Thursday, June 16, 2011

Town in New York Violates Public Bidding Law

The New York State Supreme Court has ruled that the Town of Hamburg violated a state law that requires public agencies to bid and award multiple contracts for subcontract work, rather than awarding public works projects to a general contractor.  

Does Estimate or Cost Trigger the Law?  Hamburg officials maintained that the law (known as the Wicks Law) didn't apply for the construction of a highway department storage building because the low bid came in less than the $500,000 that would trigger bidding and award of multiple prime contracts for the work.  The Court decision was based on the fact that the town's estimate for the project was over $615,000.  The town's attorney argued about the "lack of clarity" in the law as to whether the estimate or actual cost triggers the multiple prime contracts.

Pros and Cons of Multiple Prime Contracts:  The lawsuit was brought against the town by the operating engineers union who argued that the law helps prevent bid rigging and provides certain protections for the subcontractors, resulting in safer projects.  Public agencies, on the other hand, have historically argued that the law, which dates back to 1912, increases the cost of public works projects by as much as 30%.

Only a Few States Have Multiple Prime Contracts:  New York is one of only a few states states with such a requirement.  There are reasons why so few states have multiple prime contract laws.  They require public agencies to be responsible for coordinating public works projects, rather than assigning that risk to a general contractor.

More Information:   
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

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