Procurement

The Wicks Law

The Mandate: The Wicks Law - 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 ยง 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. The requirement has proven to be one of the most onerous mandates facing local governments.

The fundamental problem with the Wicks Law is that the responsibility for coordinating the various subcontractors and the overall construction process lies with the public entity bidding the project, which typically has little expertise in this area. These coordination problems often result in costly delays. Most private developers and nearly all the other states 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 also raises indipect costs for the municipality. Lawsuits are often brought against local governments 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.

For decades local governments and school districts called for reform or repeal of the Wicks Law.  The State Legislature finally amended the statute in 2008 by increasing tthe former $50,000 threshold to the current $3 million in New York City, $1.5 million in Nassau, Suffolk and Westchester counties, and $500,000 in the rest of the state. Additionally, projects for which the public entity requires the contractor to enter into a project labor agreement (PLA) are exempt from the Wicks requirements. A PLA 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 included 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.  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.

Although the changes to the Wicks Law were long overdue, the reforms that were ultimately enacted were met with mixed reviews. While the threshold increases have assisted the state's smaller communities, the rising cost of construction projects, have resulted in many municipal projects still being subject to the multiple bidding requirements under the Wicks Law.  Furthermore, several of the labor-related provisions that were included in the 2008 reforms have been criticized as disadvantaging to non-union labor, and as a result, have posed some significant problems for upstate municipalities and small businesses.

The Cost: The Wicks Law has the effect of increasing state and local construction costs, delaying projects, and in some cases preventing projects from moing forward completely. 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.

Alternatively, the Legislature should authorize the use of Design Build.   The design-build model is a project delivery system used as an alternative to the traditional design-bid-build model. Under the latter approach, design and construction are split -- separate entities, separate contracts, separate work. The design-build system is an integrated approach that provides the municipality with design and construction services under one contract. By relying on a single point of responsibility, the design-build model minimizes risks for the project owner, reduces the delivery schedule by consolidating the design phase and construction phase with a single source of contact, and cuts costs by streamlining the construction process. The model can also be used to facilitate public-private partnerships in order to share the cost of building and infrastructure projects with the private sector.

Several state agencies, including the Department of Environmental Conservation, the Department of Transportation, the Thruway Authority, the Office of Parks, Recreation and Historic Preservation, SUNY and the Bridge Authority are currently authorized to use and benefit from design-build. Currently, no authority exists for municipalities to use this model.