Opinion 2004 - 9


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

PUBLIC CONTRACTS -- Contracts Not Requiring Bidding (purchases for municipal hospitals and nutrition programs pursuant to agreements under Public Health Law)

GENERAL MUNICIPAL LAW 103(8); PUBLIC HEALTH LAW 2803-a: Purchases by a county on behalf of a "municipal hospital" or for a county nutrition program that receives federal, state or local government funding may be made pursuant to joint agreements under Public Health Law 2803-a under the exception to competitive bidding in section 103(8) of the General Municipal Law. 1991 Opns St Comp No. 91-17, p 59 is superseded to the extent inconsistent.

You ask whether purchases on behalf of county agencies, other than those that operate "municipal hospitals", may be made pursuant to the exception to competitive bidding requirements under General Municipal Law 103(8).

Section 2803-a of the Public Health Law, in pertinent part, authorizes "hospitals", under rules and regulations promulgated by the State Hospital Review and Planning Council (see 10[C] NYCRR 400.4), to enter into contracts and make arrangements among themselves and among "nutrition programs that receive federal, state, or local government funding" for the joint purchase of goods, supplies and services. General Municipal Law 103(8) provides an exception to the competitive bidding requirements of subdivision one of section 103, "[w]here municipal hospitals or nutrition programs that receive federal, state, or local funding purchase goods, supplies and services under joint contracts and arrangements entered into pursuant to" Public Health Law 2803-a.

Prior to 1998, the exception in General Municipal Law 103(8) applied only to purchases by "municipal hospitals". In the absence of a definition of "hospitals" in section 103(8), we expressed the opinion that the definition of "hospital" in Public Health Law 2801(1) would apply (1990 Opns St Comp No. 90-18, p 41; 1989 Opns St Comp No. 89-2 p 6). In 1991 Opns St Comp No. 91-17, p 59, we concluded that, because section 103(8) was then limited by its express terms to "municipal hospital", local governments could not make purchases for any other function under the section 103(8) exception to competitive bidding requirements.

In 1992, the above-quoted language in Public Health Law 2803-a, authorizing "nutrition programs that receive federal, state or local government funding" to enter into joint contracts or arrangements under that section, was added (L 1992, ch 732). A corresponding amendment was made in 1998 to subdivision 8 of section 103, to include within the competitive bidding exception in that provision, purchases of goods, supplies and services for "nutrition programs that receive federal, state, or local funding", under joint contracts and arrangements entered into pursuant to Public Health Law 2803-a (L 1998, ch 622). Therefore, purchases by political subdivisions for both "municipal hospitals" and "nutrition programs that receive federal, state or local government funding", that are made under joint contracts and arrangements entered into pursuant to Public Health Law 2803-a, are exempt from the competitive bidding requirements of General Municipal Law 103(1).

The term "nutrition program" is not defined for purposes of Public Health Law 2803-a or General Municipal Law 103(8). The legislative histories of the 1992 amendment to Public Health Law 2803-a and the 1998 amendment to General Municipal Law 103(8) indicate that those amendments were intended primarily to permit local governments that were providing preventative health services for senior citizens through nutrition programs, such as congregate and home delivered meal programs, to participate in the joint purchase arrangements (see New York State Senate and Assembly Memoranda in Support of S.7631-A/A.10572-A of 1992; Memorandum of the New York State Office For the Aging to Counsel to the Governor, Re: S.7631-A/A.10572-A, June 25, 1992; Memorandum from Senator Larkin to the Governor, Re: S.5390, July 10, 1998).

Nonetheless, although the primary purpose of the amendments was to allow use of the joint purchase authority for nutrition programs aimed at senior citizens, there is nothing on the face of the amendments or in the legislative histories indicating that purchases for other analogous nutrition programs, aimed at providing preventative health services for other than senior citizens, would be precluded from falling within the scope of the amendments (see, e.g., Sponsor's Memorandum in Support of S. 5390 of 1998, Budget Report on S. 5390 of 1998, Memorandum to the Governor from the Office of the State Comptroller on S. 5390, July 10, 1998, all generically referring to municipal nutrition programs). Thus, it is our opinion that procurements of goods, supplies and services under joint contracts and arrangements pursuant to section 2803-a of the Public Health Law for any duly established municipal nutrition program, whether for senior citizens or others, fall within the bidding exception of General Municipal Law 103(8). Each proposed procurement would have to be examined on a case-by-case basis to determine whether it is in furtherance of such a legitimate nutrition program.

Accordingly, purchases by a county on behalf of a "municipal hospital" or for a county nutrition program that receives federal, state or local government funding may be made pursuant to joint agreements under Public Health Law 2803-a under the exception to competitive bidding in section 103(8) of the General Municipal Law.1 1991 Opns St Comp No. 91-17, p 59, is superseded to the extent inconsistent with the above.

October 7, 2004

Timothy J. Holt, Sr., Director
Rensselaer County Bureau of Central Services

1 In our Ten-Day Bill Memorandum to the Governor for S. 5390 of 1998, which was enacted as chapter 622 of the Laws of 1998, we cautioned that, since prices under these joint contracts and arrangements are not required to be fixed with the benefit of a competitive bidding process, local governments should take steps to ensure that the prices are reasonable before making purchases. We also noted that the local government should ensure that use of such contracts is consistent with the local government's procurement policies and procedures adopted pursuant to General Municipal Law 104-b. We reiterate those cautionary notes here.