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A05684 Summary:

BILL NOA05684
 
SAME ASNo Same As
 
SPONSORZebrowski
 
COSPNSR
 
MLTSPNSR
 
 
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.
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A05684 Actions:

BILL NOA05684
 
03/20/2023referred to governmental operations
03/28/2023enacting clause stricken
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A05684 Memo:

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.
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A05684 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          5684
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                     March 20, 2023
                                       ___________
 
        Introduced  by  M.  of  A.  ZEBROWSKI  --  read once and referred to the
          Committee on Governmental Operations
 
        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 escalation; and providing for the repeal of such provisions upon
          the expiration thereof
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Declaration of policy and statement of purpose. It being in
     2  the vital interest of the general public that public works in the  state
     3  of  New York be administered efficiently and at a reasonable and equita-
     4  ble cost; and, the unforeseen emergency of unanticipated  escalation  in
     5  construction  materials  prices having imposed substantial inequity upon
     6  contractors who have heretofore  been  awarded  contracts  after  public
     7  bidding; and, such inequity having threatened the ability of contractors
     8  to  fulfill  contracts so awarded; and, in order to perpetuate the bene-
     9  fits derived by the general public from the existing  system  of  public
    10  bidding,  and  to  assure  the continuance of the orderly performance of
    11  contracts heretofore awarded as a result of such public bidding; and, it
    12  being in the best interest to provide equitable relief to those contrac-
    13  tors who, having been awarded public contracts, have sustained damage by
    14  reason of such construction materials  price  escalation,  this  act  is
    15  hereby enacted.
    16    §  2.  Whenever  the  terms  and conditions of a construction contract
    17  awarded by the state of New York or a public benefit  corporation  based
    18  upon  bids submitted prior to April 1, 2021 but only for which materials
    19  were purchased or invoiced after March 1, 2021, require a contractor  to
    20  furnish materials in such contract pertaining to such construction mate-
    21  rials  may  be  adjusted upon a determination made by the officer of the
    22  department, board, agency or public  benefit  corporation  that  awarded
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD09570-01-3

        A. 5684                             2
 
     1  such contract that there has been an increase in the cost of acquisition
     2  by  the contractor, subcontractor or supplier of materials of such mate-
     3  rials in excess of five percent, determined as of the time of the award.
     4  Such a determination shall be based upon the available evidence, includ-
     5  ing  but  not  limited to, an appropriate nationally recognized economic
     6  index published by the United States department of labor or other appro-
     7  priate organization. In the case of any state department or  agency  any
     8  such  increase in contract price shall be subject to the approval of the
     9  state comptroller.  Any contractor, subcontractor or supplier of materi-
    10  als who receives an increase in the cost of construction materials shall
    11  also be subject to a downward adjustment in construction materials pric-
    12  es for subsequent de-escalation which may result in a price being  lower
    13  than  the  original  bid  price. Any contractor requesting an adjustment
    14  shall make application in writing submitting documentary evidence to the
    15  office of the department, board, agency or  public  benefit  corporation
    16  that  awarded the contract establishing such increase in accordance with
    17  the requirements of the department,  board,  agency  or  public  benefit
    18  corporation, which evidence shall be subject to public inspection during
    19  regular  business  hours. Any subsequent decrease or de-escalation shall
    20  be made upon a determination by the officer of  the  department,  board,
    21  agency  or  public  benefit  corporation that awarded such contract that
    22  there has been a subsequent decrease in the cost of acquisition of  such
    23  construction  materials  by the contractor, subcontractor or supplier of
    24  materials. Such a  determination  shall  be  based  upon  the  available
    25  evidence, including but not limited to, an appropriate nationally recog-
    26  nized  economic index published by the United States department of labor
    27  or other appropriate organization.  Upon the agreement of  the  parties,
    28  the  contract  may  be  amended  in  writing to reflect the increased or
    29  decreased cost of acquisition of such materials insofar  as  it  exceeds
    30  five  percent thereof and such contract amendment shall state the amount
    31  of adjustment and the basis therefor, but in no event shall direct labor
    32  costs, additional profit or overhead be part of such adjustment. To  the
    33  extent a construction contract is subject to approval by the state comp-
    34  troller,  and  as  to  the form and manner of execution, by the attorney
    35  general, every such contract amendment shall be subject to the  approval
    36  of the state comptroller, and as to form and manner of execution, by the
    37  attorney  general.  No  adjustment  shall be granted in an amount which,
    38  together with any other sum obligated under the contract,  shall  exceed
    39  the money appropriated or otherwise lawfully available for the project.
    40    §  3.  (a)  The  commissioner  of  general services in contracting for
    41  commodities is authorized, with the approval of the  state  comptroller,
    42  to  terminate or suspend for a part of its term any state contract award
    43  for the purchase of commodities upon written application for such termi-
    44  nation or suspension by the vendor, where extraordinary  and  unforeseen
    45  general  market  conditions  have caused increases in the vendor's costs
    46  for construction materials or  other  physical  elements  consisting  of
    47  construction materials to be sold under the contract, where the contract
    48  covers  materials  which were purchased or invoiced after March 1, 2020,
    49  and the  commissioner  of  general  services  determines  upon  evidence
    50  furnished  by  the vendor as required and deemed to be sufficient by the
    51  commissioner that as the direct and sole result of such increases during
    52  the term of the contract, which exceed five percent of the  contractor's
    53  aggregate  acquisition costs determined as of the time of the award, the
    54  contractor has incurred or  will  incur  an  actual  net  loss  on  such
    55  contract  from  the  estimated  sales  made  under  the contract and the
    56  contractor would continue to incur such net losses unless  the  contract

