Vol 21, No

Facing a huge potential budget deficit, Governor Pataki called for fiscal restraint in his January 8, 2003 State of the State message. In his 9^th annual address to the state Legislature, the Governor said he will propose a state budget that would reduce spending in every area but public security, preserve already enacted tax cuts, and enact new tax incentives to encourage high-tech job creation.

Citing the tremendous damage caused to New York’s finances by the terrorist attacks and the national economic downturn, the Governor called for fiscal discipline, perseverance and nonpartisanship in addressing the State’s unprecedented fiscal challenges. He stated that the combined impact of 9/11 and the prolonged economic downturn has severely affected tax revenues and contributed to a potential deficit of approximately $2 billion in the current fiscal year, and a shortfall several times larger in the upcoming fiscal year. The Governor indicated that he will submit a Budget that: reduces year-to-year spending; reforms Medicaid and other government programs; proposes the privatization of certain State assets; and reduces debt costs by taking advantage of lower interest rates. The Governor did not specifically indicate how capital construction programs and state building aid to school districts would be impacted in his budget.

The leadership in the Republican-led Senate and Democratic-led Assembly reacted predictably to the Governor’s speech. Senate Majority Leader Joseph Bruno stated “I applaud the Governor for his commitment to continuing tax cuts that have made New York more competitive and his commitment to building on those tax cuts to create more jobs.” Assembly Speaker Sheldon Silver, on the other hand, said “One thing I can assure you, the Assembly Majority will not allow impending budget cuts to be balanced solely on the backs of our children, our working families, or our public servants”.

In a letter to the Governor, The Business Council of New York State hailed the Governor’s message of ongoing tax cuts and reduced spending. In November, the Public Policy Institute (the research arm of the Business Council) began publishing a regular series of one-page fact sheets on different aspects of the state’s fiscal situation, from debt to local aid. PPI’s research has uncovered some important and interesting facts about the state’s fiscal health:

Ø In the past five years, state-funds expenditures have risen by 32 percent, more than twice the rate of inflation. If state-funds spending had simply kept pace with inflation since 1998, this year’s total would be $7.9 billion lower.

Ø Medicaid spending will total $36 billion in New York this fiscal year. If New York could simply bring its per-capita Medicaid spending down to twice the national average, taxpayers would save more than $4 billion a year.

Ø In the last five years, New York has added $3.7 billion to state aid for schools. That’s a 34 percent increase, more than twice the inflation rate.

Ø Taxes in New York are the second-highest in the country, on a per-capita basis, behind Connecticut. Adjusted for income, our combined state and local tax burden is No. 1 among all the states.

Ø As of the end of November, the state had lost 42,400 private-sector jobs over the year. In contrast, however, state government employment had risen over the year by 1,600 jobs.

Ø Property taxes per capita in New York were about 50 percent above the national average in 2000, about $2,378 for every resident.

Ø State and local elected officials have given taxpayers in New York a debt burden of $9,357 per capita, second in the nation behind Alaska, and 81 percent above the national average.

NESCA WILL NOT HAVE A FEBRUARY MEMBERSHIP MEETING.

MEMBERS ARE ENCOURAGED TO REGISTER FOR THE FEB. 15^TH VALENTINE DINNER DANCE.

PRESIDENT’S MESSAGE (Go Top)

On January 16^th, NESCA’s Board of Directors held its annual strategic planning meeting at the Century House. In preparation for this meeting, Board members were asked to complete a short survey. One of the questions asked them to list the major business problems/challenges they face entering 2003. Not so surprisingly, the three most common responses we received were (1) getting paid; (2) the availability and affordability of liability insurance and; (3) employee productivity/work ethic. With the beginning of a new year, NESCA, primarily through our state affiliate Empire State Subcontractors Association (ESSA), will be focusing on these issues as well as other issues of importance to subcontractors and suppliers. We will continue to support reform of sections 240/241 of the Labor Law in an effort to increase the availability and lower the cost of general liability insurance. We have introduced a number of bills designed to reduce and protect retainage held by owners on private and public construction projects. We will continue meeting with the NYS Dormitory Authority in an effort to improve that agency’s payment record, particularly concerning change orders and final payment. And our March 13^th membership meeting program will focus on employee issues in the form of “Human Resources Jeopardy”.

