Bill Text: NJ A2876 | 2024-2025 | Regular Session | Introduced
Bill Title: Provides equitable relief to State contractors who sustained unanticipated expenses due to price escalation for construction materials.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced) 2024-01-09 - Introduced, Referred to Assembly State and Local Government Committee [A2876 Detail]
Download: New_Jersey-2024-A2876-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Assemblyman ANTHONY S. VERRELLI
District 15 (Hunterdon and Mercer)
Assemblyman STERLEY S. STANLEY
District 18 (Middlesex)
Assemblywoman VERLINA REYNOLDS-JACKSON
District 15 (Hunterdon and Mercer)
SYNOPSIS
Provides equitable relief to State contractors who have sustained unanticipated expenses due to price escalation for construction materials.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act providing equitable relief to State contractors who have sustained unanticipated expenses due to price escalation for construction materials.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The Legislature finds and declares that:
It is in the vital interest of the general public that public works in the State of New Jersey be administered efficiently and at a reasonable and equitable cost.
The unforeseen emergency of unanticipated escalation in construction material prices has imposed substantial inequity upon State contractors awarded contracts after public bidding.
Such inequity has threatened the ability of contractors to fulfill the contracts awarded to them.
It is imperative that the benefits derived by the general public from the existing system of public bidding and the orderly performance of contracts awarded as a result of such public bidding continue in an efficient manner.
It is therefore in the best interest of the State to provide equitable relief to those State contractors who have sustained damage from the unforeseen escalation of construction material prices.
2. a. (1) Notwithstanding the provisions of any law, rule, or regulation to the contrary, whenever the terms and conditions of a construction contract awarded by a contracting agency of the State require a contractor to furnish materials in such contract pertaining to such construction, the terms and conditions of such contract may be adjusted upon a determination by the director of the appropriate division in the Department of the Treasury that there has been an increase in the cost of acquisition of such materials by the contractor, subcontractor, or supplier of such materials in excess of five percent, determined as of the time of the award of such contract.
The determination by the director shall be based upon the available evidence, including, but not limited to, an appropriate nationally recognized economic index published by the United States Department of Labor or another appropriate organization. Any such increase shall be subject to the approval of the State Treasurer.
Any contractor, subcontractor, or supplier of such materials who receives an increase in the cost of construction materials shall also be subject to a downward adjustment in construction material prices for subsequent de-escalation that may result in a price being lower than the original bid price. Any subsequent decrease or de-escalation shall be upon a determination by the director. Such a determination shall be based upon the available evidence, including, but not limited to, an appropriate nationally recognized economic index published by the United States Department of Labor or another appropriate organization.
Any contractor requesting an adjustment shall submit an application in writing, submitting documentary evidence to the State Contract Manager for such contract establishing such increase in accordance with the requirements of the director. The evidence shall be subject to public inspection during regular business hours.
Upon the agreement of the parties, the terms and conditions of the contract may be amended in writing to reflect the increased or decreased cost of acquisition of such materials to the extent as it exceeds five percent thereof and such contract amendment shall state the amount of adjustment and basis therefor, but in no event shall direct labor costs, additional profit, or overhead be part of such adjustment. No adjustment shall be granted in an amount which, together with any other sum obligated under the contract, shall exceed the money appropriated or otherwise lawfully available for the project.
(2) The provisions of this subsection shall apply only to contracts awarded by a contracting agency based upon bids submitted prior to April 1, 2020, but only for which materials shall have been purchased or invoiced after March 1, 2020.
b. (1) The director is authorized, with the approval of the State Treasurer, to terminate or suspend for a part of its term any State contract award for the purchase of commodities upon written application to the State Contract Manager for such termination or suspension by the vendor, when extraordinary and unforeseen general market conditions have caused increases in the vendor's costs for construction materials or other physical elements consisting of construction materials to be sold under the contract.
