Sunday, October 23, 2011

The Wicks Law Debate

In New York, all public construction projects (with very few limited exceptions) must be separately specified and bid out so that various different contracts for various trades can be awarded rather than allowing the public entity to hire the classic general contractor who can then hire all of the various trade subcontractors itself.  Wicks law is frequently the topic of hot debate with many wondering whether it is the most effective way to manage public construction in New York (and prevent corruption) or whether it simply makes projects more expensive and poorly managed?

When does Wicks Law apply?

Pursuant to General Municipal Law Section 101, any public entity entering into a contract for erection, construction, reconstruction, or alteration of buildings, when the cost of such project exceeds:

  • $3,000,000.00 in New York City (Queens, Bronx, Kings, New York and Richmond Counties); or
  • $1,500,000.00 in Nassau County; or
  • $1,500,000.00 in Suffolk County; or
  • $1,500,000.00 in Westchester County; or
  • $500,000.00 in any other County in New York 
then Wicks Law applies and Municipal Law Section 101 must be followed.  

What does Wicks Law require?

When Wicks Law is applicable, the following three groups of trades must be broken into different contracts:

1.  Plumbing and gas fitting;
2.  Steam heating, hot water heating, ventilating and air conditioning apparatus; and
3.  Electric wiring and standard illuminating fixtures

In other words, the three trades must be done by three different contractors (one plumbing contractor, one HVAC contractor and one electrical contractor).  The responsibility for then overseeing these contractors falls back to the public entity.

Is Wicks Law effective?

Maybe.  It certainly depends on what entity is running the project and in which County the work is being performed.  If the entity running the project is not familiar with construction management it could end up being a negative for the project since there is no general contractor overseeing the work and reporting to the public entity.  Without a central control, there can be communication and coordination problems between the three trades that can lead to delays and cost overruns.  

Repealing Wicks Law could allow public entities to do what every other construction developer does:  bid a project out and award the contract to the most qualified, most cost efficient and effective option rather than breaking the contract into separate trades that could significantly increase the overall costs.  Those in favor of Wicks Law argue that it prevents corruption and allows the government to get the "wholesale" price rather than paying a markup through a general contractor.  But is the added hassle of dealing with four separate contractors (the three trades and then the general contractor overseeing the remaining work) really worth the cost savings?  Doesn't the additional overhead on the government end to oversee the trades directly cut out any potential savings?  

While the Wicks Law debate rages on, and calls in Albany for change have become much louder the past couple of years, I wonder what experiences, positive and/or negative, each of you have had with Wicks Law?  I am also curious whether upstate contractors, where the Wicks Law threshold is much less, feel differently about the law than downstate contractors?  

Vincent T. Pallaci is a partner in the New York law firm of Kushnick Pallaci, PLLC and practices primarily in the area of construction law.  Kushnick Pallaci has offices in Buffalo, New York and Long Island and provides legal services to the construction industry across the State of New York.


  1. Wicks law sounds similar to a law in Washington State where the MEP sub contractors are “Named” at the bid opening. Collusion, Bid Rigging, Kick Backs and other illegal activities aside the intent/effect with the Washington law simply was to address Bid Shopping. Bid shopping in the MEP market was rampant in the 1970 and 80 when the law was put into place. This has curtailed some of the activity but not all and has made bidding MEP more civilized as the low bidder in these sections can have the confidence to be competitive and not have the possibility to be shopped out. The actual nature of the bidding process and the associated contract delivery vehicle is not clear other than it appears more likely to be a Construction Management (CM) process versed a General Contractor At Risk. The difference being the style of putting a project out to bid, one lump sum at a specified hour verses bid packages that are assembled over time and possibly several months. The latter offering to take the rush decision making out of the bid room and move it to a methodical thought process which can be evaluated over time, reducing the biggest factor human error from the process.

  2. It seems to me to be nothing more than a multiple prime contracting method that has worked for several years in public construction. The only difference seems to be the Public Agency becomes the General Contractor. Most General Contractors are nothing more than a clearing house for hte subs. Few Gc's do the actual construction which definitelt leads to subcontractor price shopping. Hawaii used to require all subcontractors to quote through the GENERAL CONTRACTORS ASSOCIATION only. Prime would pick up their pricing at the local GCA office. If they did not get a sub bid for some of the work then they must self perform or not be ablle to bid the entire project. Wicks Law, rightly or wronly takes the effective construction manaement away from professionals and puts it in the hands of lesser qualified management indiviuals. TIme will tell whether it is cost effective.


  3. There's probably some advantage to buying a single contract through a general contractor and that is that the GC then carries all the burden and risk for the public contract, particularly as regards schedule delays and their associated costs. Any claim as a result of delay is solely the responsibility of one party (the GC) in the eyes of the public agency and it is up to the GC to unravel the often costly analysis/litigation as to who held who up and what the associated costs and responsibilities were. The perceived pricing advantage of having competition through multiple prime contractors of different trades is probably less than it has ever been because contractors of different trades have been hurting for work for some time and can't afford to bid to a GC with excessive margins - they won't win the work. Further, GCs can't bid the main contracts carrying subcontractor bids that are excessive because it drives up their number and reduces their chance to win the main contract in the first place. Given that good GCs are working for less work with slim margins already and their subcontractors are doing the same, the financial advantage to the public agency of purchasing separate contracts is far outweighed by negating the risk (both operational and financial) they assume by trading with a single source GC. Any purchasing advantage they gain by using multiple primes would almost certainly be eliminated by the cost of discovery and litigation for a single project that goes wrong. Better to leave that cost with the GC (who is after all the expert in the field) - it is this risk assumed that makes the GC something that is substantially more than a 'clearing house for the subs' and why the backing of a quality surety is often required of the GC.