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…]