<SEC-DOCUMENT>0001171843-16-013266.txt : 20170117
<SEC-HEADER>0001171843-16-013266.hdr.sgml : 20170117
<ACCEPTANCE-DATETIME>20161116110548
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001171843-16-013266
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20161116

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			STERLING CONSTRUCTION CO INC
		CENTRAL INDEX KEY:			0000874238
		STANDARD INDUSTRIAL CLASSIFICATION:	HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600]
		IRS NUMBER:				251655321
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		2751 CENTERVILLE RD.
		STREET 2:		SUITE 3131
		CITY:			WILMINGTON
		STATE:			DE
		ZIP:			19803
		BUSINESS PHONE:		3024789170

	MAIL ADDRESS:	
		STREET 1:		20810 FERNBUSH LANE
		CITY:			HOUSTON
		STATE:			TX
		ZIP:			77073

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	OAKHURST CO INC
		DATE OF NAME CHANGE:	19950831

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	OAKHURST CAPITAL INC
		DATE OF NAME CHANGE:	19931130
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<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">November 16, 2016</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 3pt 0 0pt"><B><U>VIA EDGAR</U></B></P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">Mr. Terence O&rsquo;Brien</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 3pt 0 0pt">Accounting Branch Chief</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 3pt 0 0pt">Division of Corporate Finance</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 3pt 0 0pt">Securities and Exchange Commission</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 3pt 0 0pt">Washington D.C. 20549</P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><B>Re: Sterling Construction Company, Inc.</B></P>

<P STYLE="margin: 0pt 0 0pt 0.5in; font-size: 10pt; text-align: justify; text-indent: 0.5in"><B>Form 10-K for Fiscal Year Ended
December 31, 2015</B></P>

<P STYLE="margin: 0pt 0 0pt 0.5in; font-size: 10pt; text-align: justify; text-indent: 0.5in"><B>Filed March 14, 2016</B></P>

<P STYLE="margin: 0pt 0 0pt 0.5in; font-size: 10pt; text-align: justify; text-indent: 0.5in"><B>Form 10-Q for Fiscal Quarter Ended
June 30, 2016</B></P>

<P STYLE="margin: 0pt 0 0pt 0.5in; font-size: 10pt; text-align: justify; text-indent: 0.5in"><B>Filed August 1, 2016</B></P>

<P STYLE="margin: 0pt 0 0pt 0.5in; font-size: 10pt; text-align: justify; text-indent: 0.5in"><B>File No. 1-31993</B></P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify">&nbsp;</P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify">Dear Mr. O&rsquo;Brien:</P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify">&nbsp;</P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify">This letter will respond to your letter dated October 20, 2016 conveying
comments from the Staff of the Securities and Exchange Commission with respect to our annual report on Form 10-K for the fiscal
year ended December 31, 2015 (the &ldquo;2015 10-K&rdquo;) and our interim report on Form 10-Q for the fiscal quarter ended June
30, 2016 (the &ldquo;2016 Q2 10-Q&rdquo;). For convenience, the Staff&rsquo;s comments are set forth below in italics, followed
by our response.</P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify">&nbsp;</P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify"><U>Form 10-K for Fiscal Year Ended December 31, 2015</U></P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify"><U>Item 7. Management&rsquo;s Discussion and Analysis of Financial
Condition and Results of Operations, page 24</U></P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify"><U>Results of Operations, page 27</U></P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">&nbsp;</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><I>1.</I></TD><TD STYLE="text-align: justify"><I>Please quantify the impact of factors disclosed as materially impacting the line items comprising
income from continuing operations for each period presented. Please refer to Items 303(a)(3)(i) and 303(a)(3)(iii) of Regulation
S-X and Section 501.12.b.3 of the Financial Reporting Codification for guidance. </I></TD></TR></TABLE>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify"><B><U>Response:</U></B></P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">We acknowledge the Staff&rsquo;s comment. In our third
quarter 2016 filing and in all future filings we have and will continue to quantify the effect of factors disclosed as materially
impacting the line items comprising income from continuing operations for each period presented in accordance with Items 303(a)(3)(i)
and 303(a)(3)(iii) of Regulation S-K and Section 501.12.b.3 of the Financial Reporting Codification. The Company will include wording
similar to the following (an example of revenues provided relating to the 2015 10-K): &ldquo;Revenues for 2015 decreased 7.2% or
$48.6 million compared to the prior year. Of the $48.6 million decrease, $37.6 million was the net decrease in revenues for the
Company which largely related to the completion of several large projects in Texas which were ongoing in 2014 and were replaced
with smaller, lower revenue projects in 2015; approximately $8.2 million was related to the significant downward first quarter
of 2015 percent-complete revisions on Texas projects; and $2.8 million related to the out-of-period correction of an error, which
decreased revenue.&rdquo;</P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">&nbsp;</P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify"></P>

