Provides equitable relief to State contractors who have sustained unanticipated expenses due to price escalation for construction materials.

A1803

ASSEMBLY, No. 1803

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman ANTHONY S. VERRELLI

District 15 (Hunterdon and Mercer)

Assemblyman STERLEY S. STANLEY

District 18 (Middlesex)

Assemblywoman VERLINA REYNOLDS-JACKSON

District 15 (Hunterdon and Mercer)

SYNOPSIS

���� Provides equitable relief to State contractors who
have sustained unanticipated expenses due to price escalation for construction
materials.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
providing equitable relief to State contractors who
have sustained unanticipated expenses due to price escalation for construction
materials.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� The Legislature finds
and declares that:

���� It is in the vital interest of
the general public that public works in the State of New Jersey be administered
efficiently and at a reasonable and equitable cost.

���� The unforeseen emergency of
unanticipated escalation in construction material prices has imposed
substantial inequity upon State contractors awarded contracts after public
bidding.

���� Such inequity has threatened
the ability of contractors to fulfill the contracts awarded to them.

���� It is imperative that the
benefits derived by the general public from the existing system of public
bidding and the orderly performance of contracts awarded as a result of such
public bidding continue in an efficient manner.

���� It is therefore in the best
interest of the State to provide equitable relief to those State contractors
who have sustained damage from the unforeseen escalation of construction
material prices.

���� 2.��� a.� (1)� Notwithstanding
the provisions of any law, rule, or regulation to the contrary, whenever the
terms and conditions of a construction contract awarded by a contracting agency
of the State require a contractor to furnish materials in such contract
pertaining to such construction, the terms and conditions of such contract may
be adjusted upon a determination by the director of the appropriate division in
the Department of the Treasury that there has been an increase in the cost of
acquisition of such materials by the contractor, subcontractor, or supplier of
such materials in excess of five percent, determined as of the time of the
award of such contract.

���� The determination by the
director shall be based upon the available evidence, including, but not limited
to, an appropriate nationally recognized economic index published by the United
States Department of Labor or another appropriate organization.� Any such
increase shall be subject to the approval of the State Treasurer.�

���� Any contractor, subcontractor,
or supplier of such materials who receives an increase in the cost of
construction materials shall also be subject to a downward adjustment in
construction material prices for subsequent de-escalation that may result in a
price being lower than the original bid price.� Any subsequent decrease or
de-escalation shall be upon a determination by the director. �Such a
determination shall be based upon the available evidence, including, but not
limited to, an appropriate nationally recognized economic index published by
the United States Department of Labor or another appropriate organization.

���� Any contractor requesting an
adjustment shall submit an application in writing, submitting documentary
evidence to the State Contract Manager for such contract establishing such
increase in accordance with the requirements of the director.� The evidence shall
be subject to public inspection during regular business hours.

���� Upon the agreement of the
parties, the terms and conditions of the contract may be amended in writing to
reflect the increased or decreased cost of acquisition of such materials to the
extent as it exceeds five percent thereof and such contract amendment shall
state the amount of adjustment and basis therefor, but in no event shall direct
labor costs, additional profit, or overhead be part of such adjustment.� No
adjustment shall be granted in an amount which, together with any other sum
obligated under the contract, shall exceed the money appropriated or otherwise
lawfully available for the project.

���� (2)�� The provisions of this
subsection shall apply only to contracts awarded by a contracting agency based
upon bids submitted prior to April 1, 2020, but only for which materials shall
have been purchased or invoiced after March 1, 2020.

���� b.��� (1)� The director is
authorized, with the approval of the State Treasurer, to terminate or suspend
for a part of its term any State contract award for the purchase of commodities
upon written application to the State Contract Manager for such termination or
suspension by the vendor, when extraordinary and unforeseen general market
conditions have caused increases in the vendor�s costs for construction
materials or other physical elements consisting of construction materials to be
sold under the contract.�

���� A vendor shall submit, in
writing, evidence as required and deemed to be sufficient by the director, that
as the direct and sole result of such increases during the term of the
contract, that exceed five percent of the contractor�s aggregate acquisition costs
determined as of the time of the award, the contractor has incurred or will
incur an actual net loss on such contract from the estimated sales made under
the contract and the contractor would continue to incur such net losses unless
the contract is suspended or terminated.�

���� Such determination shall be
made by the director.� The determination by the director shall be based upon
the available evidence, including, but not limited to, an appropriate
nationally recognized economic index published by the United States Department
of Labor or another appropriate organization.

