The following was written by Mark C. Kriss, Esq., The New York State Society of Professional Engineers (NYSSPE) Legislative and Legal Counsel.
Design Build (an alternative project delivery methodology used in lieu of Design-Bid-Build) is permitted to be employed on private sector projects in New York State, provided that the scope of design services and the amount to be paid for such services is clearly set forth in a contract executed by the project owner, the contractor and the design professional. While many, particularly in the general contractor community, maintain that the use of a three-way contract is not required and that a general contractor can contract with a design professional on project owned by a third party, the NYS Education Department unequivocally maintains that this type of an arrangement runs afoul of the State Education Law and Rules governing the design professions. A design professional should consider the potential for professional disciplinary action (e.g. fee splitting and aiding and abetting the illegal practice of engineering) before participating in a Design Build project.
With regard to the public sector projects in 2011 legislation was enacted on a pilot basis to permit specially named state agencies to utilize Design Build. (See position statement below for specific governmental entities authorized to use design build.) NYSSPE along with others in the design professional community, as well as the State Education Department, voiced concern regarding the failure of the 2011 legislation to expressly include quality assurance safeguards in the legislation. The original statute expired in early December 2014 (with an exemption for ongoing projects) and new legislation has been proposed by Governor Cuomo as part of his executive budget. The Society has issued, and broadly disseminated, a position statement which renews our concerns regarding the 2015 Governor’s Budget Proposal which proposes some amendments to the pilot program. A copy of the NYSSPE’s position statement is set forth below. (For additional information please consult the NYSSPE website FAQ addressing Design Build.
(NYSSPE) – Position Statement 2015-16 Executive Budget Proposal –
Transportation – Design Build (LBD 01/19/15 9 12573-01-5)
On behalf of the New York State Society of Professional Engineers (NYSSPE) we are writing to urge amendments to the above referenced bill consistent with the recommendations endorsed by the broader design community in New York including the State Education Department Boards for Engineering and Architecture. NYSSPE is a professional trade association representing the interests of its members, and more generally the interests of all professional engineers (totaling more than 25,000 licensees in New York State) practicing in all disciplines (civil, structural, mechanical, electrical, geological, environmental, etc.) and practicing in all practice settings (private sector consulting, industry, government, and education.) Members of the Society adhere to the Engineer’s Creed which provides:
As a Professional Engineer, I dedicate my professional knowledge and skill to the advancement and betterment of human welfare.
To give the utmost of performance;
To participate in none but honest enterprise;
To live and work according to the laws of man and the highest standards of professional conduct;
To place service before profit, the honor and standing of the profession before personal advantage, and the public welfare above all other considerations.
Governor Cuomo’s 2015 budget proposal respecting design-build largely mirrors the administration’s initial design build pilot legislation. (See Governor’s 2011 budget bill (S 50002/A 40002).) The original statute authorized design-build infrastructure projects for a limited number of state entities including the State Thruway Authority, the Department of Transportation, the Office of Parks, Recreation and Historic Preservation, the Department of Environmental Conservation and the State Bridge Authority. The 2015 Budget proposal expands the scope of governmental agencies permitted to utilize design build to all state entities, as well as SUNY and CUNY. (The proposed law applied to projects greater than 5 million dollars, whereas the original statute applied to projects with a 1.2 million dollar threshold.) Finally, the 2014 bill eliminates the current law’s three year sunset provision thereby making it permanent.
NYSSPE originally voice concerns over the Governor’s 2011 proposal, insofar as it failed to adequately insure that qualifications based selection would be utilized for all professional design services. In defining “best value” the 2011 law focused upon the general contractor’s qualifications, and, while referencing the need to consider the qualifications of a design firm, the statute emphasized the qualifications of the general contractor. The bill should be amended to specifically add to the definition of “best value” consideration of the qualifications of all firms providing professional design services and the individual qualifications of licensees providing professional design services.
Moreover, a number of additional quality assurance safeguards are needed to insure that public health, safety and welfare are not compromised in the design build process. While many of these safeguards were included in the procurement process employed in the wake of the 2011 law at the agency level, the absence of express statutory requirements threatens the potential effectiveness of the design-build process. Reduction in cost, improved speed in project delivery and improved quality are touted as the benefits of design build. However, the process is subject to abuses, and safeguards must be employed to insure that projects are designed and constructed in a manner consistent with interests of project owners and the general public.
In furtherance of the foregoing objective it is imperative that the project owner (state entity) employ an “owner’s design professional” (a licensed professional engineer or a registered architect) to act as the owner’s expert. A statutory requirement respecting the employment of an owner’s design professional would mitigate, to a substantial degree, concerns regarding the ability of the contractor to exert undue influence upon a principal design firm (or team of design firms). Additionally, consideration should be given to requiring mandatory inspections and testing (by properly credentialed inspectors and testing firms) during the construction process, and requiring that such contracts be independent from the primary design build contract (i.e. such contracts should be executed directly between the project owner and the inspection and testing firms). Further, an additional quality assurance provision should be included wherein the principal design firm is afforded unrestricted access to the project owner and the owner’s design professional.
The foregoing recommendations, in large measure, are reflected in a proposal co-authored by the State Education Department’s Board for Engineering and Land Surveying and the Board for Architecture a copy of which is attached hereto. As noted above NYSSPE supports these recommendations.
Finally, the legislation could be improved by incorporating a mandatory indemnification agreement which provides for fair and balanced contractual indemnification between the project owner and the design build firm. Presently, many governmental contracts place an undue burden upon design consulting firms for both damages and costs (including without limitation attorneys’ fees). Additionally, in the event the design build entity is comprised of a team of separate entities, incorporation of a mandatory indemnification agreement which insured fair and balanced contractual indemnification between the separate entities is advisable. For example, a professional design firm should be accountable for design defects insurable under standard professional liability policy and should not be subject to contractual indemnification for wrongful acts and omissions committed by the project owner, the general contractor or third parties retained by either the project owner or the general contractor.
NYSSPE urges your careful consideration of the recommendations set forth herein which are aimed at assuring that design build projects proceed in manner wherein the protection of the public health, safety and welfare remains paramount and all parties are treated in fair and balanced manner. The Society looks forward to working with the Legislature and the Governor in finalizing this important legislation.
Note: NYSSPE facilitates posting on this blog, but the views and accounts expressed herein are those of the author(s) and not the views or accounts of NYSSPE, its officers or directors whose views and accounts may or may not be similar or identical. NYSSPE, its officers and directors do not express any opinion regarding any product or service by virtue of reference to such product or service in this blog.