Brooklyn's Progress
August/September 2007

BY ROBERT MARK WASKO

On June 15, Governor Eliot Spitzer announced a compromise among himself and the leaders of the State Senate and Assembly to amend the Wicks Law which affects public construction projects throughout New York State. Named after former State Senator from Kingston, New York Arthur H. Wicks, the law currently provides that public construction projects exceeding $50,000.00 must have separate specifications and independent bidding on plumbing, electrical and mechanical (heating, ventilation and air conditioning) aspects of the project. Although not mentioned in the statute, a fourth contract is ordinarily required for general construction, including carpentry, dry-wall, masonry, roofing, flooring, finishing and other elements of work. The $50,000.00 threshold for this multi-contract requirement was fixed in 1961 for State contracts and in 1964 for local government contracts and has not been changed in more than forty years.

Two Sides to the Story
The Wicks Law is generally favored by subcontractors and labor organizations, who cite the original purposes of the legislation -- preventing corruption and cronyism in public bidding, increasing competition by allowing smaller contractors to bid on contracts which, if combined into one general contract, might be to large for a smaller contractor to handle, and lowering the cost to the public by eliminating the overhead and profit added on by general contractors to the subcontractors’ work.  Subcontractors contend that absent the Wicks Law, general contractors engage in bid shopping, coercing subcontractors to lower their price after the contract has been awarded based upon the subcontractors’ bids.  They also favor separate contracts because the direct contract with the public owner places them closer to the money, eliminating the need to pass through requisitions and payments through the general contractor as an intermediary.

The Wicks Law has been opposed by general contractors, local school boards and fiscal groups who contend that the cost of projects under the Wicks Law are increased by the need to prepare and administer four contracts instead of one and the need to provide supervision, by a construction manager, architect or engineer, over four contractors who have no contractual obligations to each other. The lack of coordination creates disputes, confusion and delay. Conflicts among the specifications result in more change orders, also resulting in higher costs. Moreover, the original statute was intended to apply only to large projects. With inflation, the Wicks Law currently encompasses almost every public project.

The Cost of Change
Studies by the New York State Budget Division, the New York State School Board Associations and PricewaterhouseCoopers LLP (for the New York City School Construction Authority, which is exempt from the Wicks Law) in 1987, 1991 and 1999 respectively, all concluded that the Wicks Law increased costs of public projects, by as much as 30%.

The recent compromise will amend the Wicks Law, which is found in various sections the New York State Statutes, including the General Municipal Law, the State Finance Law, the Education Law, and the Public Authorities Law.  The amendments will increase the threshold to $3 million in New York City, $1.5 million in Westchester, Nassau and Suffolk Counties, and to $500,000 throughout the rest of the State.  To appease subcontractors, bidders on projects that are exempt from the Wicks Law must submit a sealed list of it s subcontractors and the agreed upon price with their bids and neither the subcontractors nor the prices may be changed without the approval of the governmental project owner for good cause.  Also, for the benefit of subcontractors, the prompt payment law which currently requires general contractors to pay subcontractors within 15 days of receipt of payment from the owner will be amended to reduce the payment time to seven days.  Labor organizations will also gained an advantage by an amendment to the Labor Law permitting project labor agreements, which are essentially collective bargaining agreements specific to one construction project, and exempting projects with such project labor agreements from the Wicks Law regardless of the cost of the project.  Labor organizations will also receive the benefit of a new requirement for an apprentice training program for projects under the Wicks Law.

The Governor’s office has estimated that 70% of all public contracts will be exempted from the Wicks Law by these amendments, affecting approximately 20% of all public construction costs.

The State Assembly passed bill A09204 on Friday, June 22, by a vote of 107 to 19.  The State Senate adjourned without acting on Senate Bill S.6146 containing the identical language. The Senate is expected to pass the bill after its recess and Governor Spitzer is expected to sign it into law. The amendments become effective 19 days after such signing and are prospective only, applying to contracts advertised or solicited after the effective date.

Robert Mark Wasko is a resident of Brooklyn Heights and is Of Counsel to the law firm Torre, Lentz, Gamell, Gary & Rittmaster, LLP, with office in Jericho and Manhattan.  He specializes in Construction Law.