New York Governor Vetoes Public Contract Notice Bill Requiring Prejudice Before Forfeiture

One of our previous alerts provided notice of a bill passed by the New York State legislature requiring any contract awarded for public work include a provision that the contractor’s failure to give a notice within 180 days of the time prescribed in the contract would not invalidate any claim unless the public entity could demonstrate that it was materially prejudiced by the failure to provide notice. The new year, however, brought news from Albany when it was learned that the Governor, Andrew Cuomo, vetoed the bill with a message that included the following justification:

Appropriate notice provisions in public works contracts permit public owners to manage projects more efficiently. They also ensure that information is promptly provided to stakeholders if necessary to evaluate a change order or to resolve a problem on a project.

The Governor further commented that such a bill would fundamentally change well-established law and eliminate a public owner’s ability to mitigate project delays, adhere to plan work schedules and – quoting here – “would require public owners to accept and pay for work that was unnecessary and otherwise unauthorized.” Throwing more gas on the fire, the memo in support of the veto further stated that, “[m]oreover, litigating whether a public owner has been materially prejudiced will undoubtedly lead to increased claims and costs. For these reasons, I am therefore constrained to veto this bill.”
The Governor, evidently in an attempt to placate the trade groups and other organizations in support of the bill as well as the majority of the legislature, suggested that the Council of Contracting Agencies conduct a review of the notice and “forfeiture” – his words – provisions and to issue a report with their proposed recommendations in September of this year. The committee purpose apparently is an attempt to create uniform notice provisions throughout the state public contracts. However, it does not appear that uniformity in notice provisions was the prime driver of the proposed bill but, rather, their forfeiture aspects.

No-Prejudice Standard For Application Of Public Construction Contract Notices Now Required by New York

New York’s State Legislature has just passed a bill that would require a no-prejudice standard be applied in determining the application of notice provisions in public construction contracts. [1]

The bill amended current statutes [2] so as to require that unless the public owner can show they have suffered material prejudice as a result of a contractor’s (or/and subcontractor’s) failure to provide timely notice, rights are not barred. If the required notice is received more than 180 days after the time required under the contract, the burden to establish no-prejudice shifts to the contractor/subcontractor.

The Legislature Memo prepared to explain and support the bill referred to current notice provisions as one-sided and unfair “gotcha” provisions. The Memo further contended that some public owners were getting “free work” when contractors or subcontractors are barred from pursuing claims due to non-compliant notices.

Another significant element of the bill appears in the definitional section where it is provided that a “public owner’s actual knowledge of the events in question shall preclude a claim of material prejudice due to any lack of notice.” Some city and state contracts often specifically provide that actual knowledge cannot relieve contractors of the strict requirements of the notice provisions.

The bill will not become effective, however, until 180 days after it is signed by the Governor and becomes law and then only as to contracts awarded after that date.
The text of the bill is here .

1. The bill is A10136 and S6906 which passed on June 18, 2016.
2. The bill amends the Public Authorities Law, the General Municipal Law, the Public Service Law and the State Finance Law.

NYC Issues Crawler Crane Safety Requirements

Following another recent crane accident, New York City issued interim regulations addressing crawler crane safety requirements. These now include obligations to monitor forecasts and wind speed measurements, cease operations when wind speed thresholds are exceeded, generally 30 mph, with exceptions. There are additional requirements for crawler cranes with special configurations including prohibitions of use and the required presence on site of a licensed professional engineer. End of day records are required to be created by the operator. Notifications are required to be provided to the building department when twelve specified events regarding the use of a crawler crane occurs. The requirements can be found here

Overlooked Obtaining an Additional Insured Endorsement? You Might be Saved by the Automatic Additional Insured Endorsement – or Might Not.

Many CGL policies typically include an endorsement that contains a clause providing for automatic additional insured status without a project specific schedule listing names of additional insureds. (See, for example, form CG 2033 0704, “Additional Insured-Owners, Lessees or Contractors – Automatic Status When Required in Construction Agreement With You”). By this endorsement the “Who is An Insured” provision is amended “to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy.” That can be a fail-safe mechanism when upstream contracting parties neglect to obtain necessary written endorsements naming specific parties. However, it only goes so far.

