COFED Reform Proponents to Visit with Governor

Representatives of the construction industry coalition seeking the immediate prohibition of the use of COFEDs (Contractor Forfeiture Enhancement Devices) in public contracting in New York will be meeting in Albany on Wednesday, September 7, 2016 with two Deputy Counsel from the Governor's Office with the goal of gaining the Governor's support.

As you may recall, the critical need for this COFED Reform Legislation, conceived and authored by G&C managing partner, Henry L. Goldberg, is to protect contractors and subcontractors statewide from the runaway epidemic of abusive COFED use in public contracting in New York State.

Increasingly, contractors and subcontractors are being forced to comply with strict notice and damage recordkeeping provisions being inserted into public works contracts, or risk losing all rights to any recovery in the event of a contract dispute, even if the failure to comply with the particular contract notice provision caused no real harm or "prejudice" to the public owner.

Worse still, many courts are now blindly enforcing such provisions, with no consideration being given whatsoever to the informal context within which major public works construction projects operate. As a result, contractors and subcontractors are being seriously harmed and government agencies are wrongfully obtaining unfair windfalls for no justifiable reason.

This is a harsh, one-sided result that flies in the face of both basic notions of good faith and fair dealing, as well as fundamental principles of contract law (e.g., "equity abhors forfeiture"). Yet in New York, this abusive practice is growing amongst public agencies, and contractors and subcontractors, the backbone of the NYS economy, are being hurt.

As we reported on these pages, this reform legislation was very well received by the NYS Legislature. In fact, our COFED Reform bill has already passed the Assembly unanimously, and passed the Senate by all but two votes! The only thing remaining for this important legislation to become law is the Governor's signature.

In addition to me, representatives of the following association members of the coalition will also be participating in the discussions with the Governor's counsel, led by STA Lobbyist Perry Ochacher; Subcontractors Trade Association (STA); Associated General Contractors (AGC); Empire State Subcontractors Association (ESSA); Eastern Contractors Association (ECA); General Contractors Association of New York (GCA); and Building Trade Employers' Association (BTEA).

The COFED Reform Legislation is designed to prevent this abuse by New York public agencies at all levels. Without this critical protection, contractors and subcontractors will continue to suffer the complete forfeiture or unintentional waiver of valuable contract claim rights, often for failing to notify a public agency of that which it is typically already independently aware! The "COFED Reform Legislation" will, for the first time, create a "Prejudice Rule" in New York for the handling of contact notice provisions.

Under such a rule, in order to impose forfeiture or waiver upon a contractor, a public agency would have to show prejudice actually caused by a contractor's lack of compliance with a public contract's notice provisions. Simply grasping an unconscionable windfall at the expense of a contractor or subcontractor, which failed to give a contractual notice, would no longer be countenanced under New York Law.

Enough is enough. Contractors and subcontractors which invest substantially, and often risk everything, to serve the public, and whose efforts and investment help build this State (and who employ untold thousands), need this basic protection from the rampant abuse being imposed by overzealous public contract managers.

If your applicable industry trade association is involved, call and voice your support. If it is not listed above, call them immediately and get them onboard. If they need further information they can contact me directly. The time to act is now.