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<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">&nbsp;</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><I>2.</I></TD><TD STYLE="text-align: justify"><I>We note your response to comment 1 in which you note that $8.2 million of the decrease in revenues
for 2015 as compared to 2014 is due to the downward change in estimates of the percent-complete to certain project in Texas. Please
expand your disclosures to provide a meaningful analysis discussing the facts and circumstances that led to the changes in estimates
and that the contracts impacted were in a loss position resulting in the change impacting gross profit and operating loss by the
same amount. Please reconcile your statement that $8.2 million of the $48.6 million decrease in revenues is due to the downward
change in estimates of the percent-complete with your disclosures on page F-9 that the changes in estimated revenue and gross margin
for fiscal year 2015 is a net charge of $9.7 million as compared to a net charge of $9.1 million for fiscal year 2014, which would
result in a difference of $0.6 million when comparing the two periods. </I></TD></TR></TABLE>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify"><B><U>Response:</U></B></P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">&nbsp;</P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">We acknowledge the Staff&rsquo;s comment. In response
to the Staff&rsquo;s first comment, the Company will expand our disclosure in all future filings to discuss the facts and circumstances
that lead to significant changes in estimates and whether the contracts are in a loss position and how downward revisions in jobs
in a loss position affect revenues, gross profit and operating loss by the same amount. The Company will include a disclosure similar
to the following relating to the 2015 10-K: &ldquo;The majority of the $8.2 million decrease in revenues resulted from adjustments
to our production rates related to material, labor and equipment costs on certain Texas projects. During the first half of 2015,
we identified an escalation of these costs compared to our estimated costs and noted that there was no way to mitigate or reduce
these increases. Therefore, we adjusted our estimated total costs to reflect these additional costs over the remaining duration
of the contracts. The increases primarily resulted from greater than anticipated increases in wages at our Texas subsidiary beginning
in the first half of 2015, additional material costs as prior purchase orders expired and new purchase orders with higher costs
were obtained as a result of extending the construction period due to project delays, and increases in equipment rates due to an
unanticipated increase in equipment repair costs (which repairs are typically performed in the winter months due to slower activity
caused by the colder and wetter weather, primarily in January and February). As these Texas projects were in a loss position, the
effect of downward percent-complete revisions decreases revenues, gross profits and operating losses by the same amounts. This
occurs because there are no additional estimated gross profit amounts which would absorb a portion of the downward percent-complete
revisions.&rdquo;</P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">&nbsp;</P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">In response to the Staff&rsquo;s second comment, we note
that the $9.7 million and $9.1 million amounts are meant to inform readers of our net changes in estimated revenues and estimated
gross profits for the reported periods. When there are downward percent-complete revisions and the project has an estimated gross
profit, the effect on revenue would be a smaller portion of the revision depending on the percent-complete measure (unless the
project is 100% complete). Therefore, the amounts reported as changes in estimated revenues and gross profit are correlated but
not on a one-to-one basis unless the job is in a loss position or 100% complete. While there was only a $0.6 million additional
charge in 2015 compared to 2014, the Company notes that most of the ongoing projects in 2014 had gross profit available which absorbed
a portion of the prior year downward percent-complete revisions and affected revenues to a lesser extent.</P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">&nbsp;</P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify"></P>

