IN THIS ISSUE

** Neal McCaleb to Speak at April 20th CECO Meeting
** Oklahoma's Airports Gets A Big Boost From 'Air-21' Bill
** Legislative Update
** Payment Bonds: A Professionasl Obligation Beyond the Client
** Asst. Secretary of the Army to Review Corps Competition
** Finally, an explanation - hmmmmmmmmm.....
** Meetings Calendar

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NEAL MCCALEB TO SPEAK AT APRIL 20TH CECO MEETING

The next CECO General Membership meeting will be held on Thursday, April 20th in Oklahoma City. The meeting will be held at the Oklahoma Engineering Center, 201 NE 27th.

Secretary of Transportation Neal McCaleb will be our guest speaker. Secretary McCaleb will discuss the state of the Oklahoma Transportation program and current legislative activity regarding the funding of the $1 billion CIP program and the state road program.

The General Membership Meeting will begin at 5:00pm, and will be followed by dinner at 6:00pm. Secretary McCaleb will speak following dinner.

Mark you calendar now for April 20th!!!!! We look forward to seeing you then.

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OKLAHOMA'S AIRPORTS GETS A BIG BOOST FROM "AIR-21"

Four of six Oklahoma Congressmen and one of our two Senators voted for the Conference Committee Report approving the FAA Reauthorization Bill, commonly called AIR-21, adding $40 billion of funding for airport improvement projects. Senator Inhofe and Congressmen Watts, Lucas, Watkins, and Istook voted for the report which was overwhelmingly approved by both the House and Senate. Congressmen Largent and Coburn along with Senator Nickles voted against the measure.

The House vote on the agreement came during ACEC's Consulting Congress Day activities. In fact, the CECO delegation of President Tony Dark, President-Elect Jerry Shepherd, National Director Ron White, and Executive Vice President Jim Sullins were in the office of Congressman Steve Largent just prior to the vote. CECO met with Largent's Communications Director to discuss AIR-21, urging the Congressman's vote in favor of the agreement. Unfortunately, the Congressman was opposed to one provision of the bill which allowed an increase in the passenger facility charge from the current maximum of $3.00 to $4.50. Even though the decision to impose the fee is made by the local airport authority based on the local need and the increase is not mandatory, the Congressman opposed the bill because of this "tax increase." Our understanding is that Congressman Coburn and Senator Nickles shared similar views regarding the passenger facility charges.

The conference agreement to H.R. 1000 will provide billions more in funding for the FAA, particularly airport development and air traffic control modernization, and end a two-year struggle to come up with an acceptable funding plan for the agency. For the Airport Improvement Program, which provides federal grants for major expansion and renovation projects, the bill authorizes $3.2 billion for 2001, $3.3 billion for 2002, and $3.4 billion for 2003, up from current levels of $1.95 billion.

Although the final bill does not take the aviation trust fund off budget, it will guarantee that all trust fund revenues are spent each year for aviation, using a procedural mechanism in both chambers. The bill also maintains a general fund contribution for aviation, subject to the normal appropriations process. In addition to the funding changes, the measure will allow more takeoffs and landings at Reagan National Airport and the three other slot-controlled airports. It includes a provision supported by ACEC designed to avoid duplication of environmental assessments of airport projects. And it permits airports to collect passenger facility charges of as much as $4.50 per flight segment for airport improvements, up from $3.00 today.

U.S. Rep. J.C. Watts, Jr. (R-Okla.), a member of the House Transportation and Infrastructure Committee in which the bill was developed, released figures of how the state's airports will benefit from the Aviation Investment and Reform Act for the 21st Century (AIR-21).

"America's skies are becoming increasingly crowded and, with aging radar and computer systems, passenger safety would have ultimately been at risk." Watts said. "AIR-21 makes the needed investments to keep our skies safe as the number of travelers increases."

Watts said the three-year bill will increase aviation investment nationwide by $10 billion over current levels, with the lion's share of the funding going to radar modernization and much-needed airport construction projects. The total authorized funding for federal aviation programs will be $40 billion over the next three years, $33 billion of which will be guaranteed from the trust fund, while $6.7 billion will be available to be appropriated from the general fund.

Oklahoma's larger airports, Will Rogers in Oklahoma City, Tulsa International, and Lawton-Fort Sill Regional are to receive double the funding to $5,750,874, up from $2,875,437. In the bill, 75 general aviation airports throughout Oklahoma will receive their first entitlement from the federal government in the FY2001, totaling over $7.9 million. Funding is expected to upgrade equipment, modernize computer systems, and improve landing strips.

Overall, all of Oklahoma's airports will receive more than $19.6 million from AIR-21.

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LEGISLATIVE UPDATE

Another major deadline has passed, and with that just over 800 of the some 3000 bills which were introduced during the 1999-2000 legislative session remain alive.

CECO is still working several bills and is monitoring legislative activity daily watching for changes in existing bills which could impact CECO members. Below is an update on two bills which are of interest:

* HB 2495 by Covey of the House and Henry of the Senate. Creates the State Office of Administrative Hearings, and would strip all state boards, agencies and commissions of their administrative hearing authority.

