A.
INTRODUCTION
1.
The basic scheme the Local Public Contracts Law (Contracts Law) envisions
is a system of competitive bidding, with certain exceptions, and procedures
fostering openness in local governmental activities.
2.
This chapter examines those provisions of law that require a Municipal
Clerk's involvement in some aspects of the public purchasing process.
9/15/10; 9/15/12
3.
This chapter also examines the basic relationship between some of
the more pertinent provisions of the Contracts Law and those Municipal
Clerks who serve in a dual capacity of Municipal Clerk-Purchasing
Agent. 9/15/10
B.
TECHNICAL
ASSISTANCE
The Division of Local Government Services (DLGS) in the Department
of Community Affairs is authorized by Statute to assist local contracting
units in matters affecting the administration of the Local Public
Contracts Law. [N.J.S.A. 40A:11-37] Guidance concerning the Contracts
Law can be obtained by viewing the Division's Contracts Law Website
at https://www.state.nj.us/dca/divisions/dlgs/about/. 10/31/05;
9/15/08; 9/15/10; 9/15/12
The Local Public Contracts Law at N.J.S.A. 40A:11-1 et seq.,
and the Local Public Contracts Law Rules at N.J.A.C. 5:30-5.1 et seq.,
N.J.A.C. 5:30-11.1 et seq. and N.J.A.C. 5:34-1 et seq. are the controlling
law and rules. 9/15/12
[N.J.S.A. 40A:11-2] 12/02; 9/15/08; 9/15/10; 10/1/2011]
"Aggregate" means the sums expended or to be expended for the
purchase of any goods or services dealing with the same immediate
purpose or task, or the furnishing of similar goods or services, over
the course of a contract awarded by a contracting agent. 9/15/08;
10/1/11
"Bid threshold" means the dollar amount set by law, above which
a contracting unit shall advertise for and receive sealed bids in
accordance with procedures set forth in law. 10/1/11
"Contract" means any agreement, including but not limited to
a purchase order or a formal agreement, which is a legally binding
relationship enforceable by law, between a vendor who agrees to provide
goods or perform services and a contracting unit which agrees to compensate
a vendor. A contract also may include an arrangement whereby a vendor
compensates a contracting unit for the vendor's right to perform a
service, such as, but not limited to, a concession. 10/1/11
"Contract year" means the period of twelve (12) consecutive
months following the award of a contract.
"Contracting agent" means the governing body of the contracting
unit or its authorized designee which has the power to prepare the
advertisements, to advertise for and receive bids and, as permitted
by this Act, to make awards for the contracting unit in connection
with purchases, contracts or agreements. 10/31/04; 9/15/08
"Contracting unit" means any county, any municipality, any board,
commission, committee, authority or agency which is not a State board,
commission, authority or agency and which has administrative jurisdiction
over any district other than a school district, and which has statutory
power to make purchases and enter into contracts awarded by a contracting
agent for providing goods or performing services. 10/31/04; 9/15/08;
10/1/11; 9/15/12
"Goods and services" means any work, labor, commodities, equipment,
materials, or supplies of any tangible or intangible nature, except
real property or any interest therein, provided or performed through
a contract awarded by a contracting agent, including goods and property
subject to the Uniform Commercial Code. 10/1/11
"Lowest price" means the least possible amount that meets all
requirements of the request of a contracting agent.
"Professional services" means services performed by a person
authorized by law to practice a recognized profession, whose practice
is regulated by law, and the performance of which services requires
knowledge of an advanced type in a field of learning acquired by a
prolonged formal course of specialized instruction and study as distinguished
from general academic instruction or apprenticeship and training.
Professional services may also mean services rendered in the performance
of work that is original and creative in character in a recognized
field of artistic endeavor. 9/15/08
"Proprietary" means goods or services of a specialized nature,
that may be made or marketed by a person having the exclusive right
to make or sell them, when the need for such goods or services has
been certified in writing by the Governing Body of the contracting
unit to be necessary for the conduct of its affairs. 10/1/11
"Purchase" means a transaction for a valuable consideration,
creating or acquiring an interest in goods, services and property,
except real property or any interest therein. 10/31/04; 9/15/08
"Purchase order" means a document issued by the contracting
agent authorizing a purchase with a vendor to provide goods or perform
services, which, when fulfilled in accordance with the terms and conditions
of a request of a contracting agent will result in payment by the
contracting unit. 10/1/11
"Purchasing agent" means the individual duly assigned the authority,
responsibility, and accountability for the purchasing activity and
who has such duties as are defined by an authority appropriate to
the form and structure of the contracting unit and who possesses a
qualified purchasing agent certificate. [N.J.S.A. 40A:11-2(30)] 9/15/10;10/1/11
"Quotation" means the response, to a formal or informal request
made by a contracting agent, by a vendor for the purchase of goods
or services, when the aggregate cost is less than the bid threshold.
Quotations may be in writing, or taken verbally if a record is kept
by the contracting agent. 10/1/11; 9/15/12
"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.
"Responsive" means conforming in all material respects to the
terms and conditions, specifications, legal requirements, and other
provisions of the request.
