Government Procurement Law Presenter: Anne Phillips, OGS Associate Counsel State Purchasing Forum June 16 and 17, 2004

CONTRACT Uniform Commercial Code Federal Laws (e.g. Intellectual Property, Telecom) Procurement Council Guidelines Executive Law Case Law State Finance Law

Pre-1995 Public Contracting Historical Context Purchase of Traditional Commodities Capable of standardization Articles of commerce (food, salt, linens) Public entities were predominantly large institutions Services were bought individually by government agencies

Prior governing statute (§174 State Finance Law) provided minimal guidance for procurement and competitive bidding. Agencies were essentially relegated to contract awards for commodities to the lowest price bidder. Contracts for services or services procurements were not governed directly by statute. Pre-1995 Public Contracting

Post-1995 Procurement Stewardship Act Major Change in the Framework for Public Procurements State Finance Law, Article 11 Effective Date: Sunset Date:

Procurement Stewardship Act Underlying Principles and Legislative Findings Responsibility of OGS and State Agencies in cooperation with OSC and DOB to: Provide for the wise and prudent use of public money in the best interests of the taxpayers of the state; Guard against favoritism, improvidence, extravagance, fraud & corruption, and Facilitate the efficient and timely acquisition of commodities and services of the highest quality at the lowest practicable cost within available resources.

State agencies shall provide the state’s primary line of defense for protecting the integrity of the state’s procurement process and shall be responsible for ensuring that the decisions made in executing that process are made in accordance with the highest standards of professional practice. Procurement Stewardship Act

Provide a “level playing field” among competitive bidders to enhance competition. Requires a “procurement record” – a documented process which provides a balanced and fair method, established prior to receipt of offers, for evaluation of bids. Procurement Stewardship Act

Procurement Council established to review, examine and develop improvements to procurement process and competitive solicitation of bidding for commodities, services and technology Procurement Stewardship Act

Procurement Council [State Finance Law §161] Nineteen Members Chair – Commissioner of OGS OSC DOB State Agency Representatives Designated members Procurement Guidelines Procurement Policy Quarterly Meetings Strategic Plan

Cooperative Efforts to Improve Pubic Procurement Process Multi-agency Cooperative efforts (OSC, OFT, OGS, municipalities) Effort to coordinate information and expertise on statewide level Support necessary legislative and regulatory changes for best practice government procurement and competitive bidding Forum for exchange of views by participants with opposing or different interests in procurement

Government Procurement & Competitive Bidding Comprehensive Statutory Scheme Procurement Stewardship Act Article 11 State Purchasing Section 160. Definitions 161 State Procurement Council 162 Preferred Sources

Government Procurement & Competitive Bidding Section 163 Purchasing services and commodities (Sunset: 6/30/05) 163-a Vendor preparation of specifications for technology procurements; prohibitions 164 Exemptions 165 Purchasing restrictions

Government Procurement & Competitive Bidding Section 166 Requirements for financed equipment acquisition 167 Transfer and disposal of personal property 168 The management of surplus computer equipment

Government Procurement & Competitive Bidding Procurement Guidelines Detailed Guidance to State agencies on how to conduct procurements Summarizes in one place the multiple approaches to procurement Identifies essential elements of successful procurements Provides valuable technical guidance on different approaches for structuring a procurement; and Provides examples of good procurement practices

Definitions Commodities – Material goods, supplies, products, construction items or other standard articles of commerce (other than printing or technology) which are the subject of any purchase or exchange. Government Procurement & Competitive Bidding

Definitions Services – Except for state printing, the performance of a task or tasks that may include provision of a material good or a quantity of material goods, and which is the subject of any purchase or exchange. Technology is deemed a service.

Government Procurement & Competitive Bidding Definitions Technology – Either a good or a service or a combination thereof, that results in a technical method of achieving a practical purpose or in improvements in productivity. Goods may be either new or used.

