FOR RELEASE:

Comptroller, Business Community and Local Governments Jointly Develop Procurement Reforms

Cutting Red Tape Will Ease Doing Business with State and Local Governments

Omnibus Legislation Will Reduce Bureaucracy and
Strengthen Review of High-Risk Contracts

Representatives of the business community and local governments today joined the State Comptroller to propose sweeping reforms to modernize State and local government procurement and contracting rules to make it easier for companies to do businesses with governments and make government contracting more efficient. State Comptroller Alan Hevesi, The Partnership for New York City President and CEO Kathryn S. Wylde, New York State Association of Counties (NYSAC) Executive Director Steven J. Acquario, Association of Towns of New York State Executive Director G. Jeffrey Haber, and New York Conference of Mayors (NYCOM) Executive Director Edward Farrell jointly proposed the reforms, including draft omnibus legislation.

The reforms included in the omnibus legislation will affect more than $25 billion in purchases made annually by the State and billions more by local governments and will concentrate contract review resources on more costly, higher-risk purchases. At the request of business representatives and State agencies, the reform package also includes establishing a centralized database of State vendors to allow State agencies to easily share information and streamline the contracting process for vendors doing business with the State.

“My staff worked with representatives of the business community and local governments and with State agency contracting officers to develop a comprehensive reform program. These reforms make it easier to do business with the State and give more flexibility to local governments. That’s good for businesses and good for taxpayers, because the more competition for State business, the better price and quality the State receives,” Hevesi said. “My staff reviews 15,000 new contracts and 27,000 amendments worth $25 billion every year. This reform will allow us to focus on the important contracts.”

Wylde of The Partnership for New York City said, “Updating and improving the State’s procurement practices along the lines proposed by Comptroller Hevesi can only help make our government more efficient, transparent and, ultimately, make New York State a better place to do business. We are grateful that the Comptroller gave the Partnership and our members the opportunity to contribute their ideas and help to shape his reform package.”

Acquario of NYSAC said, “The current bidding and procurement thresholds are outdated and inefficient, and don’t provide our taxpayers with enough tangible cost-savings. Our member counties appreciate Comptroller Hevesi’s proposal to raise the thresholds and to provide local governments the opportunity to piggy back on federal purchasing contracts. This is a great example of how governments can work smarter to save taxpayer dollars.”

Haber of the Association of Towns said, “The changes recommended here will help promote the efficiency of town government by saving the local governments time and money.”

Farrell of NYCOM said, “The current competitive bidding limits were put in place almost 15 years ago when the costs of good and services were significantly lower than in today’s market. The increase proposed by the Comptroller’s Office is a NYCOM priority, and will provide local governments additional flexibility when entering into contracts for smaller projects.”

Currently State contracts worth more than $15,000 must go through a detailed competitive process. For local governments, the threshold is $10,000 for purchases of goods and services and $20,000 for public work projects. The reform would increase the threshold in State Finance Law for State contracts requiring a formal competitive process and approval by the Comptroller’s Office to $50,000, up from $15,000 set in statute in 2000. Thresholds for local governments established in General Municipal Law in 1991 would be increased to $20,000 for goods and services and $50,000 for public work.

“Currently, 23 percent of the new contracts that my office reviews are valued between $15,000 and $50,000,” Hevesi said. “This means a great deal of effort is expended by businesses in competing for these contracts and by State employees in awarding and reviewing them – despite the fact that they account for only one percent of the total value of contracts we review and represent relatively low risk. We know that local resources are also strained by the award process for local government contracts. Raising the thresholds will mean State and local government officials can focus attention on larger contracts where potential savings are greater.”

Current State law provides an incentive for State agencies to enter into contracts with New York small businesses and with certified Minority- and Women-Owned Business Enterprises (MWBEs), and to purchase recycled or remanufactured products, by establishing a higher threshold for requiring a competitive process. To maintain this incentive, the proposal increases the discretionary threshold for small businesses, MWBEs and recycled or remanufactured products from its current level of $50,000 up to $100,000. A similar incentive is proposed for local governments by creating a discretionary purchasing threshold of $25,000 for these categories.

“By updating the rules and systems in place to oversee purchases, we can do a better job protecting public dollars and make the system less burdensome for businesses that work with the State and local governments,” Hevesi said. “At the same time, we can redirect resources to higher value, higher risk contracts and improve our oversight to ensure that the State is doing business with the best-qualified firms offering the most reasonable prices.”

In response to requests from both State agency personnel and businesses that enter into contracts with the State, Hevesi announced plans to create a centralized system for agencies to use in determining vendor responsibility as required by law. Currently, the same vendor may have to provide different information or the same information in various forms in order to secure contracts with various state agencies. The system to be developed by Hevesi’s staff, in consultation with the business community and State agency representatives, will allow vendors to provide information once and update it periodically on-line.

The reform proposal includes recommendations for changes to the state’s Procurement Stewardship Act, which was scheduled to sunset this year, but has been extended until June 30, 2006 as part of the legislation enacting the 2005-06 State budget. These proposals include:

• Now, unsuccessful bidders usually don’t know why they lost and so can’t improve their bids in the future. The reforms would require State agencies to provide an explanation to unsuccessful bidders, if one is requested, of the reasons they did not win in an effort to improve their chances for success in the future. Encouraging more companies to compete effectively creates more opportunity and should ensure the State receives the best possible combination of price and quality.
• Currently there is one set of rules for awarding administrative-type contracts and another for awarding grants-type contracts, such as job training to not-for-profits. If a for-profit entity joins the competition for a grant, normal contract rules apply even though they may not be appropriate for a grant procurement. The reform would create separate, more appropriate rules for awarding grants when for-profits join the competition.
• Sometimes State agencies artificially split a purchase to stay below the thresholds requiring competition, thus reducing the ability of businesses to openly compete. New rules would prevent split purchasing by requiring agencies to consider all purchases of the same good or service during one year to be part of a single purchase.
• State agencies can purchase from another agency’s existing contract. In the future, agencies would have to show that it is in the best interest of the State to “piggyback” rather than procure goods or services through open competition.
• Sometimes minor deviations in procedures hold up or stop the awarding of a contract. The reforms would give the Comptroller’s Office the ability to waive minor deviations and allow the award of a contract as long as no vendor is adversely affected.
• When situations arise that the law did not anticipate, the reforms would give the Comptroller’s Office the flexibility to work with State agencies to utilize different contracting methods on a pilot basis.

Local governments can use credit cards, but there is some confusion about the rules regarding credit card use which prevent some local governments from using what can be an appropriate and efficient form of purchasing. The reforms would clarify the law allowing the use of credit cards, while mandating that appropriate internal controls are in place. The proposed legislation also would provide increased opportunities for local governments to take advantage of federal contracts.

Hevesi also underscored his support for legislation limiting the influence of lobbyists in State agency and public authority procurements, as outlined in legislation already approved by the Assembly, which is similar to a proposal advanced by the Governor. In addition, Hevesi voiced support for proposed legislation to improve the Prompt Contracting Law to help not-for-profit entities receive contract awards in a timely manner.

A description of the procurement reform agenda, along with information about procurement processes in New York State, can be found in the policy report issued today along with proposed legislation that will be delivered to the Assembly and Senate.

Click here for a copy of the report.
Click here for a copy of the Procurement Law Revisions Bill
Click here for a copy of the Procurement Law Revisions Bill Memo

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