New Law Requires Regular Disclosure of Contract Cost Increases

March 14, 2012 Updated: March 15, 2012

NEW YORK—City agencies will have to alert City Council of cost overruns on large projects after it approved new legislation on Wednesday.

An agency that enters into a contract for construction and/or services with a value of $10 million or more will now be required to notify the council and mayor should cost increases exceed 20 percent of the contract value. Given that an extension or modification is granted, any additional increase of 10 percent will again require notification.

All notifications will require explanations of the basis and scope of the cost increases. All the relevant information will be submitted to the comptroller.

The law was introduced by Councilwoman Letitia James last fall, partly in response to the problem of contracts, such as the digital timekeeping system CityTime that ballooned far above original cost projections.

“In the last five years, contract costs have increased at nearly twice the rate of overall budget spending, reaching over 10 billion in spent public funds,” said James in a statement. “The vast majority of these expenditures go toward personnel and professional service contracts.”

She added that she hopes the legislation strengthens oversight, cuts costs, and saves money.

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