Relates to amending state construction and commodity contracts to provide equitable relief to contractors who have sustained unanticipated expenses by reason of construction materials price escalations.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5684
SPONSOR: Zebrowski TITLE OF BILL:
An act in relation to amending state construction and commodity
contracts to provide equitable relief to contractors who have sustained
unanticipated expenses by reason of construction materials price esca-
lation; and providing for the repeal of such provisions upon the expira-
tion thereof
PURPOSE:
The bill will allow contractors who submitted bids to the State of New
York or a public benefit corporation prior to April 1, 2020 to receive
an,adjusted contract on materials costs where the price escalated in
excess of five (5) percent upon invoice or purchase of said materials
from the original bid.
SUMMARY OF PROVISIONS:
Section 1 is the declaration of policy and statement of purpose.
Section 2 will enable contractors holding construction contracts as
awarded by the State of New York or a public benefit corporation upon
bids submitted prior to April 1, 2020 but only for which materials were
purchased or invoiced after March 1, 2020, that experienced an increase
in the cost of acquisition of such materials in excess of five percent
(5%) be able to apply for an adjustment to their contract in order to
recoup the increased material costs.
In cases of a state department or agency, any such increase in contract
price will require the approval of the state comptroller. Contractors
requesting an adjustment will have to apply in writing, submitting
evidence to the department, board, agency or public benefit corporation
that awarded the contract. This section also accounts for changes to be
made if there is a de-escalation in costs from the original bid.
Section 3 authorizes the Commissioner of the Office of General Services
(OGS), with approval from the state comptroller, in contracting for
commodities to terminate or suspend for a part of its term any state
contract award for the purchase of commodities upon written application
where increases in cost due to unforeseen circumstances have cost
increases in excess of five percent (5%) in the vendor's costs for
construction materials or other physical elements that were purchased or
invoiced after March 1, 2020, that will result in a net loss for the
contractor unless the contract is suspended or terminated.
In cases where the contractor has incurred or will incur net losses, the
Commissioner of OGS is authorized to grant an increase or increases in
the prices of the commodities specified in the contract to prevent
further loss to the contractor. This also applies to the ability to make
adjustments should prices de-escalate. Requires contractor documentation
including records, books and documents related to any adjustments to be
made by the commissioner of OGS that are subject to the approval of the
state comptroller to be required to be available for audit and examina-
tion.
Section 4 provides for the effective date.
JUSTIFICATION:
Similar language was enacted by the State Legislature in 2004 to aid
contractors with sharp increases in steel prices. This language is once
again put forth to ensure that entities who entered into construction
contracts after public bidding with New York State or its public benefit
corporations prior to April 1, 2020, in which said contracts do not
include clauses to allow for significant price shifts in material costs
are not saddled with losses due to the unforeseen impact of the COVID-19
global pandemic on the world's supply chain on the acquisition of mate-
rials.
LEGISLATIVE HISTORY:
A.10109 (Zebrowski) of 2022 - Vetoed
FISCAL IMPLICATIONS:
To be determined.
EFFECTIVE DATE:
The act shall take effect immediately and shall expire and be deemed
repealed on June 30, 2024.
