{"id":1058,"date":"2012-03-13T19:52:00","date_gmt":"2012-03-13T19:52:00","guid":{"rendered":"https:\/\/www.lienitnow.com\/blog\/index.php\/2012\/03\/13\/new-york-enacts-design-build-legislation\/"},"modified":"2012-03-13T19:52:00","modified_gmt":"2012-03-13T19:52:00","slug":"new-york-enacts-design-build","status":"publish","type":"post","link":"https:\/\/www.lienitnow.com\/blog\/2012\/03\/new-york-enacts-design-build.html","title":{"rendered":"New York Enacts Design-Build Legislation"},"content":{"rendered":"
<\/a><\/div>\n

Leading national construction law firm Peckar & Abramson sent out a “Client Alert” earlier this year providing an analysis of New York’s new Design-Build legislation. The new legislation is interesting for several reasons, and could affect the way several large scale projects are bid and built. Not all entities are entitled to use design build, and the act is set to expire in 2014. Ten factors are to be used in determining “best value” bids.  The text of the article is below.<\/p>\n

New York Enacts Design-Build Legislation<\/a><\/p>\n

In December, 2011, the New York State Legislature enacted legislation authorizing
the Department of Transportation (\u201cNYSDOT\u201d), the Thruway Authority and other
designated public agencies to utilize the design-build project delivery method (the \u201cAct\u201d).
Thus, New York has now joined the majority of other states as well as the federal government
in providing for design-build contracts in the public sector.
Through the enactment of this legislation, three significant changes have been
made to public construction law and practice in New York. First, New York now permits
combining design and construction under one contract, expediting the completion of projects
and creating the potential for both innovative problem solving, but also increased risks
for the design-builder. Second, design-build contracts will be awarded on the basis of the
\u201cbest value\u201d, where price will be only one of many factors that go into the award. A contractor
scoring the highest on factors such as the quality of the solution, qualifications and
experience may be selected even if its price is not the lowest submitted. A design-build
contract may be awarded on a guaranteed maximum price (\u201cGMP\u201d) basis, rather than a
lump sum. Third, payment and performance bonds for the full contract sum will not necessarily
be required. Under existing New York law, payment bonds are required for most
public contracts of $200,000 or more for multi-prime projects and $100,000 or more for
single prime projects. The practice of virtually all public agencies in New York has been
to require performance bonds as well, and for both bonds to be in the full contract amount.
Under the Act, the authorized state entities have discretion to set performance and payment
bond requirements and may even adopt alternative measures for securing faithful
performance.
This legislation already has been put to use on the Tappan Zee Bridge replacement
project where the design-build delivery method is being implemented. The Request for
Qualifications (\u201cRFQ\u201d) issued by the NYSDOT for this project provides some insight into
the process that public agencies may use in awarding design-build contracts. The Tappan
Zee Bridge RFQ provided that up to five teams would be selected to advance to the second round,
where each team will submit a proposal. The RFQ also stated that the overall ratings determined on
the first round would be considered in evaluating the proposals submitted on the second round.
While neither the overall ratings, nor the ranking of the teams will be disclosed, proposers will be able<\/p>\n

to submit additional information to improve their overall qualifications rating. The RFQ
for the Tappan Zee Bridge project provided that a bidder can be either an individual company,
a joint venture, a partnership or LLC composed of two or more companies, or a
team intending to form a joint venture, partnership or LLC for the purpose of the contract.
Joint ventures, LLCs and partnerships had to submit their organizational agreement.
Proposed joint ventures, LLCs and partnerships that were not yet legally formed had to
submit their teaming agreement, a draft of their organizational agreement and a description
of how the organization will operate. Additionally, the NYSDOT reserved the right
to determine whether teams are \u201cappropriately balanced\u201d and, thereby, could exclude any
team on which a larger, more financially sound contractor has only a relatively small percentage
interest in relation to the other team members.
To assess their qualifications, teams were requested to submit information that
included each team member\u2019s experience, prior similar projects, financial statements,
claims history for the past five years and the backgrounds of the key construction and
design personnel who would be working on the project. The NYSDOT reserved the right
to revise and modify the factors to be considered in evaluating the qualifications, as well as
the evaluation methodology, and to waive weaknesses, informalities and minor irregularities
in a team\u2019s statement of qualifications.
The key provisions of this new legislation are summarized below.
Effective Date: The Act is not permanent; it will expire and be deemed repealed
three years after its effective date of December 9, 2011. Projects with RFQ\u2019s issued prior
to the expiration date will be eligible for design-build contracts, even if no award has been
made prior to the expiration date.
Entities Entitled To Use Design-Build: The state entities authorized to enter
into design-build contracts are: the NYS Thruway Authority, the NYSDOT, the NYS
Office of Parks, Recreation and Historic Preservation, the NYS Department of
Environmental Conservation, and the NYS Bridge Authority. A project performed for
any of the three authorized state agencies must have a total cost of at least $1.2 million to
be eligible for a design-build contract. There is no minimum project value for either of the<\/p>\n