"Service or services" means the performance of work, or the
furnishing of labor or time, or any combination thereof, not involving
the delivery or ownership of a specified end product or a manufacturing
process. Service or services may also include an arrangement in which
a vendor compensates the contracting unit for the right to operate
a concession. 10/1/11
A.
The
primary duties and responsibilities of a Municipal Clerk are imposed
by statute and generally outlined by specific municipal ordinances
and/or administrative codes. In addition to statutory duties, additional
ones have been assigned by custom or tradition. In some municipalities,
public purchasing is one such responsibility.
B.
A
Municipal Clerk should be aware, unless otherwise specifically delegated,
the responsibility for authorizing all contracts, (remember, purchase
orders are contracts) of whatever cost or kind, rests with a Governing
Body. [N.J.S.A. 40A:11-3a]
C.
ESTABLISHMENT
OF PURCHASING AGENT [N.J.S.A. 40A:11-9] 12/00; 9/15/10
1.
The Governing Body of any contracting unit may by ordinance, in the
case of a municipality, designate an individual to serve as the contracting
unit's purchasing agent. The individual designated as the purchasing
agent shall be assigned the authority, responsibility and accountability
for the purchasing activities for the contracting unit. The purchasing
agent may:
A.
When
the cost or price of any contract awarded by the contracting agent
in the aggregate does not exceed in a contract year the total sum
of seventeen thousand five hundred dollars ($17,500), the contract
may be awarded by a Purchasing Agent or other employee so designated
by the Governing Body when so authorized by ordinance or resolution,
as appropriate to the contracting unit, of the Governing Body of the
contracting unit without public advertising for bids, except that
the Governing Body of any contracting unit may adopt an ordinance
or resolution to set a lower threshold for the receipt of public bids
or the solicitation of competitive quotations. [N.J.S.A. 40A:11-4]
10/31/05; 9/15/10
B.
If
the Purchasing Agent is qualified, the Governing Body of the contracting
unit may establish that the bid threshold may be up to, but not exceeding
forty-four thousand dollars ($44,000). Such authorization may be granted
for each contract individually, or by a general delegation of authority
by the Governing Body to the Qualified Purchasing Agent to negotiate
and award contract. [N.J.S.A. 40A:11-3] 10/31/05; 9/15/08; 9/15/10;
10/1/11; 9/15/17; 9/15/2021
C.
The
Governor, in consultation with the Department of the Treasury, shall,
no later than March 1 of every fifth (5th) year (from the year 2000),
adjust the bid threshold amounts, for local contracting units. The
Governor shall, no later than June 1 of every fifth (5th) year, notify
each Governing Body of the adjustment. The adjustment shall become
effective on July 1 of the year in which it is made.
D.
Only
a Governing Body, by resolution, may award contracts exceeding the
bid threshold. Only a Governing Body, by resolution, can award a fair
and open contract in excess of seventeen thousand five hundred ($17,500)
dollars. It is the Division of Local Government Services' position
that non-fair and open contracts may be awarded up to a local contracting
unit's bid threshold by the purchasing agent if properly authorized
by the Governing Body. [N.J.S.A. 40A:11-4] 9/15/08; 9/15/10
E.
Municipal
Clerks/Purchasing Agents should verify that their purchasing duties
have been legally delegated by a Governing Body. [N.J.S.A. 40A:11-3a]
F.
Assignment
and delegation of such responsibilities must be in the form of a written
policy, and included in a purchasing ordinance. Without such delegated
authority, a Municipal Clerk cannot, in accordance with law, direct
or perform public purchasing activities. It is important to remember
that a Purchasing Agent's authority and establishment of a department
must be spelled out by ordinance in the case of a municipality. [N.J.S.A.
40A:11-9] When required by form of government, such matters must also
be addressed in an administrative code.
A.
Competitive
bids are required for expenditures in excess of the bid threshold
to be paid with, or out of, public funds. [N.J.S.A. 40A:11-4] Competitive
bids and competitive contracting proposals are considered acceptable
methods to use in a fair and open process. 9/15/08; 9/15/10
B.
Similar
goods and services must be aggregated and contracts must not be split
for the purpose of staying under the bid threshold. 10/1/11
C.
The
Contracts Law [N.J.S.A. 40A:11-3 and 40A:11-7] requires ... periodic
purchases of goods and services which are "single in character" and
... total over the formal bid threshold for a given year be bid in
accordance with formal bid requirements.
D.
Purchasing
needs must be consolidated into bulk purchasing specifications which
must be periodically advertised instead of buying goods and services
on an as-needed basis throughout the year. Purchases should be added
according to what they are spent for rather than who they will be
bought from or the individual nature of various components. The concept
of aggregation also applies to Pay-to-Play purchase activities. [N.J.S.A.
40A:11-7] 9/15/08; 9/15/12
E.
Circumventing
requirements of the law by utilizing the informal quotation method
for periodic purchases of similar goods and services which total over
the bid threshold for any given year is prohibited.
1.
If the cumulative dollar amount to be expended during the duration
of a multi-year contract period exceeds the formal bid threshold,
then advertisement for and receipt of formal bids are required.
2.