Government Procurement & Competitive Bidding Definitions Costs – As used in this article shall be quantifiable and may include, without limitation, the price of the given good or service being purchased; the administrative, training, storage, maintenance or other overhead associated with a given good or service; the value of warranties, delivery schedule, financing costs and foregone

opportunity costs associated with a given good or service; and the life span and associated life cycle costs of the given good or service being purchased. Life cycle costs may include, but shall not be limited to, costs or savings associated with construction, energy use, maintenance, operation, and salvage or disposal. Government Procurement & Competitive Bidding

Definitions Price – Unless otherwise specified means the amount of money set as consideration for the sale of a commodity or service and may include, but is not limited to, when applicable and when specified in the solicitation, delivery charges, installation charges and other costs.

Definitions Invitations for Bids (IFB’s) – Competitive Bidding Methodology Primarily used for procurement of commodities Basis for Contract Award Meet specifications Lowest price Government Procurement & Competitive Bidding

“Lowest Price for Commodities Statutorily defined to include “costs” such as: Administrative, training, storage, maintenance or other overhead associated with a given good or service Value of warranties Delivery schedules Financing and foregone opportunity costs Life span and associated life cycle costs (savings associated with construction, energy use, maintenance, operation, salvage or disposal) Government Procurement & Competitive Bidding

“Best Value” Bid Evaluation Criteria – Technical and Financial Qualifying Criteria i. Documented in advance of the receipt of offers ii. Quantifiable wherever possible iii. Relative weight: technical vs. financial criteria Government Procurement & Competitive Bidding

Request for Proposals (RFP’s) Competitive Solicitation Methodology Primarily used for procurement of services and technology Basis for Award Pre-established evaluation criteria where cost is not necessarily the determining factor “Best Value” to the purchaser is the determinative criteria Government Procurement & Competitive Bidding

Best Value Documentation & Other Requirements Best Practices – Before You Solicit: Document the intended basis for award. (such as meeting mandatory requirements, “best value” or “lowest price”) Determine the technical and financial evaluation criteria and relative weight. Quantify criteria whenever possible, to optimize quality, cost and efficiency. Determine and document the evaluation and selection process Advertise the procurement Government Procurement & Competitive Bidding

Distinction – “Lowest Price” vs. “Best Value” [State Finance Law, §163] “Lowest Price” ‘means the basis for awarding contracts for commodities among responsive and responsible offerors.’ Government Procurement & Competitive Bidding

“Best Value” ‘means the basis for awarding contracts for services to the offeror which optimizes quality, cost and efficiency, among responsive and responsible offerors. Such basis shall reflect, wherever possible, objective and quantifiable analysis. Services includes technology.’ Government Procurement & Competitive Bidding

Types of Contracts [State Finance Law §163] Centralized Contract Agency Specific Contract Preferred Sources Emergency Contract Single Source Contract Sole Source Contract Multiple Awards Piggybacking (Adoption of Another Government Entity Contract) Government Procurement & Competitive Bidding

Centralized Contracts “Centralized Contract” means any contract for the purchase of commodities or services, established or approved by the Commissioner of General Services as meeting the State's requirements including, but not limited to, any contract let by the federal government, other state or local governments or purchasing consortia. Government Procurement & Competitive Bidding

Examples: Vehicles & heavy equipment Pharmaceuticals & medical equipment Electronic Value Transfer (credit cards)/procurement card Fuel Oil, Gasoline, Road Salt PC’s Rubbish Removal Telecommunications Systems & Services Government Procurement & Competitive Bidding

Types of Contracts [State Finance Law §163] Centralized Contract Agency Specific Contract Preferred Sources Emergency Contract Single Source Contract Sole Source Contract Multiple Awards Piggybacking (Adoption of Another Government Entity Contract) Government Procurement & Competitive Bidding

Agency Specific Contracts Specialized Requirements Needed to Meet Agency Mission Consultant Services “Do Not Call” Registry Digital Fingerprinting Identification Specialized Software Entertainment Services Government Procurement & Competitive Bidding

Types of Contracts [State Finance Law §163] Centralized Contract Agency Specific Contract Preferred Sources Emergency Contract Single Source Contract Sole Source Contract Multiple Awards Piggybacking (Adoption of Another Government Entity Contract) Government Procurement & Competitive Bidding

Preferred Sources [State Finance Law §162] “To advance special social and economic goals, selected providers shall have preferred source status… Procurement from these providers shall be exempted from competitive procurement provisions. Government Procurement & Competitive Bidding

