COMPANY. INC 704 435-3206 t. : 0 4 //WILCO '4 Double - - PDF document

BEAM

CONSTRUCTION

• COMPANY. INC

PO Box 129 601 E. Main Street Cherryville, NC 28021 704 435-3206

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Double Payment Proposed Legislation 4

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Co-Chairs Brunstetter and Stevens, members of the LRC, I am Susie Lewis, CEO of Beam Construction. We are a North Carolina company, based in Cherryville, which employs 75 currently and had $42 million-

• in annual volume in 2011.

Thank you for your time in seeking input on the double payment issue. First and foremost, as a General Contractor, we want to make sure everyone is paid for the labor and material they supply to a project. Just as it is unfair for specialty contractors and suppliers not to be paid

• nce, it is unfair for us to have to pay twice.

The good news here is that the solution is simple. All we want is to be notified that a subcontractor or supplier is providing services to our project. Many GC's that do work for public owners have lost money by paying a subcontractor for work and then having to pay a supplier or a e d tier subcontractor again, because the subcontractor the GC paid did not pay his subs and suppliers. This sounds crazy and unfair, because it is. Harm to a Public Owner and the Public

1.

In an effort to mitigate the risk of a 1 s` tier subcontractor not paying his/her bills, a GC can require the subcontractor to supply a performance and Payment bond to the GC. The cost for subcontractor bonds is in addition to the cost of the bonds the GC must provide to the owner. This increases the cost of the project for the owner. This cost generally runs about 0.5% to 0.7%. For example on a $5 million job it adds $35,000.00 to the cost of the project.

2.

Requiring bonds on subcontractors limits the work that can be awarded to small and emerging businesses as they generally do not have the financial capacity to obtain a bond.

3.

If a subcontractor is not bonded, then we must employ additional measures to verify each payment due and to whom the 1" tier subcontractor owes monies to. This takes additional time and personnel, and slows down payments to the subcontractor and the 2nd and 3rd tier subs and

suppliers.

4.

The risk of using a small or under-financed subcontractor is greatly increased by the current

• statute. This further complicates a GC's desire to use underutilized businesses for subcontract

work, because the GC is at risk if a problem occurs, not the public owner.

5.

All of these factors affect the project schedule. Slow payments slow down deliveries. Suppliers cut off deliveries to slow paying customers and this delays work from being put in place.

6.

This bonding statute does not apply to private work in the same manner as public work. As such, the public owner is faced with less qualified competition for public bids. There are GC's and subcontractors that are not bidding public work and this will increase when the economy improves.

7.

South Carolina already has an effective statute in place for public and private work. Many GC's, including my company, will go after work in SC or other states where our risk is limited by these more favorable statutes instead of pursuing work in NC. This further limits competition in NC. Burden on Suppliers and 2 nd Tier or lower Subcontractors

1.

The requirements proposed are not burdensome. They are the same notice requirements that a subcontractor or supplier would employ on private work in NC and any work in SC to protect their rights to collect.

2.

The notice requirement calls for a 1 page document that provides the Name, Address, and Contact of the subcontractor or supplier to the GC for each project they are furnishing labor and/or materials on. They are to mail it certified, which costs $2.10 on-line or $2.55 at the Post

• Office. They only have to determine who the GC is not the owner of the project.

3.

In order to file a claim on a bond the 2nd tier subcontractor or supplier must determine the name and address of the GC on the project. They are gathering this information now to file a claim on a bond. To provide notice is exactly the same. They just file it before they provide the material

• r labor instead of after.

4.

Currently a 2 nd tier sub or supplier is required to have a "good faith belief" that the materials are going to a certain project to file a bond claim. If they do not currently track where materials go, such as a Lowes, or a hardware store, then they have no claim as it is considered "stream of commerce." If they track where the material is going, then they have enough information to provide notice under HB489.

5.

In summary, regarding the burden on a 2" tier subcontractor or supplier, if a company can create an invoice for the sale of the material they can generate a letter to provide notice of

furnishing. We want to pay for the materials and labor furnished on our projects. However, we only want to pay for them one time. We are willing to establish some threshold for small "counter" sales to reduce the burden for smaller supplier/subcontractors.

We are willing to acknowledge in writing the notice given by a 2" tier company with our contact information and bond information if requested.

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We are willing to establish a Project Letter with the name of the project, project address, the GC contact information that can be given to every 1 5t tier subcontractor or supplier to make it easy to provide this information to 2" tier companies. We appreciate the time and attention you

but we need help, too. We support the

• together. Thank you.

have given us today. We want to help our subs and suppliers, bankruptcy and other aspects of HB489. We are all in this Susie Lewis President Beam Construction Company, Inc. 601 East Main Street Cherryville, NC 28021 704-435-3206

NOTICE OF FURNISHING MATERIAL

To: Beam Construction Po Box 129 Cherryville, NC 28021

(Certified Mail #70093410000225612426) Supplier: FERGUSON ENTERPRISES, INC.

5025 Sunset Road Charlotte, NC 28203-4941

Contracted by: Action Mechanical Contractors Description of materials:

Plumbing, Pipe Valves and Fittings, Fixtures, HVAC and other Building materials

Contract price: Description of property: Clover High School 1625 Highway 55 East Clover, SC 29710 Date last material was furnished (or expected date): Undetermined

Ferguson Enterprises, Inc. will be supplying materials to Action Mechanical Contractors for the above listed project. Lien waivers for progress payments will be supplied upon request. You may contact Lydia Bolin, Credit Manager at Ferguson Enterprises at 704-597-4820.

SANFORD R LEVY DAVID VON BECK CHARLES P. MORTINIER JAMES

• D. HICKS

DOLORES EVANS, Office Manager

LEVY - VON BECK & ASSOCIATES, P.S.

ATTORNEYS AT LAW 600 University Street, Ste. 3300 Seattle, WA 98101 (206) 626-5444 Fax: (206) 382-5527 LEGAL ASSISTANTS TED LEVY REBECCA BOWERS ANDY GOLUB LAUREN IIOPP

SOUTH CAROLINA PUBLIC WORKS NOTICE OF FURNISHING Our File No. 1943.169563; LH Date of Mailing: July 27, 2011

To: Clover School District #2 of York County Beam Construction Co. Inc, Prime Contractor; Cert. Mail 7194 2862 4000 0110 7051 RE: Clover High School - ATC Building and Renovations; 1625 Highway 55 East; Clover. SC This notice of furnishing is sent in compliance with S.C. Section 11-35-3030 and to advise you that McElroy Metal commenced to deliver metal building components materials to the above-referenced project on 6/21/2011. Our client also sends this notice as a matter of courtesy and to advise you that in the event of non-payment by Martin Roofing Service Inc, McElroy Metal can look to the general contractor and its surety for payment in accordance with the South Carolina public works statutes. The name and address of the person with whom the claimant has contracted is: Martin Roofing Service Inc, located at 1407 Golden Needles Street; Wilkesboro, NC 28697. The telephone number is:

_33G - (67 — yew.

McElroy Metal has a business reputation based upon years of providing quality service and products, and is committed to doing its part to ensure that your project runs smoothly. Therefore, if you have any questions, I hope you will not hesitate to call. Sender: McElroy Metal Address: 1500 Hamilton Rd. Bossier City, LA 71111 Teleohone: 1-800-950-6531 Very truly yours,

E L

BECK & AS

EVY VO

1AT S. P.S.

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