For example, if a responsible vendor offers a low firm price of twenty-two
thousand ($22,000) dollars for the first year and eighteen thousand
($18,000) dollars for the second year of a two-year contract, the
solicitation of informal quotations satisfies present statutory requirements
(bid threshold at forty-four thousand [$44,000] dollars). 10/31/05;
9/15/10; 9/15/15; 9/15/2021
3.
If a cumulative dollar amount or any combination of total dollars
to be expended in the first and second contract year period exceeds
the present bid threshold, then advertisement for and receipt of formal
bids are required.
9/15/12
A.
Contracts
Law requires all contracts or purchases in excess of the formal bid
threshold be awarded to the lowest responsible bidder. [N.J.S.A. 40A:11-6.1]
B.
Decisions
concerning whether a bidder is responsible should include but not
be limited to consideration of experience, financial ability, moral
integrity, availability of facilities and equipment necessary to fulfill
the terms and conditions and perform the services required in a specification.
12/02
C.
Decisions
concerning whether a bidder's response to a request for receipt of
bids is responsive should include if a bid meets all specification
requirements and applicable statutory/regulatory provisions.
D.
It
is not only the lowest offered price! [N.J.S.A. 40:A11-2(27)] 10/31/04
[N.J.S.A. 40A:11-4.1 to 4.5] 10/31/05; 9/15/10
A.
PURPOSE
AND PERMITTED CONTRACTS 9/15/12
1.
Competitive contracting may be used by local contracting units in
lieu of public bidding for the procurement of specialized goods and
services that are hard to specify and the price exceeds the bid threshold
for the following purposes: 12/02
a.
The purchase or licensing of proprietary computer software and hardware
related to the proprietary software designed for contracting unit
purposes.
b.
The hiring of a for-profit entity or a not-for-profit entity incorporated
under Title 15A of the New Jersey Statutes for the purpose of:
(1)
the operation and management of a wastewater treatment system
or a water supply or distribution facility (with certain exceptions).
(2)
the operation, management or administration of recreation of
social service facilities or programs not including the administration
of benefits under the Work First New Jersey program or under General
Assistance; or
(3)
the operation, management or administration of data processing
services.
c.
Services performed by an energy services company.
d.
Homemaker-home health services.
e.
Laboratory testing services.
f.
Emergency medical services.
g.
Contracted food services.
h.
Performance of patient care services by contracted medical staff
at county hospitals, correctional facilities and long-term care facilities.
i.
At the option of the Governing Body, any good or service that is
exempt from bidding pursuant to N.J.S.A. 40A:11-5.
j.
Concessions.
k.
The operation, management or administration of other services, with
the approval of the Director of the Division of Local Government Services.
l.
If the goods and/or services are not listed, pursuant to N.J.S.A.
40A:11-4.1, you must seek the Director's approval. If you do not,
the proposed services are subject to receipt of bids.
9/15/14
2.
Any of the above listed specialized goods and services shall not
be considered by a contracting unit to be an extraordinary unspecifiable
service. A contracting unit can either use competitive bidding or
competitive contracting.
3.
Unless an exception is granted by N.J.S.A. 40A:11-15 allowing a longer
contract duration, contracts awarded under competitive contracting
shall not be for longer than five (5) years.
4.
In order to initiate competitive contracting, a Governing Body shall
pass a resolution authorizing its use each time specialized goods
or services are needed. If the desired goods and services have previously
been contracted for using the competitive contracting process, then
the original authorizing resolution shall suffice.
B.
ADMINISTRATION
1.
Competitive contracting shall be administered by a Qualified Purchasing
Agent or by Legal Counsel of the contracting unit, or by an Administrator
of the contracting unit. Any contracts awarded by competitive contracting
shall be made by resolution of the Governing Body of the contracting
unit.
2.
All competitive contracting purchases shall utilize request for proposals
(RFP) documentation.
9/15/08; 9/15/10
C.
REQUEST
FOR PROPOSALS 9/15/10
1.
A notice that RFP documentation is available shall be published in
an official newspaper of the contracting unit at least twenty (20)
days prior to the date for submission of proposals.
2.
The contracting unit may charge a fee for the RFP documentation that
shall not exceed fifty ($50.00) dollars or the cost of reproducing
the documentation, whichever is greater.
D.
EVALUATION
OF PROPOSALS 9/15/10
1.
All proposals shall be evaluated by the Qualified Purchasing Agent,
or Legal Counsel, or Administrator and proposals which are most advantageous,
price and other factors may be considered. 10/31/04; 9/15/10
2.
Under no circumstances shall the provisions of a proposal be subject
to negotiation by the contracting unit with the vendor. 10/31/04;
9/15/10
3.
The RFP may provide for interviews or presentations by vendors of
its choice, and the Qualified Purchasing Agent, Legal Counsel or Administrator
may appoint a committee as set forth in the statute to assist in evaluating
the proposals.
4.
After evaluating the proposals, the Qualified Purchasing Agent, or
Legal Counsel, or Administrator shall prepare a report evaluating
and recommending the award of a contract or contracts pursuant to
N.J.S.A. 40A:11-4.5d. 9/15/10
5.
The report shall be made public at least forty-eight (48) hours prior
to the awarding of the contract, or when it is made available to the
Governing Body, whichever is sooner.
6.
The Governing Body shall have the right to reject all proposals for
any reason set forth in N.J.S.A. 40A:11-13.2.
