IN THIS ISSUE

** DARR TAKES REIGNS OF CECO
** SALES TAX ON PROFESSIONAL SERVICES DIES
** NO CECO DUES INCREASE FOR 2002-03
** WELCOME NEW MEMBER
** MCVEY APPOINTED TO STATE BOARD OF REGISTRATION
** ANTI-OUTSOURCING THREAT LOOMING IN U.S. SENATE
** STATE BOARD OF REGISTRATION LOOKING FOR VOLUNTEERS
** SAVE THE DATE
** CONTROLLING THE COSTS OF BENEFITS

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DARR TAKES REIGNS OF CECO

Chuck Darr, Darr-Collins, LLC, Oklahoma City was installed as the 2002-03 CECO President at the CECO Annual Convention in Branson, MO. Darr succeeds Mike Arand, Dewberry Design Group, Tulsa, as CECO's chief elected officer.

Darr is a 1982 graduate of Oklahoma State University where he earned his bachelors degree in mechanical engineering. He became a registered professional engineer in 1986, and is currently registered in 15 states.

Darr-Collins, LLC, was established in 1995 by Darr and David Collins. Darr-Collins provides professional consulting engineering services with a focus on mechanical and electrical design with specialized skills in energy conservation renovation projects, institutional and health care environmental systems.

Others elected to positions on the CECO Board of Directors for the 2002-03 year are:

President-Elect: Mike Homan, Terracon, Tulsa

Vice President ­ Membership: Don Vick, JGVE, Inc, Oklahoma City

Treasurer: Jerry Farrar, Earth Tech, Tulsa

Vice President - Business Practice: Jim Stewart, PSA Consulting Engineers, Oklahoma City

Vice President - Education/P.R.: Jim Fisher, TranSystems Corporation Consultants, Tulsa

Mike Arand will continue on the Board as Immediate Past President, and Tony Dark, FHC, Inc., Tulsa, begins his final year as ACEC National Director.

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SALES TAX ON PROFESSIONAL SERVICES DIES

Sales Tax on Professional Services, along with all of the recommendations of the Legislature and Citizens Task Force on Tax Reform, died due to lack of action when the 2002 session of the Oklahoma Legislature adjourned on May 24th.

The Task Force report that recommended massive changes in the Oklahoma tax system, including the imposition of the state sales tax on a wide variety of professional services, was submitted to the Legislature in mid-April but was never codified into bill form.

Governor Frank Keating expressed his disappointment in the lack of action by the Legislature on the Task Force Report, and considered calling the Legislature back into Special Session. However, legislative leaders from both parties were cold to that idea, which Keating has now apparently abandoned.

However, the Governor has not abandoned the idea of tax reform. Published reports state that the Governor is considering an "initiative petition" which, if enough signatures were gathered, would place the proposal on a fall ballot for a "vote of the people."

Since those reports, there has been little out of the Governor's office indicating that he is serious about pursuing the initiative petition route. Additionally, with Keating completing his term, he won't have another opportunity to promote the tax reform plan. So, it looks to be unlikely that this recommendation will surface again in the near future.

CECO thanks all members who responded to our call in opposition to the Sales Tax on Professional services proposal. We know that many members of the Legislature received calls and/letters from CECO members, and that your voice was heard.

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NO CECO DUES INCREASE FOR 2002-03

The 2002-03 CECO/ACEC dues bills have been mailed and should have now been received by all member firms.

At the Annual Convention, the membership approved a balanced budget for CECO for FY 02-03, and this was accomplished with NO DUES INCREASE for this year. Much of this is due to the fact that CECO's membership currently stands at a record high 75 member firms!

We would like to take this opportunity to thank each and every CECO member for their "vote of confidence" in YOUR ORGANIZATION.

CECO is the "voice" of the engineering business and profession in Oklahoma, and our record high membership is the reason for the strength of that "voice." CECO is YOUR organization and we thank you for your continued support.

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WELCOME NEW MEMBER

CECO would like to welcome Envirotech Engineering and Consulting, Inc., Enid, as CECO's newest member firm. The firm is located at 2500 N. 11th Street, Enid, 73702, (580) 234-8780.