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<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">&nbsp;</P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify"><U>Form 10-Q for Fiscal Quarter Ended June 30, 2016</U></P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify">&nbsp;</P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify"><U>1. Business Summary and Significant Accounting Policies, page
8</U></P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify"><U>Revenue Recognition, page 9</U></P>

<P STYLE="margin: 0pt 0; font-size: 10pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><I>3.</I></TD><TD STYLE="text-align: justify"><I>We note your response to comment 8. Please help us understand what the $4.2 million and $3.9
million in revenues recognized during fiscal year 2015 and the six-months ended June 30, 2016, respectively, represent and why
the revenues were recognized during the corresponding time periods. In this regard, we note that (a) the two projects were substantially
completed during fiscal year 2014; (b) no revenues were recognized related to claims during fiscal years 2014 &ndash; 2012; and
(c) you recognize revenues in excess of contract costs incurred on claims when an agreement is reached with the customers as to
the value of the claims. As part of your response, please tell us when the significant changes to the projects occurred that caused
the significant delays and additional costs in completing the work, including the amount of the additional costs and the time period
the additional costs were incurred related to your claims. </I></TD></TR></TABLE>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify"><B><U>Response:</U></B></P>

<P STYLE="margin: 0pt 0 0pt 0.25in; font-size: 10pt; text-align: justify">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0 0pt 0.25in">We acknowledge the Staff&rsquo;s comment. The Company
notes that the amount of $4.2 million represents revenues recognized in 2015 which were included in costs and estimated earnings
in excess of billings on uncompleted contracts (&ldquo;CIE&rdquo;) and classified as claim amounts at December 31, 2015. The $3.9
million primarily represents incremental amounts paid to the Company&rsquo;s subcontractors in the first half of 2016 due to the
customer caused delays discussed below. In response to the Staff&rsquo;s comment, (a) the Company generally describes contracts
as substantially complete when their percent complete percentage is over 90%; these projects had a total contract amount of approximately
$159 million and the work performed after substantial completion was generally related to landscaping, clean-up and other miscellaneous
finishing tasks; (b) during 2012 &ndash; 2014, the Company had not classified any amounts as claims and expected all revenues recorded
to be paid; the Company did, however, disclose an amount as a change order not approved by the customer in our 2014 10-K related
to these contracts; and (c) revenues recognized were less than the claim related specific costs incurred for these projects.</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0 0pt 0.25in">The Company noted that the significant changes to the
projects occurred at the onset of the projects. There was a 188 day delay from the award notice to the actual start date of construction
and subsequently, the customer placed a stockpile approximating 65,000 cubic yards of material in an area where critical path work
was scheduled to begin. The customer took no definitive action to remove the stockpile, which denied access to the projects&rsquo;
critical path work and the stockpile remained as an obstruction for over 18 months. This required a re-sequencing of work within
and between phases of the project and resulted in significant inefficiencies and escalations of various project costs. Cumulatively,
these issues resulted in a projected 331 day delay, which primarily resulted in the 2015 incremental value of our claim of approximately
$4.2 million at December 31, 2015. The additional claim amount of $3.9 million, which was included in 2016, resulted primarily
from the payment of final incremental costs owed to the Company&rsquo;s subcontractors in the first half of 2016 due to the aforementioned
delays.<BR CLEAR="ALL">
</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"></P>

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<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">In connection with our response to the Staff&rsquo;s comments, we
acknowledge that:</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

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<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">The company is responsible for the adequacy and accuracy of the disclosure in the filing</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission
from taking any action with respect to the filing; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">The company may not assert Staff comments as a defense in any proceeding initiated by the Commission
or any person under the federal securities laws of the Unites States.</TD></TR></TABLE>

<P STYLE="font-size: 10pt; text-align: justify; text-indent: -0.25in; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">Should you have any further questions or comments regarding the
foregoing, please contact me at (281) 214-0797.</P>

<P STYLE="font-size: 10pt; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">Very truly yours,</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">&nbsp;</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0"><U>/s/ Ronald A. Ballschmiede</U></P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">Executive Vice President &amp; Chief Financial Officer</P>

<P STYLE="font-size: 10pt; text-align: justify; margin: 0pt 0">(Principal Financial Officer and Principal Accounting Officer)</P>



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