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New York City Identifies Four Semi-Finalists of Competition for Waterfront Design Innovations in Response to Superstorm Sandy

In an attempt to determine how best to design and build on the City’s waterfront areas exposed to future storms, a competition was announced by the City, together with a team of developers, in April 2013 to cultivate design development ideas for an 80 acre site in the Rockaways. In response, 117 design teams from around the globe submitted credentials and design ideas. On July 18th, four semi-finalist teams were announced including Ennead Architects (formerly Poshek Partners) of New York, Lateral Office of Toronto, Seeding Office of London, and White Arkitekler of London.

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HUD is Promoting Innovative Resilient Design Solutions in Wake of Sandy in its Rebuild By Design Competition

The U.S. Department of Housing and Urban Development (HUD) received on Friday, July 19, 2013 responses to a Request for Qualifications (RFQ) for the Rebuild By Design, a multi-phase regional design competition seeking to promote development of resilience concepts for the Superstorm Sandy affected regions. The RFQ seeks proposals from world class teams with expertise in infrastructure engineering, landscape design, urban design, architecture, land use planning, industrial design, communication and other fields. HUD is itself partnering on the program with The Rockefeller Foundation and the National Endowment for the Arts (NEA).

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NYCEDC Seeks Expressions of Interest for the Re-Development of up to 100 acres at the Staten Island Teleport

The New York City Economic Development Corporation (EDC) and the Port Authority of New York and New Jersey (Port Authority) have issued a Request for Expressions of Interest (RFEI) for re-development at the Staten Island Industrial Park known as the Teleport. The RFEI will seek ideas from developers to expand or transform the site, or to utilize the site more efficiently. Currently, approximately half of the Teleport is used as a data center and office park, while the remaining half, another 40 acres, is available for development.

A public notice regarding the opportunity was posted at the EDC’s website here. The notice summarized some background and elements of the project as follows:

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New Jersey Transit $1.2 Billion FY 2014 Capital Program Proposed

Today, July 11, 2013, the New Jersey Transit Board of Directors will be presented for approval a capital plan for Fiscal Year 2014 in the amount of $1.228 billion. Foremost among the plan’s elements are funds for rolling stock modernization including the procurement of over 1,400 new buses, over 400 multilevel railcars and more than 50 electric and dual power locomotives. The program will also invest in hard assets including railroad bridge rehabilitation, track replacement, signal upgrades to overhead power lines and electric substations, improvements to rail stations and bus shelter upgrades. Included is a $60 million installment of a $600 million 5-year planned investment in improvements to the Northeast Corridor.

Approximately 60%, $741 million, is dedicated to fixed expenses including capital maintenance and prior debt service ($691 million), mandated uses including the federal rural transit program ($46 million), and ongoing support for job programs ($4 million). Approximately 40%, $487 million, is dedicated to fund basic capital program improvements including rail improvements ($132 million), rail rolling stock ($53 million), rail station improvements ($37 million), bus and light rail infrastructure improvements ($195 million) , and system-wide improvements such as technology upgrades ($69 million).

An Owner is Ensnared By a Subguard Program

In a recent appellate decision in New York, a developer sued its construction manager for fraudulent misrepresentation that the construction manager had obtained full Subguard™ coverage [subcontractor default insurance or “SDI”] to protect developer against default by the largest subcontractor – concrete superstructure – on a Manhattan hi-rise project. The developer alleged it relied on defendant’s representation and suffered damages when the subcontractor defaulted and there was no SDI for the default.

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New York City Sandy Neighborhood Game-Changer Investment Competition

New York City economic Development Corp. is requesting proposals from qualified firms or individuals to establish programs to “catalyze significant long-term economic growth” in five areas impacted by Hurricane Sandy. See here.

The RFP process is described by the EDC as:

“NYCEDC is requesting proposals from qualified individuals, organizations or companies to execute projects and/or programs that will catalyze significant long-term economic growth in one of the following five areas impacted by Hurricane Sandy: the East and South Shores of Staten Island, Southern Manhattan, Southern Brooklyn, the Brooklyn-Queens Waterfront, and South Queens (collectively, the “Impact Areas”).

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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