By: Mark C. Kriss, Esq.   
NYSSPE Legislative Counsel

In New York State the general contracting community has broadly used design build  as an alternative to the traditional design-bid-build methodology for the development of private sector projects. Many general contractors offer project owners “one-stop-shopping” for both large and small-scale projects, by “hiring“ design professionals, PE or RA, rather than a project owner hiring a design professional. (Using a traditional design-bid-build methodology there would be separate contracts between, (i) an owner and a general contractor and,  (ii) an owner and a design professional.) See Charlebois v. Weller Assocs, 72 N.Y.2d 587 (1988) and the cases decided in its wake.

Since Charlebois has been liberally interpreted, by the courts, to permit general contractors to offer design services, there has been virtually no enforcement of illegal practice laws against general contractors, by the NYS Attorney General, for the illegal practice of the design professions.  Additionally, over the last decade the use of design build has grown substantially in the public sector and its acceptance in the public sphere has spilled over to the private sector.  (The increased use of design build in the public sector has been the direct result of legislative changes.) General contractors feel confident that they are not going to face charges for illegal practice and they do not face professional misconduct charges since they are not licensed by the state. Further, NYS Education Department regulations concerning the practice of the design professions, and the impact of these regulations upon professional engineers and registered architects, is of little concern to contractors since they are not subject to these regulations.

Notwithstanding the view of the general contractor community, licensed professional engineers and registered architects have to exercise caution in entering into design build contracts.  Care is required since the New York State Education Department (SED), which licenses and disciplines design professionals, has a different interpretation of the law and regulations wherein a design professional cannot, without qualification, “work for the general contractor” on design build projects. The only exception to this would be design services relating solely to the means and methods of construction (i.e. Temporary Shoring Design, etc.) or in cases where the general contractor also owns the project.

According to SED private sector design build contracts are permitted utilizing a three-way contract (Owner, Contractor and PE or RA) which specifically sets forth the scope of design services and the amount of consideration to be paid to the design professional.  The general contractor cannot retain a portion of the fees allocated to design services.  All three signatures can be set forth in a single contract document. [Read more…]

From NYSSPE ‘s Legislative Counsel, Mark Kriss, Esq.

FY 2021 NEW YORK STATE BUDGET SUMMARY • Hours after the April 1, 2020 deadline, Governor Andrew Cuomo and the state legislature agreed upon the FY 2021 New York State budget, tentatively totaling over $177 billion. The budget authorizes a reduction in spending by $10 billion to account for the economic impact of the COVID-19 pandemic.  Further budget adjustments are authorized to be implemented at periodic intervals by the Budget Director to insure that revenues match expenditures, subject to legislative and gubernatorial oversight.  The state will look to Washington for substantial federal aid to address the unprecedented economic dislocation caused by the pandemic, as well as issue bonds to address the shortfall.  Borrowing may well exceed ten billion dollars. During the Great Recession, just over a decade ago, public sector employers resorted to deferred raises, furloughs, early retirement incentives, layoffs and other cost cutting measures to address budget shortfalls.  Two percent scheduled raises for state employees have already been deferred for at least 90 days saving 50 million dollars. The degree to which the state will be able to avoid further use of these tools in the near future is entirely dependent upon the response from Washington.

DESIGN BUILD • Infrastructure Investment Act – Extended for two years, expands design-build authorization to other alternative project delivery methods, and expands the current list of authorized entities that may utilize design-build contracts to include the Dormitory Authority of the State of New York, the New York State Urban Development Corporation, the New York State Office of General Services, the State University Construction Fund, the Battery Park City Authority and the New York State Olympic Regional Development Authority.

ENERGY & ENVIRONMENT • Restore Mother Nature Bond Act – Establishes the $3 billion bond to be submitted to voters in November 2020. If approved by the voters, the bond will fund key projects in local infrastructure and ecosystem restoration that will help communities across New York prepare for flooding, rising seas and dangerous extreme heat. • Accelerates Renewable Energy Projects – Reforms the way we site renewable energy generation and transmission projects.

INFRASTRUCTURE  • Water and Environment – Supports $7 billion for the Department of Environmental Conservation capital plan in FY 2021. • Roads and Bridges – Supports $6 billion for the Department of Transportation capital plan in FY 2021. • High-Speed Rail Study – Aimed at the development of a plan to build faster, greener, more reliable high-speed rail in New York

LABOR & CONSTRUCTION • Prevailing Wage Changes – Requires payment of prevailing wage on “covered projects,” defined as valued at $5 million or more and receiving state and/or local benefits of at least 30 percent of project costs. Exempts brownfields, historic preservation, downtown revitalization, affordable housing and certain other projects in New York City. MWBE participation requirements apply, but other “public works” mandates (e.g., Wicks) do not. Creates a “subsidy board,” that can make recommendations on, but cannot change, applicability thresholds; it is given authority to delay implementation on a regional or statewide project based on potential for significant economic impacts. • New York Buy American Act –Makes permanent the New York Buy American Act governing use of U.S. steel and iron in projects. • Establishes Paid Sick Leave for Working New Yorkers – Businesses with five to 99 employees will provide their employees with at least five days of job-protected paid sick leave per year, and businesses with 100 employees or more will provide at least seven days of paid sick leave per year.

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