The New York State Senate

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8844
 
                             I N  S E N A T E
 
                              April 22, 2022
                                ___________
 
 Introduced  by  Sen. REICHLIN-MELNICK -- read twice and ordered printed,
   and when printed to be committed to the Committee on  Procurement  and
   Contracts
 
 AN  ACT  in  relation  to  amending  state  construction  and  commodity
   contracts  to  provide  equitable  relief  to  contractors  who   have
   sustained  unanticipated  expenses by reason of construction materials
   price escalation; and providing for the repeal of such provisions upon
   the expiration thereof
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Declaration of policy and statement of purpose. It being in
 the  vital interest of the general public that public works in the state
 of New York be administered efficiently and at a reasonable and  equita-
 ble  cost;  and, the unforeseen emergency of unanticipated escalation in
 construction materials prices having imposed substantial  inequity  upon
 contractors  who  have  heretofore  been  awarded contracts after public
 bidding; and, such inequity having threatened the ability of contractors
 to fulfill contracts so awarded; and, in order to perpetuate  the  bene-
 fits  derived  by  the general public from the existing system of public
 bidding, and to assure the continuance of  the  orderly  performance  of
 contracts heretofore awarded as a result of such public bidding; and, it
 being in the best interest to provide equitable relief to those contrac-
 tors who, having been awarded public contracts, have sustained damage by
 reason  of  such  construction  materials  price escalation, this act is
 hereby enacted.
   § 2. Whenever the terms and  conditions  of  a  construction  contract
 awarded  by  the state of New York or a public benefit corporation based
 upon bids submitted prior to April 1, 2020 but only for which  materials
 were  purchased or invoiced after March 1, 2020, require a contractor to
 furnish materials in such contract pertaining to such construction mate-
 rials may be adjusted upon a determination made by the  officer  of  the
 department,  board,  agency  or  public benefit corporation that awarded
 such contract that there has been an increase in the cost of acquisition
 by the contractor, subcontractor or supplier of materials of such  mate-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD15088-03-2
 S. 8844                             2
 
 rials in excess of five percent, determined as of the time of the award.
 Such a determination shall be based upon the available evidence, includ-
 ing  but  not  limited to, an appropriate nationally recognized economic
 index published by the United States department of labor or other appro-
 priate  organization.  In the case of any state department or agency any
 such increase in contract price shall be subject to the approval of  the
 state comptroller.  Any contractor, subcontractor or supplier of materi-
 als who receives an increase in the cost of construction materials shall
 also be subject to a downward adjustment in construction materials pric-
 es  for subsequent de-escalation which may result in a price being lower
 than the original bid price. Any  contractor  requesting  an  adjustment
 shall make application in writing submitting documentary evidence to the
 office  of  the  department, board, agency or public benefit corporation
 that awarded the contract establishing such increase in accordance  with
 the  requirements  of  the  department,  board, agency or public benefit
 corporation, which evidence shall be subject to public inspection during
 regular business hours. Any subsequent decrease or  de-escalation  shall
 be  made  upon  a determination by the officer of the department, board,
 agency or public benefit corporation that  awarded  such  contract  that
 there  has been a subsequent decrease in the cost of acquisition of such
 construction materials by the contractor, subcontractor or  supplier  of
 materials.  Such  a  determination  shall  be  based  upon the available
 evidence, including but not limited to, an appropriate nationally recog-
 nized economic index published by the United States department of  labor
 or  other  appropriate organization.  Upon the agreement of the parties,
 the contract may be amended in  writing  to  reflect  the  increased  or
 decreased  cost  of  acquisition of such materials insofar as it exceeds
 five percent thereof and such contract amendment shall state the  amount
 of adjustment and the basis therefor, but in no event shall direct labor
 costs,  additional profit or overhead be part of such adjustment. To the
 extent a construction contract is subject to approval by the state comp-
 troller, and as to the form and manner of  execution,  by  the  attorney
 general,  every such contract amendment shall be subject to the approval
 of the state comptroller, and as to form and manner of execution, by the
 attorney general. No adjustment shall be granted  in  an  amount  which,
 together  with  any other sum obligated under the contract, shall exceed
 the money appropriated or otherwise lawfully available for the project.
   § 3. (a) The commissioner  of  general  services  in  contracting  for
 commodities  is  authorized, with the approval of the state comptroller,
 to terminate or suspend for a part of its term any state contract  award
 for the purchase of commodities upon written application for such termi-
 nation  or  suspension by the vendor, where extraordinary and unforeseen
 general market conditions have caused increases in  the  vendor's  costs
 for  construction  materials  or  other  physical elements consisting of
 construction materials to be sold under the contract, where the contract
 covers materials which were purchased or invoiced after March  1,  2020,
 and  the  commissioner  of  general  services  determines  upon evidence
 furnished by the vendor as required and deemed to be sufficient  by  the
 commissioner that as the direct and sole result of such increases during
 the  term of the contract, which exceed five percent of the contractor's
 aggregate acquisition costs determined as of the time of the award,  the
 contractor  has  incurred  or  will  incur  an  actual  net loss on such
 contract from the estimated  sales  made  under  the  contract  and  the
 contractor  would  continue to incur such net losses unless the contract
 is suspended or terminated. Such a determination shall be based upon the
 available  evidence,  including  but  not  limited  to,  an  appropriate
 S. 8844                             3
 
 nationally  recognized  economic  index  published  by the United States
 department of labor or other appropriate organization.
   (b)  The  commissioner  of  general  services  is  further authorized,
 following the determination made pursuant to the provisions of  subdivi-
 sion  (a) of this section that the contractor has incurred or will incur
 an actual net loss on such  contract  from  the  sales  made  under  the
 contract, to grant an increase or increases in the prices of the commod-
 ities specified by the contract, in amounts necessary to prevent further
 net losses to the contractor on such contract from deliveries to be made
 thereafter  under  the  contract,  as compensation for and not exceeding
 increases of the contractor's  acquisition  costs  during  the  contract
 term.  Any  such  increase  in  contract  prices shall be subject to the
 approval of the  state  comptroller.  Any  contractor  who  receives  an
 increase  in  the  price  of  the commodities shall also be subject to a
 downward adjustment in the  price  of  the  commodities  for  subsequent
 de-escalation  which may result in a price being lower than the original
 bid price. Any subsequent decrease or de-escalation shall be made upon a
 determination by the officer of the department, board, agency or  public
 benefit  corporation  that  awarded  such contract that there has been a
 subsequent decrease in the cost  of  acquisition  of  such  construction
 materials  by  the  contractor,  subcontractor or supplier of materials.
 Such a determination shall be based upon the available evidence, includ-
 ing but not limited to, an appropriate  nationally  recognized  economic
 index published by the United States department of labor or other appro-
 priate organization.
   (c)  All  records,  books  and  documents  of the contractor which are
 related or useful to the determinations  made  by  the  commissioner  of
 general  services and to the approval of the state comptroller hereunder
 shall be subject to audit and examination by the state comptroller.
   § 4. This act shall take effect immediately and shall  expire  and  be
 deemed repealed June 30, 2023.