Bill Text: NJ A4222 | 2010-2011 | Regular Session | Introduced
Bill Title: Requires local public contracts to contain provision for renegotiation upon key construction material's price change based on recognized industry price index.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2011-06-27 - Introduced, Referred to Assembly Housing and Local Government Committee [A4222 Detail]
Download: New_Jersey-2010-A4222-Introduced.html
Sponsored by:
Assemblywoman LINDA STENDER
District 22 (Middlesex, Somerset and Union)
SYNOPSIS
Requires local public contracts to contain provision for renegotiation upon key construction material's price change based on recognized industry price index.
CURRENT VERSION OF TEXT
As introduced.
An Act requiring renegotiation provision in certain local public contracts to stabilize prices for public projects and address dramatic fluctuations in the cost of construction materials, and amending P.L.1971, c.198.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 16 of P.L.1971, c.198 (C.40A:11-16) is amended to read as follows:
16. a. In the preparation of plans and specifications for the construction, alteration or repair of any public building by any contracting unit, when the entire cost of the work will exceed the bid threshold, the architect, engineer or other person preparing the plans and specifications may prepare separate plans and specifications for
(1) The plumbing and gas fitting and all kindred work;
(2) Steam power plants, steam and hot water heating and ventilating apparatus and all kindred work;
(3) Electrical work;
(4) Structural steel and ornamental iron work; and
(5) All other work required for the completion of the project.
The contracting agent shall advertise for and receive, in the manner provided by law, either (a) separate bids for each of said branches of work, or (b) bids for all the work, goods and services required to complete the building to be included in a single overall contract, or (c) both. In the case of a single bid under (b) or (c), there shall be set forth in the bid the name or names of all subcontractors to whom the bidder will subcontract the furnishing of plumbing and gas fitting, and all kindred work, and of the steam and hot water heating and ventilating apparatus, steam power plants and kindred work, and electrical work, structural steel and ornamental iron work, each of which subcontractors shall be qualified in accordance with P.L.1971, c.198 (C.40A:11-1 et seq.). The contracting unit shall require evidence of performance security to be submitted simultaneously with the list of the subcontractors. Evidence of performance security may be supplied by the bidder on behalf of himself and any or all subcontractors, or by each respective subcontractor, or by any combination thereof which results in evidence of performance security equaling, but in no event exceeding, the total amount bid.
b. Whenever a bid sets forth more than one subcontractor for any of the specialty trade categories (1) through (4) specified in subsection a. of this section, the bidder shall submit to the contracting unit a certificate signed by the bidder listing each subcontractor named in the bid for that category. The certificate shall set forth the scope of work, goods and services for which the subcontractor has submitted a price quote and which the bidder has agreed to award to each subcontractor should the bidder be awarded the contract. The certificate shall be submitted to the contracting unit simultaneously with the list of the subcontractors. The certificate may take the form of a single certificate listing all subcontractors or, alternatively, a separate certificate may be submitted for each subcontractor. If a bidder does not submit a certificate or certificates to the contracting unit, the contracting unit shall award the contract to the next lowest responsible bidder.
c. Contracts shall be awarded to the lowest responsible bidder. In the event that a contract is advertised for both separate bids for each branch of work and for bids for all work, goods, and services, said contract shall be awarded in the following manner: If the sum total of the amounts bid by the lowest responsible bidder for each branch is less than the amount bid by the lowest responsible bidder for all the work, goods and services, the contracting unit shall award separate contracts for each of such branches to the lowest responsible bidder therefor, but if the sum total of the amounts bid by the lowest responsible bidder for each branch is not less than the amount bid by the lowest responsible bidder for all the work, goods and services, the contracting unit shall award a single overall contract to the lowest responsible bidder for all of such work, goods and services. In every case in which a contract is awarded for a single overall contract, all payments required to be made under such contract for work, goods and services supplied by a subcontractor shall, upon the certification of the contractor of the amount due to the subcontractor, be paid directly to the subcontractor.
d. Any bid specification prepared pursuant to this section that includes the use of 1,000 or more tons of hot mix asphalt, shall include a pay item for any asphalt price adjustment reflecting changes in the cost of asphalt cement. Any bid specification prepared pursuant to this section that includes the use of less than 1,000 tons of hot mix asphalt, shall include a pay item for an asphalt price adjustment for any quantity of hot mix asphalt exceeding 1,000 tons that may be used in the work in the event that performance of the work, including change orders, requires more than 1,000 tons of hot mix asphalt.
The asphalt price adjustment shall be calculated in accordance with the formula and relevant instructions published in the most recent edition of the New Jersey Department of Transportation Standard Specifications for Road and Bridge Construction as revised by the "Standard Inputs" periodically issued by the department. All invoices for payment shall be accompanied by the calculation of any asphalt price adjustment and a showing of the current month's Asphalt Price Index, the Basic Asphalt Price Index.
e. (1) Every bid specification prepared pursuant to this section may be eligible for a fuel price adjustment. Fuel that is eligible for a fuel price adjustment shall be the sum of the quantities of the eligible pay items in the contract times the fuel usage factors as determined by the Department of Transportation. The types of fuel furnished shall be at the option of the contractor.
