Looking ahead to a coming Senate vote on the House-passed measure, advocates of repealing the 3% requirement note that a majority of the Senate did vote for McConnell’s repeal bill.

Another encouraging sign came from OMB, which on Oct 25 issued statements saying the Obama administration supports repealing the 3% mandate and also backs the House pay-for.

Stephen Sandherr, Associated General Contractors of America CEO, said, "Given the fact that a majority of senators have already voted to repeal the tax measure and the President has said forcing contractors to forgo 3% of their earnings will hurt the economy, we expect the Senate to act swiftly to repeal this measure.”

The 3% mandate was enacted in 2006 and originally was to take effect at the start of 2011. But its effective date has been delayed twice and, unless abolished, now is slated to kick in at the start of 2013.

Engineering and construction organizations have been lobbying hard for years to see the withholding requirement abolished. They contend that having 3% held back by government agencies would severely harm design firms and contractors.

Industry welcomed the House action. Geoff Burr, Associated Builders and Contractors vice president of federal affairs, said, “We applaud the House for its leadership on this important issue, and are heartened to see a wide bipartisan majority come together to repeal this job-killing tax on America’s business community, especially construction contractors.”

An AGC survey released on Oct. 21 said that 49% of firms responding said 3% withholding would lead them to hire fewer workers and 65% said they would have to reduce equipment purchases.