E.
AWARD
OF CONTRACT 9/15/10
1.
Award of a contract shall be:
a.
By resolution of the Governing Body of the contracting unit.
b.
Within sixty (60) days of the receipt of the proposals or such longer
time as may be agreed upon.
c.
The competitive contracting report shall become part of the public
record and must reflect the final action of the Governing Body.
d.
The Municipal Clerk of the contracting unit shall publish a notice
in the official newspaper of the contracting unit summarizing the
award of the contract, which shall include, but not be limited to:
9/15/10; 9/15/12
A.
Prior
to January 1, 2006, contracts subject to N.J.S.A. 40A:11-5 that exceeded
the bid threshold could have been negotiated and awarded by the Governing
Body without public advertising for receipt of bids. 9/15/10
1.
Some exceptions that should be of special interest to municipal clerks
are the following:
a.
Professional Services. [N.J.S.A. 40A:11-5(1)(a)(i)]
b.
The printing of legal briefs, records and appendices. [N.J.S.A. 40A:11-5(1)(c)]
c.
The printing of bonds and documents necessary to the issuance and
sale of bonds. [N.J.S.A. 40A:11-5(1)(h)]
d.
The printing of legal notices in newspapers as required by law. [N.J.S.A.
40A:11-5(1)(j)]
e.
Those goods and services necessary or required to prepare and conduct
an election. [N.J.S.A. 40A:11-5(1)(l)]
f.
The printing of municipal ordinances or other services necessarily
incurred in connection with the revision and codification of municipal
ordinances. [N.J.S.A. 40A:11-5(1)(x)]
g.
Expenses for travel and conferences. [N.J.S.A. 40A:11-5(1)(cc)]
2.
Since the effective enactment (1/1/06) of the Local Unit Pay-to-Play
Law, certain contracts must be awarded through a "fair and open" or
"non-fair and open" process. The Local Unit Pay-to-Play Law will be
discussed in the context of the Contracts Law in a separate section
of this chapter. 9/15/12
B.
Contracts
that are entered into with the United States of America, the State
of New Jersey, county or municipality or any board, agency or authority
thereof or any other state or subdivision of that state. [N.J.S.A.
40A:11-5(2)]
C.
D.
EMERGENCY
PURCHASES 9/15/10
An event which the law [N.J.S.A. 40A:11-6] defines as a situation
affecting the public health, safety and welfare requiring the immediate
delivery of supplies, and goods and/or performance of work or services.
Emergency purchasing procedures are as follows: 12/01
1.
The official in charge of the agency wherein the emergency occurred
or such other officer or employee as may be authorized to act in place
of that official, shall notify the purchasing agent, a supervisor
of the purchasing agent, or a designated representative of the Governing
Body, of: 10/31/04; 10/31/05
2.
If that person is satisfied that an emergency exists, that person
shall be authorized to award a contract or contracts for such purposes
as may be necessary to respond to the emergent needs. It cannot be
emphasized enough that a formal chain of command with
designated backups is an absolute requirement. [N.J.A.C. 5:34-6.1(b)]
Such notification shall be reduced to writing and filed with the Purchasing
Agent as soon as practicable. 12/02
3.
Upon the furnishing of goods or services in accordance with the terms
of the contract, the contractor shall be entitled to be paid, and
the contracting unit shall be obligated for said payment. The Governing
Body of the contracting unit shall take such action as shall be required
to provide for the payment of the contract price. 12/02
4.
A waiver of Chapter 19 (Pay-to-Play Law) is automatically granted
as long as the emergency requirements of the LPCL, specifically N.J.S.A.
40A:11-6 and the rules of N.J.A.C. 5:34-6.1, are met.
Within thirty (30) days after the declaration of an emergency,
a municipality must file an Emergency Procurement Report with the
DLGS. A copy of the Report can be obtained by viewing the Division's
Website at https://www.state.nj.us/dca/divisions/dlgs/about/ under Model Procurement Forms. 9/15/12
E.
RESPONSES
OFFERING EQUAL PRICES (TIE BIDS) 9/15/10
Whenever two (2) or more responses offer equal prices and are
the lowest responsible bids or proposals, the contracting unit may
award the contract to a vendor whose response, in the discretion of
the contracting unit, is the most advantageous, price and other factors
considered. In such a case, the award resolution or purchase order
documentation shall explain why the vendor selected is the most advantageous.
[N.J.S.A. 40A:11-6.1d] 9/15/10
F.
PURCHASES
THROUGH THE STATE'S DIVISION OF PURCHASE AND PROPERTY 9/15/10
1.
Any local contracting unit may, without advertising for bids, or
having rejected all bids obtained pursuant to advertising, purchase
any goods or services under any contract or contracts entered into
on behalf of the State by the Division of Purchase and Property in
the Department of the Treasury. [N.J.S.A. 40A:11-12(a) and N.J.A.C.
5:34—7.29]
2.
Purchases made under a contract awarded under this program shall
be for a term not exceeding the term of a State contract. 12/02; 9/15/12
3.
Any local contracting unit using this program must authorize award
of a contract by resolution of a Governing Body unless a contract
is awarded by a Purchasing Agent pursuant to N.J.S.A. 40A:11-3 (below
the bid threshold). 10/31/04
G.
