Wicks Law Revisions Stun Contractors - (4/18/2008)

Wicks Law revisions stun contractors; many fear being squeezed out
4/18/2008

The Business Review (Albany) - by Adam Sichko The Business Review

Last-minute changes in the state budget have shocked many construction contractors who could lose some access to government-funded projects.

State legislators overhauled the Wicks Law near the end of closed-door budget negotiations earlier this month, with the stated aim of reducing costs to taxpayers.

But industry groups argue that the revisions will drive up costs and prevent non-unionized contractors from competing for public projects. This comes at a time when economic woes are slowing the flow of private-sector work.

"It could be devastating to us. We're basically shut out," said Ed Lawless, a vice president at WeatherGuard Roofing Co. in Colonie.

He said almost half the company's annual revenue comes from public projects. Its 120 employees are not unionized.

The Wicks Law mandates separate contracts for electrical, plumbing and other work on public construction projects costing more than a certain amount. It was intended to create more competition, while protecting subcontractors from fraud during the bidding process.

For upstate projects, legislators raised the price tag that triggers Wicks Law requirements by 10 times, to $500,000. That minimum amount had gone untouched for more than four decades, but critics say that threshold is still too low.

"Even a dome for sand or salt will cost over $500,000, on a county scale," said Mark LaVigne of the New York State Association of Counties.

Gov. David Paterson hailed the changes as "relieving the crushing burden of local property taxes." More than 70 percent of the state's public works projects will be exempt from the revised Wicks Law, state officials said.

But that's largely because of another change that has irked construction contractors but pleased labor unions.

Now, public entities have the option to sign an agreement with one general contractor that exempts a project from all Wicks Law requirements. The general contractor, with some oversight, then decides which subcontractors get to work.

"That basically means it'll be a union-type job," said Bill McLeod, head of McLeod Systems Inc., a unionized interior finishing firm in Schenectady. "That's probably beneficial to me, but having been in the industry, I can see both sides of the issue."

Also, the Wicks Law now says that all firms working on a public project must have had a state-approved apprenticeship program for at least three years.

Currently, no business can get approval to create a new apprenticeship program. Former Gov. Eliot Spitzer put a moratorium on that process until the state Department of Labor finishes an internal review of its procedures.

Results aren't expected until next month at the earliest.

"How will that allow any new people to get in, especially small and minority contractors?" asked Jeffrey Zogg, executive director of the General Building Contractors of New York State Inc.

"It's bogus reform," added Zogg, who would prefer to get rid of the Wicks Law.

The changes are hardly new.

In June 2007, Spitzer and legislative leaders announced an agreement to reform the Wicks Law. But bitter political fights erupted within weeks, derailing the deal.

The proposed changes at that time mirror the ones enacted in the state's 2008-09 fiscal-year budget. The new regulations go into effect on July 1.

"It's shutting us out of a market where we've established a niche," said Stefanie Wiley, vice president of finance at Hoosick Valley Contractors Inc. in Melrose. The nonunionized firm takes in about $6 million in annual revenue, and 75 percent of that comes from public projects, Wiley said.

"We have to re-evaluate and regroup."
Quick info

Major changes to the Wicks Law

Dollar amounts
Now: Wicks Law requirements govern a public project if it costs more than a certain amount. Legislators set up a three-tiered system of thresholds: $500,000 for upstate projects, $1.5 million for projects in Long Island and Westchester, and $3 million for the New York City area.
Before: The law previously set one minimum amount for the entire state: $50,000. And that had gone unchanged since the early 1960s.

Project labor agreements
Now: A public entity can waive all Wicks Law requirements if it signs an agreement with one general contractor, who will largely determine work on a project.
Before: This option did not exist before.

Apprenticeship programs
Now: All firms working on a public project must have had a state-approved apprenticeship program in place for at least three years.
Before: This requirement did not exist before.

Source: 2008-09 state budget; Business Review research

 

asichko@bizjournals.com | 518-640-6818

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