speaking with your bank to discuss changes to terms of existing debt facilities. The banking system remains strong.
If you have already applied for the PPP, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.
IFR 14 – On May 22nd, the SBA issued its 14th “final” ruling with respect to the PPP. We have written extensively about it in this article. Much of this ruling seems to support assertions made on the application itself which recently was released. The application came out before this ruling, and an application is certainly not “law”, thus this IFR was needed to cement the SBAs views on a variety of issues.
We highly recommend you read the entire article as many topics were covered, but here are some notable highlights:
For the purpose of forgiveness, owners of Partnerships and Schedule C’s are capped at their 2019 earnings. That could be problematic for companies that had down years in 2019.
As we know, borrowers do not have to count (as a reduction of FTEs) employees who were offered employment during the covered period and refused to come back to work, however this IFR indicates that the borrower will need to inform the applicable state unemployment insurance office of the rejected offer of reemployment within 30 days of the rejection.
As we expected, employee hazard pay and bonuses are eligible for loan forgiveness because they are a similar form of compensation. Notably, the IFR offers no other limitations on the payment of bonuses, so the bonus payment may be able to exceed 8 weeks’ worth of the annual bonus amounts and still be eligible for forgiveness (up to the $15,385 limit).
Reminder Section: (what should I be doing):
Call your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
Talk to your payroll company about the Sick Pay Bill (passed prior to the CARE Bill).
Consider speaking with your bank to discuss changes to terms of existing debt facilities. The banking system remains strong.
If you have already applied for the PPP, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.
The past few months have introduced us all to a whole new set of issues impacting productivity. From additional safety and screening requirements to distancing protocols, COVID-19 is causing real and often dramatic productivity losses on the job site. In this webinar, MCAA Project Management educator John Koontz will walk you through The Measured Mile Method of productivity analysis. The Measured Mile is an established method for identifying productivity loss. Using it can not only assist you in adjusting workflow to limit loss but can also provide clear metrics for documentation and potential cost recovery. In the first of four webinars covering content found in the MCAA’s newly updated Change Order Productivity Overtime manual, John will cover labor cost system best practices that allow you to use the measured mile system of productivity analysis.
With a surplus of patients in healthcare facilities across the country due to COVID-19, commercial facilities are opening their doors to become temporary field hospitals. Sloan has supplied its touch-free commercial restroom products to two of these field hospital facilities: Chicago’s McCormick Place Convention Center and Yale University’s Payne Whitney Gym.
At McCormick Place Convention Center there are 500 beds in makeshift rooms, with plumbing requirements calling for over 200 Sloan sensor faucets in handwashing stations.
Yale’s Payne Whitney Gym needed to retrofit its existing manual faucets and flushometers to provide more sanitary environment for the influx of patients. The facility removed its existing faucets and replaced them with Sloan sensor-operated faucets, while also installing new Sloan sensor flushometers to provide a touch-free experience.
“At Sloan, we understand that the touch-free products we manufacture across the entire commercial restroom play an essential role in the fight against the COVID-19 pandemic,” said Graham Allen, Sloan co-president and CEO. “We are proud to support those in our backyard of Chicago, Yale University, and anyone in need across the country, and we will continue to do everything in our power to supply sensor-operated products.”
Alston & Bird have released their May 26 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.
