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A07945 Summary:

COSPNSRBichotte, Sepulveda, Braunstein, Quart, Steck, D'Urso, Dickens, Taylor, Rivera, Blake, Cook, Wright, Arroyo, Jaffee, Niou, Fahy, Hooper, Benedetto
MLTSPNSRSimon, Tague
Add §138-b, St Fin L
Relates to damages to contracts occasioned by delay.
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A07945 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
  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 public contracts to include a clause authorizing contractors to recover damages for delay for itself as well as on behalf of subcontrac- tors or materialmen.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 of this bill amends the State Finance Law by adding a new Section 138-b which would provide that all public works contracts shall contain a clause which allows a contractor, subcontractor, or material- man to make claim for additional costs due to excusable delays which are the result of actions or omissions by a public owner or any of its representatives. The act or omission must be within the scope of their responsibility or control. Section 2 of the bill sets forth the effective date.   JUSTIFICATION: Current case law in New York State follows KALISCH-JARCHO, INC. V. CITY OF NEW YORK (578 NY 2nd 377) and subsequent court 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 establish bad faith and deliberate intent makes it unlikely that 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 allowance for damages for delays resulting from public agency action. By tracking current OGS contract language, this bill would reinstate the pre-Kalisch-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 project owner. It would require all public contracts to include a clause authorizing contractors to recover damages for delay under such circumstances, which is both fair and equitable, and recognized as such by one of the largest agencies in New York State. Seventeen 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 responsible, which was unreasonable under the circumstances, and which 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. In 1998, Governor Pataki vetoed S.6711-B, a more generalized 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 and that the recognized that policy of OGS was directed to address the needs sought in the legislation, but there were technical problems in the bill draft. This bill addresses the technical issues raised by Governor Pataki and clarifies liability for damages where actions or omissions of a public agency are directly associated with the damages incurred by a covered contractor.   PRIOR LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: To be determined.   EFFECTIVE DATE: This act shall take effect 180 days after enactment.
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A07945 Text:

                STATE OF NEW YORK
                               2017-2018 Regular Sessions
                   IN ASSEMBLY
                                      May 22, 2017
        Introduced  by  M.  of A. KIM, BICHOTTE -- read once and referred to the
          Committee on Governmental Operations  --  committee  discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
        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)  "Public  entity"  shall mean any state agency, department, board,
     6  bureau,  municipal  corporation,  public  benefit  corporation,   public
     7  authority  or  any  other state entity, any school district or any other
     8  special district, or any instrumentality of the  state  or  a  political
     9  subdivision of the state.
    10    (b) "Contract" shall mean any agreement awarded by a public entity for
    11  the design, construction, reconstruction, demolition, alteration, repair
    12  or improvement of any public works.
    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,  subcon-
    16  tractor or materialman to a contract and which is a direct result of the
    17  act  or  omission  of the public entity for whom the contractor, subcon-
    18  tractor or materialman is providing services  as  provided  for  in  the
    19  contract.
    20    (d) "Claim" shall mean a request for additional costs from the follow-
    21  ing  causes  listed  in  this  subdivision  attributable to delay in the
    22  performance of a contract, occasioned by any act or omission to  act  by
    23  the  public  entity with whom a contractor, subcontractor or materialman
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 7945--A                          2
     1  has contracted with, but shall not include delay from any  other  cause,
     2  which  delay  shall be compensated for solely by an extension of time to
     3  complete the performance of the work:
     4    (i)  the  failure  of the public entity to take reasonable measures to
     5  coordinate and progress the work;
     6    (ii) extended delays attributable to the public entity in  the  review
     7  or  issuance  of  orders-on-contract  or  field  orders, in shop drawing
     8  reviews and approvals or as a result of the cumulative impact of  multi-
     9  ple  orders  on  contract,  which constitute a qualitative change to the
    10  project work and which have a verifiable impact on project costs;
    11    (iii) the unavailability of the site for such an  extended  period  of
    12  time  which  significantly  affects  the  scheduled  completion  of  the
    13  contract; or
    14    (iv) the issuance of a stop  work  order  relative  to  a  substantial
    15  portion of work for a period exceeding thirty days.
    16    2.  All contracts made and awarded shall contain a clause which allows
    17  a contractor, subcontractor or materialman to make  a  claim  for  addi-
    18  tional  costs arising from delay if such delay in the performance of the
    19  contract is caused by or occasioned by any act or omission of the entity
    20  with whom they have contracted in the contract, or any of such  entity's
    21  representatives or agents.
    22    3. The contractor, subcontractor or materialman shall provide a notice
    23  of  claim  of  an  anticipated  claim  for  delay  to a public entity by
    24  personal service or certified mail no more than fifteen days after  such
    25  contractor  knew the facts which form the basis of the claim. The public
    26  entity shall acknowledge receipt of the notice, in writing, within  five
    27  days.  Such notice shall at a minimum provide a description of any oper-
    28  ations that were, are being or will be delayed, and the  date  or  dates
    29  and  reasons  for  the  delay.  In  no case shall oral notice constitute
    30  notice pursuant to this section or be deemed to constitute a  waiver  of
    31  the written notice requirement.  For the purposes of this section, fail-
    32  ure  to  provide  such notice shall be considered to have prejudiced the
    33  public entity.
    34    4. Failure by a contractor to adequately progress  the  completion  of
    35  work  shall  be  considered  in determining the causes of delay. For any
    36  claim asserted pursuant to this title, the contractor, subcontractor  or
    37  materialman  shall  keep detailed written records of the costs and shall
    38  make them available for the purposes of audit  and  review.  Failure  to
    39  provide  the  required written notice or to maintain and furnish records
    40  of the costs of such claims shall constitute a waiver of the claim.
    41    5. The following information shall be provided by the contractor  upon
    42  request of a public entity if not previously supplied:
    43    (a) a description of the operations that were delayed, the reasons for
    44  the delay and an explanation of how they were delayed;
    45    (b)  a detailed factual statement of the claim providing all necessary
    46  dates, locations and items of work affected by the claim;
    47    (c) the date on which actions  resulting  in  the  claim  occurred  or
    48  conditions resulting in the claim became evident;
    49    (d)  the  names,  functions and activities of each contractor, subcon-
    50  tractor and materialman involved in, or knowledgeable about  facts  that
    51  gave rise to such claim;
    52    (e)  the  identification of any pertinent documents, and the substance
    53  of any material oral communication relating to such claim;
    54    (f) the amount of additional compensation sought; and

        A. 7945--A                          3
     1    (g) if an extension of time is also requested, the specific number  of
     2  days for which it is sought and the basis for such request as determined
     3  by an analysis of the construction progress schedule.
     4    6. When submitting any claim, the contractor, subcontractor or materi-
     5  alman  shall  certify in writing and under oath that the supporting data
     6  is accurate and complete to his or her best  knowledge  or  belief,  and
     7  that  any  amount  demanded  reflects,  in  good  faith,  what he or she
     8  believes to be the public entity's liability.
     9    § 2. This act shall take effect on the one hundred eightieth day after
    10  it shall have become a law and shall apply to all contracts entered into
    11  on and after such date.
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