PURCHASES
FROM THE U.S. GENERAL SERVICES ADMINISTRATION -FEDERAL SUPPLY SCHEDULES
9/15/08; 9/15/10
A local contracting unit may also use, without advertising for
bids, or having rejected all bids obtained pursuant to advertising,
the Federal Supply Schedules of the General Services Administration.
Only those Federal General Services Administration Contracts as authorized
in writing by the Director of the Division of Purchase and Property
are exempt from bidding.
H.
NATIONALLY-RECOGNIZED
AND ACCEPTED COOPERATIVE PURCHASING AGREEMENTS 9/15/12
1.
Any municipality may award contracts for goods and services through
the use of such national agreements that have been developed utilizing
a competitive bidding process by another contracting unit within the
State of New Jersey, or within any other state, when available. [N.J.S.A.
52:34-6.2(b)2] 9/15/16; 9/15/19
2.
Municipal clerks should be aware of the legal advertising requirements
for using such agreements. Please see LFN 2012-10, 5/14/12, pp. 7-8,
and Appendix A. 9/15/16
I.
QUOTATIONS
TEN PERCENT (10%) LESS THAN THE STATE CONTRACT PRICE [N.J.S.A. 40A:11-5(4)]
12/00; 9/15/08; 9/15/10; 9/15/12
1.
A contracting unit shall, by resolution adopted by an affirmative
vote of two-thirds (2/3) of the full membership of the Governing Body,
award a contract without advertising whenever the contracting unit
has solicited and received at least three (3) quotations on materials,
supplies or equipment for which a State contract has been issued pursuant
to N.J.S.A. 40A:11-12, and the lowest responsible quotation is at
least ten percent (10%) less than the price the contracting unit would
be charged for the identical items, in the same quantities, under
the State contract. The phrase "if practicable" does not apply. 10/31/04
2.
Quotations for the contract item shall not be received from any vendor
to whom the State contract has been awarded, and where such vendor
has agreed to extend the contract pricing for the item to local contracting
units pursuant to N.J.S.A. 52:25-16.1. [N.J.A.C. 5:34-7.30(a)1]
3.
The contracting unit must file copies of the purchase order relating
to any such contract; the requisition for purchase order, if applicable;
documentation identifying the price of the materials, supplies or
equipment under the State contract; and the State contract number
with the Director of the Division of Local Government Services within
five (5) working days of the award of the contract by the contracting
unit.
J.
GOODS
OR SERVICES PURCHASED FROM A BEQUEST, LEGACY OR GIFT 9/15/10; 9/15/12
Goods or services, the payment for which utilizes only funds
received by a contracting unit from a bequest, legacy or gift, shall
not be subject to the provisions of the Contracts Law if such bequest,
legacy or gift contain written instructions as to the specifications,
manufacturer or source of supply. [N.J.S.A. 40A:11-13.1]
9/15/10
A.
TYPES OF LOCAL COOPERATIVE PURCHASING SYSTEMS 9/15/10
All of these systems are required to be registered with the
DLGS. In addition, cooperative pricing, joint purchasing, county cooperative
contract purchasing, regional cooperative pricing and commodity resale
systems require a resolution of the Governing Body for establishing
or participating in such a system, and a resolution for a formal contract.
System approval is for a period of five (5) years. Contact the DLGS
for further information.
1.
Cooperative Pricing System [N.J.S.A. 40A:11-11(5)]
This system is different inasmuch as one (1) government agency
performs the advertising and awarding of the lowest responsible bid,
but separate contracts or purchase orders are executed between each
participating government agency and a vendor. [N.J.A.C. 5:34-7.3]
2.
Joint Purchasing System
In a joint purchasing arrangement [N.J.S.A. 40A:11-10], two
(2) or more local contracting units contractually agree that one of
them will serve as purchasing agent for the group, at least with respect
to certain specified categories of purchases. [N.J.A.C. 5:34-7.3]
3.
County Cooperative Contract Purchasing System
a.
The Governing Body of a county government may establish a cooperative
pricing system for the voluntary use of contracting units within the
county. [N.J.S.A. 40A:11-11(6) and N.J.A.C. 5:34-7.21 to 7.26]
b.
A county government cooperative purchasing system works like the
State's cooperative contracts where estimates do not have to be provided
by local contracting units.
c.
A county must offer potential bidders an option of participating
in the program. 9/15/12
4.
Regional Cooperative Pricing System
a.
Two (2) or more registered cooperative pricing systems may join together
for the provision and performance of goods and services, including
the purchasing of energy. 9/15/12
5.
Commodity Resale System
a.
Under the commodity resale system [N.J.A.C. 5:34-7.15 et seq.], a
local contracting unit (lead agency) may purchase gasoline, diesel
fuel or snow removal chemicals, public works materials and supplies,
including road and roadway construction materials or any other such
materials as may be approved by the Director of the Division of Local
Government Services. 10/31/04
b.
The lead agency may then resell a portion of such commodity to another
local contracting unit as a participating member.
A.
"Extraordinary unspecifiable services" (EUS) means services which
are specialized and qualitative in nature requiring expertise, extensive
training and proven reputation in the field of endeavor. [N.J.S.A.
