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A02040 Summary:

BILL NOA02040A
 
SAME ASSAME AS S05933-A
 
SPONSORKim (MS)
 
COSPNSRBraunstein, Lavine, Dilan, Quart, Barnwell, Vanel, Steck, Bichotte, Hevesi, Niou, Blake, Wright, Weprin, Cusick, Reyes
 
MLTSPNSRSimon, Tague
 
Add §138-b, St Fin L
 
Relates to damages to contracts occasioned by delay of state agency.
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A02040 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A2040A
 
SPONSOR: Kim (MS)
  TITLE OF BILL: An act to amend the state finance law, in relation to damages to contracts occasioned by delay   PURPOSE OR GENERAL IDEA OF BILL: Requires state agency and authority public works contracts to include a clause authorizing contractors to recover reasonable damages for delay under limited circumstances.   SUMMARY OF PROVISIONS: Section 1 of this bill amends the State Finance Law by adding a new Section 138-b which would provide that all state agency and state authority contracts shall contain a clause which allows a contractor to make claim for additional costs due to excusable delays which are the result of actions or omissions by a state agency or authority. The act or omission must be within the scope of their responsibility or control. Section 2 of the bill sets forth the effective date.   DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION: The amended version of this bill is intended to match A.7985 (Kim). The only difference between a7985 and this bill is that there is a different definition of "State Agency" in this version.   JUSTIFICATION: Current case law in New York State follows KALISCH-JARCHO, INC. V. CITY OF NEW YORK (578 NY 2nd 377) and subsequent Court of Appeals decisions, which allow a contractor to recover damages for such delay caused where the owner acted in bad faith and with deliberate intent, along with several other limited exceptions. In fact, the burden of proof to estab- lish bad faith and deliberate intent makes it unlikely those contractors would be able to recover damages for delay. Several public agencies, most notably NYS Office of General Services (OGS) and the federal government, have already recognized the unfairness of this restriction and have provided in their public contracts for a more equitable allow- ance for damages for delays resulting from public agency action. By tracking current OGS contract language, this bill would reinstate the preKalisch-Jarcho standard making "no damages for delay" clauses unen- forceable where the contractor has suffered a delay for an unreasonable time and such delay is the fault or responsibility of the state agency. It would require state agency and authority contracts to include a clause authorizing contractors to recover damages for delay under such circumstances, which is both fair and equi table, and recognized as such by one of the largest agencies in New York State. Over 17 states allow for the specific recovery of damages related to expenses incurred by the contractor for a delay for which the state governmental unit is respon- sible, and which delay was unreasonable under the circumstances, and was not within the contemplation of the parties to the contract. Many more states recognize a common law right to damages for delay. New York should not be an exception to this trend, based on simple principles of equity and fairness.In 2018, Governor Cuomo vetoed a more expansive version of this legislation (S.6686/A.7945-A). In his veto message (see Veto Message 355-2018), Governor Cuomo raised several technical issues of concern. This bill addresses the technical issues raised by Governor Cuomo and clarifies liability for damages where actions or omissions of a state agency or state authority are directly associated with the damages incurred by a covered contractor. Specifically and in response to the Governor's concerns, this bill a) is limited in application and scope only to state agencies and state authorities; b) removes prior language that the Governor was concerned could establish privity of contract between a subcontractor and a public agency, and other third parties; and c) further limits and narrows the criteria for a delay damages claim against a state agency.   PRIOR LEGISLATIVE HISTORY: New Bill. Similar to A.7945 -A of 2018 (Kim) - Vetoed   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: To be determined. However, a standardized "damages for delay" claUse in state agency and authority contracts will result in decreased litigation costs to the state and contractors.   EFFECTIVE DATE: This act shall take effect 180 days after enactment.
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A02040 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         2040--A
 
                               2019-2020 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 22, 2019
                                       ___________
 
        Introduced  by  M.  of  A.  KIM -- Multi-Sponsored by -- M. of A. SIMON,
          TAGUE -- read once and referred to the Committee on Governmental Oper-
          ations -- reported and referred to the Committee on Ways and Means  --
          committee  discharged,  bill amended, ordered reprinted as amended and
          recommitted to said committee

