§ 38. Contracts for construction or improvement of highways. State
highways shall be constructed or improved by contract. Upon the
completion and final adoption or approval, as provided by law, of the
plans and specifications for the construction or improvement of a state
highway, contracts therefor shall be executed as provided herein.

1. Advertising for proposals. The commissioner of transportation shall
advertise for proposals for the construction or improvement of such
highways or sections thereof according to the plans and specifications
prepared therefor. The advertisement shall be limited to a brief
description of the work proposed to be done, with an announcement
stating where the maps, plans and specifications may be seen, the terms
and conditions under which proposals will be received, the time and
place where the same will be opened, the amount of the draft or
certified check to accompany the proposal, and such other matters as the
commissioner of transportation may deem advisable to include therein.
Such advertisement shall be published at least once in each week for two
successive weeks in a newspaper published in the county in which such
highway or section thereof is to be constructed or improved, and in such
other newspapers as the commissioner of transportation may designate. If
no newspaper is published in the county, the publication of the
advertisement shall be in such newspaper or newspapers in an adjoining
county as may be selected by the commissioner of transportation. Failure
of such newspaper, published in such county or adjoining county, to
publish such advertisement as provided in this subdivision or as
directed by the commissioner of transportation shall not invalidate the
publication of advertisement for proposals provided such advertisement
is published in another newspaper or trade publication, which will be
most likely to give adequate notice to contractors of the work
contemplated and of the invitation to submit proposals therefor, at
least once in each week for any two successive weeks preceding the date
on which proposals described in such advertisement are to be received
and opened.

2. Proposals. Each proposal shall specify the correct gross sum for
which the work will be performed and shall also include the amount to be
charged for each item specified on the proposal estimate sheet. The
commissioner of transportation may prescribe and furnish forms for the
submission of such proposals and may prescribe the manner of submitting
the same which shall not be inconsistent herewith. Accompanying each
proposal there shall be either a certified check or bank cashier's check
for the amount of the bid deposit, to be fixed by the commissioner of
transportation and specified in the advertisement for proposals or such
other security from the bidder as may be acceptable to the commissioner
of transportation. The checks of the two low bidders shall be deposited
by the commissioner of transportation in a special account. Provided,
however, that if prior to or upon receipt of said checks by the
commissioner of transportation a bidder who is one of the two low
bidders shall have duly filed a bond as hereinafter provided the
commissioner of transportation shall forthwith return to said bidder his
aforesaid check without depositing the same. If alternate proposals are
taken, the checks of the two low bidders of all alternate proposals
shall be deposited. All checks other than those of the two low bidders
shall be returned promptly by the commissioner of transportation.
Notwithstanding the provisions of any general or special law, the money
represented by the checks of the two low bidders shall be paid from the
special account when the contractor has duly executed and delivered to
the commissioner of transportation the contract and the bond or bonds,
if any, required by law for the performance of the work of a public
improvement for the state of New York, or upon the rejection of all
bids. The low bidder, in the discretion of the commissioner of
transportation, and the second low bidder, as a matter of right, may at
any time after the opening of the respective proposals, file with the
commissioner of transportation a bond, the principal amount of which
shall at least equal the amount of the respective bidder's check,
theretofore deposited with his proposal, in the form prescribed by the
commissioner of transportation, with sufficient sureties, to be approved
by the commissioner of transportation, conditioned that the said bidder
will execute a contract and furnish such performance or other bonds as
may be required by law in accordance with the terms of the bidder's said
proposal. If a bidder complies with the aforesaid provision, the
commissioner of transportation shall forthwith return the money
represented by the check of such bidder. In case the bidder to whom the
contract shall be awarded shall fail to execute such contract and bond
if required, the moneys represented by such check shall be regarded as
liquidated damages and shall be forfeited to the state and shall be
deposited by the commissioner of transportation with the commissioner of
taxation and finance to the credit of the general fund. Provided,
however, that although a performance bond or a payment bond or both may
be accepted from a bidder by the commissioner of transportation, a
requirement to furnish such bond or bonds may be dispensed with where
the aggregate gross sums of the contracts to be awarded for the project
is under fifty thousand dollars and provided further, that in a case
where a single contract is issued for a project which is not subject to
the multiple contract award requirements of section one hundred
thirty-five of the state finance law, such requirements may be dispensed
with where the commissioner finds it to be in the public interest and
where the aggregate amount of the contract awarded or to be awarded is
less than two hundred fifty thousand dollars. The gross sums indicated
on the proposals when opened shall be publicly read. The commissioner
shall keep the bids for the several items of the proposals confidential
until an award of the contract is made, after which the proposals shall
be subject at all reasonable times to public inspection.

