ALEXANDRIA, Va. - The American Subcontractors Association’s (ASA’s) report on “The Policy Environment in the States” awarded New Mexico the highest ranking (69 out of 100) for overall public policies that affect construction subcontractors. The annual report scores each state in policy areas such as those that discourage bid shopping and others that encourage prompt payment. The association then assigns each state an overall score and grade. New Mexico dominated ASA’s state ranking for a third year in a row.

“Every state has a long way to go to achieve a supportive policy environment for subcontractors, but New Mexico remains the leader,” said 2006-07 ASA President Stephen Rohrbach, CPC, president of F. A. Rohrbach Inc., Allentown, Pa. “Some states showed modest policy gains for subcontractors in 2006, but no state came close to dethroning New Mexico from its place as the front runner.”

Oklahoma showed the greatest overall improvement in 2006, moving up 15 spots from 34 to 19. A sweeping indemnity reform bill (S.B. 324), signed into law Nov. 1, 2006, caused the increase. The law prohibits hold-harmless terms and “additional insured” requirements in construction contracts from indemnifying parties against liability for personal injury or damage that arises out of their own negligence or fault.

ASA calculated that, aside from New Mexico, every other state and the District of Columbia had a failing grade, or overall score of 60 points or less out of 100. The grades were calculated by scoring seven key state public policy areas, then combining the points for a final score and a final grade for each state. Those seven policy areas were prompt payment protections, treatment of pay-if-paid clauses, mechanic’s lien protections, payment bond protections, retainage limitations, anti-indemnity protections (including limits on “additional insured” endorsements), and anti-bid-shopping measures. The scoring took into account laws and judicial decisions.

The association said it is launching a campaign to warn subcontractors of deficits in their state laws, provide advocacy information to help change laws, and educate subcontractors about the need to remain vigilant when negotiating contracts in a harsh public policy environment. For more information, visit www.asaonline.com.

Publication date: 03/26/2007