United States: Recent Changes In New York City's Standard Construction Contract

The most widely discussed change in the City's standard construction contract is the elimination of an express "no damage for delay" clause.

With its new Standard Construction Contract, issued in December 2013, the City of New York (the "City") has implemented numerous significant changes as compared with its 2008 standard contract. This Alert briefly summarizes some of the new provisions.

Some Delays Are "Compensable"

The most widely discussed change in the City's standard construction contract is the elimination of an express "no damage for delay" clause. At least ostensibly, the new contract represents a more flexible approach to delay damages by enabling the contractor to recover for delays in factual settings not previously amenable to delay claims. The scenarios in which recovery for delay damages may now be available are listed in Article 11.4 of the new contract, entitled "Compensable Delays."

Among others, these scenarios include such familiar circumstances as (i) extended delays by the City in reviewing or issuing change orders, or in reviewing and approving shop drawings, or delays resulting from the "cumulative impact of multiple change orders," if such delays have a "verifiable impact on Project costs"; (ii) extended site unavailability that "significantly affects the scheduled completion of the Contract"; and (iii) differing site conditions not "reasonably ascertainable on a pre-bid inspection of the Site or review of the bid documents or other publicly available sources" and "not ordinarily encountered" in the geographical area of the site or the type of work being performed.

One of the more significant changes embodied in the new Article 11 is the possibility of recovering for delays resulting from "[t]he failure of the City to take reasonable measures to coordinate and progress the work ...." "Coordination" issues, under prior practice, were precluded by the no damage for delay clause. However, this apparent flexibility regarding "coordination" issues may be tempered by subsequent court decisions defining more precisely or narrowly what the City's coordination responsibilities are—particularly since, under the new Article 11, the City's coordination responsibilities are explicitly limited by the contractor's own responsibility to coordinate its subcontractors and to progress the subcontractors' work.1

The new provisions concerning delays may be said to reflect a greater flexibility than previously existed. However, this is not to say, and it should not be assumed, that delay claims have necessarily become "easy" or even significantly easier to pursue. Many of the strictly enforced notice provisions that have barred delay claims in the past are still in place; and where a contractor is undergoing a delay that is or may be "compensable," care should be taken to comply with all pertinent contract requirements. The designated notices and statements of claim are required not only to preserve a claim for additional costs due to delay but also to qualify for an extension of time under the contract.

Thus, the new standard contract, similar to the prior one, requires written notice to the Engineer of any condition that "is causing or may cause a delay." This notice must be provided within a brief time period (seven days after the commencement of the condition) and must state "the existence, nature and effect of such condition upon the approved progress schedule and the Work," and "why and in what respects, if any, the condition is causing or may cause a delay." (Article 11.1)

Further, after a delay is first encountered and damages are first incurred, updated verified written statements specifying the damages and extensive additional detailed information (as listed in Articles 11.1.2 and 11.6), along with "documentary evidence of such damages," must be submitted every 30 days. The initial verified statement containing this information and the "documentary evidence of such damages" must be submitted within 45 days from the time the damages are first incurred.

If the contractor is successful on its delay claim, the costs that may recoverable could include the following: direct labor costs; necessary materials as reflected by time and materials records; reasonable equipment rental values; and insurance and bond costs. Extended field office costs, extended site overhead and extended home office overhead also may be recoverable.

After final completion, the Commissioner of the relevant agency determines whether a delay claim is compensable and, if so, the amount that shall be paid, although an earlier determination may be made on the threshold question of whether a delay is compensable. Challenges to the Commissioner's determinations are not made to the Contract Dispute Resolution Board under the City's mandatory dispute resolution procedure (contract Article 27 and Procurement Policy Board Rules § 4-09). Whether the contractual changes regarding delay claims will in fact permit compensation for delays on a greater scale than previously would seem to depend in large part upon determinations made at the Commissioner's level.

Overhead for Extra Work

Compensation for extra work by the contractor shall now include a factor for overhead at the increased rate of 12 percent (up from 10 percent). (Article 26.2.11)

Prevailing Wages / Referrals to Prosecutors

Under Article 37.4.3 of the new contract, "[a] determination by the Comptroller that a Contractor and/or its Subcontractor willfully violated" the prevailing wage law under Labor Law § 220 "will be forwarded to the City's five District Attorneys for review." Given this mention of possible criminal responsibility, and since any such review could adversely impact a contractor's status as a "responsible" bidder, this is possibly a questionable provision for a general or prime contractor that at worst is only "vicariously liable" for a subcontractor's willful violation—as distinct from being actively or "willfully" involved in the subcontractor's violation. Other penalties and consequences for prevailing wage violations, also impacting "responsibility" and the ability to bid public projects, are listed in Article 37.4.

Prevailing wages must be paid by check or direct deposit; and in cases of contracts exceeding $1 million, or subcontracts exceeding $750,000, the checks must be issued by a payroll service or through an in-house payment system approved by the agency. Cash payment of prevailing wages is not recognized. (Article 37.6.7)

Although not a new requirement, Article 37.6.2 of the contract requires the maintenance of daily sign-in / sign-out sheets both for contractors' and subcontractors' employees. Consideration should be given to strictly maintaining such sign-in (and sign-out) records in case of any subsequent prevailing wage issue, e.g., as evidence of who actually worked at the site and during what general time periods and hours. Electronic or biometric sign-in systems may be acceptable, but they have to be approved by the City's Chief Procurement Officer (the "CCPO").

The new contract also requires "site laminated identification badges" with photographs of workers and listing the worker's "trade" (among other identifying information) as a "condition of employment on the site." (Article 37.6.4) Again, close adherence to this provision should be considered (e.g., to assist in determining who was and was not employed at the site in connection with prevailing wage claims, among other possible issues).

Subcontractors

As a material obligation of the new contract form, contractors are required to list their subcontractors in the "web-based Subcontracting Reporting System through the City's Payee Information Portal (PIP), available at: www.nyc.gov/pip." Specified information about the subcontractor and its work, and the payments to it, must be entered. Failure to comply may be deemed a "default" of the contract, resulting in liquidated damages. (Article 17.3)

The subcontract document must include the prevailing wage rates and supplemental benefits to be paid to the subcontractor's employees under Labor Law § 220.

The City's new standard construction contract contains many other new or changed provisions. All contractors and vendors who perform City projects or contracts may want to become familiar with the new contract form.

If you have any questions about this Alert or would like more information, please contact Allen J. Ross, Charles Fastenberg, any of the attorneys in our Construction Group or the attorney in the firm with whom you are regularly in contact.

Note

1 See Article 12 of the new standard contract for further provisions concerning the contractor's coordination responsibilities.

This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.

Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. The Duane Morris Institute provides training workshops for HR professionals, in-house counsel, benefits administrators and senior managers.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.