40A:11-2(7)] An example is the purchase of insurance coverage and
consultant services. [N.J.S.A. 40A:11-5(m)] 9/15/12
1.
Application of this exception must be construed narrowly in favor
of open competitive bidding, where possible.
2.
Before a Governing Body awards an EUS contract which exceeds the
bid threshold, a designated administrative official of a local contracting
unit must file a certificate with the Governing Body clearly describing
the nature of the work/service to be done, stating it is not reasonably
possible to draft specifications, describing the informal solicitation
of quotations and describing in detail why the contract meets the
provisions of the statute and rules [N.J.A.C. 5:34-2.3b] Please
refer to sample EUS certification form at the end of this Chapter. 12/02
3.
A contract for EUS may be awarded upon determination in writing by
the contracting agent that the solicitation of competitive quotations
is impracticable. A mere recitation of the statutory language shall
not be acceptable.
4.
EUS contracts shall be awarded by resolution of the Governing Body.
[N.J.S.A. 40A:11-6.1(b)]
9/15/10
A.
CONTRACTS BELOW THE BID THRESHOLD BUT FIFTEEN PERCENT (15%) OR MORE
OF THAT AMOUNT
1.
Contract in the aggregate below the bid threshold — two thousand
six hundred twenty-five ($2,625) dollars for the seventeen thousand
five hundred ($17,500) dollars threshold and six thousand six-hundred
($6,600) dollars threshold for the forty-four thousand ($44,000) dollars
threshold with a Qualified Purchasing Agent, and 10/1/11; 9/15/15;
9/15/2021
2.
Contracts that are exempt from public advertising, and the receipt
of bids require the contracting agent to actively solicit at least
two (2) competitive quotations, if practicable.
3.
Such contracts in excess of seventeen thousand five hundred ($17,500)
dollars are subject to Pay-to-Play requirements.
B.
CONTRACT AWARD PROCEDURES
1.
Work by employees of the contracting unit, are exempt from both competitive
bidding and competitive quotations.
2.
Contracts awarded by competitive quotations shall be awarded to the
vendor whose response is most advantageous, price and other factors
considered.
3.
The contracting agent must retain the record of the quotations solicited
and shall include a copy of the record with the voucher used to pay
the vendor.
4.
If authorized by a Governing Body's resolution or ordinance, all
contracts that are in the aggregate less than fifteen percent (15%)
of the bid threshold may be awarded by the contracting agent without
soliciting competitive quotations by using sound business judgment.
5.
Sound business practices mean employing such judgment that the price
charged to the contracting unit reflects current market conditions
and the quantity and delivery needs of the contracting unit. 2/02
[N.J.A.C. 5:34-9.5(b)] 9/15/12
9/15/08; 9/15/10
STATUTORY AUTHORIZATION
A.
For any period not to exceed twenty-four (24) consecutive months.
B.
Exceptions are specifically permitted pursuant to N.J.S.A. 40A:11-15.
C.
Professional services contracts can only be awarded for a period
not to exceed twelve (12) consecutive months.
D.
Contracts exceeding the statutory limits of N.J.S.A. 40A:11-15 are
beyond the powers conferred upon local contracting units by law. The
courts have ruled that such contracts are null and void.
12/02; 9/15/08; 9/15/10
A.
PUBLICATION FOR RECEIPT OF BIDS
2.
In no event less than ten (10) days prior to date fixed for receiving
bids. [N.J.S.A. 40A:11-23] Do not count the day of the receipt of
bids. 9/15/08
3.
Exception - receipt of bids for collection
and disposal of municipal solid waste must be published in an official
newspaper circulating in a county or municipality and in at least
one (1) newspaper of general circulation published in the state. Advertisement
cannot be less than sixty (60) days prior to date fixed for receiving
bids. 10/31/04
4.
Publication of detailed specifications is not necessary. A brief
description of what a local contracting unit needs is acceptable.
C.
LIMITS ON BID ACCEPTANCE DATES
1.
For all contracts, the date fixed for receiving bids shall not fall
on a Monday, or any day directly following a State or federal holiday.
[N.J.S.A. 40A:11-23(a)]
2.
Currently, all federal holidays are also State holidays, and many
of them fall on Monday.
3.
The law applies whether or not the contracting unit observes a given
holiday. The law supersedes local holiday observance.
4.
It is the Division of Local Government Services' view that the law
also applies to competitive contracting.
5.
Annual updates are posted on the Division's website, https://www.state.nj.us/dca/divisions/dlgs/about/ 9/15/12
D.
NOTICE OF REVISIONS 9/15/08
1.
Construction Contracts:
Notice must be provided to any person who has submitted a bid
or has received a bid package. Notice shall be provided in any of
the following ways no later than seven (7) days, Saturdays, Sundays
or holidays excepted, prior to the date on which the bids are to be
submitted:
2.
Solid Waste Disposal and Collection Contracts: 10/31/05
a.
A notice must be published in an official newspaper of the contracting
unit and in at least one newspaper of general circulation published
in the State not later than seven (7) days, Saturdays, Sundays and
holidays excepted, prior to date for acceptance of bids. [N.J.S.A.
