In a win for construction contractors working in New York, legislation establishing a panel to examine and possibly recommend reform of the state’s public contracting process has passed the statehouse and awaits the governor’s signature.
The Construction Industry Public Contracting Advisory Council bill is a response to longstanding industry complaints that rules governing state contracts routinely, unfairly, and needlessly expose contractors to serious financial hardship and, in turn, complicate efforts to get vital taxpayer-funded work performed in a cost-efficient and timely manner.
In a news release announcing the bill’s passage, Willett Public Affairs, Rye Brook, N.Y. — which helped draft it in partnership with New York Electrical Contractors Association (NYECA), a group that represents 190 electrical contractors in New York City and surrounding areas — notes that the bill’s objective is to bring together stakeholders who can work to “change New York State’s public contracting process.” Once the bill is law, a 21-member council made up of contractors, legislators, regulators, and others will be assembled and begin a year-long effort to identify significant problems in the state’s public contracting process and propose solutions.
Peter Rescigno, who led the NYECA effort to spearhead the bill on behalf of contractors, says following repeated failures to get corrective bills passed an advisory council is now the best approach to examine the contracting process and the best bet for ultimately getting needed changes made, whether through regulatory, legislative, or executive action.
“We’ll get people appointed who have an interest in getting this fixed,” said Rescigno, the group’s director of operations and executive secretary. “This is a mechanism to get people together to talk about the issues and we think it will move the ball better than pursuing bills that get no traction.”
The bill limits the scope of the council’s examination to four areas:
- Damages incurred by contractors, subcontractors, and other parties due to delay in payments by public project owners or managers
- Substantial completion as it is defined in state finance law
- Public works contracting issues affecting minority and women contractors and subcontractors
- Retainage in public works contracts.
Contractors of all types are routinely tripped up in all these areas as they bid and perform work on public projects, Rescigno says.
“We want to address inefficiencies in the public contracting process that are driving up costs and hurting the state’s economy,” Rescigno says. “In our association, we have a sizable number of contractors who want a fairer and more equitable approach to these contracts, which would lead to more businesses competing in that market.”
Public projects are a major revenue source for many individual construction contractors in both the state and New York City, where such expenditures are likely to increase. A recent report from the Office of the New York State Comptroller notes that the state’s recently passed budget anticipates $311 billion for publicly funded infrastructure investment through the next two 5-yr capital programs, $125 billion of which would be in New York City (see the Chart below).
Additionally, New York City government capital spending is seen rising from $10 billion this year to $15 billion by 2025 (see the Figure below).
Russ Lancey, president and CEO of Five Star Electric, New York, which is a big player in the public contracting area in the Greater New York area, sees a need for a closer look and possibly some reform.
“The intent is to better educate agencies on the construction industry and some of the hurdles associated with working in the public contracting space,” he says. “For example, as it relates to some of our projects, at times, it can be a real challenge settling out disputes that may arise — something that can be seen as fair for both parties. Hopefully, this council can educate and help to improve the process.”
For its part, Lancey says, Five Star knows “from experience the pitfalls of such projects” and consequently, “the company is very selective with its bidding as a result.”
Vic Salerno, CEO of O’Connell Electric, Victor, N.Y., which regularly bids on state work mostly outside of New York City, says bidders must know what they’re potentially getting into with public projects. Rules governing contracts can complicate change orders, and contractors can get into a costly bind if engineering and design problems arise.
“Each state agency letting bids can be a bit different, too, and that can be an issue with contracts,” he says. “Working in this area as a contractor isn’t for the faint of heart.”
Tom Zind is a freelance writer based in Lees Summit, Mo. He can be reached at [email protected].