(2) The fuel requirement for items not determined by the Department of Transportation to be eligible, and for pay items in the bid specifications calling for less than 500 gallons of fuel, shall not be eligible for a fuel price adjustment. If more than one pay item has the same nomenclature but with different thicknesses, depths, or types, each individual pay item must require 500 gallons or more of fuel to be eligible for a fuel price adjustment. If more than one pay item has the exact same nomenclature, similar pay items shall be combined and this combination must require 500 gallons ore more of fuel to be eligible for the fuel price adjustment.
(3) Fuel price adjustments shall not be made in those months for which the monthly fuel price index has changed by less than five percent from the basic fuel price.
f. As used in subsections d. and e. of this section:
"Asphalt Price Index" means the Asphalt Price Index as determined and published by the New Jersey Department of Transportation.
"Basic Asphalt Price Index" means the Basic Asphalt Price Index as published by the New Jersey Department of Transportation in its "Standard Specifications for Road and Bridge Construction," as revised by the "Standard Inputs" periodically issued by the New Jersey Department of Transportation.
"Fuel Price Index" means the Fuel Price Index as determined and published by the New Jersey Department of Transportation.
"Pay Item" means a specifically described item of work for which the bidder provides a per unit or lump sum price in a bid specification as determined and published by the New Jersey Department of Transportation.
g. Any bid specification prepared pursuant to this section shall include in the contract a material price stabilization clause that provides for adjusting the price of a material, not already covered by subsections d. and e. of this section, purchased during the term of the contract, the value of which exceeds five percent of the contract value, if the material's price increases or decreases by at least two times the percentage change in the Consumer Price Index for that geographic region, at any time during the term of the contract. The contractor may provide to the project owner a list of those items included in the contract, and subcontracts, which exceed the five percent threshold. These items shall be deemed eligible items. No price adjustment shall be made for any item not identified as an eligible item by the contractor at the time of bid. The contractor awarded the project shall disclose to the project owner the price included in the contractor's bid for eligible items, and shall be required to document the actual cost for the purchase of the eligible items to be deemed eligible for a material price adjustment. The material price stabilization clause shall be applicable to every party to the contract, including subcontractors.
In the case of a subcontract, of any tier, "contract value" in this subsection means the total value of that individual subcontractor's contract with the prime contractor, general contractor, or higher tier subcontractor.
The baseline for any price adjustment shall be specified in the contract and shall be a recognized industry index for the specific material. A recognized industry index includes, but is not limited to, the Engineering News Record's "Materials Cost Index," and the "Cost of Construction Inputs," as determined by the United States Department of Labor, Bureau of Labor Statistics, for the month immediately preceding the contract award. The index used as a basis for adjustment shall be the same index used to determine the baseline, and the adjustment shall be paid on a lump sum basis, as appropriate, to either a contracting unit in the event of a downward adjustment, or to a contractor or subcontractor in the event of an upward adjustment.
Any funds awarded to a contracting unit as a result of a downward adjustment in the price of the material as provided under the material stabilization clause of a contract shall be paid or credited by the contractor, or subcontractor of any tier which actually purchased the material.
Any funds awarded to a contractor or subcontractor of any tier as a result of an upward adjustment in the price of the material, as provided under the material stabilization clause of the contract, shall be paid by the contracting unit to the contractor or subcontractor of any tier which actually purchased the material.
(cf: P.L.2009, c.187, s.1)
2. This act shall take effect immediately.
STATEMENT
This bill would require each construction contract entered into pursuant to the "Local Public Contracts Law," (C.40A:11-1 et seq.), to contain a provision that requires renegotiation when the price of a key construction material fluctuates by at least two times the change in the Consumer Price Index during the term of the contract. This bill would ultimately lower the cost of projects for the taxpayer by providing greater certainty to project bidders, thus lessening the impact of contingency pricing currently included in bids. Additionally, public entities will benefit by earning credit for any qualified materials that decrease in price during the term of a contract.
Materials which exceed five percent of the total contract value would trigger the renegotiation clause and the renegotiated price would be measured using a baseline price for a particular material, which this bill would require to be a recognized industry price index.
The bill provides that any funds awarded to a contracting unit as a result of a downward adjustment in the price of the material as provided under the material stabilization clause of a contract shall be paid or credited by the contractor, or subcontractor of any tier which actually purchased the material. In addition, any funds awarded to a contractor or subcontractor of any tier as a result of an upward adjustment in the price of the material, as provided under the material stabilization clause of the contract, shall be paid by the contracting unit to the contractor or subcontractor of any tier which actually purchased the material.
