Please note that this memorandum has been replaced by this updated one.
MEMORANDUM IN OPPOSITION
S5887 (Lanza) A7590 (Benedetto) New York City Design Build Authorization
S 5887, in relevant part, would vest a number of New York City agencies with the authority to utilize design build without State legislative oversight. Specifically the bill authorizes the use of design build for virtually all projects including roads, bridges, tunnels, buildings and other public improvements.
Pursuit to current law construction in both the public and private sectors must utilize a design-bid-build construction methodology. In New York, design build has only been authorized by virtue of project specific enabling legislation, or by virtue of 2011 legislation establishing a pilot project employing a limited number of entities on a trial basis respecting highway and bridge projects. The 2011 pilot was extended last year and a report on the use of design build is awaiting delivery to the Legislature.
Design-build is a project delivery system whereby a single entity is contractually responsible for both the design and construction of the project. It differs from the design-bid-build, which entails the production of a set of plans and specifications, which are offered for bid. Proponents of traditional design-bid-build argue that the interests of the owner are better protected using the design-bid-build model which emphasizes the role of the design professional as the owner’s expert. Supporters of design-build cite savings attributable to a faster construction timetable and the ability to provide for one-stop shopping.
In New York, the State Education Law, by its express terms, prohibits the practice of professional engineering by persons who are not licensed or authorized under New York law to offer to provide or provide professional engineering services. In short, a strict reading of the statute bars general business corporations, limited liability companies and other entities (contractors) from providing professional engineering services. The principal public policy rationale of the law is to help insure that public health, safety and welfare are not compromised by the undue influence of a profit motivated corporate enterprise. The danger to be guarded against is the potential that corporate financial goals will trump professional considerations.
Further, with design-build projects, the full contract price is typically established at the beginning stages of the project. This presents a greater potential for unanticipated design and construction costs arising after the fixed contract price has been established. This, in turn, can lead to eroded contractor profits or, worse, the temptation to cut corners in construction, which creates an increased chance for errors, omissions, claims and lawsuits. Moreover, design build can be abused by project proponents in the initial phases of site development. Since complete plans are not required, essential components of the design can be omitted or obscured, and the true cost of the project not accurately presented to the public and governmental bodies.
Another concern raised by the instant legislation is that it will permit the selection of design services based on a low bid selection process without sufficient regard to quality based selection procedures (QBS). The use of QBS insures that the quality of the design team is given sufficient weight in the design build selection process. QBS employs a Request for Proposals which leads to the identification of qualified firms which are scrutinized to determine the firm best suited for the project. Price negotiations then ensue, and if the parties cannot agree, the next most qualified firm would be approached until a contract is consummated by the best qualified firm, subject to meaningful cost considerations. The employment of QBS, which has been widely praised in New York and throughout the country, should not be impeded. The legislation should be amended to insure the broadest possible use of the QBS process. Moreover the instant bill permits the proposer (general contractor) to dismiss a design firm in its discretion after a project has been awarded. In the absence of wrongdoing on the part of a design firm, which owes a duty to protect both the interests of the project owner and public, the proposer should not be afforded the right to discharge the design firm without the owner’s consent.
(QBS is an essential tool to ensuring that projects move forward in manner which best advances the interests of the State and taxpayers. The cost of design services represents a fraction of the overall cost of the project and its life cycle costs. It is penny wise and pound foolish to not emphasize quality over cost when the cost of good versus poor design is fully examined.)
Finally, NYSSPE has endorsed the expanded use of design build provided the concerns expressed above are addressed and additional safeguards are employed. Additional safeguards include those advanced by the New York State Boards for Engineering, Land Surveying, Architecture and Landscape Architecture in a 2013 Summary Statement addressing the use of design build. The recommendations of these Boards should be incorporated into the instant legislation before the legislation is permitted to advance.
Accordingly, in the event that the proposed amendments are not adopted NYSSPE remains opposed to this bill.
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