Sponsored by:
Assemblywoman SHANIQUE SPEIGHT
District 29 (Essex)
Assemblyman REGINALD W. ATKINS
District 20 (Union)
SYNOPSIS
Provides equitable relief to government contractors who have sustained unanticipated expenses due to increases for construction materials; appropriates $25 million.
CURRENT VERSION OF TEXT
As introduced.
An Act providing equitable relief to government contractors who have sustained unanticipated expenses due to increases for construction materials and making an appropriation.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The Legislature finds and declares that:
a. It is in the vital interest of the general public that public works throughout the State of New Jersey be administered efficiently and at a reasonable and equitable cost.
b. The unforeseen emergency of unanticipated increases in construction material costs has imposed substantial inequity upon government contractors awarded contracts after public bidding.
c. Such inequity has threatened the ability of contractors to fulfill the contracts awarded to them.
d. 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.
e. It is therefore in the best interest of the State to provide equitable relief to those government contractors who have sustained damages from the unforeseen increases in construction material costs.
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 that contract pertaining to such construction, the terms and conditions of the 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 those materials by the contractor, subcontractor, or supplier of the materials in excess of five percent, determined as of the time of the award of the 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 costs for subsequent decreases that may result in a cost being lower than the original bid. Any subsequent decrease shall be upon a determination by the director. The 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 State contractor requesting an adjustment shall submit an application in writing by submitting documentary evidence to the State Contract Manager for such contract establishing the 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 construction materials to the extent as the costs exceed five percent thereof and the 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 that are valued at $25 million or less and are based upon bids submitted prior to December 1, 2021, 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 contractor, when extraordinary and unforeseen general market conditions have caused increases in the contractors costs for construction materials or other physical elements consisting of construction materials to be sold under the contract.
A contractor shall submit, in writing, evidence as required and deemed to be sufficient by the director, that as the direct and sole result of those increases during the term of the contract, that exceed five percent of the contractors 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 those net losses unless the contract is suspended or terminated.
Such determination for a termination or suspension under this subsection 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 for the costs 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 contractors acquisition costs during the contract term. Any increase in contract costs shall be subject to the approval of the State Treasurer.
Any contractor who receives an increase for the cost of the commodities shall also be subject to a downward adjustment in the cost of the commodities for subsequent decreases that may result in a cost being lower than the original bid. Any subsequent decrease shall be upon a determination by the director that there has been a subsequent decrease in the c