A01123 Summary:

BILL NOA01123
 
SAME ASNo Same As
 
SPONSORCahill
 
COSPNSRAbinanti
 
MLTSPNSRBrindisi
 
Add S139-l, amd S163, St Fin L; amd S142, Ec Dev L; amd S100-a, Gen Muni L; amd S2879, Pub Auth L
 
Includes net economic impact as a factor to consider in awarding state procurement contracts.
Go to top    

A01123 Actions:

BILL NOA01123
 
01/08/2015referred to governmental operations
01/06/2016referred to governmental operations
Go to top

A01123 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A1123
 
SPONSOR: Cahill (MS)
  TITLE OF BILL: An act to amend the state finance law, the economic development law, the general municipal law and the public authorities law, in relation to considering net economic impact in procurement contracts   PURPOSE OR GENERAL IDEA OF BILL: To assure state procurement contracts to any contractor are awarded on the basis of the economic benefits such contract has on the New York economy. This bill would authorize the Office of the State Comptroller to establish rules and regulations in reference to the evaluation and awarding of state contracts to include the proposal's quantifiable long-term fiscal benefits to the State.   SUMMARY OF SPECIFIC PROVISIONS: State Finance Law is amended to include Section 139-j, which defines "Net Economic Impact," and author- izes the Office of the State Comptroller to promulgate rules and regu- lations to create the evaluation process. Section 142 of the Economic Development Law is amended to authorize the Commissioner of Economic Development to make notice of any changes to any procurement contract opportunity to be communicated in its Procure- ment Opportunities Newsletter. Section 100-a of the General Municipal Law is amended to include the economic impact be considered as the priority when negotiating contracts for public works and public purchases. Subdivision 1 of Section 2879 of the Public Authorities Law is amended to authorize any public authority and public benefit corporation to adopt comprehensive guidelines regarding purchases to include the economic impact of such contract as defined in Section 139-j of the State Finance Law.   JUSTIFICATION: This legislation would create a statewide procurement policy for state agencies, public authorities and public works purchases that would assure those public funds are spent in the most efficient and economically beneficial manner. Currently, state contracts are awarded based on the lowest bid submitted. The lowest bid does not equate to the best bid or most economically beneficial purchase. Although the lowest bid remains part of the purchasing criteria, this bill would take into consideration the entire economic impact a state contract would on New York's economy. By evaluating the perspective proposal on the basis of its net economic impact, the state can create a level playing field for all businesses competing for state contracts.   PRIOR LEGISLATIVE HISTORY: 2013-2014: A.1243 - Referred to Govern- mental Operations 2011-2012: A.59 - Referred to Governmental Operations 2009-2010 : A.572 - Referred to Governmental Operations 2007-2008 : A.3928 - Referred to Governmental Operations 2005-2006 : A.7882 - Referred to Governmental Operations 2004: A.11689 - Referred to Govern- mental Operations   FISCAL IMPLICATIONS: None   EFFECTIVE DATE: This act shall take effect on the one hundred eight- ieth day after it shall become law.
Go to top

A01123 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          1123
 
                               2015-2016 Regular Sessions
 
                   IN ASSEMBLY
 
                                     January 8, 2015
                                       ___________
 
        Introduced by M. of A. CAHILL -- Multi-Sponsored by -- M. of A. BRINDISI
          -- read once and referred to the Committee on Governmental Operations
 
