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05/21/2024 10:05 AM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20230&cosponId=38696
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Senate of Pennsylvania
Session of 2023 - 2024 Regular Session

MEMORANDUM

Posted: December 14, 2022 05:41 PM
From: Senator Devlin J. Robinson and Sen. John I. Kane
To: All Senate members
Subject: Construction Material Price Escalation
 
In the near future, we will introduce legislation to address extraordinary construction material price increases.
 
It is well known that material costs have skyrocketed due to global supply chain disruptions and inflation, and this has overwhelmingly affected the construction industry. Contractors currently face unanticipated cost escalation, sometimes of more than 300%, on the price of construction materials.
 
This has especially hurt contractors who were awarded construction contracts based on bids submitted prior to severe price escalation of materials required for the project. Public works contractors facing this scenario are currently obligated to carry the full burden of these price escalations, potentially leading to financial harm while they are completing public projects.
 
Our legislation will specifically authorize Commonwealth agencies to adjust previously awarded contracts with public works contractors whose bids did not account for the unforeseeable escalation of material prices.
 
Contractors may apply to the Secretary of General Services who would be authorized to adjust the prices of construction material line items in public contracts. They would be eligible if the project’s bids were submitted between March 15, 2020 and the effective date of the legislation, and if the cost of material acquisition by the contractor, subcontractor, or supplier has increased by 5% or more since the time of the bid.
 
The goal is to make sure contractors are compensated fairly for the public projects they performed during the pandemic. This is specifically for construction materials – not labor costs, profit, or overhead. Any adjustments will be made public on the DGS website.
 
Senator Robinson circulated a memo last session, but did not introduce the bill. We have worked closely with stakeholders to make sure the introduced language is in its best form.
  
We respectfully ask for your consideration to join us as a cosponsor of this important legislation. If you have any questions, please contact Sen. Robinson’s office or Sen. Kane’s office. Thank you.
 
 



Introduced as SB359