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.
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.