        AN ACT to amend the state finance law, the economic development law, the
          general  municipal  law and the public authorities law, in relation to
          considering net economic impact in procurement contracts
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Short  title. This act shall be known and may be cited as
     2  the "competitive procurement act".
     3    § 2. Legislative findings. The legislature hereby finds that in  order
     4  to  assure the economically sound use of public funds for the benefit of
     5  the entire state and to facilitate the  acquisition  of  facilities  and
     6  commodities  of  maximum quality, this act shall require the negotiation
     7  of such procurement contracts for public works and public  purchases  to
     8  make  the  net  economic  impact of such contract a priority in awarding
     9  such procurement contracts. Although the economic  impact  traditionally
    10  includes  evaluation  of  the direct, indirect, and induced impacts of a
    11  contract on the economy of this state,  the  legislature  further  finds
    12  that  the "net economic impact" must include consideration of the lowest
    13  responsible bid and best  value  as  additional  component  criteria  in
    14  determining  the  overall  economic  impact of a contract on the state's
    15  economy. Therefore, it is in the public's best interest  to  incorporate
    16  the lowest responsible bid and best value criteria into the net economic
    17  impact criterion in order to award the most economically viable procure-
    18  ment contracts in New York state.
    19    § 3. The state finance law is amended by adding a new section 139-l to
    20  read as follows:
    21    §  139-l.  Net  economic impact in procurement contracts.  1. Notwith-
    22  standing any other provision of law to the contrary, where a contract is
    23  to be awarded by a state agency, public authority or municipality pursu-
    24  ant to a competitive bidding process or a request for proposal  process,
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06228-01-5

        A. 1123                             2
 
     1  such  state  agency, public authority or municipality shall require that
     2  any proposal submitted by a prospective contractor in  response  thereto
     3  include  an  economic  impact  statement  detailing  how an award of the
     4  contract  to  the particular contractor would benefit the economy of New
     5  York state and shall provide that net economic impact will be considered
     6  in making the award. The weight to be given to such net economic  impact
     7  criterion  relative  to  other  criteria used to evaluate the proposals,
     8  including lowest responsible bidder and best value, shall be  determined
     9  by  the  contracting agency, authority or municipality on a case by case
    10  basis. The state agency, public authority, or  municipality  shall  give
    11  priority  to  the net economic impact criterion wherever practicable and
    12  set forth the basis for its award in writing.
    13    2. For the purposes of this section, the following  terms  shall  have
    14  the following definitions:
    15    (a)  "Net  economic  impact" means the measure of economic stimulation
    16  that occurs from purchasing transactions that have occurred  within  the
    17  local  economy  of  New  York  state and the lowest responsible bid. Net
    18  economic impact shall be measured by direct impact, indirect impact  and
    19  induced  impact, as well as lowest responsible bid and best value, which
    20  are defined as:
    21    (1) "Direct impact" means  the  amount  of  direct  economic  activity
    22  generated  by  the  purchasing transaction, or business transactions, in
    23  question. The sets of numbers used to  determine  direct  impact  are  a
    24  result  of  developing  per capita numbers based on actual economic data
    25  supplied by transaction management, attendance figures, and other finan-
    26  cial information for all  transaction-related  activities,  as  well  as
    27  using  available  transaction  industry  average  per capita expenditure
    28  levels for various items.
    29    (2) "Indirect impact" includes economic activity felt by businesses as
    30  an indirect result of the purchasing or business transaction.
    31    (3) "Induced impact" is the impact generated  when  those  surrounding
    32  businesses  purchase  additional  products  and  services, and hire more
    33  employees to meet the demand brought on by direct and indirect impacts.
    34    (4) "Lowest responsible bidder" means any person,  firm,  corporation,
    35  successor  corporation,  contractor or subcontractor who (i) submits the
    36  lowest responsible bid and (ii)  is  not  disqualified  on  any  of  the
    37  grounds provided by law, rule or regulation.
    38    (5)  "Best  value" means the same as in subdivision one of section one
    39  hundred sixty-three of this chapter.
    40    (b) "Municipality" shall mean any city, town, village, county, munici-
    41  pal corporation, district corporation, district or any  office,  depart-
    42  ment or agency, thereof.
    43    (c)  "State agency" shall, notwithstanding any other provision of law,
    44  mean any state department, board,  bureau,  division,  office,  council,
    45  committee  or officer of the state, or the state university of New York,
    46  or the senior colleges of the city university of New York, or any public
    47  benefit corporation or commission at least  one  of  whose  members  are
    48  appointed by the governor.
    49    3.  The comptroller and the commissioner of the department of economic
    50  development shall establish, through the promulgation of rules and regu-
    51  lations, and in consultation with the heads of state agencies, a  method
    52  for  structuring  requests  for  proposals  to  require  inclusion of an
    53  economic impact statement and in evaluating responses to  such  requests
    54  for  proposals. The comptroller shall also establish through the promul-
    55  gation of rules and regulations guidelines for agencies, authorities and
    56  municipalities to incorporate consideration of  the  lowest  responsible