two authorized state authorities \u2013 the NYS Bridge Authority and the NYS Thruway
Authority \u2013 to enter into a design-build contract.
Method of Selection: The Act provides for the fairly typical two step method
for selecting the design-build team. Step one starts with the issuance of a RFQ, which will
inform \u2018bidders\u2019 of the general description of the project, the maximum number of companies
to be selected to submit proposals, and the selection criteria for short listing. The
selection criteria must include \u201cthe qualifications and experience of the design and
construction team, organization, demonstrated responsibility, ability of the team or of a
member \u2026 to comply with the applicable requirements \u2026, past record of compliance with
the labor law\u201d, other qualifications as the state entity deems appropriate, including \u201cproject
understanding, financial capability and record of past performance\u201d, and the participation
of and ability to work with MBE or WBE firms and small business concerns. After
ratings of the companies responding to the RFQ are generated, step one of the process will
culminate in the issuance of a shortlist of companies to receive a Request for Proposals
(\u201cRFP\u201d).
The second step in the award process starts with the state entity issuing the RFP to
shortlisted contractors. The RFP is to contain the scope of the work and other requirements,
and it must specify the criteria for evaluating proposals and the relative weight to
be given to each criterion. The criteria are to include cost, the quality of the proposal\u2019s
solution, the relative qualifications and experience of the proposers and other factors,
which may include \u201cthe proposer\u2019s project implementation, ability to complete the work
in a timely and satisfactory manner, maintenance costs of the completed project, maintenance
of traffic approach, and community impact.\u201d The ten factors to be used in determining
best value are: (1) the quality of the contractor\u2019s work on prior projects; (2) the timeliness
of the contractor\u2019s performance on prior projects; (3) the level of the contractor\u2019s customers\u2019
satisfaction; (4) the contractor\u2019s record of performing projects on budget and ability
to minimize cost overruns; (5) the contractor\u2019s ability to limit change orders; (6) the contractor\u2019s
ability to prepare project plans; (7) the contractor\u2019s technical capacities; (8) the
individual qualifications of the contractor\u2019s key personnel; (9) the contractor\u2019s ability to
assess and manage risk and minimize risk impact; and (10) the contractor\u2019s past record of
compliance with MBE and WBE requirements.
The state entity must award the contract to the responsive and responsible bidder
offering the best value to the state. The state entity is not prohibited \u201cfrom negotiating
final contract terms and conditions, including cost.\u201d It appears that negotiations may be
had with any bidder.
Pre-Qualification: Alternatively, a state entity may skip step one altogether by
maintaining a list of prequalified contractors for design-build contracts. The factors for<\/p>\n

prequalification may include experience, past performance, ability to undertake the type
and complexity of the work, financial capability, responsibility, compliance with equal
employment opportunity requirements and anti-discrimination laws, and reliability. The
statute does not expressly provide for design-build teams to be prequalified; rather it provides
for \u201ccontractors\u201d to be prequalified. It appears that both construction contractors
and engineers can be separately prequalified, and that any prequalified construction contractor
for the type of work involved in the project can team up with any engineering firm
prequalified for the same work to submit a proposal for a design-build contract.
Alternative Methods for Awarding Construction Contract: State entities
may award the contract either to the contractor offering the best value, utilizing a cost plus
not to exceed a guaranteed maximum price form of contract or utilizing a lump sum contract.
1 Thus, once the state entity determines which proposal offers the best value, it may
contract on either a cost plus\/GMP or a lump sum basis. The statute requires that for contracts
awarded on a cost plus\/GMP basis, the contract must describe the scope and cost of
performing the work; include a detailed line item cost breakdown, a list of all drawings,
specifications and other information on which the GMP is based, the dates for substantial
and final completion on which the GMP is based, a schedule of unit price, and allow for
an audit.
Incentive Clauses: Design-build contracts may include an incentive clause for
achieving \u201cvarious performance objectives\u201d. The statute does not define or provide a list
of the performance objectives for which a state entity may pay an incentive.
Bonding Requirements: Design-build contracts are to include \u201csuch performance and
payment bonds as [the state entity] deems necessary.\u201d State entities are, therefore, not
bound to require 100% performance and payment bonds for design-build contracts.
MBE\/WBE Requirements: The statute requires that each design-build contract must
comply with the MBE and WBE requirements of Article 15-A of the Executive Law or, for
projects receiving federal aid, with applicable federal requirements for disadvantaged business
enterprises.
Project Labor Agreements: Contracts let on a design-build basis may be subject
to project labor agreements.
State Wicks Law: Section 135 of the State Finance Law\u2014which provides for
separate specifications and bids for plumbing, HVAC and electrical work for contracts for
the erection, construction, or alteration of buildings for the state where the cost exceeds
$3,000,000 in New York City, $1,500,000 in Nassau, Suffolk and Westchester Counties
and $500,000 in all other counties\u2014applies to design-build contracts. Since the legislation
is targeted at projects that are primarily not for the erection, construction or alteration of
buildings, this provision will have limited application to design-build contracts.<\/p>\n