In short, NESCA will be working hard during the coming year to assistance members with the challenges they face in many ways; from legislative and administrative action to information and education. The legislative session is shaping up to be a contentious one with New York facing a $2 billion budget deficit (see page 1 article on the Governor’s State of the State message). That’s why we need more subcontractors and suppliers than ever to get on Board with NESCA and work with us to protect our common interests. We all know of subcontractors and suppliers who are NOT members of NESCA. Let’s all increase our efforts this year to bring them into the fold. In other words, lets ALL make a commitment to recruit a new member. New members benefit through exposure to the tremendous amount of information disseminated by NESCA, and the association benefits through political clout gained through increased numbers. In this case, size DOES matter!

Those of you who attended NESCA’s January 9^th joint membership meeting with NAWIC were treated to a fantastic presentation by David Biggs about the World Trade Center Disaster. Mr. Biggs, with Ryan-Biggs Associates, was one of 18 engineers asked to serve on the Building Assessment Team formed to determine specifically why the towers came down. His presentation was extremely interesting and very informative! A sincere “thank you” goes out to Adam Ross Cut Stone Co., Inc. for sponsoring the January 9^th membership meeting.

NESCA won’t be holding a regular membership meeting in February, but we will hold a Valentine Dinner Dance on February 15^th at the Century House. The Dinner Dance is a fabulous event and I encourage all members to join us for an extremely enjoyable night of socializing, dancing and great food!

James M. Elacqua, President

COURT HOLDS THAT PROMISSORY ESTOPPEL APPLIES TO BIDS (Go Top)

The Supreme Court of New York, Appellate Division, Third Department on December 26, 2002 decided Bunkoff General Contractors, Inc. v. Duham Electric, Inc. Plaintiff in this case was the successful bidder as general contractor for a local renovation project. In preparing its bid, plaintiff incorporated a quotation for electrical work submitted by defendant. According to plaintiff, before submitting its bid to the owner, its representatives contacted defendant’s president to confirm the quotation and informed him that if they were awarded the project, the electrical work would be awarded to defendant. Prior to awarding the bid to anyone, however, the owner informed the plaintiff, and apparently all other bidders to come up with cost reduction suggestions. Defendant thereafter made two written proposals containing various cost reductions which were passed on to the owner. After plaintiff was formally awarded the contract, but before any written subcontract was executed between them, defendant refused to perform the electrical work on the project. The plaintiff secured another electrical subcontractor for a higher price and then commenced this action sounding in promissory estoppel to recover the difference between the defendant’s bid and the amount paid to the substitute subcontractor. The court pointed out the concept of promissory estoppel provides a remedy for persons who detrimentally rely on the promises of others and are injured thereby. The court further stated that in its view, the weight of controlling, recent authority compelled the conclusion that the doctrine (of promissory estoppel) can be asserted as a viable cause of action in New York State. The court further rejected the defendant’s argument that the doctrine of promissory estoppel is not a legally cognizable cause of action in disputes regarding construction contract bids.

This case illustrates the application of the doctrine of promissory estoppel to construction bids. More specifically, where a subcontractor who makes a clear and unambiguous promise to a contractor when it submits its quote and where the contractor reasonably relies upon the subcontractor’s promise in submitting its own bid to the project owner, the subcontractor will be prevented from subsequently refusing to honor its bid prior to entering into the subcontract. The fact that the subcontractor has not yet entered into the subccontact with the contractor will not relieve its liability to the contractor who has relied upon the subcontractor’s bid.

Terence J. Burke, Esq., NESCA Legal Counsel

BILL WHICH GRANTS UNIONS PREVAILING WAGE ENFORCEMENT POWERS DELIVERED TO GOVERNOR (Go Top)

A bill which would grant unions the same standing to enforce the prevailing wage law as the public owner in charge of a public work project has been sent to Governor Pataki for his consideration. This bill, S.7562/ A.11582, was passed by both houses of the state Legislature in June but was not delivered to the Governor until December 30^th.

The bill, which would amend Section 223 of the Labor Law, states that “….an employee organization shall have the same standing to enforce the provisions of this article against a contractor or any subcontractor as the officer, department, board or commission in charge of such public work contract if any of the employee organization’s members were employed on such public work project by any contractor or subcontractor who fails to comply with or evades the provisions of this article. It shall not be necessary for the fiscal officer to present evidence of such non-compliance or evasion to the employee organization in order for said employee organization to enforce the provisions of this article…..”

