Senate Bill S5829

                                 BILL NUMBER:  S5829

 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
maintain, support, protect or otherwise accommodate, energy,
telecommunications 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 allocation 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 but 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
utility 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 monopoly 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
municipal work and the private utility work, with the contract awarded
to the lowest responsible bidder for the combined work. The utilities,
by separate 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 eliminating 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 utilities 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
significant 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 regulation 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 72nd Street,
includes engineering challenges 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 are 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 businesses, 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
consideration of this proposal by the Legislature.