        A. 5684                             3
 
     1  is suspended or terminated. Such a determination shall be based upon the
     2  available  evidence,  including  but  not  limited  to,  an  appropriate
     3  nationally recognized economic index  published  by  the  United  States
     4  department of labor or other appropriate organization.
     5    (b)  The  commissioner  of  general  services  is  further authorized,
     6  following the determination made pursuant to the provisions of  subdivi-
     7  sion  (a) of this section that the contractor has incurred or will incur
     8  an actual net loss on such  contract  from  the  sales  made  under  the
     9  contract, to grant an increase or increases in the prices of the commod-
    10  ities specified by the contract, in amounts necessary to prevent further
    11  net losses to the contractor on such contract from deliveries to be made
    12  thereafter  under  the  contract,  as compensation for and not exceeding
    13  increases of the contractor's  acquisition  costs  during  the  contract
    14  term.  Any  such  increase  in  contract  prices shall be subject to the
    15  approval of the  state  comptroller.  Any  contractor  who  receives  an
    16  increase  in  the  price  of  the commodities shall also be subject to a
    17  downward adjustment in the  price  of  the  commodities  for  subsequent
    18  de-escalation  which may result in a price being lower than the original
    19  bid price. Any subsequent decrease or de-escalation shall be made upon a
    20  determination by the officer of the department, board, agency or  public
    21  benefit  corporation  that  awarded  such contract that there has been a
    22  subsequent decrease in the cost  of  acquisition  of  such  construction
    23  materials  by  the  contractor,  subcontractor or supplier of materials.
    24  Such a determination shall be based upon the available evidence, includ-
    25  ing but not limited to, an appropriate  nationally  recognized  economic
    26  index published by the United States department of labor or other appro-
    27  priate organization.
    28    (c)  All  records,  books  and  documents  of the contractor which are
    29  related or useful to the determinations  made  by  the  commissioner  of
    30  general  services and to the approval of the state comptroller hereunder
    31  shall be subject to audit and examination by the state comptroller.
    32    § 4. This act shall take effect immediately and shall  expire  and  be
    33  deemed repealed June 30, 2024.
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