ASA Central PA and Western PA Chapters Support Construction Materials Price Escalation Bill
On Thursday, the PA Senate Labor and Industry Committee voted on SB 359, the Construction Materials Price Escalation Bill, which would address extraordinary construction material price increases. ASA Central PA and Western PA Chapters helped draft this legislation. 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. This legislation would specifically authorize the Commonwealth of Pennsylvania’s 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 and we applaud PA Sens. Robinson and Kane for introducing this important legislation.