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Recommendations
For
Local Government
Procurement Reform
In
New York State
Paul J. Brennan, C.P.M., CPPB
Donald C. Miller, MBA, CPPO
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New York State Association of Municipal Purchasing Officials, Inc.
2003 – 2004 Officers
President
Paul J. Brennan, CPPB, C.P.M.
Director of Purchasing
County of Rockland
1
st
Vice President
Donald C. Miller, CPPO
Director of Central Services
County of Dutchess
2
nd
Vice President
Karen Storm, CPPB
Purchasing Agent
Albany County
3
rd
Vice President
Peter McMillan
Director of Purchasing
Town of Cortlandt
2003 - 2004 Executive Board
Paul Apicella, CPPB
Purchasing Agent
Troy School District
Carolyn Campbell, CPPB
Purchasing Agent
City of Long Beach
Raymond DeRuyter, CPPB
Specification Writer
County of Ontario
Larry Waxman, CPPB, C.P.M.
Procurement Contracts Manager
Port Authority of NY & NJ
Mitchell Yonkler, CPPO
Procurement Contracts Manager
Port Authority of NY & NJ
Mark Zulli, MBA
Purchasing Manager
City of New Rochelle
Procurement Reform Taskforce and Legislative Committee
Beatrice Angerami
Schenectady County
Julie Best, CPPB
QUESTAR II BOCES
Charles Bond, CPPB
County of Rockland
Billie Burgamy, CPPB, C.P.M.
Capital Region BOCES
Mark Coleman
County of Orange
Lori Follett
Albany County
Joan Levine, CPPB
Ramapo Central School District
Pam O’Neill
Albany County
Robin Peruso
Ulster County
Mark Sachetti
Jefferson County
Douglas Sippel
Town of Colonie
Cliff Stoodley
Schenectady County
Greg Grower
Oneida County
Nancy Waite
Greenfield Fire District
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Demands on Local Governments to provide more services have been increasing significantly on
an annual basis. Funding continues to move from the federal government through state
governments and down to the local government level. Local governments provide a vast array of
services to their citizens, requiring increased flexibility in the procurement laws and regulations
that govern how they contract for goods and services, and in addition, requires employees that
are well trained in public procurement, ethics, and contract management.
General Municipal Law, which governs contracts and purchases by local governments, has not
been significantly revised in over a decade. At that time, the major revision was to raise the
statutory bid limits to their current levels. Since that time only a few revisions have been
adopted, including two important changes in 2003. General Municipal Law was amended
through the 2003-2004 budget bill to allow the receipt of electronic bids, and in addition, to
allow local governments to purchase from any County (in New York) contract for commodities
and certain services which do not require prevailing wages to be paid. Although these latest
revisions are considered positive; they do not have a considerable effect on the statutory bid
process and the way in which bids are evaluated and awarded by local governments.
Legislation introduced over the past three years in the Assembly and Senate show a concern
regarding adherence to General Municipal Law requirements for competitive bidding and other
contracting processes. Legislative research and audits performed by the Office of the State
Comptroller have identified common occurrences of non-compliance to many of the
requirements of General Municipal Law by local governments throughout the state. These
include bid splitting, abuses of change orders, overly restrictive bid specifications, and failure to
issue competitive bids when required. A report issued by Assemblyman Robert K. Sweeney
noted the lack of any effective mechanism for assuring compliance with the competitive bidding
requirements of General Municipal Law.
Before recommending revisions to the current requirements of General Municipal Law, the New
York State Association of Municipal Purchasing Officials formed a Procurement Reform
Taskforce comprised of local government procurement officials. The purpose of the taskforce
was to identify perceived deficiencies in the sections of General Municipal Law that govern local
government procurement, evaluate current local government procurement practices, identify
causes of non-compliance to General Municipal Law, and to develop recommendations for Local
Government Procurement Reform.
Based upon the work of the taskforce, the New York State Association of Municipal Purchasing
Officials determined that:
Training for local government employees involved in the purchasing function is basically
nonexistent. The taskforce found that while ample training opportunities in public
procurement exist; most local governments fail to provide sufficient funding for, nor
actively support, training of those employees entrusted with spending the taxpayer’s
dollars.
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Without a legislative requirement for annual training or professional certification in
public procurement the deficiencies commonly found in audits performed by the Office
of the State Comptroller will never be corrected.
Most local governments do not operate under a centralized purchasing function, rather
using a decentralized system that makes it more difficult to comply with competitive
bidding statutes. In addition, the taskforce found that it was difficult to identify who was
actually responsible or had procurement authority in these decentralized systems.