NESCA has strongly opposed this bill for a variety of reasons and has questioned its constitutionality. It is NESCA’s position that there are many remedies currently available to adequately enforce the prevailing wage law. Public contracting agencies and the Department of Labor have the right to withhold payments from contractors, assess penalties and interest where a contractor or subcontractor has underpaid wages, and debar contractors and subcontractors for willful violations of the law. While the association has long supported the vigorous and fair enforcement of prevailing wage requirements, this legislation goes completely over the edge, anointing private labor unions with governmental prosecutorial and enforcement powers, something NESCA believes is clearly unconstitutional. To make matters worse, the bill would allow unions to enforce the prevailing wage law completely absent any evidence that a contractor or subcontractor has even violated the law.

NESCA has urged Governor Pataki to veto this bill, arguing that the bill will arm unions with astonishing new powers but will not result in improved enforcement of the prevailing wage law. Since the bill was delivered to the Governor at the very end of the year, it automatically became a “30-day bill”, meaning the Governor has 30 days to sign or veto this measure.

WELCOME NEW MEMBERS (Go Top)

Capital Region Insur. Agency, Inc.

1021 Watervliet Shaker Road

Albany, NY 12205

(518) 456-8965; Fax (518) 456-3901

Contacts: Peter Hanely, Bob Franzese

Long Island Pipe

60 Cohoes Ave.

Green Island, NY 12183

(866) 800-9359; Fax (518) 270-8384

Contact: Paul Badejo

Riverside Fab., Inc.

1 Pruyn’s Island Drive

Glens Falls, NY 12801

(518) 798-3533; Fax (518) 798-1711

Contact: Erla S. Oakley

Star Roofing and Restoration

P.O. Box 941

Albany, NY 12201

(518) 449-3422; Fax (518) 449-3426

Contacts: Peter Wall, James Wall

Utica Mutual Insurance Company

P.O. Box 530

Utica, NY 13503

(315) 734-2943; Fax (315) 734-2149

Contacts: Hal Winstell, Rick Pesano

Victaulic Co. of America

19 Pine Meadows

Exeter, NH 03833

(508) 878-7367; Fax (603) 773-0052

Contacts::S. MacDonald,,Ben Lauletta

Woodstone Development, LLC

P.O. Box 338

Bethel, NY 12720

(845) 583-6500; Fax (845) 583-8011

Contact: David Allen

CALENDAR OF EVENTS

February 3, 2003 February 6, 2003

ESSA Board of Directors Meeting NESCA Board of Directors Meeting

Fort Orange Club, Albany, 5 pm Century House, Latham, 6 pm

February 15, 2003 March 6, 2003

Valentine Dinner Dance NESCA Board of Directors Meeting

Century House, Latham, 6 pm Century House, Latham, 6 pm

March 13, 2003 March 27, 2003

NESCA Membership Meeting NESCA Car/Cash Giveaway

Century House, Latham, 6 pm Wolfert’s Roost Country Club, Albany, 7 pm

The NESCA Valentine Dinner Dance is Returning After an 8-Year Absence!

Saturday, February 15, 2003

Century House, Latham

Information and Registration Forms at the NESCA Office!

Order Your Tickets Today!!

Get Your Ticket for NESCA’s 18th Annual Frank Campito Memorial Car/Cash Giveaway

Nearly $35,000 in Prizes to be Awarded!!

Tickets Available at the NESCA Office – Call (518) 869-9800

$200.00 Per Ticket

Bennington Iron Works was the member pulled in the monthly $100 attendance incentive drawing at the January 9^th membership meeting. Sorry you weren’t there!

Better luck next time!

BUSINESS COUNCIL FIGHTS “LABOR NEUTRALITY LAW” (Go Top)

The Business Council of New York State has asked the National Labor Relations Board (NLRB) to issue an injunction preventing New York State from implementing its controversial “labor neutrality law.”

“The NLRB should issue an injunction declaring the law invalid because the law is preempted by the National Labor Relations Act”, Business Council President Daniel B. Walsh said in a December 31 letter to Arthur F. Rosenfeld, general counsel of the NLRB. The NLRB oversees federal labor law and has the authority to enjoin enforcement of state laws on the ground that the field of labor relations is preempted by the National Labor Relations Act. The Walsh letter also applauded the NLRB for beginning an inquiry into the law through an October 30 letter from Margery E. Lieber, an NLRB attorney, to state Labor Commissioner Linda Angello.

