Assembly Bill A8821

                                BILL NUMBER:A8821

TITLE OF BILL:  An act to amend the general municipal law, in relation
to contracts for a public work project and accommodation of private
facilities or structures within a specified area of New York county; and
providing for the repeal of such provisions upon expiration thereof

SUMMARY OF PROVISIONS:

This bill authorizes the City of New York to include in a contract for
any public work project within the area of New York county south of and
including 72nd Street any work deemed necessary or desirable to main-
tain, support, protect or otherwise accommodate, energy, telecommuni-
cations and other private facilities or structures not owned by the
municipality which are located within, traversing or adjacent to the
construction area of such project. The bill permits the public agency to
award a contract to the lowest responsible bidder for all of the work,
including the utility interference work, with the proviso that if the
cost of the agency work is more than twenty percent below the average of
the next two lowest bids, the new authorization would not apply. The
bill also provides that the costs of utility interference work shall not
be borne by the municipality, but leaves intact the provisions for allo-
cation of costs involving certain gas facilities as provided for in
Chapter 357 of the Laws of 1988 (Gas Facility Cost Allocation Act), as
well as the provisions that apply to projects subject to the Coordinated
Construction Act for Lower Manhattan (Chapter 259 of the Laws of 2004,
              

as amended).  The bill would apply notwithstanding an y inconsistent
laws, including section 103 of the General Municipal Law. Applicable
provisions of section 103 that are not inconsistent with this bill would
continue to govern. The bill would expire on December 31, 2014 hut would
apply to contracts advertised or otherwise formally solicited before
that date.

REASONS FOR SUPPORT:

Public rights of way generally contain not only municipally-owned utili-
ty services like water mains and sewers but also utility lines for the
transmission of energy and telecommunications. These private facilities
often must be moved or protected in order for the municipal work to
proceed. The municipal work can be delayed or stopped if the utility is
required to negotiate the price of protecting or moving the utility
facility with the contractor for the municipal work or, locate another
contractor to do the work. Because bringing in a second contractor is
rarely practical, the negotiations often stall when the de facto monopo-
ly position of the municipal contractor leads to prices that the utility
believes to be far in excess of the value of the work. Delay of the
municipal work not only adversely affects the public at large but also
has a significant impact on local businesses.

In an effort to reduce the inconvenience resulting from construction
delays as a result of utility interference work, in 1992 the City of New
York began the practice of "joint bidding." This practice required

bidders to provide.  within a single bid, separate prices for the munic-
ipal work and the private utility work, with the contract awarded to the
lowest responsible bidder for the combined work. The utilities, by sepa-
rate agreement, reimbursed the City for the additional cost of the
City's share of the overall low bid if the low bidder on the municipal
work was not the same as the low bidder on the combined work. Thus, the
cost to the City was never more than the lowest bid for the municipal
work. Taxpayers therefore benefited from the conveniences of joint
bidding at no additional cost.

The City's joint bidding practices ended in 1998, however, when a
contractor who had bid the lowest price for the municipal portion of a
project, but was not awarded the contract because its bid was not the
lowest bid overall, challenged the City's practice of joint bidding. The
Court of Appeals determined that private utility interference work is
not "public work" and cannot be included in a contract for municipal
work bid pursuant to General Municipal Law § 103 unless specifically
authorized by the Legislature.  See Diamond Asphalt v. Sander, 92 NY2d
244 (1998).

This State Legislature recognized the value of appropriate joint bidding
arrangements when it authorized them in the Coordinated Construction Act
for Lower Manhattan (Chapter 259 of the Laws of 2004, as amended by
Chapter 231 of the Laws of 2004). The provision in this bill is modeled
upon section 4(d) of that Act. By enacting the Act, the Legislature
sought to ensure a productive revitalization process for the area of New
York City devastated by the events of September 11, 2001. In recognition
of that goal, the Legislature expressly stated in section 1 that the
purpose of the Act was to promote the fast, safe and fair redevelopment
of lower Manhattan. To date, the City of New York has awarded four
contracts under the Act and these projects are currently under
construction.  Moreover, on more than twenty other contracts let prior
to Diamond Asphalt v. Sander, experience has shown that jointly-bid
contracts establish more reasonable prices for utility interference work
and speed street construction jobs, thereby reducing the adverse impact
on the public and local businesses. In addition, they do not inflate the
costs of the municipal work.

Currently, the revitalization of lower Manhattan is directly benefiting
from the projects in construction and these projects include Beckman
Street, Harrison Street, Liberty Street, and Fulton Street. The Beekman
Street project is the furthest along in construction and has shown
significant savings in time by reducing, if not altogether eliminating,
delays from work to be performed in the street. Furthermore, having the
City include the utilities' work in a single contract has resulted in
better coordination and scheduling of all work by reducing or eliminat-
ing days when no work is performed as the contractor and a utility argue
over a scope of work item; this results in a savings of time for the
overall project. Moreover, having the utility work included in one
contract has benefited the City in that the utilities are now paying
their respective shares of costs that the City used to bear when the
projects were delayed while the utility and contractor argued.  Finally,

by having a single entity - the City - manage the job, with the utili-
ties creating a special office to deal with these contracts, the joint
bidding arrangement is more efficient in resolving issues in the field.
This centralization of accountability is more likely to result in an on
or ahead of schedule completion date. The bottom line outcome is that
projects bid with joint bids minimize disruption to the community and
return the affected streets to the residents and businesses faster than
projects that do not utilize this approach. This experience was
reflected by projects in the City that benefited from joint bidding
before the Court of Appeals decision, including Columbus Avenue in
Manhattan, 9th Street and Tompkins Avenue in Brooklyn, Booth Memorial
Avenue and Baisley Boulevard in Queens, and the Carpenter Avenue area of
the Bronx. Conversely, projects such as Hudson Street, Boston Road and
Queens Village did not include joint bidding and were subject to signif-
icant construction delays due to utility interference work.

The City of New York has initiated plans for infrastructure improvements
that involve work related to the construction of the City's third water
tunnel trunk main, which includes the construction of the water regu-
lation distribution systems and its connection to the shafts. Limited
use of the third water tunnel, a critical public project that has been
the focus of many years of great expense and effort, cannot begin until
this work is completed. The work, which will take place in many
locations in Manhattan south of nod Street, includes engineering chal-
lenges that involve key transportation access points, such as tunnels,
including the Holland Tunnel, Mid-town Tunnel and Lincoln Tunnel, and
bridges, including the 59th Street Bridge. The work further includes
main areas of business and tourist attractions such as Lincoln Center
and Times Square. In addition, the work involves intersections that arc
already congested, as well as side streets that support the areas
defined above.  Furthermore, in a post September 11, 2001 environment,
there are security concerns involving the locations of the projects and
it is essential that these sites and adjoining areas are built in the
most efficient and safest way possible. By enabling the City of New York
to invite bids for both the municipal work and the necessary utility
work on a joint basis, this hill will achieve the goal of completing the
work fast and safely.

Enactment of this legislation would enable the City of New York to
obtain reimbursement for the cost of the work from the utilities so that
there will be no negative cost impact to the public agency for jointly
bidding work; to the extent that the cost of the utility interference
work is reasonable, utility customers, including residents and busi-
nesses, will benefit. Further, the great inconvenience to the public and
local businesses caused when streets are opened will he minimized as a
result of the shortened duration of the construction.

Accordingly, the Mayor urges the earliest possible favorable consider-
ation of this proposal by the Legislature.