While the current competitive bidding dollar thresholds, ($10,000 for commodities and
$20,000 for Public Works projects) were set with the intent to save local governments
considerable time and money, and to prohibit fraud and corruption at the local level, it
has proven to be, in many instances, more cumbersome and costly to implement and
enforce. The current bid limits apply to all local governments (City, County, Town,
Village, School District, Fire District, and other municipal corporations) regardless of
their size, budget, and population they serve or services they deliver. This “one-size-fits-
all” approach to governing public procurement does not work well and hampers the
larger local governments from using the latest contracting methods and thus from
achieving the best value for their taxpayers. To illustrate this point, you only need to look
at the annual budget of one of the largest county’s in the state, Nassau County with a
budget of $2.28 billion, and compare it to a budget of a small village with a budget of $1
million. The levels of services provided by a county or city far exceed those provided by
smaller government units. The result is local governments that provided vastly different
levels of service have to abide by the same competitive bidding limits. Bidding limits that
are already below the national average.
There are inconsistencies between General Municipal Law, which governs procurements
by local governments, and State Finance Law, which governs procurements by state
agencies. In 1995, New York State Finance Law was amended to provide state agencies
the statutory authority to contract for services and technology on the basis of “best value”
or “low price”. This amendment provided state agencies with the ability to use the most
modern contracting methods, already utilized by most other states. This authority has not
been granted to local governments in New York.
Local governments in New York are restricted from having the opportunity to utilize
Government Services Administration (GSA) contracts, where allowed by the Federal
Government, and other Government Group Purchasing Contracts such as the U.S.
Communities Government Purchasing Alliance that bid contracts on a national basis to
take advantage of the collective buying power of local governments to the benefit of their
taxpayers. Currently only New York and New Jersey prohibit their local governments
from utilizing U.S. Communities Group Purchasing Alliance contracts.
In summary the Procurement Reform Taskforce determined that as a result of the current statues
governing local government procurement in New York; local governments are often required to
put more emphasis on the procurement process as opposed to the end result and the benefits to
our taxpayers.
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Based upon the work of the Procurement Reform Taskforce, the New York State Association of
Municipal Purchasing Officials, Inc. proposes the following Procurement Reform Initiatives to
strengthen and modernize the local government procurement process and to increase
conformance to all applicable procurement laws.
PROCUREMENT REFORM RECOMMENDATIONS
1. Statutory Requirement for Continuing Education
Current trends show that more and more governments are mandating training or continuing
education on an annual basis for all those with purchasing authority and responsibility. The
Federal Government now requires annual training and certification of all employees involved
in procurement. States such as Texas, Florida, Ohio, Alaska and others have mandated
minimum annual continuing education requirements for public purchasers, and many are
moving to mandate professional certification by either the National Institute of Governmental
Purchasing or the Institute for Supply Management.
Total local government spending in New York State is estimated to be in excess of $74
billion dollars annually. Local government employees who receive little or no training in
public procurement and contract management mostly perform these expenditures of taxpayer
money. The Procurement Reform Taskforce believes that the current problems associated
with compliance to competitive bidding laws are a direct result of inadequate training and
lack of professional certification as opposed to a willful disregard of the law.
Our recommendation is for the State Legislature to pass legislation requiring a
minimum of 24 hours of continuing education and training in Public Procurement
subject matter every two years for all local government employees with procurement
authority and responsibility.
2. Identification of Local Government Employees with Purchasing Authority and
Responsibility
The current requirements of General Municipal Law, Section 104b, mandate that all local
governments adopt, on an annual basis, a Procurement Policy that stipulates how that
government will process all purchases and contracts that are not subject to the competitive
bidding statutes.
There is currently no requirement to identify the individual or individuals (by name and title)
that have the responsibility to ensure compliance with General Municipal Law requirements.
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Our recommendation is for the State Legislature to pass legislation amending General
Municipal Law, Section 104b, to require that each local government, on an annual
basis, to identify by name and title, the individual or individuals responsible for
ensuring compliance with the requirements of General Municipal Law. (Where a local
government operates under a centralized purchasing function, the Director of Purchasing
shall be named. Where a local government operates in a decentralized purchasing function,
all employees with authority to approve purchase requests or to specify requirements shall
be named.)
