For years, general contractors and trade contractors have faced very strict “no damages for delay” clauses on New York State construction projects. The tides are changing.  If signed into law, S. R. 06686, Reg. Sess. 2017-2018 (NY 2017) will require public entities to allow contractors, subcontractors and suppliers to recover for costs associated with project delays to the extent the delays were caused by the entity’s actions or inactions. Public entities would include, without limitation, any state agency, department, board, bureau, municipal corporation, school district or any instrumentality or public subdivision of the State of New York.

The proposed law would allow recovery for delay damages, despite contract language to the contrary, under the following circumstances:

  • Failure of the public entity to take reasonable measures coordinate and progress the work;
  • Extended delays attributable to the public entity in the review or issuance or orders-on-contract or field orders, in-shop drawing reviews and approvals or as a result of the cumulative impact of multiple orders on contract; which constitute a qualitative change to the project work and which have a verifiable impact on project costs;
  • The unavailability of the site for such an extended period of time which significantly affects the scheduled completion of the contract; or
  • The issuance of a stop work order relative to a substantial portion of work for a period exceeding 30 days.

The law would actually require that each contract contain a provision mirroring the Act.

The proposed legislation also outlines strict claim submittal requirements in order for a claimant to be entitled to compensation for delays. The contractor, subcontractor or supplier must provide a notice of claim for the delay to a public entity by personal service or certified mail no more than fifteen (15) days after such contractor knew the facts which form the basis of the claim. The public entity must acknowledge receipt of the notice, in writing within five (5) days. The legislation expressly precludes oral notices and provides that the failure to provide such notice will result in per se prejudice to the public entity, which under most circumstances will preclude the claim.

Claimants will also be required to certify in writing and under oath that all of the information offered in support of the delay claim is accurate and complete and being submitted in good faith. This requirement could strengthen a False Claims Act claim against anyone making a claim for delay damages without justification. The New York False Claims Act imposes liability on anyone who knowingly presents false claim, request or demand for payment to a public entity. The knowingly requirement under the False Claims Act extends beyond actual knowledge to those submitting information with a reckless disregard of the truth or falsity of the information. With the certification under oath requirement, the proposed legislation could also have the effect of deterring frivolous claims for delay damages.

Under the proposed law, the onus would be on the claimant to record and maintain diligent written records of their claim, “For any claim asserted pursuant to this title, the contractor, subcontractor, or materialman shall keep detailed written records of the costs and shall make them available for the purposes of audit and review. Failure to provide the required written notice or to maintain and furnish records of the costs of such claims shall constitute a waiver of the claim.” The proposed law would also require the claimant to provide the following documents to the public entity, upon request:

  • Description of the operations that were delayed, the reasons for the delay and an explanation of how they were delayed;
  • A detailed factual statement of the claim providing all necessary dates, locations, and items of work affected by the claim;
  • The date on which actions resulting in the claim occurred or conditions resulting in the claim became evident;
  • The names, functions and activities of each contractor, subcontractor and materialman involved in, or knowledgeable about facts that gave rise to such claim;
  • The identification of any pertinent documents, and the substance of any material oral communication relating to such claim;
  • The amount of additional compensation sought; and
  • If an extension of time is also requested, the specific number of days for which it is sought and the basis for such request as determined by an analysis of the construction progress schedule.

In addition, the law would require, upon submitting a claim, that the contractor, subcontractor or supplier certify in writing and under oath that the supporting data is accurate and complete to his or her best knowledge or belief and that any amount demanded reflects in good faith, what he or she believes to be the public entity’s liability.

We are monitoring the legislation closely and will keep our readers advised of any developments. You can also review the entire text of the legislation and check out its status here.