        AN ACT to amend the  state  finance  law,  in  relation  to  damages  to
          contracts occasioned by delay
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. The state finance law is amended by adding  a  new  section
     2  138-b to read as follows:
     3    § 138-b. Damages occasioned by delay.  1. For purposes of this section
     4  the following terms shall have the following meanings:
     5    (a)  "State  agency"  shall  mean any state department, board, bureau,
     6  commission, division, office, council, or state committee or  any  state
     7  authority  as  defined  in  subdivision one of section two of the public
     8  authorities law. Such term shall not include the legislature or  judici-
     9  ary.
    10    (b)  "Contract" shall mean any agreement awarded by a state agency for
    11  the design, construction, reconstruction, demolition, alteration, repair
    12  or improvement of any public works project.
    13    (c) "Delay" shall mean any delay,  disruption,  interference,  ineffi-
    14  ciencies, impedance, hindrance or acceleration in the performance of the
    15  contract which causes damages to be incurred by a contractor.
    16    (d)  "Claim"  shall  mean a request for additional costs only from the
    17  following causes:
    18    (i) the failure of the state agency to  take  reasonable  measures  to
    19  coordinate and progress the work;
    20    (ii) extended delays attributable to the state agency in the review or
    21  issuance  of orders-on-contract or field orders, in shop drawing reviews
    22  and approvals or as a result of the cumulative impact of multiple orders
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05157-02-9

        A. 2040--A                          2
 
     1  on contract, which constitute a qualitative change to the  project  work
     2  and which have a verifiable impact on project costs; or
     3    (iii)  the  unavailability  of the site for such an extended period of
     4  time  which  significantly  affects  the  scheduled  completion  of  the
     5  contract.
     6    2.  All contracts made and awarded shall contain a clause which allows
     7  a contractor to make a claim for additional costs arising from delay  in
     8  the  performance of a contract if such delay is caused by a material act
     9  or omission of the state agency.
    10    3. The contractor shall provide a notice of claim  of  an  anticipated
    11  claim  for delay to a state agency by personal service or certified mail
    12  no more than fifteen days after such contractor  knew  the  facts  which
    13  form  the basis of the claim. The state agency shall acknowledge receipt
    14  of the notice, in writing, within five days.  Such  notice  shall  at  a
    15  minimum  provide a description of any operations that were, are being or
    16  will be delayed, and the date or dates and reasons for the delay. In  no
    17  case  shall oral notice constitute notice pursuant to this section or be
    18  deemed to constitute a waiver of the written notice  requirement.    For
    19  the  purposes  of  this section, failure to provide such notice shall be
    20  considered to have prejudiced the state agency.
    21    4. Failure by a contractor to adequately progress  the  completion  of
    22  work  shall  be  considered  in determining the causes of delay. For any
    23  claim asserted  pursuant  to  this  title,  the  contractor  shall  keep
    24  detailed  written records of the costs and shall make them available for
    25  the purposes of audit and review. Failure to provide the required  writ-
    26  ten  notice  or  to  maintain  and  furnish records of the costs of such
    27  claims shall constitute a waiver of the claim.
    28    5. The following information shall be provided by the contractor  upon
    29  request of a state agency if not previously supplied:
    30    (a) a description of the operations that were delayed, the reasons for
    31  the delay and an explanation of how they were delayed;
    32    (b)  a detailed factual statement of the claim providing all necessary
    33  dates, locations and items of work affected by the claim;
    34    (c) the date on which actions  resulting  in  the  claim  occurred  or
    35  conditions resulting in the claim became evident;
    36    (d)  the  names,  functions and activities of each contractor involved
    37  in, or knowledgeable about facts that gave rise to such claim;
    38    (e) the identification of any pertinent documents, and  the  substance
    39  of any material oral communication relating to such claim;
    40    (f) the amount of additional compensation sought; and
    41    (g)  if an extension of time is also requested, the specific number of
    42  days for which it is sought and the basis for such request as determined
    43  by an analysis of the construction progress schedule.
    44    6. When submitting any claim, the contractor shall certify in  writing
    45  and  under oath that the supporting data is accurate and complete to his
    46  or her best knowledge or belief, and that any amount demanded  reflects,
    47  in  good faith, what he or she believes to be the state agency's liabil-
    48  ity.
    49    § 2. This act shall take effect on the one hundred eightieth day after
    50  it shall have become a law and shall apply to all contracts entered into
    51  on and after such date.
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