In a long-awaited turn of events, Bill No. A07636, known as the “New York City Public Works Investment Act,” was delivered and subsequently passed by the New York State Assembly on June 19, 2019.  The Bill is now before the New York State Senate awaiting a final vote.[1]  The reception the current design-build legislation has received in the New York State Legislature is its most positive yet.  It has been on the Assembly/Senate floor two times previously, in both the 2015-16 and 2017-18 Legislative sessions, both times being stalled and subsequently not passed.  The current Bill, unlike its predecessors, has received overwhelming support in both the Cities Committee and Rules Committee (14-1 in favor and 25-0 in favor, respectively).  While the proposed legislation has not been officially passed by the Senate and approved by the Governor, it is highly encouraging to see it moved through the New York State Legislature with such swiftness and support.

If enacted, the new law will allow certain New York City agencies[2] to use the design-build procurement model for their infrastructure projects.  Design-build is a method of project delivery in which the owner retains a single contractor to provide turnkey design and construction services for the project. The design-build model has been used successfully in the private sector and more recently at the State agency level to complete projects on time and on budget. Having a single point of contact saves both time and money and permits the design and construction teams to work more efficiently.

Part of the reason why the implementation of the design-build system on New York State and City public works projects has been so vexing is the “Wicks Law,” which requires the award of separate prime contracts for mechanical, electrical and plumbing work on municipal projects over certain dollar thresholds.  By requiring the municipal agencies to directly retain four separate contractors for each of the primary subdivisions of work, the Wicks Law precluded the single contractor design-build delivery system on projects of any significant dollar amount.  Further, the agencies have interpreted the NYS Education Law as preventing non-licensed contractors from offering professional design services. Even though the design services would continue to be signed and sealed by appropriately licensed design professionals as subcontractors to the design-builder, the restrictive interpretation of the Education Law handcuffed the agencies from reaping the benefits of the design-build delivery system. 

The impasse was finally broken through the passage of the New York State Infrastructure Investment Act, which permitted a select few state agencies to engage in design-build contracts in recent years notwithstanding the prohibitions of the Wicks Law and Education Law. The results were immediate and overwhelming. Specifically, the design-build delivery system enabled the NYS Thruway Authority to complete the Tappan Zee Bridge replacement project in August 2017 – more than a year ahead of schedule and approximately $1 billion less than what the State projected.  The success of the Tappan Zee Bridge Project has opened the door to more than 30 other public works projects where the design-build project delivery method is being utilized, such as the Kosciuszko Bridge Replacement Project, the Rehabilitation of Atlantic Avenue Viaduct Project, and the reconstruction of the BQE. 

While the State agencies have been reaping the benefits of design-build projects, the City agencies have not. The hope is that is about to change. The NYC Public Works Investment Bill that is making its way through the NYS Legislature mimics the NYS Infrastructure Investment Act and will allow NYC agencies to utilize the design-build delivery system on the City’s infrastructure projects.  Under the applicable provisions of the pending legislation, the “design-build contractor” may be a team comprised of separate entities, thus eliminating the separate prime contractors required by the Wicks Law. The Bill also proposes that the design-build project must be subject to a Project Labor Agreement.

Further, the Bill resolves the NYS Education Law impediment by enabling the design-builder to provide the professional services regulated by Articles 145, 147 and 148 of the Education Law through the appropriately licensed design firms that are retained by the design-build contractor. 

In effect, the NYC Public Works Investment Act would codify the New York Court of Appeals’ decision in Charlebois v. J.M. Weller Associates, Inc., 72 N.Y.2d 587 (1988), which elicits the principle that a contract, which includes an express requirement for a separately retained licensed professional to perform the design function of a project, does not violate the licensing protections of the Education Law when the professional services are provided through a subcontractor.  As the Court of Appeals held over 30 years ago, when the design-builder places in writing its duty to find the appropriate individual/entity that possesses the proper professional licenses to engage in the specified “design” services aspect of a project, the design-builder does not run afoul of the Education Law. 

The Bill, having passed the New York State Assembly, now only waits to be passed in the NYS Senate.  If the Bill passes the Senate and is signed into law, it would take effect immediately.  The Bill also has a sunset provision, through which the law will expire and be deemed repealed three years after enactment, unless extended by the State. 

CMM will continue to monitor the status of this Bill and keep our clients informed.

Thank you to Brendan Mahon for his research and drafting assistance with this article.

[1] While the Bill is not guaranteed to pass, it appears more likely than prior attempts. In 2015, similar legislation was stalled in the Cities Committee and Rules Committee of the Assembly and Senate.

[2] The authorized NYC agencies are: Department of Design and Construction, Department of Environmental Protection, Department of Transportation, Parks and Recreation, Health and Hospitals Corporation, School Construction Authority, and NYC Housing Authority.