2-a. Contracts; rubber-modified asphalt materials. In regard to
contracts for construction or improvement of highways incorporating the
use of asphalt construction materials after May first, nineteen hundred
eighty-nine, the commissioner may require that the paving materials
incorporate a percentage of scrap rubber derived from motor vehicle
tires discarded in the state. Such percentage of rubber additives may be
established by the commissioner subsequent to the completion of a
rubber-modified asphalt pilot project to be conducted pursuant to
section twenty-three of this chapter.

3. Award of contracts. The contract for the construction or
improvement of such highway or section thereof shall be awarded to the
lowest responsible bidder, as will best promote the public interest. No
contract shall be awarded to a bidder other than the lowest responsible
bidder without the written approval of the comptroller. The lowest bid
shall be deemed to be that which specifically states the lowest gross
sum for which the entire work will be performed, including all the items
specified in the estimate thereof. The lowest bid shall be determined by
the commissioner of transportation on the basis of the gross sum for
which the entire work will be performed, arrived at by a correct
computation of all the items specified in the estimate therefor at the
unit prices contained in the bid.

4. Rejection of proposals. The commissioner of transportation may
reject any or all proposals and may advertise for new proposals as
provided in this section, if, in his opinion, the best interests of the
state will thereby be promoted.

5. Form of contract. The commissioner of transportation shall
prescribe the form of contract and may include therein such matters as
he may deem advantageous to the state.

6. Bond of contractor. Each contractor, before entering into a
contract for such construction or improvement, shall execute a bond in
the form prescribed by the commissioner of transportation, with
sufficient sureties, to be approved by the commissioner of
transportation, conditioned that he will perform the work in accordance
with the terms of the contract and the plans and specifications, and
that he will commence and complete the work within the time prescribed
in the contract. The bond shall also provide against any direct or
indirect damages that shall be suffered or claimed on account of such
construction or improvement during the time thereof, and until the
highway is accepted.

7. Payments on contract, state taxes. The contract shall provide for
partial payments as the work progresses as hereinafter provided:

(c) Whenever a contract shall in the judgment of the commissioner of
transportation be substantially completed, the commissioner of
transportation may, provided the regional director certifies that the
essential items in the contract have been completed in accordance with
the terms of the contract and the provisions of this chapter, direct the
regional director to include in the final account such uncompleted items
and pay therefor at the item prices in the contract upon the contractor
depositing with the commissioner of transportation a certified check
drawn upon a legally incorporated bank or trust company equal to at
least double the value of such uncompleted work or, with the approval of
the state comptroller, securities as are listed in subdivision three of
section one hundred thirty-nine of the state finance law, equal to at
least double the value of such uncompleted work. The deposit may be used
by the commissioner of transportation to complete the uncompleted
portion of the contract and shall be returned to the contractor if he
completes the uncompleted portion within a specified number of working
days after he has been notified to proceed with the work.

(d) No certificates approving or authorizing a partial or final
payment shall be made by the commissioner of transportation until he is
satisfied that all laborers employed on the work have been paid for
their services for the last payroll period preceding the said partial or
final payment. The commissioner of transportation may, if he deems
necessary, require an affidavit to such effect from the contractor or he
may depend on any other source which he deems proper for such
information.

(e) No such certificate approving or authorizing the first partial
payment or any final payment to a foreign contractor shall be made
unless such contractor shall furnish satisfactory proof that all taxes
due the state tax commission by such contractor, under the provisions of
or pursuant to a law enacted pursuant to the authority of article nine,
nine-a, twelve-a, sixteen, sixteen-a, twenty-one, twenty-two,
twenty-three, twenty-eight, twenty-nine or thirty of the tax law or
article two-E of the general city law have been paid. The certificate of
the state tax commission to the effect that all such taxes have been
paid shall be, for purpose of this paragraph, conclusive proof of the
payment of such taxes. The term "foreign contractor" as used in this
subdivision means, in the case of an individual, a person who is not a
resident of this state, in the case of a partnership, one having one or
more partners not a resident of this state, and in the case of a
corporation, one not organized under the laws of this state.