Envirotech is headed by Rob Stallings and Ron Erdman, and is a 19-person civil engineering and infrastructure design, environmental consulting, geotechnical engineering, lab testing, and construction inspection firm.

We welcome Envirotech Engineering and Consulting to CECO and ACEC, and look forward to having them as active members.

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MCVEY APPOINTED TO STATE BOARD OF REGISTRATION

Bill McVey, President of PSA Consulting Engineers, Oklahoma City, has been named by Governor Frank Keating to serve on the State Board of Registration for Professional Engineers and Land Surveyors. Bill was recommended to the Governor for appointment by CECO.

McVey's appointment was confirmed by the Oklahoma Senate in late May, and he will begin his six-year term of office in July. He replaces Ross Relph, who was appointed to the State Board two years ago to fill the vacancy left by the death of Bob Cornforth.

McVey is a 1971 graduate of the University of Arkansas with a degree in electrical engineering. He is currently registered in 15 states. He joined PSA Consulting Engineers in 1984. Prior to that, he was Chief Electrical Engineer for Frankfort-Short-Burza and was a sales engineer for Oklahoma Gas & Electric.

Our congratulations to Bill on his appointment, and we look forward to working with him during his tenure on the State Board.

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ANTI-OUTSOURCING THREAT LOOMING IN U.S. SENATE

Sen. Edward Kennedy (D-Mass.) is expected to introduce an anti-outsourcing amendment that would hinder DoD's ability to contract with the private sector, including engineering services, when the Senate takes up the F.Y. 2003 Defense Authorization Bill next week. The amendment is almost identical to one introduced in the House last month by Reps. Tom Allen (D-Maine) and Robert Andrews (D-N.J.) that was killed through ACEC's efforts.

ACEC continues to fight to ensure that its members can compete for Defense Department contracts. ACEC and its allies in industry recently defeated an anti-outsourcing amendment in the House version of the Defense Authorization bill. However, federal employee unions are making another run at attempting to attach an anti-outsourcing amendment to the Defense bill when it comes before the full Senate in mid-June. This time Senator Ted Kennedy will carry the torch for the federal employee unions and introduce an amendment that would reduce DoD's ability to contract with the private sector. Like the TRAC Act, this amendment would be devastating to DoD and our national security by imposing unprecedented restrictions on DoD's ability to manage its operations and achieve optimum efficiency and effectiveness.

The Kennedy Amendment would
o radically expand the widely discredited OMB Circular A-76 process;

o require the government engage in active competition with the competitive private sector, even when there is NO affected federal workforce involved, such as for work currently performed in the private sector or for new work that is already competitively awarded;

o force DoD to engage in lengthy A-76 public-private competitions for new work and a massive amount of already contracted work;

o require sourcing decisions be based on low cost, rather than on technical qualifications, thereby overturning qualifications based selection for engineering firms;

o reinstate additional contractor cost tracking and reporting of contractor direct and indirect man-hour and cost information briefly required by the Department of the Army but rescinded in June 2001.

o and, would negate the recommendations of the congressionally mandated GAO Commercial Activities Panel.

The Amendment has a vague carve out for engineering services in some provisions of the bill though the language is ambiguous and does not include the range of services offered by ACEC member firms.

Even though Oklahoma Senators Nickels and Inhofe oppose the Kennedy Amendment and all other TRAC-like amendments, you are urged to call or write them expressing your opposition to these amendments.

ACEC has sent an alert to all members asking them to contact senators to oppose the Kennedy amendment. Go to ACEC Government Affairs web page (http://www.acec.org/programs/wr06142002.htm) for a sample letter and other important information.

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STATE BOARD OF REGISTRATION LOOKING FOR VOLUNTEERS

With the approval of the Mandatory Continuing Education rules for professional engineers, the State Board of Registration must now develop the process for tracking, verifying, and approving professional development hours for engineers.

The State Board is forming a committee to assist in developing and writing procedures for "auditing" renewal applications. This committee will also serve as the first "audit" team when the rules become effective in July, 2004. To refresh your memory, the rules will apply to all renewals July, 2004 and forward. Anyone renewing a registration on or after July 1, 2004, will have to show a total of 30 professional development hours earned after January 1, 2002.