���� (2)�� The director is
authorized, following the determination made pursuant to the provisions of
paragraph (1) of this subsection, that the contractor has incurred or will
incur an actual net loss on such contract from the sales made under the
contract, to grant an increase or increases in the prices of the commodities
specified by the contract, in amounts necessary to prevent further net losses
to the contractor on such contract from deliveries to be made thereafter under
the contract, as compensation for and not exceeding increases of the
contractor�s acquisition costs during the contract term.� Any such increase in
contract prices shall be subject to the approval of the State Treasurer.

���� Any contractor who receives an
increase in the price of the commodities shall also be subject to a downward
adjustment in the price of the commodities for subsequent de-escalation that
may result in a price being lower than the original bid price.� Any subsequent
decrease or de-escalation shall be upon a determination by the director that
there has been a subsequent decrease in the cost of acquisition of such
construction materials by the contractor, subcontractor, or supplier of
materials.� Such a determination shall be based upon the available evidence,
including, but not limited to, an appropriate nationally recognized economic
index published by the United States Department of Labor or another appropriate
organization.

���� (3)�� The provisions of this
subsection shall apply only for such contracts that cover materials which were
purchased or invoiced after March 1, 2020.

���� c.���� All records, books, and
documents of the contractor that are related or useful to the determinations
made by the director shall be subject to audit and examination by the director.

���� 3.��� This act shall take
effect immediately and shall expire on June 30, 2023.

STATEMENT

���� This bill provides equitable
relief to State contractors who have sustained unanticipated expenses due to
price escalation for construction materials.

���� The unforeseen emergency of
unanticipated escalation in construction material prices has imposed
substantial inequity upon State contractors awarded contracts after public
bidding.� Such inequity has threatened the ability of contractors to fulfill
the contracts awarded to them.� It is in the best interest of the State to
provide equitable relief to those State contractors who have sustained damage
from the unforeseen escalation of construction material prices.

���� This bill allows for the terms
and conditions for certain State contracts to be amended to adjust for the
rising costs of construction materials.� The contractors would be required to
provide evidence, in writing, to the State Contract Manager for such contract
establishing such increase in costs.� The determination of the adjustment would
be made by the director of the appropriate division in the Department of the
Treasury and would be based upon the available evidence, including, but not
limited to, an appropriate nationally recognized economic index published by
the United States Department of Labor or another appropriate organization. �The
adjustments would be made in writing and agreed to by both parties and would
not exceed five percent of the cost of acquisition of the materials determined
as of the time of the awarding of such contract.� The adjustments would apply
only to contracts awarded by a contracting agency based upon bids submitted
prior to April 1, 2020, but only for materials purchased or invoiced after
March 1, 2020.

���� This bill also authorizes the
director to terminate or suspend for a part of its term any State contract
award for the purchase of commodities upon written application for such
termination or suspension by the vendor, where extraordinary and unforeseen
general market conditions have caused increases in the vendor�s costs for
construction materials or other physical elements consisting of construction
materials to be sold under the contract.� The vendor would submit, in writing,
evidence that as the direct and sole result of such increases during the term
of the contract, which exceed five percent of the contractor�s aggregate
acquisition costs determined as of the time of the award, the contractor has
incurred or will incur an actual net loss on such contract from the estimated
sales made under the contract and the contractor would continue to incur such
net losses unless the contract is suspended or terminated.�

���� The director would also be
authorized to grant an increase or increases in the prices of the commodities
specified by the contract, in amounts necessary to prevent further net losses
to the contractor on such contract from deliveries to be made thereafter under
the contract, as compensation for and not exceeding increases of the
contractor�s acquisition costs during the contract term.� The adjustments would
apply only for such contracts that cover materials which were purchased or
invoiced after March 1, 2020.

���� The provisions of this bill
would expire on June 30, 2023.