On September 30, 2002, Governor Pataki signed the so-called “labor neutrality law”, a measure that will leverage state purchasing and contracting to help unions organize. The law is designed to keep taxpayer funds from being used to counter union organizing efforts. Specifically, the law prohibits the use of state funds and facilities to assist, promote or deter union organizing, and requires employers to keep records of the expenditures of state funds sufficient to show that state funds have not been utilized in this manner. The business community had vehemently opposed this bill arguing that it undermined the NLRA, limited employers’ first amendment rights to free speech, and posed a cumbersome and expensive accounting burden for businesses.

The Walsh letter noted that organized labor has asked state legislatures for such laws in California, New Jersey and New York in an effort to “seek advantages Congress specifically intended to prevent in the National Labor Relations Act, and administrative interpretations historically made in creating a fair system for employee and employer decisions on workplace representations.”

A lawsuit against the labor neutrality law is expected to be filed by various employer groups in federal court on February 1^st.

GRACE PERIOD ENDS FOR ANNUALIZATION OF SUPPLEMENTS (Go Top)

The New York State Department of Labor has decided not to further extend the willful violation “grace period” for contractors who fail to “annualize” prevailing wage supplements beyond December 31, 2002. DOL first issued a notice in April of 1999 informing the construction industry that prevailing wage supplements must be annualized in order for contractors and subcontractors to be in compliance with the prevailing wage law. At that time, DOL’s notice provided a grace period whereby contractors found in violation of the annualization requirements would not receive a “willful violation”. This grace period has been extended periodically by DOL since the original notice was issued….. until now. Effective December 31, 2002, any contractor or subcontractor found to be in violation of the annualization requirement may be subject to a willful violation.

NESCA MEMBERS REMINDED TO COMPLETE ECONOMIC CENSUS (Go Top)

The United States Department of Commerce has sent questionnaires to more than 5 million businesses (about 360,000 in New York State), launching the 2002 Economic Census. The Economic Census is the nation’s primary source of detailed data on business and industry. The Census is taken every five years and provides a benchmark for many other economic surveys and operations. It provides official measures of output for industries and geographic areas. Economic policy makers in federal, state and local governments use Economic Census data to project trends, guide economic development and assess the impact of economic policy. Economic Census data also help build the foundation for Gross Domestic Product (GDP) and other indicators of economic performance. Businesses use Economic Census data in such ways as calculating market share, gauging the competition, evaluating prospective locations, designing sales territories and evaluating new business opportunities.

The Economic Census was mailed to most businesses in every industry in December 2002. Only the smallest of businesses within a particular industry may not receive the Census. The following groups of businesses are included in the Census:

Ø All businesses with employees operating in more than one place of business or establishment.

Ø All businesses with employees operating a single place of business over a given size, which varies by industry.

Ø A sample of businesses with employees operating a single place of business under a given size, which varies by industry. (Generally this includes businesses with less than 10 employees and those businesses which as a group represent less than 10 percent of the sales for the industry.)

Response to the Census is required by law. Title 13, United States Code, requires businesses that receive the questionnaire to answer the questions and return the report to the U.S. Census Bureau. The Economic Census is also confidential and may be used only for statistical purposes. If someone who receives a questionnaire doesn’t return it by February 12, 2003, the Census Bureau will begin follow-up activities, which may include sending additional copies of the questionnaire and/or phone calls from the Census Bureau. Businesses can get help completing the Economic Census questionnaire by visiting the Census Bureau’s Economic Census Help web site at www.census.gov/econhelp or by calling the Census Bureau’s toll-free help line during business hours at 1-800-233-6136.

BRUNO APPOINTS NEW JUDICIARY COMMITTEE CHAIRMAN (Go Top)

Senator John DeFransisco of Syracuse has been appointed chairman of the Senate Judiciary Committee by Majority Leader Joseph Bruno. This represents a positive development for subcontractors since many ESSA bills are referred to the Judiciary Committee and Senator DeFransisco has generally been helpful to subcontractors and the construction industry.

AIRPORT AUTHORITY JOINS ONLINE PURCHASING GROUP (Go Top)

The Albany County Airport Authority has joined the Capital Region Purchasing Group (CRPG), an online regional bid notification system created for purchasing departments within the Capital Region. This new e-procurement system, developed in conjunction with BidNet was created for agencies within the Capital Region to notify businesses of bid and contract opportunities. Businesses have access to all CRPG participating agencies bid information from one single website. This system provides instant access to bids, RFP’s, addenda and awards all on one centralized system. The Airport Authority joins Albany County and the Cities of Schenectady and Troy on this system, and additional agencies are expected to join.

