Requires public contracts to include a clause authorizing contractors to recover damages for delay for itself as well as on behalf of subcontractors or materialmen

Title of bill

An act to amend the state finance law, in relation to damages for delay clauses in public contracts

Purpose or general idea of bill

Requires all public contracts to include a clause authorizing contractors to recover damages for delay.

Summary of specific provisions

Section 1: Adds State Finance Law Section 138-b to provide that all public works contracts include a provision that a contractor, subcontractor, or materialman may seek recovery for unanticipated costs due to inexcusable delays which are the result of actions or omissions caused by the local government or public entity (public owner) that retained such contractor, subcontractor or materialman. The act or omission must be within the scope of responsibility or control of such public owner.

Justification

Case law in New York State follows Kalish-Jarcho, Inc. v. City of New York (578 NY 2nd 377), which allows a contractor to recover damages for such delay caused by an owner only where the owner acted in bad faith and with deliberate intent. In fact, the burden of proof to establish bad faith and deliberate intent makes it unlikely that contractors would be able to recover damages for unreasonable delays caused by such public owner. Several public agencies (NYS Office of General Services (OGS), Department of Transportation (DOT), and the Metropolitan Transportation Authority (MTA)) have already recognized the unfairness of this restriction and have provided in their public contracts for a more equitable allowance for damages for delays resulting from public agency action.

In 1998, the Governor vetoed S6711B (same as A10093B), a proposal to achieve the same relief sought by this legislation. In his veto message (see Veto Message 1404), Governor Pataki stated that he was sympathetic to the concept that public owners should compensate contractors who had caused unreasonable delays and thereby forced contractors, subcontractors or materialmen to sustain losses due to the actions of such public owner, Further, to help remedy this situation, that the policies of NYS OGS and DOT were already directed to address the needs sought under that bill. This new bill addresses the issues raised by the Governor and clarifies liability for damages where actions or omissions of a public agency are directly associated with the damages incurred by a covered contractor.

Fiscal implications

None.

Effective date

This act shall take effect on the 180th day after becoming a law.