Editor\u2019s Note: There are pitfalls and attendant risks to be avoided when proposing on,
and undertaking performance of, a design-build contract in the public sector. Peckar &
Abramson has been providing advice and counsel to clients on virtually all aspects of the
design-build delivery system, including drafting of construction documents, review and
evaluation of the design-build contracts and strategies for claim and dispute avoidance.
Client comments and inquiries on these critical subjects are invited and encouraged before
embarking upon the pursuit of a design-build contract.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Leading national construction law firm Peckar & Abramson sent out a “Client Alert” earlier this year providing an analysis of New York’s new Design-Build legislation. The new legislation is interesting for several reasons, and could affect the way several large scale projects are bid and built. Not all entities are entitled to use design build, […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1910,1349,1911,1478],"tags":[],"yoast_head":"\nNew York Enacts Design-Build Legislation - Tools of the Trade | LienItNow Blog<\/title>\n<meta name=\"description\" content=\"Leading national construction law firm Peckar & Abramson sent out a "Client Alert" earlier this year providing an analysis of New York's new\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.lienitnow.com\/blog\/2012\/03\/new-york-enacts-design-build.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"New York Enacts Design-Build Legislation - Tools of the Trade | LienItNow Blog\" \/>\n<meta property=\"og:description\" content=\"Leading national construction law firm Peckar & Abramson sent out a "Client Alert" earlier this year providing an analysis of New York's new\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.lienitnow.com\/blog\/2012\/03\/new-york-enacts-design-build.html\" \/>\n<meta property=\"og:site_name\" content=\"Tools of the Trade | LienItNow Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LienItNow\/\" \/>\n<meta property=\"article:author\" content=\"https:\/\/facebook.com\/LienItNow\" \/>\n<meta property=\"article:published_time\" content=\"2012-03-13T19:52:00+00:00\" \/>\n<meta property=\"og:image\" content=\"http:\/\/2.bp.blogspot.com\/-SAEZVOX4S4w\/T1-uX0laheI\/AAAAAAAAAA4\/MpjXvjGXGjU\/s320\/new+york.gif\" \/>\n<meta name=\"author\" content=\"Stephen\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@lienitnow\" \/>\n<meta name=\"twitter:site\" content=\"@lienitnow\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Stephen\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"9 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.lienitnow.com\/blog\/2012\/03\/new-york-enacts-design-build.html#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.lienitnow.com\/blog\/2012\/03\/new-york-enacts-design-build.html\"},\"author\":{\"name\":\"Stephen\",\"@id\":\"https:\/\/www.lienitnow.com\/blog\/#\/schema\/person\/d4ad09932756b36935fd15ab497722fe\"},\"headline\":\"New York Enacts Design-Build Legislation\",\"datePublished\":\"2012-03-13T19:52:00+00:00\",\"dateModified\":\"2012-03-13T19:52:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.lienitnow.com\/blog\/2012\/03\/new-york-enacts-design-build.html\"},\"wordCount\":1761,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.lienitnow.com\/blog\/#organization\"},\"articleSection\":[\"design build\",\"Mechanics Liens\",\"New York design build\",\"public works\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.lienitnow.com\/blog\/2012\/03\/new-york-enacts-design-build.html#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.lienitnow.com\/blog\/2012\/03\/new-york-enacts-design-build.html\",\"url\":\"https:\/\/www.lienitnow.com\/blog\/2012\/03\/new-york-enacts-design-build.html\",\"name\":\"New York Enacts Design-Build Legislation - 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