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Legislative Memo

Johnny Evers
T 518.465.7511
www.bcnys.org

BILL:

S.6315 (DeFrancisco)/ A.9868 (Cusick)

Support

SUBJECT:

Defines “substantial completion” for the purposes of requisition payments to contractors, subcontractors and materials suppliers in construction contracts

 

DATE:

May 9, 2016

 

The Business Council of New York State, the state’s leading statewide business and industry association, strongly supports S. 6315/A.9868, which amends the state finance law and general municipal law in relation to payments for construction contracts. This bill clarifies the meaning of “substantial completion” on public works contracts and provides statutory language making necessary reform governing the system of prompt payments. In essence, this change will reform the prompt payment system for contractors, subcontractors and materials suppliers on public works contracts.

The bill makes clear that a project has reached “substantial completion” when a public owner occupies or utilizes a substantially completed project, “so that the public owner may occupy or utilize the work for its intended use” or “use of a portion of the project” when “the contract with the public owner provides for occupancy or use of a portion of the project.” This bill defines that process, sets specific timelines, and insures that significant payments issues are avoided. It is in the best interest of all involved – the owner, the contractors, and taxpayers – to close out public works contracts in a timely and efficient manner.

Under the bill, no later than “fourteen calendar days after the date when the project has reached substantial completion, the public owner shall submit to the contractor a written list describing all remaining items to be completed.” In turn, no later than seven days the contractor shall submit to each subcontractor, from whom the contractor is withholding retainage, a written list of items required for completion. This system provides clarity and certainty and will eliminate payment issues and delay. This new defined system will eliminate disputes which so often in the past have led to slow closeouts of projects, unnecessary delays in payments and occupancy, and time lost by contractors, subcontractors, and material suppliers as they wait for completion beyond appropriate timeframes.

Establishing and defining substantial completion on public construction projects will help reduce the unnecessary financial burdens on contractors, subcontractors, and materials suppliers because it will compel the public owner to provide a final punch list to close out the project.

For the above reasons, The Business Council of New York State strongly supports this legislation and urges its passage.