        A. 1123                             3
 
     1  bidder  criteria into the net economic impact formula. Such net economic
     2  impact shall include, but not be  limited  to,  consideration  of  where
     3  subcontractors  used  by  contractors to fulfill a contract are located,
     4  how  many  jobs in the state, if any, will be created by the awarding of
     5  such a contract, and the estimated tax revenue  and  ancillary  economic
     6  activity  that  would  be generated in the state through the awarding of
     7  such contracts and subsequent subcontracts, lowest responsible bid,  and
     8  best value. Such rules and regulations shall include a procedure whereby
     9  a  state  agency,  public authority or municipality may request a waiver
    10  from the requirements of this section.
    11    4. (a) The provisions of this section shall not apply to contracts for
    12  which a state agency, public authority, or municipality  receives  funds
    13  administered  by  the  federal government, except to the extent that the
    14  federal government would not withhold such  funds  owing  to  the  state
    15  agency's,  public  authority's,  or  municipality's compliance with this
    16  section.
    17    (b) The provisions of  this  section  shall  not  apply  to  contracts
    18  between  a state agency, public authority, or municipality in negotiated
    19  reciprocity for goods or services, except to the extent  that  such  net
    20  economic impact shall not undermine such reciprocal contract agreement.
    21    5.  Any person, firm, corporation, successor corporation, labor organ-
    22  ization, contractor or subcontractor may, within ten days after a bid is
    23  accepted, file an application to  challenge  the  determination.    Upon
    24  receipt  of  such  application, the comptroller, or his or her designee,
    25  shall conduct a hearing to determine the validity  of  the  application.
    26  Notice  shall be given to the applicant and to the proposed contract bid
    27  awardee of the date, time and place of the hearing.  The  applicant  and
    28  the  proposed  contract  bid  awardee  shall be given the opportunity to
    29  present evidence and witnesses on their behalf. The comptroller, or  his
    30  or her designee, presiding over such hearing shall issue a written deci-
    31  sion  with findings of fact whether the proposed contract bid awardee is
    32  valid. Such contract shall not be awarded prior to  such  decision.  The
    33  awarding  agency,  authority,  or  municipality shall notify all bidders
    34  regarding the selection of its proposed contract bid awardee.
    35    § 4. The opening paragraph and paragraph c of subdivision 2, the open-
    36  ing paragraph and subparagraphs (ii), (v) and (vi) of  paragraph  a  and
    37  subparagraph  (i)  of paragraph b of subdivision 3 of section 163 of the
    38  state finance law, as added by chapter 83  of  the  laws  of  1995,  are
    39  amended to read as follows:
    40    The  objective  of state procurement is to facilitate each state agen-
    41  cy's mission while protecting the interests of the state and its taxpay-
    42  ers and promoting fairness in contracting with the  business  community.
    43  The  state's  procurement  process  shall  be guided by the net economic
    44  impact, pursuant to section one hundred thirty-nine-l of  this  chapter,
    45  of a contract on the state and the following principles:
    46    c.  To  encourage  the  investment  of  the private and not-for-profit
    47  sectors in New York state by making reasonable efforts  to  ensure  that
    48  offerers  are  apprised  of procurement opportunities; by specifying the
    49  elements of a responsive bid and disclosing  the  process  for  awarding
    50  contracts  including,  if  applicable,  the  relative  importance and/or
    51  weight of [cost] net economic impact and the overall technical criterion
    52  for evaluating offers; and by  ensuring  the  procurement  is  conducted
    53  accordingly.
    54    State  agency  procurement practices for commodities shall incorporate
    55  net economic impact, pursuant to section one  hundred  thirty-nine-l  of
    56  this chapter, and then the following:

