C.O.F.E.D. (CONTRACTOR FORFEITURE ENHANCEMENT DEVICE)

Further to our Construction Law Update of last week, and as the Legislative Session in Albany comes to a close, events are moving quickly regarding the C.O.F.E.D Reform Bill. The Bill (drafted by G&C Managing Partner, Henry L. Goldberg) directly addresses the severe harm being done to public contractors in New York State by their own government agencies. I am pleased to report that the Bill passed the NYS Senate by the (almost unanimous) vote of 59 to 2! Clearly our State Senators, realized the unfairness of C.O.F.E.D.s ("Contractor Forfeiture Enhancement Devices") in public contracts and recognized the need for immediate reform to help the public contracting community, a major economic engine in New York State.

As you may recall, this Bill will immediately create a "Prejudice Rule" with regard to the epidemic of excessively harsh and strictly enforced (and typically unnecessary) notice provisions in public contracts throughout New York State.

These ubiquitous notice provisions are being shamelessly used by public agencies to unfairly impose waiver and forfeiture of valuable contractor rights. Ironically, these claim rights enable contractors to fairly receive compensation for the wrongdoings perpetuated by public agencies themselves, from pervasive defective design to extra work requirements, to delay, interference and impacts of all types.

Under the Bill, government agencies will be prohibited from denying a contractor's claim based on the failure of the contractor to provide timely notice, unless the government suffered actual "prejudice" as a result of a contractor's delay in notice. Furthermore, the government's rights would not be deemed prejudiced unless the failure of the contractor to give timely notice materially impairs the ability of the government to investigate or defend a claim. The Bill creates this "Prejudice Rule" so that if, on the rare occasion, the public owner is actually prejudiced by lack of notice, the notice provision would be enforceable; but in the typical situation, where there is absolutely no prejudice and simply an unjustified windfall to the government, caused by the unintentional waiver of a claim, the notice provision would not be enforceable.

With the Senate Bill (S.6906) now having been overwhelmingly passed, we need to turn our immediate attention to the Assembly. In this regard, representatives of a broad coalition of the construction industry met with Assembly Speaker Carl E. Heastie and his Counsel last evening. Whether you are personally familiar with your NYS Assemblyperson or not, please immediately contact him/her today. It is just a phone call, but it could have a tremendous impact on your future.

For future detailed information about the C.O.F.E.D. Reform Bill please refer to our prior Construction Law Update of last Thursday, June 9, 2016. Feel free to use it as a Memorandum In Support in discussions with your assemblyperson.

If you would like a copy of the Assembly Bill (A.10136), please contact me directly at hlgoldberg@goldbergconnolly.com, or simply call your local assemblyperson immediately. It is not an overstatement to say that the future of your company as a public contractor can very well depend upon the success of this desperately needed reform.