The House of Representatives approved the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) by a bipartisan vote of 357 to 70 in January. The legislation addresses a key ACEC priority by delaying the R&D amortization requirement until 2026.
Other provisions include a delay of the limits on interest deductibility and full expensing of capital equipment purchases. The package also expands the child tax credit with an emphasis on low-income families.
Senate consideration could occur in March. Several senators have expressed interest in having the opportunity to consider changes to the legislation. ACEC and its coalition allies are pressing Congress to pass H.R. 7024 before engineering firms and other employers have to file their 2023 tax returns.
ACEC was successful in securing an exemption for A/E services subject to procurement rules under the Brooks Act from a final Biden Administration rule requiring the use of project labor agreements (PLAs) for federal construction projects larger than $35 million.
In its initial rulemaking, the administration proposed that all contractors and subcontractors engaged in federal projects agree to negotiate or become a party to a PLA with one or more appropriate labor organizations. In comments directed to the Federal Acquisition Regulatory Council, ACEC advocated that employees of engineering firms should be specifically excluded from PLAs due to the unique and critical roles engineering firms perform on construction sites. These include field representatives and surveyors who monitor that the work is being performed in compliance with design documents. To perform such work, these personnel must remain independent and objective, and the Council raised concerns that pushing engineering firms into PLAs could create a conflict of interest that could compromise project success and public safety, creating liabilities for the industry.
In the final rule, the Department of Labor clarified the language, making it clear that A/E services were exempt. The agency noted in response to concerns raised by ACEC and other entities that the final rule applies the PLA requirement to contractors or subcontractors “engaged in construction on the project” and specifically excludes professional architecture and engineering services that are covered by the Brooks Act.
The National Defense Authorization Act includes ACEC-backed language that increases the long-standing 6 percent cap on design fees to 10 percent for work performed for the U.S. Army Corps of Engineers and other Department of Defense agencies.
The current 6 percent fee cap has been in place since 1939. While it is intended to apply to cost-plus fixed fee contracts, defense agency clients continue to use the limitation in negotiations on lump-sum contracts. Lifting the cap to 10 percent will give design firms greater latitude to negotiate contract terms that better reflect the qualifications of the design team, as well as the project goals, innovation, and the complexity and risk factors involved with the project.
“This reform is long overdue,” said ACEC President and CEO Linda Bauer Darr. “The work that our industry performs for our federal clients delivers innovation and value to the taxpayer, and the contract terms should reflect that fact.”
In a letter to the leadership of the House and Senate Armed Services Committees, Darr emphasized the importance of Qualifications-Based Selection being the driving factor in the procurement of engineering services. She noted that raising the fee cap is “a positive step in the right direction.”