Henry Goldberg is managing partner of Goldberg & Connolly, a construction and government contracting law firm based in Rockville Center, N.Y.

Albany Eyes Damages for Delay in Public Works

State legislators take another look at a provision that could make it easier for contractors to recover damages from public owners.

by Henry L. Goldberg

In 1998, I had the privilege of co-chairing an industry-wide coalition to develop legislation to prohibit the use of "no damage for delay" clauses in public works contracts in New York State. This important reform legislation was well received in Albany at that time.

Legislators quickly understood the need for greater public agency accountability. Having government entities artificially insulate themselves from their own negligence can hardly be in the public's interest. The bill passed the Senate unanimously that year, and passed the Assembly by all but four votes.

After deliberating for more than six months, Gov. George Pataki eventually vetoed the bill. However, he expressed his agreement with its purpose and intent, stating in his veto message: "Conceptually, I am sympathetic with a central objective of the bill, allowing contractors to recover costs for damages unjustly caused by public entities. In fact, the State Office of General Services and the State Department of Transportation have already instituted policies that allow contractors to seek compensation, under specified, clearly-defined circumstances, for unreasonable delays that are the fault of the State. These voluntary 'damages for delay' clauses are consistent with this Administration's policy of making government more accountable and more business-friendly."

As Gov. Pataki prepares to leave office at the end of this year, there is a strong sense among industry leaders that this is the year to revisit the issue in force. In this regard, the General Contractors Association and the Subcontractors Trade Association have taken leadership roles.

Also on board is virtually every major construction industry association, including the New York Building Congress, Building Trades Employers' Association, Construction Industry Council, Long Island Contractors Association, the Associated General Contractors, the General Building Contractors, and the Empire State Subcontractors Association. Organized labor, including the Building and Construction Trades Council and individual unions too numerous to mention, have also provided strong support in Albany.

Efforts this year are off to an excellent start. On March 15, the New York Senate passed the 2006 bill, S2893B, unanimously.

Earlier, on May 9, I attended an industry coalition meeting among representatives from the GCA, STA, New York Building Congress, CIC, LICA, and ESSA, and we met with Assembly Speaker Sheldon Silver in Albany. We also met with Government Operations Committee Chair RoAnn Restito of Utica and the Assembly bill's sponsor, Paul Tonko of Amsterdam.

It was clear that the Assembly, having overwhelmingly passed the bill before, is sympathetic and supportive of the current bill, A2723B. It was equally clear, however, that lobbyists representing New York City and other "public owner" groups, such as counties, school districts, and townships, have been spreading dire warnings about the potential impact of eliminating NDFD clauses from public contracts.

Nonetheless, the coalition firmly believes that with sufficient grassroots support from the construction industry and, if necessary, minor amendments to the bill, Assembly passage appears likely. The key component to our success, therefore, will ultimately be Gov. Pataki.

The governor has already stated his agreement in principle with the bill's purpose and intent. Furthermore, the 2006 version of the bill specifically deals with each and every technical concern he had expressed in his veto message.

We also believe it is imperative to emphasize the "government reform" aspect. This is not about "greedy contractors" wanting to pursue delay claims. Rather, it is about assuring that public projects aren't delayed. Contractors can maintain profit margins when they get in and out of a project on schedule. This legislation is about making construction agencies more efficient, more responsive, and more accountable.

Finally, the unyielding stance of the bill's opponents can only be helpful. This is all the more so, because as stated, we in the coalition are willing to make technical adjustments to eliminate any possible criticisms voiced by the public owners. These possible amendments, which I collaborated in drafting, will in no way diminish the effectiveness of the bill, and will only "tighten up" certain provisions.

This is clearly one of the most important pieces of government reform legislation to directly impact public works contractors in years, perhaps decades. The industry's participation is critical as the bill clears the Assembly and heads for the governor's desk.