If you would like to be considered for this volunteer position, please call or write CECO. We will then forward your name to the State Board for consideration.

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SAVE THE DATE

The 2002 ACEC Fall Conference will be held Oct. 23-26 at Puerto Rico's breathtaking Westin Rio Mar Beach Resort. ACEC attendees are being offered the following discounted room rates: Mountain View - $175 single/double; Ocean View - $200 single/double; and Ocean Front - $215 single/double. Contact the Westin for reservations at 1-800-4-RIO-MAR (474-6627) and reference "ACEC" to receive the discounted rates. Look for registration details to be mailed in late July.

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CONTROLLING THE COSTS OF BENEFITS
(from AEC Workforce, Powered by Zwieg White

For three years now, ZweigWhite has reported on the best-performing firms in the A/E/P and environmental consulting industry in the Successful Firm Survey. In the 2002 survey it was found that one of the most distinguishing characteristics of high-profit firms (firms with pre-tax, pre-bonus profit margins in excess of 15% of net service revenue over the last three years) is their low overhead rates. High-profit firms have a median overhead rate, excluding bonuses, of 144.7% vs. the median for the industry as a whole of 156.6%. The overhead rate is defined as total overhead expenses (including indirect labor) as a percentage of direct labor cost.

One of the largest overhead expenses for firms in this industry is indirect labor. Therefore, we often find that firms with high overhead rates have low chargeability levels. However, our Successful Firm Survey shows only a small difference in chargeability levels between high-profit firms and the overall industry. In our latest survey, high-profit firms have a median chargeability level of 62.6% vs. 62.1% for the industry as a whole.

This seems to indicate that the high-profit firms in our survey are outperforming their peers in terms of controlling general and administrative expenses. These expenses include such categories as professional liability insurance, group insurance costs, and pension/profit sharing/401(k) costs. How does your firm compare to the industry when it comes to these overhead expenses?

Group insurance costs include employer-paid health, dental, life, and disability insurance. It's a large and ever-increasing expense category for most firms. According to our Operating Expenses Survey, the median firm spends 3.4% of net service revenue, or $2,869 per employee, on group insurance. Most firms require an employee co-payment of some amount. According to our 2002 Policies, Procedures & Benefits Survey of A/E/P & Environmental Consulting Firms, the median employee health insurance co-payment is $50 a month for individual coverage and $191 a month for family coverage.

Establishing an employee contribution is one way to maintain control of group insurance costs, but there may be additional ways to reduce costs. It's always wise to review your insurance provider's rates each year and get quotes from two or more competitors. You may also consider adding lower-cost HMO options to employees. If your firm requires employee contributions toward group health and dental premiums, you may find that many young and healthy employees will opt for the lower-cost HMO, saving them and the company money.

As with group insurance, professional liability insurance should also be reviewed periodically to be sure that rates are competitive and coverages are appropriate.

Finally, pension/profit sharing/401(k) benefits are another category where cuts can be difficult to make without negative consequences. Even so, you may want to take a look at how your benefits compare to the industry. According to our Policies, Procedures & Benefits Survey, more than 90% of firms with more than 50 employees offer a 401(k) plan. Of the 78% of firms that match contributions, the typical employer matches the first 6% of employees' salary deferrals at a rate of 50 cents on the dollar. About a quarter of firms surveyed offer additional, non-qualified benefit plans, such as deferred compensation plans, stock option plans, or supplemental executive retirement plans (SERPs), with the median contributions being 0.9% of net service revenue.

After taking a hard look at some of these expense categories, you may find some places where overhead can be trimmed. And remember, every dollar of expenses saved falls straight to your firm's bottom line.

ABOUT AECWorkForce:

AECWorkForce is the Internet job portal powered by ZweigWhite, a trusted name in AEC management information and expertise. Unlike mainstream job boards, AECWorkForce is devoted exclusively to companies and professionals in the Architecture, Engineering, and Construction industry. Join a host of other top firms and put AECWorkForce to work on your company's hiring needs. Call 1-800-218-8930 or go to http://www.aecworkforce.com/empabout.htm for more information.

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