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State Finance Law Preferred Source document sample
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OGS Procurement Services Group
2006 State Purchasing Forum
State Finance Law
Presenter‟s Contact Information
Anne Phillips
Associate Counsel
Office of General Services
anne.phillips@ogs.state.ny.us
(518) 474-5607
2006 Purchasing Forum – State Finance Law
State Finance Law Case
Law
Uniform
Commercial
Code CONTRACT
2006 Purchasing Forum – 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
2006 Purchasing Forum – State Finance Law
Pre-1995 Public Contracting
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.
2006 Purchasing Forum – State Finance Law
Post-1995 Procurement Stewardship Act
Major Change in the Framework for Public
Procurements
• State Finance Law, Article 11
• Effective Date: 4/1/95
• Sunset Date: 6/30/06
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
Procurement Stewardship Act
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.
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
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
2006 Purchasing Forum – State Finance Law
Cooperative Efforts to Improve Public 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
2006 Purchasing Forum – State Finance Law
Government Procurement & Competitive Bidding
Comprehensive Statutory Scheme
Procurement Stewardship Act
Article 11
State Purchasing
Section 160 Definitions
161 State Procurement Council
162 Preferred Sources
2006 Purchasing Forum – State Finance Law
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
2006 Purchasing Forum – State Finance Law
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
2006 Purchasing Forum – State Finance Law
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
• Provides examples of good procurement practices
2006 Purchasing Forum – State Finance Law
Government Procurement & Competitive Bidding
Definitions
• Commodity
• Service
• Technology
• Costs
• Price
Provides a foundation of commonly understood
concepts to apply within public procurement
infrastructure
2006 Purchasing Forum – State Finance Law
Government Procurement & Competitive Bidding
Definitions
Invitations for Bids (IFB’s)
• Competitive Bidding Methodology
• Primarily used for procurement of commodities
• Basis for Contract Award
- Meet specifications
- Lowest price
2006 Purchasing Forum – State Finance Law
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
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
Government Procurement & Competitive Bidding
Distinction
“Lowest Price” vs. “Best Value”
[State Finance Law, §163]
2006 Purchasing Forum – State Finance Law
Government Procurement & Competitive Bidding
“Lowest Price” „means the basis for awarding
contracts for commodities among responsive and
responsible offerors.‟
“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 include
technology.‟
2006 Purchasing Forum – State Finance Law
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)
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
Government Procurement & Competitive Bidding
Examples of Centralized Contracts:
• Vehicles & heavy equipment
• Pharmaceuticals & medical equipment
• Electronic Value Transfer (credit cards)/
procurement card
• Fuel Oil, Gasoline, Road Salt
• PCs
• Rubbish Removal
• Telecommunications Systems & Services
2006 Purchasing Forum – State Finance Law
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)
2006 Purchasing Forum – State Finance Law
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
2006 Purchasing Forum – State Finance Law
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)
2006 Purchasing Forum – State Finance Law
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.”
2006 Purchasing Forum – State Finance Law
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 11th
Registry
2006 Purchasing Forum – State Finance Law
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
2006 Purchasing Forum – State Finance Law
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)
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
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)
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
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)
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
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)
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
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)
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
Government Procurement & Competitive Bidding
Note:
These contracts and purchases also need to be
supported by a procurement record and are subject to
OSC approval.
2006 Purchasing Forum – State Finance Law
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).
2006 Purchasing Forum – State Finance Law
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,”
2006 Purchasing Forum – State Finance Law
Process for Conducting Procurements
Criteria OGS uses includes, but is not limited to:
• Availability of a volume discount;
• Prior use of the commodity among state
agencies;
• Relative cost of establishing the contract;
• Anticipated use; and
• Expected actual savings for the State.
2006 Purchasing Forum – State Finance Law
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)
2006 Purchasing Forum – State Finance Law
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
• Responsibility Questionnaire
• Sales Tax Certification
2006 Purchasing Forum – State Finance Law
Government Procurement & Competitive Bidding
Discretionary Thresholds for Purchasing
• State Agencies up to $15,000 $50,000
• State Agencies up to $50,000 $100,000
- For recycled commodities or technology
- For remanufactured commodities or
technology
- From small businesses
- From certified minority/women-owned
business enterprises
2006 Purchasing Forum – State Finance Law
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.
2006 Purchasing Forum – State Finance Law
Government Procurement & Competitive Bidding
Use of Mini Bids (continued)
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.
2006 Purchasing Forum – State Finance Law
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
2006 Purchasing Forum – State Finance Law
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
2006 Purchasing Forum – State Finance Law
Government Procurement & Competitive Bidding
Vendor Responsibility Due Process and the
Opportunity to be Heard
• 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
• 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
2006 Purchasing Forum – State Finance Law
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
2006 Purchasing Forum – State Finance Law
Government Procurement and 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
2006 Purchasing Forum – State Finance Law
Government Procurement and Competitive Bidding
Selection and Contract Award
• Using Bid Documents for Contract Award
• Negotiate Contract
2006 Purchasing Forum – State Finance Law
Government Procurement and 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
2006 Purchasing Forum – State Finance Law
Government Procurement and Competitive Bidding
Other Relevant Laws
• Sections 139-j and 139-k State Finance Law
Restriction on Contracts and Disclosure
of Contacts
• Section 144-a State Finance Law
Rock Salt Preference
• Section 220 and 240 Labor Law
Prevailing Wage Rate
• Article 2 Uniform Commercial Code
Sales
2006 Purchasing Forum – State Finance Law
Presenter‟s Contact Information
Anne Phillips
Associate Counsel
Office of General Services
anne.phillips@ogs.state.ny.us
(518) 474-5607
2006 Purchasing Forum – State Finance Law
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