Wicks Law Changes Effective July 1, 2008

By Michael J. Vardaro, Partner, and Daniel Crow, Associate

For years, it seems that all parties involved in public construction projects in New York have called for lawmakers to revamp the infamous Wicks Law. The Wicks Law mandate is a series of laws first enacted in 1912 that requires New York State and its local governments to issue multiple construction contracts for most public works projects when the cost exceeds $50,000. Under the multiple contract system, the government entity must award separate prime contracts for at least three major components of the work: electrical, plumbing and HVAC. A fourth contract is usually awarded to a general contractor for the remainder of the project scope.

Wicks Law effectively dictates an entirely different scheme of project delivery, as contrasted with private/non-Wicks Law projects, by requiring multiple prime contractors. Wicks Law forces the owner (public entity) to manage the construction process, coordinate schedules of the separate prime contractors and resolve disputes. In contrast, the federal government, most other states and private industry use a variety of contract methods to obtain these services from a general contractor or construction manager.

The purpose of Wicks Law has been described “to insure some form of expertise in these areas of construction, rather than having all bids made by general contractors who would subcontract these various classes of work in their own discretion and at a potential hazard to the State…” Nager Elec. Co. v. Office of General Services, 56 Misc.2d 975, 977 (N.Y. Sup. Ct. Albany County 1967), aff ’d, 30 AD2d 626 (3rd Dep’t 1968). However, most in the industry agree that even if Wicks Law accomplished its intended purpose at the time of enactment, it now fails to deliver the value it was promised to bring to the State.

After many years or urging, changes to Wicks Law have finally been made. New York public works contracts advertised or solicited for bid on or after July 1, 2008 will now be subject to a new statutory scheme. The new statutory scheme consists of two major components: (1) raising the monetary threshold triggering the multiple prime requirement and (2) allowing public owners to avoid the multiple prime requirements through Project Labor Agreements (“PLA”).

Currently, in instances where the entire cost of a public works project for the erection, construction, reconstruction or alteration of a building exceeds $50,000, separate specifications must be prepared for the (1) plumbing and gas fitting; (2) steam heating, hot water heating, ventilating and air conditioning equipment; and (3) electrical wiring fixtures. The separate specifications are required so that each may be separately and independently bid.

NEW THRESHOLD AMOUNTS

As of July 1, 2008, the Wicks Law’s threshold amount triggering the requirement of multiple prime contractors will increase to:

PROJECT LABOR AGREEMENT OPTION

Public owners can now also avoid the Wicks Law requirements of multiple primes for a project which exceeds the monetary threshold. To avoid the multiple prime requirement, the public owner must require a PLA that satisfies certain criteria. The new legislation defines a PLA as “a pre-hire collective bargaining agreement between a contractor and a bona fide building and construction trade labor organization establishing the labor organization as the collective bargaining representative for all persons who will perform work on a public project, and which provides that only contractors and subcontractors who sign a pre-negotiated agreement with the labor union organization can perform project work.”

This PLA option is the most controversial part of the new legislation as many believe that this option greatly favors union contractors. Proponents of the legislation believe that non-union contractors can still qualify to do work provided that, among other things, they comply with union work rules for all trades, standard hours of work per day, and obligations to pay union dues and contribute to employee benefit funds. However, nonunion contractors disagree and point to the PLA requirement that “each contractor and subcontractor participate in apprentice training programs.” Even in instances where non-union contractors could change compensation packages and work schedules to satisfy the PLA requirement, it is unlikely that they could immediately comply with the apprentice program requirements.

While the new Wicks Law scheme is a step in the right direction, it falls short of the call by many to repeal the multiple prime requirement. Only time will tell if these modest amendments sufficiently quell the industry’s call for change.

Please contact Michael J. Vardaro at (212) 682-6800 or mvardaro@zdlaw.com for more information.

JULY 2008