The Wicks Law protects New York taxpayers

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For almost a century now, there has been a mandate for state and local government construction projects in New York. The purpose of this law–commonly known as the Wicks Law–is to promote competitive bidding and provide full transparency in construction projects involving taxpayer dollars.

The Wicks Law requires the use of multiple bids on construction projects above a specified dollar amount. If a public construction project exceeds $500,000 in Upstate New York, the public agency is required to solicit separate bids from the general contractor, the electrical contractor, the heating/ventilation/air conditioning contractor and the plumbing contractor. This is known in the industry as a multiple prime project.

The dollar threshold varies throughout the state to accommodate each area’s market. Without this law, the public construction agency accepts a single bid from a general contractor, which then subcontracts the work to the specialty contractors listed above. This is known as a single prime project.

There are arguments for using both multiple prime and single prime contracts in public construction. Some of the major arguments in favor of single prime contracts include cost and quality. Proponents of this approach argue that multiple prime contracts lead to higher original bid costs, amplified administrative expenses, more change orders and lower quality in the final project.

In fact, there are clear advantages in using multiple prime contracts. This method actually lowers bid costs and increases the quality of the final project. This is primarily due to the bidding process being open to all qualified contractors in the area, which increases competition. Multiple prime projects can avoid the concerns of general contractors hiring "friends," marking up the price of the project and delaying payments to subcontractors. One of the biggest problems in the industry today for a subcontractor is payment delays or non-payment, which often leads to higher project costs and expensive litigation. If you owned a business and completed a job on time without error, wouldn’t you expect to be paid promptly?

With multiple prime contracts, the public construction agency has the opportunity to work directly with specialty contractors that it believes can provide the best work at the most competitive price. Moreover, as in any industry, increased competition promotes a price war, which produces an initial bid cost that is lower than for single prime projects. The result is a project completed more efficiently and effectively, leading to increased value at a lower cost.

Let’s examine some facts. A study conducted by professor Eddy Rojas of the University of Washington for ELECTRI International-The Foundation for Electrical Construction Inc. compared single and multiple bid projects based on their bid cost and on total contract cost relative to original bid cost. Three ratios were examined in this study: final cost to estimated cost, bid cost to estimated cost, and final cost to bid cost.

In New York, the multiple prime contract agency studied was the Office of General Services; the single prime contract agency was the State University Construction Fund. There were 220 multiple prime projects totaling $1,089,000,000 and 247 single prime contracts totaling $1,350,000,000 in New York in this study.

The study showed that the average ratio of final cost to estimated cost was 5 percent higher for single prime contracts than for multiple prime contracts. The ratio of bid cost to estimated cost was 4 percent higher for single prime jobs, and the ratio of final cost to bid cost was 1 percent higher for single prime contracts. Roughly 80 percent of the savings found were attributable to lower bid costs for multiple prime projects.

The Wicks Law was created to promote competitive bidding and provide full transparency in construction projects involving taxpayer dollars. According to this national study, using multiple prime contracts saves New York taxpayers millions of dollars.

As a New York taxpayer, I would like my money to be used as effectively as possible, especially in today’s economy. The Wicks Law continues to accomplish exactly what it was designed to do: protect New York taxpayers.

Lawrence J. Bradley is executive director of the Rochester chapter of the National Electrical Contractors Association.

3/12/10 (c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail [email protected].