40A:11-23c(3)] 10/31/05; 9/15/08
b.
While the Local Public Contracts Law does not specifically provide
for the three (3) methods (certified mail, certified facsimile transmission
or by delivery service) for these contracts, it may be a best practice
to use any one of the three (3) methods. 10/31/04
3.
All Other Contracts: 9/15/12
A notice must be published not later than seven (7) days, Saturdays,
Sundays and holidays excepted, prior to date for acceptance of bids
in an official newspaper of the contracting unit and be provided to
any person who has submitted a bid or has received a bid package,
using one of the following means: 10/31/05
a.
In writing by certified mail; or
b.
By certified fax transmission where the sender's fax machine produces
a receipt showing the date and time of transmission and verification
that the transmission was successful; or
c.
By a delivery service that provides certification of delivery to
the sender. [N.J.S.A. 40A:11-23]
4.
Failure to fully comply with requirements for notice of revision(s)
or addenda will render the receipt of bids null and void and require
a rebid. 12/02
9/15/08; 9/15/10
A.
As a general rule, state law does not allow bids to be received after
the time designated in an advertisement. [N.J.S.A. 40A:11-23] This
issue has been litigated on several occasions.
B.
RECEIPT OF BIDS BY MAIL: [N.J.S.A. 40A:11-23]
1.
Procedures should be established to prevent abusive practices.
2.
Bids, especially those received by mail, must be properly safeguarded.
Avoid any possibility or allegation of early opening or improper handling
of bids.
3.
An individual who handles the received mail and hand delivered bids
should not be the same individual who will officially receive and
open them at the designated time. This should be avoided if at all
possible. 9/15/08
4.
All bids should be submitted in properly labeled, sealed envelopes
to be opened only at the designated time and location.
C.
RETURN OF REJECTED BIDS
Bids rejected for failing to comply with procedural requirements
should not be returned to a bidder until an official action has been
taken by a Governing Body. Only a Governing Body has the power to
formally award a contract or reject all bids. [N.J.S.A. 40A:11-4]
D.
CANCELLATION OR POSTPONEMENT OF RECEIPT OF BIDS OR PROPOSALS
A concern from time to time is what to do with the pending receipt
of bids when some event or situation causes the advertised date to
be postponed or canceled.
1.
This is sometimes further complicated when there is not sufficient
time to place a notice in a legal newspaper to publicly reach as many
potential bidders as possible. Does one send a fax, or use a telephone
to notify everyone who may have specifications? This may not be a
solution since one might not know how many vendors have specifications.
Local contracting units should maintain a record of names and contact
information for potential bidders or proposers who have received a
set of specifications or proposals. 9/15/08; 10/1/11
2.
A worse scenario is when vendors appear for a bid opening and no
local official is there to inform them of a change in date for receipt
of bids. 9/15/12
3.
The Contracts Law is silent on this point. Changing a date for receipt
of bids should be avoided. However, if there is no other choice, the
new date selected must comply with the requirements of the Contracts
Law, the Open Public Meetings Act, and any other formal action that
a Governing Body may wish to pursue.
4.
While the Contracts Law is silent on this issue, your attention is
called to N.J.A.C. 5:34-9.3(a) concerning the cancellation or N.J.A.C.
5:34-9.3(b) regarding the postponement of receipt of bids or proposals.
A careful review of this rule should be helpful in resolving such
issues. 10/31/04; 9/15/08; 9/15/12
9/15/08; 9/15/10
A.
At stated time and place, a properly designated Purchasing Agent
must publicly receive bids, immediately proceed to unseal them and
publicly announce the contents. [N.J.S.A. 40A:11-23] If there is no
properly designated Purchasing Agent, either a Municipal Administrator/Manager,
Municipal Clerk, or Chief Financial Officer can be designated to receive
and open bids.
B.
Announcement of a bid's contents must be made in the presence of
any parties bidding or their agents who are present.
C.
A proper record of the prices and terms of an award to be made by
resolution of a Governing Body must be recorded in the minutes of
said Governing Body.
D.
If an award is to be made by other than a Governing Body, a record
must be kept in an appropriate book for such purpose. Such an award
would apply to a quotation or an emergency pursuant to N.J.S.A. 40A:11-6.
9/15/08
E.
WITHDRAWAL OF BIDS FOR PUBLIC WORKS CONTRACTS 10/1/11
1.
The amendment at N.J.S.A. 40A:11-23.3, authorizes bidders on public
works projects to request withdrawal of a bid due to a "mistake" on
the part of the bidder after the receipt and public opening of the
bids. This provision applies only to public works projects. Public
works means building, altering, repairing, improving or demolishing
any public structure or facility constructed or acquired by a contracting
unit to house local government functions or provide water, waste disposal,
power, transportation, and other public infrastructures. [N.J.S.A.
40A:11-2(34)] 10/1/11
2.
A "mistake" means: "for a public works project, a clerical error
that is an unintentional and substantial computational error or an
unintentional omission of a substantial quantity of labor, material,
or both, from the final bid computation." [N.J.S.A. 40A:11-2(42)]
10/1/11
3.