Preferred Status Correctional Services – Commodities Agencies for the Blind – Commodities & Services Agencies for the Severely Disabled – Commodities and Services Special Employment for Mentally Ill – Commodities and Services Disabled Veterans – Commodities sand Services Veterans – Commodities and Services Qualified Apparel Manufacturer – September 11 th Registry Government Procurement & Competitive Bidding

Public List of Commodities & Services Approval by Procurement Council Price Approval – Not greater than 15% above Prevailing Market Price Alternate Process for Procurements of Apparel & Textiles Government Procurement & Competitive Bidding

Types of Contracts [State Finance Law §163] Centralized Contract Agency Specific Contract Preferred Sources Emergency Contract Single Source Contract Sole Source Contract Multiple Awards Piggybacking (Adoption of Another Government Entity Contract) Government Procurement & Competitive Bidding

Emergency Contracts [State Finance Law §163(10(b)] Procurements may be made to meet emergencies arising from unforeseen causes without using a formal competitive process. Such procurements shall be made only under unusual circumstances and shall include a determination in the procurement record of the nature of the emergency and that the procurement was conducted in a fair and equitable manner. Government Procurement & Competitive Bidding

Types of Contracts [State Finance Law §163] Centralized Contract Agency Specific Contract Preferred Sources Emergency Contract Single Source Contract Sole Source Contract Multiple Awards Piggybacking (Adoption of Another Government Entity Contract) Government Procurement & Competitive Bidding

Single Source Single Source means a procurement in which although two or more offerors can supply the required commodities or services, the Commissioner or State agency, upon written findings setting forth the material and substantial reasons therefore, may award the contract to one offeror over all others. The Commissioner or State agency shall document in the procurement record the circumstances leading to the selection of the vendor, including the alternatives considered, the rationale for selecting the specific vendor and the basis upon which it determined the cost was reasonable. Government Procurement & Competitive Bidding

Types of Contracts [State Finance Law §163] Centralized Contract Agency Specific Contract Preferred Sources Emergency Contract Single Source Contract Sole Source Contract Multiple Awards Piggybacking (Adoption of Another Government Entity Contract) Government Procurement & Competitive Bidding

Sole Source Sole Source means a procurement in which only one offeror is capable of supplying the required commodities or services Government Procurement & Competitive Bidding

Types of Contracts [State Finance Law §163] Centralized Contract Agency Specific Contract Preferred Sources Emergency Contract Single Source Contract Sole Source Contract Multiple Awards Piggybacking (Adoption of Another Government Entity Contract) Government Procurement & Competitive Bidding

Multiple Awards [State Finance Law §163(10)(c)] The Commissioner or State agency may elect to award a contract to one or more responsive and responsible offerors provided, however, that the basis for the selection among multiple contracts at the time of purchase shall be the most practical and economical alternative and shall be in the best interests of the State, and further provided that the requirements set forth herein shall not preclude the Commissioner from establishing multiple award contracts for reasons including increased opportunities for small businesses to participate in State contracts. Government Procurement & Competitive Bidding

Types of Contracts [State Finance Law §163] Centralized Contract Agency Specific Contract Preferred Sources Emergency Contract Single Source Contract Sole Source Contract Multiple Awards Piggybacking (Adoption of Another Government Entity Contract) Government Procurement & Competitive Bidding

The Commissioner of General Services may authorize purchases required by state agencies or authorized purchasers by letting a contract or by approving the use of a contract let by any department, agency or instrumentality of the United States government and/or any department, agency, office, political subdivision or instrumentality of any state or states. Government Procurement & Competitive Bidding

The Commissioner of General Services is authorized to let centralized contracts for joint purchasing by New York State and any department, agency or instrumentality of the United States government and/or any state including the political subdivisions thereof; provided however that any entity incurring a liability under such contract shall be responsible for discharging said liability. Government Procurement & Competitive Bidding

Under this authority, the State can recognize and use or be a part of contracts of other public purchasers. In most instances, these other government entities establish their agreements using competitive solicitations. This procurement methodology has proven to be a tool that provides a means to meet special requirements or to efficiently and economically meet the needs of State agencies and Authorized Users. Government Procurement & Competitive Bidding

Note: These contracts and purchases also need to be supported by a procurement record and are subject to OSC approval. Government Procurement & Competitive Bidding

