Home

Legislative Memo

Frank Kerbein
Director, Center for Human Resources
T 518.465.7511 x210
www.bcnys.org

BILL:

S.7724 (Velella) / A.11526-A (P Rivera)

Support

SUBJECT:

An act to amend the Business Law, in relation to construction contracts

 

DATE:

June 19, 2002

 

The Business Council of New York State, Inc., whose membership includes over 3,600 companies and more than 100 chambers of commerce and professional trade associations, has reviewed the above mentioned legislation and strongly opposes its enactment.

This bill, which attempts to impose strict limitations on the private right to contract in the construction industry, is very similar to legislation that was vetoed by the Governor during the 2001 session (Veto #56). In his veto message, the Governor stated that the provisions within the bill "may go too far in limiting freedom to contract, in prescribing payment schedules and record-keeping requirements and imposing draconian interest penalties." We believe that the current version of this bill still maintains many of the same objectionable tenets from previous legislation.

Our members have serious concerns about their freedom to contract for services under this legislation. These companies routinely enter into contracts to build, reconstruct, excavate or alter their buildings and properties and their contracts often involve unique conditions and critical deadlines. The flexibility they now enjoy would be stripped under this proposal and substituted with a system that eliminates the ability of both the owner and contractor to seek the best course of action and construction for each situation.

The legislation contains many provisions that limit the owner's flexibility to contract. The bill references an owner's flexibility in choosing the number of days under which payment should be made - a very limited flexibility when taken in the context of the entire bill. A reading of the bill reveals many of the same prescribed payment schedules and record-keeping requirements from last year's vetoed legislation. The bill proscribes payment procedures in extreme detail - details that are best left to the individual parties to contract as each situation and building project merits.

Under the provisions of this bill, a universal payment schedule between owner and contractor and contractor and subcontractor would be established. These imposed time tables are also tied to a "remedies" system that imposes fines based on universal payments schedules. No matter what type of project or what system of private contracting is engaged, this legislation would mandate a new style under which all payments must be made from the owner to the contractor.

In the cases of projects that are planned by some of our largest members, the proposed system under this bill would convolute and mire the projects in unnecessary entanglements and a one size fits all approach to private contracting. Many contractors themselves have expressed disapproval of this type of one size fits all approach to private sector building contracts. This legislation threatens the timely and smooth completion of the gas lines and power plants seeking certification to supply New York with its increasing demand for energy, the expansion of a healthy retail marketplace, and the continued growth of some of New York's major corporations.

For the above referenced reasons, we oppose this legislation and urge its defeat.