Enhanced Contractor Review Procedure

This procedure applies to housing construction or rehabilitation projects which receive financing from HPD, below-market conveyance of City-owned property through HPD, and/or discretionary tax exemption through or at the request of HPD (collectively, “Projects”). The developers and owners who receive these subsidies select contractors to perform the Project’s construction or rehabilitation work (collectively, “construction”). This procedure establishes a framework primarily focusing on labor law compliance and construction quality to help HPD determine whether to approve the participation of any such contractor in a Project. This framework supplements, but does not replace, the Sponsor Review process (which addresses additional issues regarding integrity and competence that are not the subject of this procedure).

1. Definitions

As used herein:

"Construction Law" means, collectively, the Multiple Dwelling Law, the Building Code, Section 804(f)(3)(C) of the federal Fair Housing Act (42 U.S.C. 3604(f)(3)(C)), Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), the Occupational Safety and Health Act, and any other federal, state, or local law addressing similar or related subject matter.

“Contractor” means general contractors and subcontractors as well as their principals and related companies or entities.

"Labor Law" means, collectively, Labor Law §220 or §230, the Davis-Bacon and Related Acts (40 U.S.C. 276a-276a-5), the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-332), the Copeland Act (40 U.S.C. 3145) the Fair Labor Standards Act (29 U.S.C. 201 et seq.), and any other federal, state, or local law addressing similar or related subject matter.

2. Procedure

HPD will (i) determine, based on the criteria specified below, whether Contractors working or seeking work on Projects should be placed on Enhanced Review status; (ii) publish a list of Contractors on Enhanced Review status on at least a quarterly basis; (iii) review the list of Contractors on Enhanced Review status prior to approving any Contractor selected by a developer or owner to perform work on Projects, and (iv) monitor Projects on which Contractors on Enhanced Review status are working.

3. Enhanced Review Status

HPD will place a Contractor on Enhanced Review status if the Contractor:

  • has $500,000 or more in current prevailing wage withholdings and/or underpayments based on the work of such Contractor or any of its subcontractors (not including any withholding that has been outstanding for less than 30 calendar days and is based solely on the Contractor’s failure to submit required documentation); or
  • has a history of multiple or significant construction quality issues; or
  • has a history of multiple or significant Labor Law or Construction Law violations, as evidenced by (i) one or more determinations in judicial or administrative proceedings (unless such determination has been reversed on appeal), (ii) one or more settlements, pleas, or other agreements in judicial or administrative proceedings; and/or (iii) non-confidential information based upon which HPD has reason to believe that the Contractor has violated such laws.
  • is listed in the List of Parties Excluded from Federal Procurement and Nonprocurement Programs maintained by the Federal General Services Administration, the List Of Employers Ineligible To Bid On Or Be Awarded Any Public Work Contract maintained by the State Department of Labor, the List Of Debarred Offerors maintained by the State Office of General Services pursuant to State Finance Law §139-j(10), and/or the New York City School Construction Authority's list of Disqualified/Suspended/Ineligible Firms.
  • engages a subcontractor that is on Enhanced Review status to work on a Project without obtaining the prior written consent of HPD in accordance with the Subcontractor section below.

HPD may also place a Contractor on Enhanced Review status based on current prevailing wage withholdings and/or underpayments in any amount based on the work of such Contractor or any of its subcontractors (not including any withholding that has been outstanding for less than 30 calendar days and is based solely on the Contractor’s failure to submit required documentation) if HPD determines that such withholdings and/or underpayments indicate serious, systemic, or habitual compliance deficiencies.

HPD will determine whether to place a Contractor on Enhanced Review status, the conditions for removing a Contractor from Enhanced Review status, and whether to remove a Contractor from Enhanced Review status.

4. Notice

When HPD intends to place a Contractor on Enhanced Review status on the basis of facts or conclusions that are open to dispute and the Contractor has not previously had an opportunity to dispute such facts or conclusions, HPD will notify the Contractor before placing it on Enhanced Review status. The notification will include (i) the reason(s) for the proposed placement of the Contractor on such status, and (ii) an opportunity to comment on or challenge any of the facts upon which the proposed placement of the Contractor on such status is based. If, after the Contractor has had its opportunity to comment on or challenge such facts, HPD determines that the Contractor should be placed on Enhanced Review status, HPD will send the Contractor a notice of such determination stating the reason(s) for placing the Contractor on such status.

When HPD determines to place a Contractor on Enhanced Review status on the basis of facts or conclusions that are not open to dispute, or where the Contractor has previously had an opportunity to dispute such facts or conclusions, HPD will notify the Contractor of such determination at the time that HPD places it on Enhanced Review status. The notification will include the reason(s) for placing the Contractor on such status.

5. Closing

HPD will determine, on a project-by-project basis, whether to proceed (and, if so, upon what conditions) with the closing of any proposed Project where the developer or owner intends to employ a Contractor on Enhanced Review status as the general contractor. If HPD proceeds with the closing, any such Project will be subject to monitoring by HPD and the Contractor will be required to (i) provide advance notice of all subcontractors that it intends to use; (ii) ensure that any monitoring requirements imposed by HPD are passed on to its subcontractors (and require each such subcontractor to impose such requirements on any subcontractor that it engages); (iii) ensure that all subcontractors comply with all other applicable HPD requirements; and (iv) submit a Project-specific work plan, in form and substance acceptable to HPD, before commencing construction work and provide regular updates to such work plan during construction.

