New York State Construction Industry Council Update
December 19, 2017
Staff Contact: Johnny Evers
Business Council and Other Business Groups Join Together to Advocate for Prevailing Wage Reforms
On December 18, a coalition of the state’s leading business and industry groups announced their commitment to advocating for reforms to New York’s prevailing wage law. In light of projected multi-billion dollar state budget deficits, and overwhelming infrastructure needs, the coalition is calling on members of the Legislature to reform this outdated and costly mandate. According to the Empire Center’s seminal report on the topic, “Prevailing Waste: New York’s Costly Public Works Pay Mandate”, prevailing wage increases the costs of construction jobs by as much as 25 percent. In the recent legislative sessions, The Business Council and others have also fought against the expansion of prevailing wage to projects that receive any level of state or local financial assistance, and against the expansion of the prevailing wage mandate into areas that have previously been defined as non-prevailing wage areas (i.e. materials fabrication). The full press release can be accessed here.
Assembly Holds Hearings on MWBE Issue
On December 5 the Assembly held a hearing on New York State’s Minority and Women-Owned Business Enterprise (MWBE) Program to address the 2016 MWBE Disparity Study. The law establishing the MWBE program, Article 15-A of the Executive Law, expires on December 31, 2018, requiring reauthorization during the 2018 session, either in the state budget (as was proposed last year but was removed prior to passage) or as stand-alone legislation. Several construction industry representatives testified, raising concerns that the Disparity Study contained flawed or incomplete information, for example, questioning the study’s finding that in the areas of construction almost 54% of the existing firms are MWBE. The study also claims an overall MWBE utilization rate of about 27%. Thus there still exists a gap, according to the report, between MWBE contractors and their usage. Many noted that utilization alone should not be used in assessing the success of the program. Industry representatives also called for measures to increase MWBE capacity, by looking at the factors that may be hindering their participation in public works, such as cash flow, access to bonding and loans, potential problems caused by change orders on some firms, and the scaffold law on overall cost due to higher general liability insurance.
The Business Council will be working on the MWBE issue throughout the 2018 session. We are concerned that dependence on the Disparity Study and its questionable data and findings could result in very unfavorable outcomes during Article 15-A reauthorization. While a new focus on training, apprenticeship issues, and the speed by which MWBE certification and renewals are welcomed, other issues discussed at the hearing raise concerns, including the possibility of a 10% credit for MWBE firms who are not the low bidder to be awarded the contract, elimination of some qualification barriers, and revisiting preferred source offerings.
Assembly Transportation Funding Hearing
On December 15, the Assembly Committee on Transportation held a hearing on the impact of the FY 2018 State Budget on the Department of Transportation (DOT) Capital Program. A number of Business Council members testified at the hearing. Of greatest concern is the continuation of so-called “parity” between upstate DOT programs and downstate Metropolitan Transportation Authority (MTA) capital programs. Concern was also expressed for increased upstate transit operating aid akin to the parity issue surrounding capital aid. Concerns were also raised that the high cost of general liability coverage due to the scaffold law limits the state’s funding for capital projects. The Business Council will continue to champion the issue of parity in DOT Capital funding, as well as new scaffold law reform legislation, especially in light of the State Deficit, estimated by some to be as high as $4.4 Billion in the State fiscal year 2018-2019.
Governor Signs "Buy American" Provisions
Governor Cuomo recently approved legislation adopting new “Buy America” provisions. The bill, S.6639-A/A 8427-A, was scaled back from the ones initial discussed as part of the State budget, and mandates the use American made iron and steel in contracts valued at $1 million or more for surface road and bridge projects, let by the Department of Transportation, the Thruway Authority, and state authorities. It also creates a work group to evaluate the impact of this statute on reciprocal trade agreements and to consider extension of the “Buy American” provision to other product categories. The Business Council did not take a position on this final bill, as its provisions largely replicate existing law. However, the work group, once established, could look to have “Buy America” mandates in other areas of public procurement. The Business Council cautioned lawmakers when they proposed “Buy American” provisions because of the intricacies of components in many goods and the international aspects of many industries.
2018 Construction Council Agenda - Adopted at November 13 Meeting
Significant investment in public infrastructure is necessary to ensure the efficient flow of goods, services and people. Rebuilding New York’s aging infrastructure requires alternatives to the standard approach of financing, constructing and operating our transportation systems. To help the state achieve these objectives, The Business Council’s Constuction Industry Council has adopted a legislative agenda for 2018 that include the following priorities:
- Monitor state mandated MWBE guidelines to insure they are realistic, attainable, and that waivers are fairly applied.
- Support upstate/downstate parity in state investments in transportation infrastructure.
- monitor state public works letting levels to ensure timeliness of both letting and payment schedules.
- Support expansion and permanent extension of the design-build method of project delivery.
- Support reforms to ensure that “prevailing wage” determinations accurately reflect regional private sector wage levels.
- Support efforts to expand workforce development in the skilled trades.
- Oppose any mandatory Project Labor Agreement (PLA) requirement.
- Oppose extension of prevailing wage mandates to private sector activities.
John T. Evers, PhD
Director of Government Affairs
The Business Council of New York State, Inc.
111 Washington Avenue
Albany, NY 12210
Tel. 518-465-7511 ext. 204