OGS Procurement Services Group

OGS Procurement Services Group 2006 State Purchasing Forum

State Finance Law

2006 Purchasing Forum – State Finance Law

Anne Phillips

Associate Counsel

Office of General Services

[email protected]

(518) 474-5607

Presenter’s Contact Information


CONTRACTUniform

Commercial Code

Federa

l

Laws (

e.g.

Intellec

tual

Property,

Teleco

m)

Procurement

Council

Guidelines

Executive

Law Case Law

State Finance Law


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

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.

Pre-1995 Public Contracting


Major Change in the Framework for Public Procurements

• State Finance Law, Article 11

• Effective Date: 4/1/95

• Sunset Date: 6/30/06

Post-1995 Procurement Stewardship Act


Underlying Principles and Legislative FindingsResponsibility 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.

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.



• 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 Council established to review, examine

and develop improvements to procurement process

and competitive solicitation of bidding for

commodities, services and technology.



• Nineteen Members- Chair – Commissioner of OGS

- OSC- DOB- State Agency Representatives- Designated members

• Procurement Guidelines

• Procurement Policy

• Quarterly Meetings

• Strategic Plan

Procurement Council [State Finance Law § 161]


• 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

Cooperative Efforts to Improve Public Procurement Process


Comprehensive Statutory Scheme


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



Section 166 Requirements for financed equipment acquisition

167 Transfer and disposal of personal property

168 The management of surplus computer equipment



Procurement GuidelinesDetailed Guidance to State agencies on how toconduct 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



Government Procurement & Competitive BiddingDefinitions

• Commodity

• Service

• Technology

• Costs

• Price

Provides a foundation of commonly understood concepts to apply within public procurement infrastructure


Government Procurement & Competitive BiddingDefinitions

Invitations for Bids (IFB’s)

• Competitive Bidding Methodology

• Primarily used for procurement of commodities

• Basis for Contract Award

- Meet specifications

- Lowest price


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



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.



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.’

“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.’



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)



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.



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






Entity Contract)


Agency Specific Contracts

Specialized Requirements Needed to Meet Agency Mission

• Consultant Services

• “Do Not Call” Registry

• Digital Fingerprinting Identification

• Specialized Software

• Entertainment Services





Entity Contract)



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.”



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



• 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





Entity Contract)



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.





Entity Contract)



Single SourceSingle 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.





Entity Contract)



Sole Source

Sole Source means a procurement in which only one

offeror is capable of supplying the required

commodities or services.





Entity Contract)



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.




• Centralized Contract• Agency Specific Contract• Preferred Sources• Emergency Contract• Single Source Contract• Sole Source Contract• Multiple Awards• Piggybacking (Adoption of Another Government Entity Contract)



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.



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.



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.



Note:

These contracts and purchases also need to be

supported by a procurement record and are subject to

OSC approval.



• 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).



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,”

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.



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)



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



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



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.



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.



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



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



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



Bid Evaluation & Approvals

• Bid Disputes

- No statutory right

- Commissioner's responsibility to make an award consistent with

procurement laws

• Elements of defensible decisions



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 and Competitive Bidding


Selection and Contract Award

• Using Bid Documents for Contract Award

• Negotiate Contract



Other Relevant Laws

• Section 112 State Finance LawOSC 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



Other Relevant Laws

• Sections 139-j and 139-k State Finance LawRestriction on Contracts and

Disclosure of Contacts

• Section 144-a State Finance Law Rock Salt Preference

• Section 220 and 240 Labor LawPrevailing Wage Rate

• Article 2 Uniform Commercial Code Sales



Anne Phillips

Associate Counsel

Office of General Services

[email protected]

(518) 474-5607

Presenter’s Contact Information

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