Relates to alternative delivery system contracts awarded by public authorities

Section 2 of the bill would add a new subdivision 25 to PAL § 1678 to authorize DASNY to solicit and award alternative delivery system contracts to a single entity or entities for projects that are otherwise subject to competitive bidding statutes, for projects in excess of $10,000,000. Consistent with DASNY's policy governing the use PLAs, new PAL § 1678(25) would permit alternative delivery system contracts so long as they include a provision requiring the contractor to enter into a PLA that complies with the requirements of Labor Law § 222. New PAL § 1678(25) would require any alternative delivery system contract to be awarded pursuant to a two-step open, competitive and objective process that would require DASNY to set forth its rationale for using this method of procurement before starting the process and the procurement to comply with guidelines adopted by DASNY's board. New PAL § 1678(25) would also require DASNY to include in its Annual Procurement Report a description of each alternative delivery system contract that it awarded, as well as the specific benefits associated with each such award. Finally, new PAL § 1678(25), authorizing DASNY to utilize alternative delivery system contracts would sunset on July 30, 2013.

Section 3 of the bill would add a new subdivision 26 to PAL § 1678 to authorize DASNY to pre-qualify contractors for procurements in which DASNY is required by law to award contracts to the lowest responsible bidder, based on specific criteria including: (1) the experience and past performance of the prospective bidder; (2) the prospective bidder's ability to undertake the work; (3) the financial capability, responsibility and reliability of the prospective bidder; and (4) the prospective bidder's record of compliance with Executive Law Article 15-A. Under new PAL § 1678(26), DASNY would be required publish advertisements in the State Procurement Opportunities Newsletter requesting prospective bidders to submit their qualifications. DASNY would be required to make such publications at least quarterly, and with respect to projects in excess of $5,000,000, on a project specific basis. DASNY would be required to review and update its list of pre-qualified bidders not less than annually. Section 4 of the bill would make it effective immediately; provided that sections 1 and 2 of the bill, authorizing DASNY to award alternative delivery system contracts, would expire on July 30, 2013.

Existing law

Under current law, DASNY is not permitted to award alternative delivery system contracts for most of its construction projects and programs, where DASNY must comply with competitive bidding requirements, and DASNY is not authorized to pre-qualify contractors on contracts subject to competitive bidding.

Legislative history

S.7455-A (relative to alternative delivery system contracts) passed the Senate in2008.

Statement in support

In hard economic times like the present, it is particularly important that DASNY has the ability to deliver construction projects for its clients at the lowest possible cost. This bill would provide DASNY with a tool to achieve this objective, by authorizing alternative delivery system contracts for projects in excess of $10,000,000.

Traditional competitive bidding frequently is not the most cost-effective method of procurement for certain types of construction projects. For this reason, alternative delivery system procurement, in which a single contract is executed with a single entity to provide construction services, has become an effective method of project delivery, particularly in the private sector. DASNY has used alternative delivery system procurement where competitive bidding is not required by law, and now seeks authority to employ such procurement in appropriate instances for all its construction clients. Alternative delivery systems, such as construction-manager-at-risk, can produce significant cost and time savings in the construction of public entities' buildings.

Alternative delivery system procurement would be an important tool for DASNY because it would improve contracting efficiencies. Alternative delivery systems permit the single prime contractor to have input in the design phase and to assume responsibility for coordination of the schedule, proper structuring of bid packages and phasing of the work. The single prime contractor is responsible for defaulted subcontractors and must, in the event of such default, complete the work on time and for the negotiated cost of the project.

This legislation contains safeguards to ensure the integrity of alternative delivery system procurements. It requires DASNY to document and justify: (i) the use of the alternative delivery system procurement in any given situation; and (ii) the evaluation process for both the selection of entities on its short list and the award of the alternative delivery system contract. In addition, DASNY would be permitted to utilize this alternative method of procurement only if the procurement complied with guidelines approved by DASNY's board. Finally, DASNY would be required to publicly disclose any use of this method as part of the DASNY's Annual Procurement Report.

This bill would also authorize DASNY to pre-qualify bidders for contracts that must be awarded to the lowest responsible bidder after public advertisement, in order to provide DASNY with a method of selecting qualified, responsible contractors that is more efficient than the current post-bid review process. Pre-qualification would reduce the time required to select contractors after their bids are received and reviewed, thereby allowing construction projects to commence sooner. And the use of pre-qualification would eliminate costly, time-consuming litigation brought by disgruntled contractors who were deemed to be not responsible after a bid. Pre-qualification would reassure bidders that the quality of their bids alone would be relevant to the award of the contract.

Budget implications

This bill would reduce the cost of public construction projects and generate substantial savings for New York State taxpayers.

Effective date

This bill would take effect immediately, provided, however; that sections 1 and 2 of the bill would expire on July 30, 2013.