On June 9 Assembly Speaker Sheldon Silver submitted a bill that would permit joint bidding for utility interference work. What does this mean for you – no more independent negotiations with the utility companies. The utility interference work will be included in your bid price and the project will be awarded to the lowest responsible bidder. Given that the type and extent of interferences that will be encountered is inexact and difficult to accurately estimate, it unclear to me how the City of New York intends to structure the bid documents. It would make sense to me for the bids to be based upon a multiplier of a unit price, but we shall see.
On June 9 Assembly Speaker Sheldon Silver submitted a bill that would permit joint bidding for utility interference work. What does this mean for you – no more independent negotiations with the utility companies. The utility interference work will be included in your bid price and the project will be awarded to the lowest responsible bidder. Given that the type and extent of interferences that will be encountered is inexact and difficult to accurately estimate, it unclear to me how the City of New York intends to structure the bid documents. It would make sense to me for the bids to be based upon a multiplier of a unit price, but we shall see.
For those of you old enough to remember, in 1993 the City experimented with a joint bidding process. Back then, the City consulted with the relevant utility companies to identify the interferences and then incorporate those interferences into the project specifications of the contract. The bid documents solicited separate bids for the City work and the utility interference work, the “non-City” work. The contract was then awarded to the contractor who submitted the lowest aggregate bid. However, the Court of Appeals, the highest court in the State of New York, concluded that this bid structure violated the public bidding rules, as it was possible that the contractor with the lowest bid for the City work would not be awarded the project, if his bid for the non-City work was too high. It is also possible that a contractor with a higher bid for the City work to be awarded the contract, where its bid for the non-City work was lower, making its aggregate bid the lowest. Thus, “Section U” was born. Section U eliminated aggregate bidding but required the contractor to perform the utility interference work.
Now, in the last days of this legislative session, Speaker Silver in response to the lobbying efforts of the utility companies, submitted this bill for a return to joint bidding. All indications are that this bill will pass. We will keep you posted on the passage of the bill and the structure of the bids to see if they conform to the public bidding rules. Only time will tell. I am sure this will be a hot topic in the coming months.
If you ever find yourself unsure of your legal footing feel free to contact Connell Foley’s New York Construction Law Group for guidance on this or any other construction related issue.