PROCUREMENT STRATEGIES “GETTING IT WRITE”

1. PROCUREMENT STRATEGIES“GETTING IT WRITE” Presenters: Patrick M. Moran SBA/BS Middlesex Regional Educational Services Commission pmoran@mresc.k12.nj.us; 732-777-9848, Ext. 3120 Ronald J. Ianoale Esq. McManimon, Scotland & Baumann, LLC rji@msbnj.com; 973-622-1800

2. Procurement Strategies • Quotes • Bidding • Competitive Contracting • Request for Proposals • Request for Qualifications • Request for information • Extraordinary Unspecified Services (“EUS”)

3. Procurement Strategies • Professional Services • Fair and Open Practices • Cooperative Purchasing • State Contracts • Government Services Agency (GSA) Contracts • Proprietary/Single Source Contracts • Public Works Contracts

4. Procurement Strategies • This is meant to be a conversation about how to use the procurement tools available to you. • It’s not a program about procurement law. • It will address procurement law as guidance for implementing your strategies. • So feel free to ask questions, supplement our presentation or disagree with us. • No one knows it all so share your experience.

5. Quotes • For contracts that in the aggregate exceed 15% of your bid threshold. • Bidding exceptions and professional services excluded. • Work done by Board employees are excluded. • Two competitive quotes should be solicited “if practicable.”

6. Quotes • The quote award “should be made to the vendor whose response is most advantageous, price and other factors considered.” N.J.S.A. 18A:18-37(a). • Maintain your records for audit and compliance purposes. • Remember “aggregate” refers to the 12 months prior to making this purchase.

7. Bidding • When should you bid? • When the expenditure for like goods or services exceeds or may exceed your bid threshold in the contract year. • “Contract Year” means the period of 12 consecutive months following the award of a contract and not a school district’s fiscal year.

8. Bidding Process • When are you required to obtain Board approval to bid goods or services? • Bids should be researched and written by Board employees. • Vendor supplied specifications should not be used. • Bids should be fair and encourage competition.

9. Bidding Process • Bids should be properly advertised at least 10 days prior to a bid. Exceptions 18A:18A-5 • You may want to advertise for a longer period of time to attract more bidders. • The complexity of the bid should be considered when establishing bid dates. • Bids should be opened and read at the time and date advertised. No late bids accepted!

10. Deviations in the Bid • Is the deviation “material” or can it be “waived”? • Certain deviations in the bid cannot be waived. • Two part test for determining whether other types of deviation to be bid can be waived.

11. Deviations in the Bid • Two part test • The deviation would deprive the Board of Education of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements; and • The deviation is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standards of competition. • If the answer is “no” to both questions, the deviation may be waived.

12. Bidding process • Bids should be evaluated to provide the most cost effective award to the Board. • Bid awards are made by the Board. • Bidders are notified of the award even if they were not awarded a contract. • Bids are rejected by the Board for any reason they chose. WHAT?

13. Rejecting a Bid • 18A:18A-22 • The low bid substantially exceeds budget. • The low bid substantially exceeds the Board’s appropriation. • The Board abandons the project. • The Board wants to substantially revise the specs. • 18A:18A-1 et seq. is being violated. • The Board chooses to use a State contract.

14. Competitive Contracting • Contracting for goods or services through the Request for Proposal (RFP) process. • Proposals are reviewed and scored by the Purchasing Agent, Counsel or Business Administrator. • Proposals may also be reviewed and scored by a committee. • Price and other factors determine the award.

15. Competitive Contracting • When should you use Competitive Contracting? • When price is not the only concern. • For any of the 11 services defined in 18A:18A-4.1 • Other services approved by the Division of Local Government Services. • Competitive Contracts shall not be considered Extraordinary Unspecified Services.

16. The Process • The Board must first approve the use of competitive contracting. • The process must be administered by the QPA, Counsel or BA. • The RFP process shall be used. • The RFP shall define the requirements of the services required. The RFP shall contain the methodology for evaluating and rating proposals.

17. The Process • The RFP must be advertised for at least 20 days. • Proposals shall conform to the RFP and cannot be negotiated. • If the Board is using competitive contracting to privatize services, the employees affected must be notified.

18. The Process • Proposals can only be evaluated within the methodology defined within the RFP. • A report must be written identifying all respondents, summarizing their proposals, ranking their proposals, and making a recommendation for award. • The report shall be made available at least 48 hours before award or when sent to the Board.

