New Jersey State Library Directors Training: Purchasing Basics and Bid Thresholds

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Explore the essential topics covered in the New Jersey State Library Directors Training on Purchasing Basics, including bid threshold exceptions, local public contract laws, Qualified Purchasing Agent certification requirements, and the importance of not dividing contracts to bypass bid thresholds.

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New Jersey State Library New Directors Training February 16, 2022 Purchasing Basics 1

The materials and information provided in this presentation are for informational purposes and do not constitute legal advice. Disclaimer Participation in this seminar does not create an attorney-client relationship You should contact your attorney to obtain advice with respect to any particular issue or problem 2

Bid Threshold Exceptions to the Bid Requirement Quote Threshold/ Below Quote Threshold Hiring Professionals Length of Contracts Prevailing Wage Pay to Play Emergency Purchases Business Registration Certificate Paying Your Bills Disposing of Government Property Outline 3

Local Public Contract Law N.J.S.A. 40A:11-3 requires that every contract for the provision or performance of any goods or services, the cost of which in the aggregate exceeds the bid threshold, shall be awarded only by resolution of the governing body to the lowest responsible bidder after public advertising for bids and bidding therefor, except as is provided otherwise in this act or specifically by any other law. 4

Local Public Contract Law Bid Threshold Bid Threshold (changes every 5 years last change July 1, 2020) $17,500 no Qualified Purchasing Agent (QPA) $44,000 with QPA To be certified as a Qualified Purchasing Agent must pass an exam 2 yrs of college (or equiv. experience) + 2 yrs as purchasing agent Course work through Rutgers Principles of Public Purchasing l Principles of Public Purchasing II Principles of Public Purchasing III Municipal Finance Administration for Purchasing Agents 5

In the Aggregate Contract not to be Divided NJSA 40A:11-7 - No contract in the aggregate which is single in character or which necessarily or by reason of the quantities required to effectuate the purpose of the contract includes the provision or performance of add l goods or services, shall be divided, to bring it under the bid threshold Example - Custodial services In January you award ABC Cleaning a contract for $10,000 for period Jan-June. In July you decide to contract for custodial services for July-Dec the cost of which is $10,000. This is a divided contract and is not legal. This contract must be put out for public bid. 6

In the Aggregate Cumulative work exceeds threshold As of Sept. 30, you have purchased $15,000 worth of chain link fence through quotations. In October, you learn that you need an additional $10,000 worth of chain link fence before year end, and you need $21,000 worth of chain link fence next year. Solution put out to bid the procurement of the $31,000 in fencing needed for the remainder of this year and next because the total amount exceeds the bid threshold of $17,500. 7

Cumulative Work Exceeds Threshold Same as previous slide, except no need for fencing in the following year only need $10,000 more for current year. May solicit quotations or publicly bid the remaining amount because it is between 15% and 100% of the bid threshold. Same as the first scenario, except that in addition to $10,000 for this year, need $5,000 for following year, for a total of $15,000. May solicit quotations or publicly bid the remaining amount because it is between 15 % and 100% of the bid threshold. 8

Lowest Responsible Bidder - NJAC 5:34-1.2 The Bidder whose response to a request for bids offers the lowest price, is responsive and is responsible. Responsive means conforming in all material respects to the terms and conditions, specifications, legal requirements, and other provisions of the request. Responsible means able to complete the contract in accordance with its requirements, including but not limited to requirements pertaining to experience, moral integrity, operating capacity, financial capacity, credit, and workforce, equipment, and facilities availability. 9

Bid Advertisements/No Bid Mondays Ads for bids must be published sufficiently in advance to promote competitive bidding but at least 10 days prior to bid deadline. Bids are opened only at the time and place stated in the ad. Bids are opened in the presence of any parties bidding and the contents shall be publicly announced Bidders may examine the bid packages but may not take them Bid opening cannot occur on a Monday, or a day directly following a State or Federal holiday. 10

Rejection of Bids Bids may be rejected for the following reasons: Low bid substantially exceeds the cost estimate Low bid substantially exceeds the appropriation Board decides to abandon the project Board wants to substantially revise the specifications Board decides to use a State authorized contract 11

Exceptions to Public Bid Requirement N.J.S.A. 40:54-12.1/N.J.S.A. 40:33-8.1/N.J.S.A. 40A:11-5 Library materials; rebinding; specialized library services Professional Services e.g. - Attorney, Architect, Engineer, Auditor Extraordinary Unspecifiable Services (EUS), e.g. - website design, maintenance and hosting Public utility regulated by the BPU Expenses for travel and conferences State Contract and Regional and National Coops BUT Pay to Play Will Apply to contracts >$17,500 12

