|The Wicks Law|
The Mandate: The Wicks Law - a construction mandate dating back to 1912 - was put into place to promote competition and protect workers' rights. Named for Senator Arthur Wicks who sponsored a bill to expand the law in 1946, the Wicks Law requires that, under General Municipal Law § 101, state and local government construction projects (including school district construction projects) costing more than $3 million in New York City, $1.5 million in Nassau, Suffolk and Westchester counties, and $500,000 in the rest of the state are subject to separate plumbing, heating/ventilation/air conditioning and electrical contracts. This requirement has proven to be one of the most onerous mandates facing local governments.The fundamental problem with the Wicks Law stems from the fact that the responsibility for coordinating the various subcontractors and the overall construction process lies with the public entity which typically has little expertise in this area. These coordination problems often result in costly delays. Most private developers and nearly every other state in the nation employ a single contract method, where the authority to coordinate the project is vested in a general contractor, who has a financial interest in ensuring that the project is completed in a cost efficient and timely manner.
The Wicks Law raises costs in other ways as well. Lawsuits are often brought against municipalities for losses that developers incur as a result of the project delays. The courts have upheld the government's liability in several of these cases, even when the delays are the fault of another contractor. Additionally, there are increased administrative expenses associated with preparing, bidding and awarding separate contracts, as well as the added costs resulting from contractors who automatically increase initial bids for projects subject to Wicks, to compensate for the anticipated delays and other problems common among Wicks Law projects.
After local governments and school districts, for decades, called for reform or repeal of the Wicks Law, the State Legislature finally amended the statute in 2008. These changes included a long-awaited increase to the former $50,000 threshold - now $3 million in New York City, $1.5 million in Nassau, Suffolk and Westchester counties, and $500,000 in the rest of the state. In addition, projects for which the public entity requires the contractor to enter into a project labor agreement (PLA) are exempt from the Wicks requirements. Such agreement is defined as "a pre-hire collective bargaining agreement between a contractor and a trade labor organization establishing the labor organization as the collective bargaining representative for all persons working on the project," and provides that only contractors and subcontractors who sign a pre-negotiated agreement with the labor organization can perform project work.
Other reforms include new requirements governing the presentation of bids, an authorization for the prequalification of bidders, and prompt payment provisions that require contractors to pay subcontractors within seven days of receiving payment. Additionally, with respect to projects for which a PLA is entered into, each contractor and subcontractor must participate in apprentice training programs that have been approved by the Department of Labor for at least three years; have graduated at least one apprentice in the last three years; have at least one apprentice currently enrolled in its program; and have made significant efforts to attract and retain minority apprentices.
The Cost: This requirement has the effect of increasing state and local construction costs, delaying projects and, in some cases, preventing projects from going forward at all. Previous studies estimate that the Wicks Law adds anywhere from 8% to 30% to project expenses. Repeal of the Wicks Law would significantly reduce municipal debt service costs and save local governments billions of dollars in capital costs.
The Solution: Enact legislation to repeal the Wicks Law. Eliminating this onerous mandate will help stimulate our languishing local economies by allowing municipalities to utilize a more cost-effective approach to executing public projects, thereby removing a major impediment to communities investing in much-needed infrastructure and other capital improvements. Additionally, the elimination of this requirement would produce savings for New York State as well.