3. Increase Statutory Bid Limits
Based on a 2002 national survey on Competitive Bidding Dollar Thresholds conducted by
the National Institute of Governmental Purchasing, of which 76.8% of the respondents were
local governments, 73.4% of the local governments respondents had competitive bidding
thresholds in excess of the current New York State bidding threshold of $10,000 for
commodities and $20,000 for Public Works Projects.
The survey showed that 53.8% of the responding governments had a competitive bidding
threshold of $25,000 or higher.
Our recommendation is for the State Legislature to pass legislation amending General
Municipal Law to increase the Competitive Bidding Thresholds to $25,000 for
commodities and to $50,000 for Public Works Projects.
4. Best Value Awards
The ability to award bids based on Best Value Analysis has become the new standard in
government contracting. The ability to use factors other than purchase price to make contract
awards is crucial in providing our taxpayers with the best value for their money. Based on the
current requirement to award bids to the “lowest responsible bidder” cost is given
extraordinary weight in the award process. When you award a contract based on low price,
too often local governments end up with a product that is low in quality and fails to meet the
needs of the local government.
Procurements based on the best value concept take into consideration a variety of factors,
including life-cycle costs, past performance of vendors, and their ability to complete the
contract on time.
Our recommendation is to amend General Municipal Law to mirror State Finance Law
and give local governments the ability to award Bids and Contracts based on using
“Best Value Analysis” or “Low Price”.
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5. Use of Cooperative Contracts outside of New York State
The federal government has now authorized State and Local Governments to use the General
Services Administration (GSA) Schedule 70 contracts for Information Technology products
and services. Currently under General Municipal Law there is no exception authorized to
allow the use of GSA contracts while satisfying the competitive bidding requirements.
The ability to purchase from GSA Schedule 70 contracts will give local governments an
additional procurement tool to help achieve the best purchase price for their taxpayers. While
there is no guarantee that a GSA contract price may be lower then that of a state contract
price, having the ability to use the GSA contract provides the local government purchasing
professional the opportunity to explore all options to obtain the best value. In addition, GSA
contracts may provide contract pricing on goods and services not covered by a state contract,
thereby allowing the local government to procure the needed items in a quick and efficient
manner; without the expense of issuing a formal competitive bid. The use of the GSA
contracts can also enhance the local governments ability to respond to immediate needs
identified in relation to Homeland Security issues.
In addition, there are several national Government Group Purchasing Alliances that
collectively bid contract requirements to take advantage of larger buying power. These
groups include U. S. Communities Government Purchasing Alliance and the Western States
Contracting Alliance. Both of these organizations memberships are comprised of state and
local governments. Although these groups have been incorporated as not-profits, each
competitive bid is issued by a state or local government entity. By pooling requirements
across state lines, the Group Purchasing Alliances can usually offer increased savings to their
members who purchase from the contracts. Again, while there is no guarantee that a U.S.
Communities or Western States contract price may be lower then a state contract price,
having the ability to use these contracts provides the local government purchasing
professional the opportunity to explore all options to obtain the best value. In addition, these
group purchasing contracts may provide contract pricing on goods and services not covered
by a New York State contract, thereby allowing the local government to procure the needed
items in a quick and efficient manner; without the expense of issuing a formal competitive
bid
Our recommendation is to amend General Municipal Law and allow for the use of
General Services Administration Schedule 70 contracts, U.S. Communities Government
Purchasing Alliance contracts, and Western States Contracting Alliance contracts as
exceptions to the current competitive bidding requirements.
CONCLUSION
The New York State Association of Municipal Purchasing Officials Executive Board, the
Procurement Reform Taskforce and the over three hundred members representing municipalities
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in every county of New York State, outside of New York City, overwhelmingly endorse these
proposals.
Ensuring that those involved with overseeing the expenditure of some $74 billion dollars in New
York State Taxpayer’s money have a minimal amount of training and increased options with
which to perform their responsibilities is little to expect. The State has already put in place
requirements for training and licensing for a wide variety of trades and occupations in an attempt
to protect the public. Some of these trades listed by the NYS Labor Department include
Massage Therapist, School Administrator, Assessor, Driving Instructor, Insurance Adjustor,
Land Surveyor, Acupuncturist, Barber/ Hair Dresser, Security Guard, Chauffer, Boiler Inspector,
Certified Nurses Aide and Welder to name only a few.
The New York State Association of Municipal Purchasing Officials, Inc. believes that the
protection of taxpayer’s money, which our members are entrusted with, deserves at least equal
consideration and look for the Governor and Legislature to support these procurement reform
recommendations.