(f) Payment of the moneys due under a contract shall be made in
accordance with the provisions of article eleven-A of the state finance
law, provided failure to make such payment, as heretofore prescribed,
shall not be due to any fault, neglect, or omission on the part of the
contractor or by reason of the filing of any lien, attachment, or other
legal process against the money due said contractor.

(g) For the purpose of making a final payment on a highway
construction contract, the date to be used for determining the receipt
of an invoice in subdivision two of section one hundred seventy-nine-f
of the state finance law shall be the date on which the contract work
has been accepted as completed by the commissioner of transportation.

8. Contingencies and extra work. Whenever the commissioner of
transportation determines that from any unforeseen cause the terms of
any contract should be altered to provide for contingencies or extra
work, he may, if funds are available for payment of the cost thereof,
issue an order on contract therefor to the contractor, a copy of which
shall be filed with the director of the budget and the state
comptroller. The estimated expenditure pursuant to the order on contract
shall not increase the total amount of the primary contract until the
estimated expenditure shall have been approved by the commissioner of
transportation and a duplicate of such approval shall have been filed
with the comptroller. No such extra work shall be commenced or
undertaken until the commissioner of transportation has issued an order
on contract as herein provided.

When such order on contract provides for similar items of work or
materials which increase or decrease the itemized quantity provided for
in the primary contract, the price to be paid therefor shall not exceed
the unit bid price in the primary contract for such items. Agreed prices
for new items of work or materials may be incorporated in the order on
contract as the commissioner of transportation may deem them to be just
and fair and beneficial to the state.

Whenever the commissioner of transportation also determines that in
the cases herein provided it is impracticable for him to ascertain in
advance the just and fair price to be paid by the state for new items of
work or materials, the order on contract therefor may provide for
performance of the work and the furnishing of the materials and
equipment, in which event the contractor shall keep and shall make
available at all times to the commissioner of transportation such
accounting records, data and procedure as may be required by the
commissioner of transportation. An estimate of the value of such work
and the furnishing of materials and equipment shall be submitted by the
commissioner of transportation to the state comptroller who is hereby
empowered to approve such estimate. Partial and final payments shall be
made upon proper records and data itemized as hereinbefore indicated.

Before any final accounting shall become effective, a supplemental
contract and final agreement shall first be approved by the comptroller,
and filed in his office. The director of the budget may at his
discretion require the commissioner of transportation to submit periodic
summaries of and reports on the scope and status of highway projects in
such form and at such intervals as he may require, including any and all
contract documents.

9. Adjustment of disputes. Notwithstanding the provisions of any
general or special law, and in case of a dispute between a contractor
and the commissioner of transportation concerning questions of fact
which may arise under a contract, the contractor may, at any time before
the final estimate is rendered, petition the commissioner of
transportation for a hearing in relation thereto, provided (1) the
amount involved therein as shown by such petition does not exceed five
thousand dollars or five per centum of the final estimate of the
completed contract, whichever is greater, (2) the contractor has
complied with all provisions of the contract that relate to the filing
of any protest and also of any statement concerning the subject-matter
thereof, and (3) the contractor shall expressly agree in such petition
that any determination as hereinafter provided, shall be final and
conclusive upon all parties thereto. If the commissioner of
transportation grants such petition, he shall, within a reasonable time,
mail a notice to the contractor which shall specify the place of such
hearing and the date thereof which shall be within thirty days after the
mailing of such notice. Within ten days after such mailing, the
commissioner of transportation shall also mail a copy of the petition
and of such notice of hearing to the attorney general, who together with
the commissioner of transportation, shall constitute a board to (a) hear
such dispute, either personally or by any duly authorized officer or
employee of their respective departments, and (b) determine the issues
thereof.

Any amount fixed in the determination to be paid to the contractor
shall be deemed to be a special item to be incorporated in a final
supplemental contract and shall be payable from monies available for
construction and reconstruction of state highways, on the audit and
warrant of the comptroller on vouchers approved by the commissioner of
transportation.