Bill S1786-2009

Relates to performance and payment bonds

Increases the contract threshold for which performance and payment bonds are required for small and certified minority and women owned businesses.

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  • May 3, 2010: NOTICE OF COMMITTEE CONSIDERATION - REQUESTED
  • Jan 6, 2010: REFERRED TO FINANCE
  • Feb 6, 2009: REFERRED TO FINANCE

Memo

 BILL NUMBER:  S1786

TITLE OF BILL : An act to amend the state finance law, in relation to performance and payment bond requirements

PURPOSE OR GENERAL IDEA OF BILL : To provide increased performance and payment bond waiver levels for small and certified minority and women-owned businesses.

SUMMARY OF SPECIFIC PROVISIONS : This bill would increase the contract threshold for which performance and payment bonds are required to $500,000 for small and certified minority and omen-owned businesses and would require information on bonding requirements or dispensations in advertisements for bids.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER : Currently, under the State Finance Law, performance and payment bonds may be dispensed with at the discretion of the state agency head for contracts less than $100,000, or, for contracts not subject to multiple contract award requirements, $200,000. This bill would provide a targeted increase of these thresholds for small and certified minority and women-owned businesses. The bill would also require that information on bonding requirements be included in advertisements for bids.

AMENDMENT : Performance and payments bonds for single contracts have been increased to $150,000 and multiple contracts to $300,000 and allows for automatic increases based upon inflation of construction costs.

JUSTIFICATION : This proposal is intended to enhance the participation of small, certified minority and woman-owned businesses in public projects. Testimony from an Assembly hearing in 2005 documented that statutory bonding requirements on public projects pose a barrier to the growth of small, certified minority and woman owned contractors. These firms often lack the assets and the record of experience required by bonding companies; yet without bonding they cannot compete for the work, and thus, cannot get the experience and assets they need to become bondable. By providing a targeted dispensation of bonding requirements this bill would enable small, certified minority and women-owned businesses to gain experience with larger projects, and will benefit contracting agencies as well as the targeted businesses by creating a larger pool of qualified contractors and subcontractors available for public works projects.

PRIOR LEGISLATIVE HISTORY : 2006: A.9069 2007: S.5199-A - Died in Finance Committee

EFFECTIVE DATE : Immediately.

Text

STATE OF NEW YORK ________________________________________________________________________ 1786 2009-2010 Regular Sessions IN SENATE February 6, 2009 ___________
Introduced by Sen. STEWART-COUSINS -- read twice and ordered printed, and when printed to be committed to the Committee on Finance AN ACT to amend the state finance law, in relation to performance and payment bond requirements THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 1 of section 137 of the state finance law, as separately amended by section 17 of part MM of chapter 57 and chapter 619 of the laws of 2008, is amended to read as follows: 1. In addition to other bond or bonds, if any, required by law for the completion of a work specified in a contract for the prosecution of a public improvement for the state of New York a municipal corporation, a public benefit corporation or a commission appointed pursuant to law, or in the absence of any such requirement, the comptroller may or the other appropriate official, respectively, shall nevertheless require prior to the approval of any such contract a bond guaranteeing prompt payment of moneys due to all persons furnishing labor or materials to the contrac- tor or any subcontractors in the prosecution of the work provided for in such contract. Whenever a municipal corporation issues a permit subject to compliance with section two hundred twenty of the labor law, such permittee or its contractor or subcontractors furnishing workers shall post a payment bond subject to this section. Provided, however, that all performance bonds and payment bonds may, at the discretion of the head of the state agency, public benefit corporation or commission, or his or her designee, be dispensed with for the completion of a work specified in a contract for the prosecution of a public improvement for the state of New York for which bids are solicited where the aggregate amount of the contract is under one hundred FIFTY thousand dollars and provided further, that in a case where the contract is not subject to the multi- ple contract award requirements of section one hundred thirty-five of this article, such requirements may be dispensed with where the head of
the state agency, public benefit corporation or commission finds it to be in the public interest and where the aggregate amount of the contract awarded or to be awarded is less than [two] THREE hundred thousand dollars. THE HEAD OF THE STATE AGENCY, PUBLIC BENEFIT CORPORATION OR COMMISSION, OR HIS OR HER DESIGNEE, SHALL ADJUST THE AGGREGATE CONTRACT AMOUNTS LISTED IN THIS SUBDIVISION EVERY YEAR TO ACCOUNT FOR INCREASES IN THE COSTS OF CONSTRUCTION. ADVERTISEMENTS FOR BIDS SHALL PROVIDE INFORMATION ON THE REQUIREMENTS FOR, OR DISPENSATION OF, PERFORMANCE AND PAYMENT BONDS. Provided further, that in a case where a performance or payment bond is dispensed with, twenty per centum may be retained from each progress payment or estimate until the entire contract work has been completed and accepted, at which time the head of the state agency, public benefit corporation or commission shall, pending the payment of the final estimate, pay not to exceed seventy-five per centum of the amount of the retained percentage. S 2. Subdivision 4 of section 139-f of the state finance law, as amended by chapter 83 of the laws of 1995, is amended to read as follows: 4. Notwithstanding any other provision of this section or other law, requirements for the furnishing of a performance bond or a payment bond may be dispensed with at the discretion of the head of the state agency or corporation, or his or her designee, where the public owner is a state agency or corporation described in subdivision one-a of this section and the aggregate amount of the contract awarded or to be awarded is under ONE HUNDRED fifty thousand dollars and, in a case where the contract is not subject to the multiple contract award requirements of section one hundred thirty-five of this article, such requirements may be dispensed with where the head of the state agency or corporation finds it to be in the public interest and where the aggregate amount of the contract awarded or to be awarded is under [two] THREE hundred thou- sand dollars. THE HEAD OF THE STATE AGENCY, PUBLIC BENEFIT CORPORATION OR COMMISSION, OR HIS OR HER DESIGNEE, SHALL ADJUST THE AGGREGATE CONTRACT AMOUNTS LISTED IN THIS SUBDIVISION EVERY YEAR TO ACCOUNT FOR INCREASES IN THE COSTS OF CONSTRUCTION. ADVERTISEMENTS FOR BIDS SHALL PROVIDE INFORMATION ON THE REQUIREMENTS FOR, OR DISPENSATION OF, PERFORMANCE AND PAYMENT BONDS. Provided further, that in a case where a performance or payment bond is dispensed with, twenty per centum may be retained from each progress payment or estimate until the entire contract work has been completed and accepted, at which time the head of the state agency or corporation shall, pending the payment of the final estimate, pay not to exceed seventy-five per centum of the amount of the retained percentage. S 3. This act shall take effect immediately.

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