Piggybacking Agreements have provided for imaging systems, landscape furniture, cellular telephone service and mission specific consultant services such as Year 2000 programming. Joint Agreements have provided for pharmaceuticals (Minnesota multi-state) and traffic cones (New England States and New York. Government Procurement & Competitive Bidding

Process for Conducting Procurements Developing the Procurement Determination of Need Form, Function & Utility Decisions for Centralized Contracts Discretion of OGS Commissioner – “in cooperation with State Procurement Council and state agencies,”

Criteria which OGS uses includes, but is not limited to: i. Availability of a volume discount; ii. Prior use of the commodity among state agencies iii. Relative cost of establishing the contract; iv. Anticipated use; and v. Expected actual savings for the State Process for Conducting Procurements

Drafting & Issuing Agency Contracts IFB vs. RFP NYS Contract Reporter Advertisement Required if Contract Value Over $15,000 [Article 4C Economic Development Law] Receipt of offers minimum of fifteen business days after notice published Appendix A (Standard Clauses for State Contracts Process for Conducting Procurements

Drafting & Issuing the Document Appendix B (OGS General Specifications for Procurement Contracts) Non-Collusive Bidding Certificate MacBride Certification Executive Order No. 127 – Providing for Additional State Procurement Disclosure Process for Conducting Procurements

Discretionary Thresholds for Purchasing State Agencies up to $15,000 State Agencies up to $50,000 For recycled commodities or technology For remanufactured commodities or technology From small businesses From certified minority/women-owned business enterprises Government Procurement & Competitive Bidding

Use of Mini Bids Another competitive solicitation technique employs multiple contract awards where vendors present their qualifications and agree to standard terms and conditions for a multiple year contract term with not to exceed prices – backdrop contracts. State agencies and Authorized Users present their technical needs to a pool of qualified contractors (“Project Definition” or “Mini Bid”) choosing the best value solution. Government Procurement & Competitive Bidding

This allows the purchaser to focus on meeting their operational or functional requirements and cut down on the contract cycle time often reducing the procurement time to weeks rather than months. Government Procurement & Competitive Bidding

Use of Mini Bids Computer Consulting, Systems Integration and Training Agreements with categories of services Telephone Systems and Maintenance Third Party Financing Services Microcomputer Systems Government Procurement & Competitive Bidding

Bid Evaluation & Approvals Responsive Offeror Material vs. Non-Material Deviations Clarifications, revisions, discussions, where provided in the solicitation Responsible Offeror Due Diligence Due Process Prior Contract History No debarment in NYS, other than for prevailing wage rate or labor law violations Government Procurement & Competitive Bidding

Procurement determinations arising from the need to ascertain the responsibility of a vendor/bidder impose a duty on the State agency to provide an opportunity to be heard Government Procurement & Competitive Bidding Vendor Responsibility Due Process and the Opportunity to be Heard

It is the policy of the Office of General Services’ (OGS) Procurement Services Group (PSG) to provide vendors with an opportunity to administratively resolve complaints or inquiries related to PSG bid solicitations or contract awards. Bidders are encouraged to seek resolution of complaints through consultation with PSG staff. All such matters will be accorded impartial and timely consideration. Government Procurement & Competitive Bidding

Bid Evaluation & Approvals Bid Disputes No statutory right Commissioner's responsibility to make an award consistent with procurement laws Elements of defensible decisions Government Procurement & Competitive Bidding

Bid Evaluation Approvals Required Approvals Department of Law Specialty Contracts Civil Service Office for Technology Division of the Budget Office of the State Comptroller Government Procurement & Competitive Bidding

Selection and Contract Award Using Bid Documents for Contract Award Negotiate Contract Government Procurement & Competitive Bidding

Other Relevant Laws Section 112 State Finance Law OSC Approval Section 97-g State Finance Law Centralized Services Section 138 State Finance Law Non-Assignment of State Contracts Section 139-d State Finance Law Non Collusion by Bidders Section 144-a State Finance Law Rock Salt Preference Section 220 and 240 Labor Law Prevailing Wage Rate Article 2 Uniform Commercial Code Sales Government Procurement & Competitive Bidding

Questions