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ACEC Members Testify in Congressional Subcommittee on FAR Credits Clause Impact03/23/2021
To the ACEC Community
Earlier today, ACEC Chair-Elect Robin Greenleaf and ACEC member Carlos Penin testified before the House Small Business Committee’s Subcommittee on Contracting and Infrastructure on the severe impact that the FAR Credits Clause will have on firms that have forgiven PPP loans.
Winning a waiver from the FAR Credits Clause has been a primary advocacy goal since it was determined that firms must provide a refund or credit in their billing rates on government contracts for forgiven PPP loans. At the hearing, the firm executives briefed Congress on the negative impact of this policy will have on engineering businesses and urged them to find a legislative fix.
Greenleaf is president of Architectural Engineers, Inc., which employs 33 people in the Boston area. She told members of the subcommittee that “the PPP program was created to help small businesses like mine stay afloat during the early days of the COVID shutdown. Congress already made clear that forgiven PPP loans are not to be treated as income for tax purposes and then further clarified that covered expenses are deductible. In the same way, forgiven PPP loans ought not to count as income under the FAR. This was emergency relief to support employers, and our businesses ought to be able to take full advantage of the program.”
Greenleaf provided several examples of the Credits Clause's impact, including one firm that performs predominantly highway-related work for state DOTs. “On a $1.4 million PPP loan, the FAR credit will reduce their billing rate by 34 points, resulting in a $1.7 million loss in revenue in one year alone and close to $7 million in lost revenue over five years.”
Penin, who is president of CAP Engineering in Coral Gables, Fla., told the committee, “The PPP loan forgiveness program was intended to provide much-needed help to all companies that applied, qualified, and received these monies. This program was never intended to provide a benefit to the government agencies we contract with.”
If unchanged, both Greenleaf and Penin testified, the policy will create a disincentive for engineering firms to work for public agencies and will hamper efforts to expand small business and women-owned and disadvantaged business contracting opportunities.
“At a time when the industry is very eager to work with you and your colleagues to deliver a robust infrastructure-based economic recovery agenda,” Greenleaf said, “the prospects for those opportunities are dimmer because of this credit holding us back.”
She closed her testimony by urging Congress to act quickly, as firms cannot make long-term business decisions about their rates, projected revenues, and employment levels until the issue is resolved.
ACEC will continue to work with Congress and the Administration to fix this unintended consequence of the FAR Credits Clause, and I encourage all of you to make your voices heard on this issue. Reach out to your Congressional delegation and tell them how important this is to your firm and to our industry. Explain to your public agency clients how the Credits Clause could affect your work with them. Use your social media accounts to broaden awareness of the impact. Visit our Advocacy page for more information.
This issue is too vital for any of us to stay on the sidelines.
Have a great week,
Linda Bauer Darr