        A. 1123                             4
 
     1    (ii)  Commodities  contracts  shall be awarded on the basis of [lowest
     2  price to] net economic impact of a responsive and  responsible  offerer;
     3  or,  in  the  case of multiple awards, in accordance with paragraph c of
     4  subdivision ten of this section.
     5    (v)  Consistent  with guidelines issued by the state procurement coun-
     6  cil, state agencies may competitively purchase commodities  procured  in
     7  accordance with this article in lieu of using centralized contracts when
     8  the  resultant  [price  is less] net economic impact is greater than the
     9  centralized contract [price].
    10    (vi) When justified by [price] net economic  impact,  state  agencies,
    11  and  hospitals  and  facilities managed and controlled by state agencies
    12  eligible pursuant to section twenty-eight hundred three-a of the  public
    13  health  law,  shall be eligible to make purchases pursuant to guidelines
    14  issued by the state procurement council from a consortium or  comparable
    15  entity in lieu of using centralized contracts for commodities.
    16    (i)  determine,  in cooperation with the state procurement council and
    17  state agencies, the  identity,  form,  function  and  utility  of  those
    18  commodities  which  shall  be  made  available on or through centralized
    19  contracts. Criteria shall include the net economic impact, as defined in
    20  section one hundred thirty-nine-l of this chapter, on New  York  state's
    21  economy.  Criteria  may  include, but need not be limited to, the avail-
    22  ability of a volume discount, prior use of  the  commodity  among  state
    23  agencies  and the relative cost of establishing the contract, its antic-
    24  ipated use and expected actual savings for the state.  The  commissioner
    25  may also act as a broker for state agencies to procure commodities.
    26    § 5. The opening paragraph and paragraph d of subdivision 4 of section
    27  163  of  the  state  finance  law, as added by chapter 83 of the laws of
    28  1995, are amended to read as follows:
    29    State agency procurement practices for services shall incorporate  the
    30  net  economic impact, as defined in section one hundred thirty-nine-l of
    31  this chapter, and then the following:
    32    d. Service contracts shall be awarded on the basis of [best value  to]
    33  net  economic impact of a responsive and responsible offerer; or, in the
    34  case of multiple awards, in accordance with paragraph c  of  subdivision
    35  ten of this section.
    36    §  6.  Subdivision 7, paragraphs a and b of subdivision 9, the opening
    37  paragraph and paragraph a of subdivision 10, and the  opening  paragraph
    38  of  subdivision  11 of section 163 of the state finance law, as added by
    39  chapter 83 of the laws of 1995, and subdivision 7 as amended by  section
    40  10  of  part L of chapter 55 of the laws of 2012, are amended to read as
    41  follows:
    42    7. Method of procurement. Consistent with the requirements of subdivi-
    43  sions three and four of this section, state agencies shall select  among
    44  permissible  methods  of  procurement  including, but not limited to, an
    45  invitation for bid, request for proposals or other means of solicitation
    46  pursuant to guidelines issued by the state  procurement  council.  State
    47  agencies  may  accept  bids  electronically  including submission of the
    48  statement of non-collusion required by section one hundred thirty-nine-d
    49  of this chapter and, starting April  first,  two  thousand  twelve,  and
    50  ending  March  thirty-first,  two  thousand fifteen, may, for commodity,
    51  service and technology contracts require electronic  submission  as  the
    52  sole method for the submission of bids for the solicitation. State agen-
    53  cies shall undertake no more than eighty-five such electronic bid solic-
    54  itations, none of which shall be reverse auctions, prior to April first,
    55  two  thousand  fifteen.  In  addition,  state agencies may conduct up to
    56  twenty reverse auctions through electronic means, prior to April  first,