A vendor shall submit, in writing, evidence as required and deemed to be sufficient by the director, that as the direct and sole result of such increases during the term of the contract, that exceed five percent of the contractor's aggregate acquisition costs determined as of the time of the award, the contractor has incurred or will incur an actual net loss on such contract from the estimated sales made under the contract and the contractor would continue to incur such net losses unless the contract is suspended or terminated.
Such determination shall be made by the director. The determination by the director shall be based upon the available evidence, including, but not limited to, an appropriate nationally recognized economic index published by the United States Department of Labor or another appropriate organization.
(2) The director is authorized, following the determination made pursuant to the provisions of paragraph (1) of this subsection, that the contractor has incurred or will incur an actual net loss on such contract from the sales made under the contract, to grant an increase or increases in the prices of the commodities specified by the contract, in amounts necessary to prevent further net losses to the contractor on such contract from deliveries to be made thereafter under the contract, as compensation for and not exceeding increases of the contractor's acquisition costs during the contract term. Any such increase in contract prices shall be subject to the approval of the State Treasurer.
Any contractor who receives an increase in the price of the commodities shall also be subject to a downward adjustment in the price of the commodities for subsequent de-escalation that may result in a price being lower than the original bid price. Any subsequent decrease or de-escalation shall be upon a determination by the director that there has been a subsequent decrease in the cost of acquisition of such construction materials by the contractor, subcontractor, or supplier of materials. Such a determination shall be based upon the available evidence, including, but not limited to, an appropriate nationally recognized economic index published by the United States Department of Labor or another appropriate organization.
(3) The provisions of this subsection shall apply only for such contracts that cover materials which were purchased or invoiced after March 1, 2020.
c. All records, books, and documents of the contractor that are related or useful to the determinations made by the director shall be subject to audit and examination by the director.
3. This act shall take effect immediately and shall expire on June 30, 2023.
STATEMENT
This bill provides equitable relief to State contractors who have sustained unanticipated expenses due to price escalation for construction materials.
The unforeseen emergency of unanticipated escalation in construction material prices has imposed substantial inequity upon State contractors awarded contracts after public bidding. Such inequity has threatened the ability of contractors to fulfill the contracts awarded to them. It is in the best interest of the State to provide equitable relief to those State contractors who have sustained damage from the unforeseen escalation of construction material prices.
This bill allows for the terms and conditions for certain State contracts to be amended to adjust for the rising costs of construction materials. The contractors would be required to provide evidence, in writing, to the State Contract Manager for such contract establishing such increase in costs. The determination of the adjustment would be made by the director of the appropriate division in the Department of the Treasury and would be based upon the available evidence, including, but not limited to, an appropriate nationally recognized economic index published by the United States Department of Labor or another appropriate organization. The adjustments would be made in writing and agreed to by both parties and would not exceed five percent of the cost of acquisition of the materials determined as of the time of the awarding of such contract. The adjustments would apply only to contracts awarded by a contracting agency based upon bids submitted prior to April 1, 2020, but only for materials purchased or invoiced after March 1, 2020.
This bill also authorizes the director to terminate or suspend for a part of its term any State contract award for the purchase of commodities upon written application for such termination or suspension by the vendor, where extraordinary and unforeseen general market conditions have caused increases in the vendor's costs for construction materials or other physical elements consisting of construction materials to be sold under the contract. The vendor would submit, in writing, evidence that as the direct and sole result of such increases during the term of the contract, which exceed five percent of the contractor's aggregate acquisition costs determined as of the time of the award, the contractor has incurred or will incur an actual net loss on such contract from the estimated sales made under the contract and the contractor would continue to incur such net losses unless the contract is suspended or terminated.
The director would also be authorized to grant an increase or increases in the prices of the commodities specified by the contract, in amounts necessary to prevent further net losses to the contractor on such contract from deliveries to be made thereafter under the contract, as compensation for and not exceeding increases of the contractor's acquisition costs during the contract term. The adjustments would apply only for such contracts that cover materials which were purchased or invoiced after March 1, 2020.
The provisions of this bill would expire on June 30, 2023.
