PancakeJack
ISA CMUA
- Joined
- Jun 5, 2014
- Messages
- 5
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Hey guys - Thanks in advance for any comments/advice about this. We are a family-owned tree care corporation location on Long Island, NY. We have been doing utility tree trim for the local utility for over 25 years. In all that time, and through all the utility BS, we have never encountered this situation, so my boss asked me to throw it out there to see if any other companies from around the country have come across the same thing. The utility is trying to force us contractors into a "Not To Exceed" agreement, stating that NTE agreements are all the rage, across the country. It's designed to take all of us contractors that are getting high off the hog while working for utility companies down a peg or two. According to the utility, they have the right to change the rules in the middle of the game - after set pricing and terms have been established and signed into contract - without our approval.
The new utility manager, PSEG, took over for National Grid on Jan 1, 2014. We discussed and established pricing with them in December and signed the amendment into our 5-year contract, in which we are working on year 3. Three months into the game, they tell us that they want "better" pricing because they are facing a budget shortfall. We're not sure how that happened. They knew what their budget was, and they knew how many miles they want to trim. When we gave them the updated prices for 2014, i guess they never bothered to do the math. Regardless, in the spirit of good faith, we took a good, hard look inside and figured out where we could shed a shekel or two, and submitted "better" prices. Apparently, our "better" prices were not as "better" as they hoped, and when they called us contractors in individually, they told us that they are accepting the "better" numbers, and that they are in the process of instituting a "Not To Exceed" spec. The way they explained it to is goes something like this:
The 2014 utility tree trim work is being funded by federal money (which is, as yet not confirmed), so we need to comply with the Davis Bacon Act and submit certified payrolls for each circuit worked. After we submit the CP's, they will do some fantasy math to determine our "costs" for the circuit....based solely on the payroll+benefits. If what they think our costs are comes out to a certain percentage away from the already-established circuit price, they we will get paid the already-established circuit price. If what they think our costs are comes out to LESS than that certain percentage away, then we would get paid 10% on top of what they think our costs are, and the remainder - up to the already established circuit price - would be split 50/50 between the contractor and the utility.
Correct me if i'm wrong, but IF federal money is allocated for a project, it needs to end up 100% in the hands of a contractor, no? If the federal government is giving PSEG a grant of, let's say $40 million to perform 2014 tree trim on Long Island (and that bottom line number is established by the amendment to our contract), using this new NTE agreement could mean that, by the end of the year, $32 million gets paid to the contractors and $8 mill ends up in PSEG's bank account. That doesn't sound like a legal use of federal funds.
If any of you have had any experience with a NTE or some other kind of 50/50 "profit sharing" plan with a local utility, i would appreciate some feedback! This is just another lovely day working on Long Island! Thanks!
The new utility manager, PSEG, took over for National Grid on Jan 1, 2014. We discussed and established pricing with them in December and signed the amendment into our 5-year contract, in which we are working on year 3. Three months into the game, they tell us that they want "better" pricing because they are facing a budget shortfall. We're not sure how that happened. They knew what their budget was, and they knew how many miles they want to trim. When we gave them the updated prices for 2014, i guess they never bothered to do the math. Regardless, in the spirit of good faith, we took a good, hard look inside and figured out where we could shed a shekel or two, and submitted "better" prices. Apparently, our "better" prices were not as "better" as they hoped, and when they called us contractors in individually, they told us that they are accepting the "better" numbers, and that they are in the process of instituting a "Not To Exceed" spec. The way they explained it to is goes something like this:
The 2014 utility tree trim work is being funded by federal money (which is, as yet not confirmed), so we need to comply with the Davis Bacon Act and submit certified payrolls for each circuit worked. After we submit the CP's, they will do some fantasy math to determine our "costs" for the circuit....based solely on the payroll+benefits. If what they think our costs are comes out to a certain percentage away from the already-established circuit price, they we will get paid the already-established circuit price. If what they think our costs are comes out to LESS than that certain percentage away, then we would get paid 10% on top of what they think our costs are, and the remainder - up to the already established circuit price - would be split 50/50 between the contractor and the utility.
Correct me if i'm wrong, but IF federal money is allocated for a project, it needs to end up 100% in the hands of a contractor, no? If the federal government is giving PSEG a grant of, let's say $40 million to perform 2014 tree trim on Long Island (and that bottom line number is established by the amendment to our contract), using this new NTE agreement could mean that, by the end of the year, $32 million gets paid to the contractors and $8 mill ends up in PSEG's bank account. That doesn't sound like a legal use of federal funds.
If any of you have had any experience with a NTE or some other kind of 50/50 "profit sharing" plan with a local utility, i would appreciate some feedback! This is just another lovely day working on Long Island! Thanks!