HPD may also require (i) the Contractor to engage and pay for a third party Labor Compliance Service Provider (this decision will be based on the number of Projects the Contractor is being considered for, the size of such Projects, the type and extent of the Contractor's past Labor Law violations [if applicable], the dollar amount of current prevailing wage withholdings or underpayments [if applicable], whether the Project requires prevailing wages, and any other facts and circumstances that HPD deems relevant to such determination); (ii) the Contractor to deposit money into escrow, to be used if HPD determines that a third party Labor Compliance Service Provider is necessary during the term of construction; (iii) enhanced monitoring of construction quality (based on the type and extent of the Contractor's past construction quality issues); and (iv) any other conditions that HPD deems necessary or desirable with regard to the issues that caused the Contractor to be placed on Enhanced Review status.

6. Subcontractors

Before hiring any Contractor that is on Enhanced Review status as a subcontractor, or allowing such a subcontractor to perform any work on the Project, a Contractor must obtain written consent from HPD to engage such subcontractor. HPD’s determination to grant or deny such consent will be based on the number of Projects the subcontractor is being considered for, the size of such Projects, the type and extent of the subcontractor's past labor law violations (if applicable), the dollar amount of current prevailing wage withholdings or underpayments (if applicable), whether the Project requires prevailing wages, the type and extent of the subcontractor’s past construction quality issues (if applicable), and any other facts and circumstances that HPD deems relevant to such determination.

List of Contractors on Enhanced Review Status

Enhanced Review Subcontractor Consent Form

If HPD fails to respond within 10 business days after receiving a properly submitted written request containing all required information, its consent will be deemed granted.

If HPD consents to a Contractor’s request to engage a subcontractor that is on Enhanced Review status, HPD will monitor the subcontractor’s work on the Project.

If a Contractor engages a subcontractor that is on Enhanced Review status without obtaining the prior written consent of HPD, the Contractor will be placed on Enhanced Review status. In addition, the developer or owner that engaged such Contractor may be subject to negative scoring during future requests for proposals, requests for qualifications, or other selection processes, and adverse findings during Sponsor Review.

7. Compliance Action Plan

Any Contractor placed on Enhanced Review status must submit a compliance action plan outlining specific steps that it will take to prevent recurrence of the issues that led to its placement on Enhanced Review status and to ensure compliance with applicable laws and contractual obligations. The Contractor must renew the compliance action plan at least every three years until it is removed from Enhanced Review status.

8. Quarterly Conferences

A Contractor on Enhanced Review status may request a conference with HPD up to once per quarter to discuss outstanding compliance obligations and other relevant issues.

9. Removal from Enhanced Review Status

A Contractor may apply to HPD for removal from Enhanced Review status. The application must include a written explanation of how the Contractor has addressed the issues that resulted in its placement on Enhanced Review status and any supporting documentation.

HPD will remove the Contractor from Enhanced Review status (either in response to an application from the Contractor or upon HPD’s own initiative) if it determines, based on evidence satisfactory to HPD, that the Contractor has cured the issues that resulted in its placement on Enhanced Review status (or has successfully implemented an acceptable corrective plan to do so) and/or has performed enough subsequent work without a recurrence of such issues to indicate that the deficiencies that led to such issues have been appropriately addressed.

HPD will notify a Contractor in writing of any determination on an application for removal from Enhanced Review status, or if HPD determines on its own initiative to remove the Contractor from Enhanced Review status. If HPD denies a Contractor’s application for removal from Enhanced Review status, the Contractor may reapply not less than six months after notification of such determination.

10. Conditional Removal from Enhanced Review Status

If a Contractor has been on Enhanced Review status for four or more years and has not performed work on any Project during that time of a type that would enable HPD to evaluate how well the Contractor has addressed the issues that originally resulted in its placement on such status (e.g., a Contractor originally placed on such status due to prevailing wage violations that has not subsequently performed work on a Project subject to a prevailing wage requirement), HPD may conditionally remove such Contractor from Enhanced Review status.

For a period of four years after such conditional removal (“Conditional Removal Period”), the Contractor will be required to notify HPD before performing, or contracting to perform, work on any Project. If HPD determines that the Project would enable it to evaluate how well the Contractor has addressed the issues that originally resulted in its placement on Enhanced Review status, HPD may subject such Contractor’s participation in the Project to additional requirements in accordance with the Closing and Compliance Action Plan sections above, in addition to any other HPD requirements.

HPD will place a Contractor back on full Enhanced Review status pursuant to the procedure set forth in the Notice section above, if, at any point during the Conditional Removal Period, HPD determines that the Contractor (i) performed, or contracted to perform, work on a Project either without prior notice to HPD or without complying with requirements imposed by HPD in accordance with the Closing and/or Compliance Action Plan sections above, or (ii) experienced a recurrence of any of the issues that originally resulted in such Contractor’s placement on Enhanced Review status or an occurrence of any other issues listed in the Enhanced Review Status section. In the absence of such a determination, the requirements of this Section will terminate at the end of the Conditional Removal Period.

List of Contractors on Enhanced Review Status