Interested vendors who would like to receive bid opportunities from the agencies participating in this system have two options as follows:

Option 1 – E-mail or Fax Notification

Ø Receive instant alerts for all formal bids (over $10,000) from all participating agencies.

Ø Receive instant alerts for all quotes (bids less than $10,000) from all participating agencies.

Ø Receive instant alerts for all addenda from all participating agencies.

Ø Submit quotes (bids less than $10,000) by e-mail or fax.

Ø Receive instant alerts when awards are made for quotes you submit.

Ø Access all other award information for formal bids from all participating agencies.

Ø Alerts are sent only when they match your product/service codes.

Ø Register for one year for $29.95, two years for $49.95, or three years for $59.95.

Option 2 – No Notification

Ø You must login and search for all formal bids (over $10,000) for each agency.

Ø You must login for amendments (addenda) for each agency.

Ø You must login and search for all award information for each agency.

Ø You cannot access or submit quotes (bids less than $10,000).

Ø Although there is no charge for this option, you will not be notified when new bids and amendments are issued and you must check this website frequently to avoid missing new postings.

The Airport Authority hopes the BidNet system will provide vendors with broader access to new business opportunities while also providing more bid information, less paperwork and a simplified bid process.

Contractors and vendors who have internet access may review registration options online by signing on to www.govbids.com and clicking on the Capital Region Purchasing Group link. The Airport Authority will begin issuing bids, quotes, amendments and awards via this new system beginning January 10, 2003. Companies without internet access should call BidNet at 800-677-1997 and ask for their Vendor Support Department at extension #214 to register by telephone.

COMPTROLLER SAYS CONTRACTOR CAN’T WEAR 2 HATS (Go Top)

A recent opinion issued by the Office of the State Comptroller has found that a firm may not be engaged both as construction manager to act on behalf of a public owner in coordinating the work of prime contractors, and as one of the prime contractors.

The December 30, 2002 opinion was issued in response to an inquiry by the Town of Schuyler concerning a proposed town building construction project. The town was considering engaging the services of a construction manager to assist in certain pre-construction matters and to manage the project during construction. The question raised was whether it would be proper for the firm to also submit a bid and, if it was the lowest responsible bidder, to be awarded a prime contract for a portion of the project.

In issuing this opinion, the Comptroller stated that it has generally been held that section 101 of the General Municipal Law (Wicks Law) does not authorize political subdivisions to delegate to one of the prime contractors project supervision and coordination responsibility. The political subdivision may allow an agent to perform coordination and supervision functions on behalf of the political subdivision, however, the agent may not be one of the prime contractors. Accordingly, the Comptroller found that it would be inconsistent with section 101, as construed by the courts, for the same firm to be engaged both as construction manager to act on behalf of the town, and as one of the prime contractors.

The Comptroller further stated that even if the project was not subject to section 101, the submission of a bid by a firm also engaged to coordinate and supervise the construction work could raise a “reasonable apprehension” among the other prospective bidders, thus creating the potential for an impaired bidding process.

NEW YORKERS PREFER CUTTING GOVERNMENT TO RAISING TAXES (Go Top)

A December poll of New York voters shows that New Yorkers by a significant margin prefer cuts in government to higher taxes, as Albany deals with the state’s current fiscal challenges.

More than half of New Yorkers polled (52 percent) said the state should cut services to balance the budget, a poll by Quinnipiac University Polling Institute showed. In contrast, only 34 percent of responding New Yorkers said the state should raise taxes.

The poll had asked if respondents preferred “raising taxes to keep state services at their current level or cutting state services to keep taxes at their current level?” The poll did not include questions about reducing taxes or cutting costs by making government more efficient.

Forty percent of New York voters said they dislike their local property tax the most, followed by 17 percent each who list the federal income tax and the state sales tax, 10 percent who list the Social Security tax, and 8 percent who list the state income tax.

Governor Pataki has said the state is facing a budget gap of about $2 billion this year, and a budget gap of $5 billion or more is projected for the 2003-04 fiscal year.

Vol 21, No. 8

(518) 869-9800

February 2003

GOVERNOR PATAKI CALLS FOR FISCAL RESTRAINT (Go top)

“We simply must spend less money”

CALENDAR OF EVENTS

February 3, 2003 February 6, 2003

March 13, 2003 March 27, 2003

NESCA Membership Meeting NESCA Car/Cash Giveaway

Century House, Latham, 6 pm Wolfert’s Roost Country Club, Albany, 7 pm