The bill directly impacts the State Board of Registration as it would be required to forward all administrative hearing actions to this new state agency. Then, the hearing would be conducted before an Administrative Law Judge (ALJ) who's decision would be final. The appointed members of the State Board would have no input during the hearing on technical issues, and would not have the ability to review or amend the ALJ's decision. In effect, it would make the State Board and all other agencies and commissions useless as their only function would be to approve or disapprove license applications.

The bill has passed the House and was approved last week by the Senate Judiciary Committee, chaired by the bill's sponsor. The bill will go to Conference Committee in the next couple of weeks, where CECO and other interested organizations are hopeful of getting an exemption for professional licensing boards.

* SB 1250 by Robinson of the Senate and Paulk of the House. Creates a system under which the state may use Design/Build for certain projects.

The bill is awaiting House floor action after it was narrowly approved by the Senate (27-24). The bill would allow the State to use the Design/Build delivery system, but only on certain projects which meet criteria to be developed by the Department of Central Services. CECO is working closely with the sponsors and DCS to assure that the final version of the bill protects the integrity of qualifications-based selection, and provides safeguards to assure that Design/Build is used only for very specific, narrowly defined projects.

Check the CECO web site (www.cecok.org) and watch your e-mail for updates on these and other bills.

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PAYMENT BONDS: A PROFESSIONALS OBLIGATION BEYOND THE CLIENT
by George Vogler, Reserved Resource Insurance

The Oklahoma Supreme Court's decision in Boren v. Thompson & Associates made news recently for deciding an Architect owes subcontractors a duty to withhold certification of the general contractor's progress payment application when the Architect knew or should have known that the general contractor had failed to secure the statutory payment bond.

On the facts, the architect for a public school library project obtained and forwarded the general contractor's performance bond, but no payment bond was either obtained or delivered to the architect. Bonds are not taken lightly. Contractors and their subcontractors may not lien public property. Instead, a statutory payment bond substitutes for lien rights ordinarily available against private property.

Construction of the project began sometime in August of 1994. The architect regularly certified the general contractor's requests for progress payments. By December of 1994, the architect was brought into a dispute between the contractor and a subcontractor over timely payments. At that point the absence of a payment bond was apparent to the architect. Nevertheless, the architect resumed certifying payment requests. By May and June of 1995, the architect began to receive notices of other subcontractor claims for non-payment.

A lawsuit filed in November 1995 by the disappointed subcontractors against the Architect got everyone's attention. The lawsuit made two claims. First, that the architect was negligent in certifying payments to the contractor in the absence of the statutorily required payment bond. Second, a rather nasty matter that the firm's architect had acted willfully and with reckless disregard for the rights of the subcontractors. The architect's defense was in three principal parts. First, the architect owed no duty to the subcontractors to protect them from the sort of damage they sustained. Second, the architect shares that certain immunity public officials posses from claims for their failure to secure payment bonds. Third, the subcontractors' own negligence was the proximate cause of their damages.

The subcontractors prevailed at trial. On appeal by the architect, the Oklahoma Court of Civil Appeals reversed and remanded the matter to the trial court with a finding that the proximate cause of the subcontractor's damages was their own failure to ensure the statutory payment bond was in place before furnishing material or commencing work. The subcontractors appealed to the Oklahoma Supreme Court. As an aside, subcontractors particularly sensitive to payment regularly request a copy of the payment bond before embarking on public projects.

The Oklahoma Supreme Court decided three important issues in the subcontractors' favor. An architect does not share the immunity from liability possessed by public officials for their failure to obtain payment bonds on public projects. Next, a subcontractor is not, as a matter of law, barred from recovery against a third party by its own failure to ensure a payment bond is in place before embarking on a public works project. Apparently, though, the subcontractor's negligentce is a relevant factor. It simply is not an outright bar to recovery. A subcontractor should be able to assume, said the Supreme Court, "that the private party responsible for certifying payments has verified the existence of the bonds."

Finally, where an architect had a contractual obligation to certify the general contractor's pay requests and had the authority to withhold certification, the architect has a duty to avoid foreseeable harm to the subcontractors. Under the facts of this case, where the architect knew the payment bond did not exist and subcontractors were unpaid, the Architect "had a duty to the subcontractors to refrain from paying the contractor without the required statutory payment bond being secured.

For those of us bothered by the lack of privity between the architect and the subcontractors, the court remarked "under many circumstances, [privity] is no longer a bar to a negligence action against an architect." Dare we conclude under any circumstances that matter to architects and engineers? It has been difficult for decades to reserve a room in the house of privity.

How should architects and engineers adjust their practices in light of Boren v. Thompson & Associates? Certainly, design professionals will wish to verify that both payment and performance bonds are in place. Collect both bonds and forward them to the Owner. I advise that your transmittal include a sentence saying the bonds are transmitted as received from the contractor, and verification of their validity is beyond the scope of your professional services. Suggest the Owner's legal or insurance advisor review the bonds for validity. You should remain alert to bonds that appear irregular from a cursory look. Bonds on Big Chief note pads are suspect. Although it is not currently a regular practice, consider a special condition to the General Conditions requiring that the general contractor inform subcontractors in writing that the statutory bond has been procured.