19. The Process • Award of contract shall be made by the Board. For a maximum term of five years. • The report shall be part of the public record. • The award shall be published with a summary of its contents. • The award shall be available for public inspection.

20. Request for Proposals • When can they be used? • During the competitive contracting process. • For the selection of professional service providers • For the award of extraordinary unspecified services contracts.

21. Request for Qualifications • Not identified or defined in 18A:18A-1. • Could be used for the selection of professional services. • Could be used for an award under extraordinary unspecified services.

22. Request for Information • Not identified or defined in 18A:18A-1. • Could be used for the selection professional services.

23. Extraordinary Unspecified Services • Services that cannot be reasonably described by written specifications. • The exception for EUS shall be construed narrowly in favor of open competitive bidding. • “Sole source” is not a reason to use EUS. • Expertise, extensive training, proven reputation must be critical to defining the EUS (See “Local Finance Notice,” AU 2002-2, dated February 26, 2002).

24. Extraordinary Unspecified Services • Previously bid contracts are excluded unless you can demonstrate the inability to prepare specifications. • A written report is required. • EUS may not be combined with other biddable services. • Take care when awarding contracts to consultants previously hired through an EUS.

25. Extraordinary Unspecified Services • A designated administrative official must submit a certification to the Board describing the nature of the work to be done, stating that it is not reasonably possible to draft specifications. • Sample certification is available on the Local Government Services website. • Award must be advertised.

26. Extraordinary Unspecified Services • When to use EUS: • Selection of Insurance broker • Purchase of insurance • Selection of Construction Manager • Selection of Financial Advisor

27. Professional Services • The first exception to requirement for advertising. • Board must state supporting reasons for making the award. • Award must be advertised. • Resolution and contract must be available for public inspection

28. Professional Services • When to use this exception: • Appointing an Attorney • Appointing an Auditor • Appointing an Architect/Engineer • Appointing Medical Professionals

29. Fair and Open Practices No school board will vote upon or award any contract in the amount of $17,500 or greater to any business entity which has made a contribution reportable by the recipient under P.L. 1973, c. 83 (N.J.S.A. 19:44A-1 et seq.) to a member of the district board of education during the preceding one-year period. Contributions reportable by the recipient under P.L. 1973, c. 83 (N.J.S.A. 19:44A-1 et seq.) to any member of the school board from any business entity doing business with the school district are prohibited during the term of a contract.

30. Fair and Open Practices The disclosure requirement set forth in section 2 of P.L. 2005, c. 271 (N.J.S.A. 19:44A-20.26) applies when the contract is required by law to be publicly advertised for bids. (C. 271 “Political Disclosure Form,” http:www.state.nj.us/dca/divisions/dlgs/lpcl.html)

31. Cooperative Purchasing • COOPERATIVE PURCHASING A GUIDE FOR LOCAL OFFICIALS http://www.mresc.k12.nj.us/files/_xUCOD_/968d0d5c987502e83745a49013852ec4/Coop_Purchasing_Guide_.pdf • FIFTH ADDITION, February 2002, Reprinted September 2006 • Department of Community Affairs • Division of Local Government Services • This is the road map we follow to ensure compliance with the rules.

32. Introduction • When local governments put aside provincial interests in exchange for the broader benefits to be achieved through Cooperative Purchasing, they can secure the provision and performance of goods and services at a lower cost. Cooperative Purchasing has demonstrated a strong ability to serve as an effective tool to assist local officials in saving taxpayer dollars. Cooperative Purchasing presents viable alternatives to the conventional “go-it-alone” bidding process.

33. Cooperative Purchasing Is For You! • Participation in a Cooperative Purchasing System does not relieve a local government of its mandated legal responsibilities. • Determine exactly what it is you want to buy. • Items purchased through a Cooperative Purchasing System are not always cheaper than what you can purchase yourself. • Once a determination is made that a Cooperative Purchasing System is desirable, make sure you go about it properly.

34. Types of Cooperative Purchasing • COOPERATIVE PRICING • “Cooperative Pricing” is a purchasing system in which a Lead Agency advertises for bids; awards a master contract to the vendor providing for its own needs and for the prices to be extended to registered members; and notifies the members of the contract awarded. The registered members then contract directly with the vendor for their own needs, subject to the specifications in the master contract.