        A. 1123                             5
 
     1  two  thousand  fifteen.  Prior to requiring the electronic submission of
     2  bids, the agency shall make a determination, which shall  be  documented
     3  in the procurement record, that electronic submission affords a fair and
     4  equal opportunity for offerers to submit responsive offers. Within thir-
     5  ty  days  of the completion of the eighty-fifth electronic bid solicita-
     6  tion, or by April first, two thousand fifteen, whichever is earlier, the
     7  commissioner shall prepare a report  assessing  the  use  of  electronic
     8  submissions  and  make  recommendations  regarding  future  use  of this
     9  procurement method. In addition, within thirty days of the completion of
    10  the twentieth reverse auction through  electronic  means,  or  by  April
    11  first,  two  thousand  fifteen,  whichever  is earlier, the commissioner
    12  shall prepare a report assessing the use  of  reverse  auctions  through
    13  electronic  means  and make recommendations regarding future use of this
    14  procurement method. Such reports shall be published on  the  website  of
    15  the  office of general services. Except where otherwise provided by law,
    16  procurements shall be competitive,  and  state  agencies  shall  conduct
    17  formal competitive procurements to the maximum extent practicable. State
    18  agencies  shall  document the determination of the method of procurement
    19  and the basis of award in the procurement record. Where  the  basis  for
    20  award  is  the  best [value] net economic impact offer, the state agency
    21  shall document, in the procurement record and in advance of the  initial
    22  receipt  of  offers, the determination of the evaluation criteria, which
    23  whenever possible, shall be quantifiable, and the process to be used  in
    24  the  determination of best [value] net economic impact and the manner in
    25  which the evaluation process and selection shall be conducted.
    26    a. The commissioner or a state agency shall select  a  formal  compet-
    27  itive  procurement  process in accordance with guidelines established by
    28  the state procurement council and  document  its  determination  in  the
    29  procurement  record. The process shall include, but is not limited to, a
    30  clear statement of need; a description of  the  required  specifications
    31  governing  performance  and  related  factors;  a reasonable process for
    32  ensuring a competitive field; a fair and equal opportunity for  offerers
    33  to  submit  responsive  offers; and a balanced and fair method of award.
    34  Where the basis for the award  is  best  [value]  net  economic  impact,
    35  documentation  in  the  procurement  record  shall,  where  practicable,
    36  include a quantification of the  application  of  the  criteria  to  the
    37  rating  of proposals and the evaluation results, or, where not practica-
    38  ble, such other justification which demonstrates that best  [value]  net
    39  economic impact will be achieved.
    40    b.  The  solicitation  shall  prescribe  the minimum specifications or
    41  requirements that must be met in order to be considered  responsive  and
    42  shall  describe  and disclose the general manner in which the evaluation
    43  and selection shall be conducted. Where  appropriate,  the  solicitation
    44  shall  identify  the  relative  importance  and/or  weight of [cost] net
    45  economic impact and the overall technical criterion to be considered  by
    46  a state agency in its determination of best [value] net economic impact.
    47    Contracts  for  commodities  shall  be awarded on the basis of [lowest
    48  price to] net economic impact of a responsive and  responsible  offerer,
    49  pursuant   to   section  one  hundred  thirty-nine-l  of  this  chapter.
    50  Contracts for services shall be awarded on the basis of best [value] net
    51  economic impact from a responsive and responsible offerer,  pursuant  to
    52  section  one hundred thirty-nine-l of this chapter.  Multiple awards for
    53  services and commodities shall be conducted in accordance with paragraph
    54  c of this subdivision.
    55    a. Selection and  award  shall  be  a  written  determination  in  the
    56  procurement  record  made  by  the  commissioner  or a state agency in a

