Buried in New York's recent, long-delayed state budget package is a provision allowing conditional relief to contractors suffering price increases for steel products.

Contracts based on bids submitted before April 15, 2004, involving steel materials purchased after December 1, 2003, may be adjusted upon a determination by the department, board, agency or public benefit corporation which awarded the contract that there has been an increase in the cost of steel materials of more than 5 percent since the time of award. See, Part S, Section 2 of the budget legislation at Chapter 56 of the Laws of 2004; S. 6056, A. 9556.

The determination is to be made based on available evidence, such as "an appropriate nationally recognized economic index published by the United States department of labor or other appropriate organization."

Contract adjustments are subject to the approval by the state controller's office. Prices also are subject to downward adjustment in the event of a subsequent de-escalation of prices to a level lower than the original bid price.

Requests for adjustments are to be made in writing with documentary evidence and will be subject to public inspection. Labor costs, overhead and profit charges are not to be altered as part of such price adjustments.

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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-848-4996 or at paulberning@howrey.com or contact your Howrey attorney. For more information about Howrey's Construction Practice Group, click here.

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