Quote Threshold Quote Threshold 15% of bid threshold Contracts > $2,625 ($6,600) up to $17,500 ($44,000) Need at least 2 quotes Award to a vendor whose response is most advantageous, price and other factors considered. At or below $2,625 ($6,600) Sound Business Judgement All contracts for goods or services must be in writing 13

Hiring Professionals or EUS When the contract exceeds the bid threshold Adopt a resolution stating the reasons for the action; and Publish in the official newspaper, a brief notice stating the nature, duration, service and amount of the contract (either flat sum or hourly rate), that the contract is on file and available for public inspection in the library office. 14

Length of Contracts Contracts cannot be longer than 24 months, except that contracts for professional services cannot exceed 12 months. In addition, NJSA 40A:11-15 contains a list of ~40 different contracts that can exceed 24 months Leasing machinery and equipment of any kind up to 5 years Products or services for voice, data, transmission up to 5 years Construction contracts, including architect and engineer, for the time necessary for completion of the actual construction 15

Length of Contracts Contracts for services, the statutory length of which is 3 years or less, may contain provision for one two-year or two one-year extensions if a)the contract is awarded by board resolution; b) it runs for no more than 5 consecutive years; c) any price change is based on the terms contained in the original contract and the change does not exceed the statutory index rate; and (d) the terms and conditions of the contract remain substantially the same. 16

Multi-Year Contracts Appropriation/Cancellation Clause With certain exceptions, such as a construction contract, multi-year contracts must include a clause making them subject to the availability and appropriation annually of sufficient funds as may be required to meet the extended obligation or contain an annual cancellation clause. 17

Prevailing Wage Public works project is subject to prevailing wage if the total value exceeds $16,263 where the work is being done for, or on property or premises owned by, a municipality. Prevailing Wage is the minimum rates of pay to laborers, craftsmen and apprentices employed on public works projects as determined by the NJ Commissioner of Labor. Public work means any construction, reconstruction, demolition, alteration or repair work, or maintenance work, done under contract and paid for in whole or in part out of the funds of the public body, except work performed under a rehabilitation program. 18

Pay to Play Pay to Play applies to all contracts > $17,500, including purchases of books and other library materials. Does not include contracts with banks, insurance companies, and public utilities Contracts may be awarded in one of two ways Fair and Open Process sealed bid or sealed RFQ Non-Fair and Open Process Contractor must complete Business Entity and Political Contribution Disclosure forms 19

Pay to Play In the year preceding award of the contract, and during the term of the contract, the Contractor cannot donate more than $300 to any political party committee, candidate or office holder for elective office in the jurisdiction(s). http://www.state.nj.us/dca/divisions/dlgs/resources /poli_docs/p2pguide.pdf 20

Emergency Purchases N.J.S.A. 40A:11-6/19:44A-20.12 Neither the bid statute nor the pay to play statute applies when An actual or imminent emergency exists requiring the immediate delivery of goods of the performance of the service; and Need for the goods or services could not be reasonably foreseen Length of contract is limited to meet the immediate needs of the emergency Emergency purchase cannot be used to enter a multi-year contract Board to adopt rules establishing a process to determine the existence of an emergency and the emergency purchase procedure to be implemented 21

Business Registration Certificate Required for all purchases of goods and services over $2,625 Vendor s cumulative contracts not aggregation by type of goods or services Library materials are not exempt Does not apply to non-profit corporations or government agencies Emergency purchase can be contracted but payment cannot issue without the business registration certificate Only required to obtain one time unless business address changes 22

Paying Your Bills Check with your auditor as to method of processing/approving bills Claims/Encumbrances List Bills List List of Checks Purchase Order/Voucher Requires the vendor/contractor to certify that the bill is correct, and that the money is due and owing 23

Paying Your Bills No Credit Cards Credit Cards and Debit Cards are NOT allowed for purchases Can accept credit card for payment of fines, lost books, donations, etc. Procurement cards aka P Cards are permitted. May also use Electronic Funds Transfer (EFT) Wire Transfer and Automated Clearing House (ACH) P Cards and EFT requires board to adopt a resolution, which includes all policies and procedures for implementation and oversight Local Finance Notice 2018-13 24

Disposing of Property Board adopts resolution to sell/dispose of the property If the est. fair value of the property to be sold is less than or equal to 15% of the bid threshold in any one sale, it may be sold at private sale w/o advertising for bids, or recycled or trashed. If the est. fair value of the property to be sold > 15% of the bid threshold in any one sale, sell at public sale to the highest bidder, via sealed bid or public auction. 25

Disposing of Property The date, time and place of the public sale, a description of the items to be sold and the conditions of sale shall be published not less than 7 nor more than 14 days before the sale. No need to advertise for bids when it makes any sale to the United States, the State of New Jersey, another contracting unit, or any governmental unit in the United States. 26