        A. 1123                             6
 
     1  manner consistent with the provisions of the solicitation. In the  event
     2  two offers are found to be substantially equivalent, [price] net econom-
     3  ic  impact  shall  be  the basis for determining the award recipient or,
     4  when  [price]  net  economic  impact  and  other factors are found to be
     5  substantially equivalent, the determination of the commissioner or agen-
     6  cy head to award a contract to one or more  of  such  bidders  shall  be
     7  final.  The  basis  for determining the award shall be documented in the
     8  procurement record.
     9    It shall be the responsibility of the head of  each  state  agency  to
    10  periodically  sample  the results of the procurement process to test for
    11  reasonableness; to ensure that the results withstand public scrutiny and
    12  that the quality and the price of  the  purchase  makes  sense;  and  to
    13  ensure that purchasing is conducted in a manner consistent with the best
    14  net economic impact interests of the state.
    15    §  7. Subdivision 1 of section 142 of the economic development law, as
    16  amended by chapter 137 of the laws  of  2008,  is  amended  to  read  as
    17  follows:
    18    1.  The  commissioner  shall  publish  on  a daily basis a procurement
    19  opportunities newsletter, which shall  contain  notices  of  procurement
    20  contract  opportunities and any other information the commissioner deems
    21  necessary to effectuate the purposes of this article including, but  not
    22  limited  to,  any  changes  in  the law, rules and regulations regarding
    23  procurement contracts. Notices  of  procurement  contract  opportunities
    24  shall be available on the internet for at least fifteen days.
    25    §  8.  Section 100-a of the general municipal law, as added by chapter
    26  363 of the laws of 1964, is amended to read as follows:
    27    § 100-a. Declaration of policy. [It] Notwithstanding any provision  of
    28  this  article to the contrary, it is hereby declared to be the policy of
    29  this state that this article  shall  [be  construed]  consider  the  net
    30  economic  impact, as defined in section one hundred thirty-nine-l of the
    31  state finance law, as the priority in the negotiation of  contracts  for
    32  public  works  and  public purchases to which political subdivisions [or
    33  and district] and/or districts therein [is] are a party so as to  assure
    34  the  prudent  and economical use of public moneys for the benefit of all
    35  the inhabitants of the state and to facilitate the acquisition of facil-
    36  ities and commodities of maximum quality [at the lowest possible cost].
    37    § 9. Subdivision 1 of section 2879 of the public authorities  law,  as
    38  amended  by  chapter  564  of  the  laws  of 1988, is amended to read as
    39  follows:
    40    1. Every public authority and public benefit corporation,  a  majority
    41  of  the  members  of  which  consist  of persons either appointed by the
    42  governor or who serve as members by virtue of holding a civil office  of
    43  the state, or a combination thereof, (such entities to be hereinafter in
    44  this  section  referred  to  as "corporation") shall adopt by resolution
    45  comprehensive guidelines which detail the corporation's operative policy
    46  and instructions regarding the use, awarding, monitoring  and  reporting
    47  of  procurement contracts.   Notwithstanding any other provision of law,
    48  rule or regulation, such guidelines shall include, but  not  be  limited
    49  to,  making  consideration  of  the  net  economic impact, as defined in
    50  section one hundred thirty-nine-l of the state finance law, the priority
    51  in awarding procurement contracts. Guidelines  approved  by  the  corpo-
    52  ration shall be annually reviewed and approved by the corporation.
    53    §  10.  This  act  shall  take effect on the one hundred eightieth day
    54  after it shall have become a law; provided, however, the  provisions  of
    55  this  act  shall  be  applied  to all contracts entered into on or after
    56  April 1, 2015; and provided, further, however, that  the  amendments  to

        A. 1123                             7
 
     1  the  provisions of section 163 of the state finance law made by sections
     2  four, five and six of this act shall  not  affect  the  repeal  of  such
     3  section  and shall be deemed repealed therewith.  Effective immediately,
     4  the  addition,  amendment and/or repeal of any rule or regulation neces-
     5  sary for the implementation of this act on its effective date is author-
     6  ized and directed to be made and completed on or before such date.
Go to top