35. Joint Purchasing • In a Joint Purchasing System, two or more local contracting units agree that one of them will serve as the Lead Agency or “purchasing agent” for the system, at least with respect to certain specified categories of purchases. The Lead Agency, in its capacity as purchasing agent, does the purchasing for the members of the System. It prepares the formal bid specifications; advertises for and receives bids; and executes a contract with the lowest responsible bidder for the full amount of the commodities or services needed by all participants.

36. Commodity Resale • With the implementation of stricter environmental standards for underground gasoline storage tanks, many local governments removed their tanks and closed their gas dispensing facilities. As an alternative, they entered into contractual relationships with neighboring governments for the purchase of gasoline and diesel fuel.

37. COUNTY COOPERATIVE CONTRACT PURCHASING • County Cooperative Contract Purchasing is a Cooperative Purchasing System that may be created only by a county government. The county advertises for bids and awards a contract to the successful bidder. With the approval of both the county and the successful vendor, local contracting units located within the geographic boundary of the county may purchase under the contract subject to its specifications, terms and conditions. It is similar in concept to the State Cooperative Purchasing System.

38. REGIONAL COOPERATIVE PRICING SYSTEM • Regional Cooperative Pricing is a Cooperative Pricing System composed of two or more registered Cooperative Pricing Systems and their participating contracting units that have agreed to join together for the provision and performance of goods and services, including the purchase of energy.

39. STATE CONTRACTS • Contracts issued by the State of New Jersey for the procurement of goods and services the State requires • Public Agencies are permitted to use these contracts based on the terms and conditions set by the State • State contracts may be found on the Treasury website at www.state.nj.us/treasury/purchase • National contracts adopted by the State may also be used by public agencies

40. GOVERNMENT SERVICES AGENCY CONTRACTS • Contracts issued by the federal government • Contract use is limited to agencies specifically noted in the GSA award (General Services Administration) • These contracts are most commonly used for acquisition of copy machines

41. NATIONAL CONTRACTS • Contracts issued by National Cooperative Pricing groups • Use of National Contracts is controlled by Local Finance Notice 2012-10 • Be careful, as these agencies will represent that they are in compliance with N.J. law when sometimes they are not.

42. LEGAL BASIS FOR COOPERATIVE PURCHASING • The basis for Cooperative Purchasing is to be found in the Local Public Contracts Law (N.J.S.A. 40A:11-11) and the Public School Contracts Law (N.J.S.A. 18A:18A-11). • Additional guidance is found in N.J.A.C. 5:34-7 et seq.

43. OBTAINING STATE APPROVAL • Lead Agency submits an application to Local Government Services (LGS) for review and approval • Application includes authorizing resolutions from the Lead Agency and system member(s), a copy of the Cooperative Purchasing Agreement and the Cooperative Purchasing Form • After approval, LGS issues an Identification Code

44. NEXT STEPS • The lead agency must submit a listing of items to be purchased to LGS • LGS must approve the list • Bid specifications must be developed

45. USE OF PRE-EXISTING CONTRACTS • New members may use existing contracts when permission is given by the Lead Agency and the Vendor. • We include language within our specifications to authorize the use of existing contracts by new members. • Vendors have always been willing to extend their pricing to new members.

46. COOPERATIVE PRICING SAMPLE DOCUMENTS • Sample documents, including membership agreements and resolutions are provided within the Co-op guide • Using these sample documents expedites approvals and makes record keeping easy

47. HOW TO USE A COOPERATIVE PURCHASING SYSTEM • You must pass an authorizing resolution • You must execute a participation agreement • Your lead agency must submit your enrollment to Local Government Services • Local Government Services must approve your membership • Once approval is received you may participate

48. WHAT DOES MEMBERSHIP COST? • The cost of membership varies based on the Co-op you belong to: • Some co-op’s charge a membership fee to use their bids so you may pay for services you never use • Some co-op’s charge a membership fee for their base bids and additional fees to use specialized bids • Some co-op’s build the administrative fee into the bid prices so vendors pay them and you only pay for what you use

49. HOW TO USE A COOPERATIVE PURCHASING SYSTEM • How you participate depends on what type of program you have joined: • Cooperative Pricing Systems • Joint Purchasing Systems • Commodity Resale Programs • County Cooperative Contract Purchasing • Regional Cooperative Pricing Systems Remember! Each system has its own guidelines.

50. HOW TO USE A COOPERATIVE PURCHASING SYSTEM • Cooperative Pricing Systems are the most common. To use these systems, you contract directly with the vendors to order and pay for the goods & services received. • Joint Purchasing Systems require the Lead Agency to pay vendors and members pay the Lead Agency.