Editors Note: George Vogler is a Missouri attorney and professional liability insurance broker. He can be contacted at Reserved Resource Insurance, 2200 N. Overholser Drive, Oklahoma City, OK, 73127, (405) 495-8800. This article is intended to provide only general information. Always contact your own insurance advisor and/or legal counsel with questions pertaining to your individual firm and situation.

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ASST. SECRETARY OF THE ARMY TO REVIEW CORPS COMPETITION

Asst. Secretary of the Army, Dr. Joseph Westphal, the Department of Defense's top civilian in charge of the U.S. Army Corps of Engineers, has informed ACEC that he will review the Corps move into the school construction market and will review any current, pending or future instances where it has been suggested that the Corps is competing with the private sector for local work.

Dr. Westphal met with ACEC and other industry leaders recently where the representatives expressed their opposition to the Corps competing against the private sector, as exemplified by the recent situation in Los Angeles. The Corps has come under fire from ACEC when it recently competed for and was awarded a $2 billion renovation project by the Los Angeles Public School District.

In addition, the Secretary of the Army has directed the Army Corps to refer all and pending requests to perform work under the "Support for Others" Program to Dr. Westphal's office for review and in order to determine whether the Corps activities will compete with the private sector. Dr. Westphal suggested that local districts will no longer be allowed to "market" their services and that requests for the Corps to perform work will have to be reviewed by his office to insure that proper procedure has been followed and that it does not conflict with the Corps mission.

This was a "top priority" issue during ACEC's Consulting Congress Day. Senators and Congressmen were briefed on the Corps competing in the private sector marketplace. ACEC members urged Congress to keep government agencies from competing in the private sector marketplace.

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FINALLY, AN EXPANATION - HMMMMMMMMMMM...

I was on my way to the post office to pick up my of free M&M's (sent to me because I forwarded their e-mail to five other people, celebrating the fact that the year 2000 is "MM" in Roman numerals) when I ran into a friend whose neighbor, a young man, was home recovering from having been served a rat in his bucket of Kentucky Fried Chicken which is predictable, since as everyone knows, there's no actual chicken in Kentucky Fried Chicken, which is why the government made them change their name to KFC.

Anyway, one day this guy went to sleep and when he awoke he was in his bathtub and it was full of ice and he was sore all over and when he got out of the tub he realized that HIS KIDNEYS HAD BEEN STOLEN. He saw a note on his mirror that said "Call 911!" but he was afraid to use his phone because it was connected to his computer, and there was a virus on his computer that would destroy his hard drive if he opened an e-mail entitled "Join the crew!" He knew it wasn't a hoax because he himself was a computer programmer who was working on software to prevent a global disaster in which all the computers get together and distribute the $250.00 Neiman-Marcus cookie recipe under the leadership of Bill Gates. (It's true - I read it all last week in a mass e-mail from BILL GATES HIMSELF, who was also promising me a free Disney World vacation and $5,000 if I would forward the e-mail to everyone I know.)

The poor man then tried to call 911 from a pay phone to report his missing kidneys, but a voice on the line first asked him to press #90, which unwittingly gave the bandit full access to the phone line at the guy's expense. Then reaching into the coin-return slot he got jabbed with an HIV-infected needle around which was wrapped in a note that said, "Welcome to the world of AIDS." Luckily he was only a few blocks from the hospital - the one where that little boy who is dying of cancer is, the one whose last wish is for everyone in the world to send him an e-mail and the American Cancer Society has agreed to pay him a nickel for every e-mail he receives. I sent him two e-mails and one of them was a bunch of x's and o's in the shape of an angel (if you get it and forward it to more than 10 people, you will have good luck but for 10 people you will only have OK luck and if you send it to fewer than 10 people you will have BAD LUCK FOR SEVEN YEARS). So anyway the poor guy tried to drive himself to the hospital, but on the way he noticed another car driving without its lights on. To be helpful, he flashed his lights at him and was promptly shot as part of a gang initiation.

Send THIS to all the friends who send you their junk mail and you will receive 4 green m&ms, but if you don't the owner of Proctor and Gamble will report you to his Satanist friends and you will have more bad luck: you will get cancer from the Sodium Laureth Sulfate in your shampoo, your wife will develop breast cancer from using the antiperspirant which clogs the pores under your arms, and the U.S. government will put a tax on your e-mails forever.

I know this is all true 'cause I read it on the Internet.

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MEETING CALENDAR

CECO Board & General Meeting
Thursday, April 20, 2000
Oklahoma City (Dinner Meeting)
Guest Speaker: Neal McCaleb

ACEC Annual Convention
May 14-17, 2000
Buffalo, NY

CECO Annual Meeting
Joint Meeting with Missouri/Arkansas
June 15-17, 2000
Branson, MO

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