If a bidder determines that their bid includes a mistake that meets
the definition under the law, a bidder can make a request to withdraw
the bid. To do so a bidder shall submit the withdrawal request in
writing by certified or registered mail to the proper name and title
of the local official at the complete address to which the bid was
submitted. 10/1/11
4.
The bidder shall request withdrawal of a bid within five (5) business
days after the opening of the bids. Since the bid withdrawal request
shall be effective as of the postmark of the certified or registered
mailing, if a contracting unit plans to award a public works contract
before the five-day time period expires, the appropriate local official
should contact the apparent lowest responsible bidder prior to the
contract award to ascertain if the bidder is going to request a bid
withdrawal. If the bidder indicates a plan to withdraw, the award
should be held off pending receipt of the request. 10/1/11
5.
For further information and guidance regarding N.J.S.A. 40A:11-23.3,
please refer to Local Finance Notice, LFN 2011-12, dated 3/18/11.
10/1/11
12/02; 9/15/08; 9/15/10
A.
Guidelines should encompass a determination of who submitted the
lowest bid, whether the low bidder is responsible, and if the low
bid is responsive to a set of specifications.
B.
Openness, impartiality and reasonableness are standards in any competitive
process.
C.
Bids rejected for failing to comply with certain statutory or procedural
requirements and/or are determined to be non-responsive should not
be returned to a bidder(s) until an official action has been taken
by the Governing Body.
[N.J.S.A. 40A:11-13.2] 9/15/10
A.
A local contracting unit may reject all bids
for any of the following reasons:
1.
The lowest bid substantially exceeds the cost estimates for the goods
and services.
2.
The lowest bid substantially exceeds the contracting unit's appropriation
for the goods or services.
3.
The Governing Body of the contracting unit decides to abandon the
project for provision or performance of the goods or services.
4.
The contracting unit wants to substantially revise the specifications
for the goods and services.
5.
The purposes or provisions or both of the Local Public Contracts
Law are being violated.
6.
The Governing Body of the contracting unit decides to use a State
authorized contract as allowed by the Local Public Contracts Law.
The process has more accountability. A local contracting unit
cannot reject all bids because it simply did not like the price of
a bidder or the ranking of a certain bidder or bidders. 12/02
[N.J.S.A. 40A:11-4b] 10/31/04; 9/15/10; 9/15/18
A.
Consult with the municipal attorney;
B.
The Governing Body of a contracting unit may, by resolution approved
by a majority of the Governing Body, disqualify a bidder who would
otherwise be determined to be the lowest responsible bidder, if the
Governing Body finds that it has had prior negative experience with the bidder. 9/15/12
C.
There are certain conditions that apply if a Governing Body is contemplating
a disqualification based on prior negative experience [N.J.S.A. 40A:11-4c(1)
through (6)].
D.
Disqualification shall be for a reasonable, defined period of time
which shall not exceed five (5) years. [N.J.S.A. 40A:11-4c (4)] 9/15/12
12/02; 9/15/08; 9/15/10
A.
BID GUARANTEES
1.
A guarantee, payable to a local contracting unit for the faithful
signing and execution of a contract.
2.
A bid guarantee shall be in an amount of ten percent (10%) of a bid,
but not in excess of twenty thousand ($20,000) dollars. 10/31/04;
10/31/05; 9/15/08
3.
If a bid guarantee is required, it may be given at the option of
a bidder by certified check, cashier's check or bid bond. [N.J.S.A.
40A:11-21]
B.
A Consent of Surety is given at the time bids are received that a
performance bond will be given upon contract signing, if required.
12/02
C.
Performance Bond - A bond provided by a surety company for a contractor's
faithful performance of all provisions of the contract specification(s).
[N.J.S.A. 40A:11-22] It is suggested that the form and contents of
all bonds be reviewed by a Municipal Attorney. 12/02
E.
All bond requirements are at the option of a local contracting unit.
The Contracts Law statutes are permissive. However, a contractor bidding
on a construction, public works or utilities project in excess of
one hundred thousand ($100,000) dollars shall furnish a bid guarantee
and a certificate (consent of surety) from a surety company. [N.J.S.A.
40:A:11-21 and 22] 9/15/08; 9/15/12
12/02; 9/15/08; 9/15/10
A.
A Governing Body must award a contract or reject all bids within
a specified time, but it cannot exceed sixty (60) calendar days. [N.J.S.A.
40A:11-24a]
B.
A Governing Body may extend beyond the sixtieth (60th) day. A local
contracting unit can request that the bids of any bidders who consent,
be held for consideration for such longer period as may be agreed.
C.
A local contracting unit is required to return bid security of those
bidders not among the lowest three (3) bids within ten (10) days after
opening of bids (Sundays and holidays excepted). [N.J.S.A. 40A:11-24a]
9/15/08
D.
Within three (3) days, (Sundays and holidays excepted) after an award
and signing of a contract, and approval of a contractor's performance
bond, the bid security of any remaining unsuccessful bidders must
be returned. [N.J.S.A. 40A:11-24a]
E.
All parties within the time limit set forth in specifications must
sign a contract. [N.J.S.A. 40A:11-24b]
1.
The time limit must not exceed twenty one (21) days (Sundays and
holidays excepted) after award of a contract.
2.
All parties to a contract may agree to extend the time limit set
forth in specifications beyond the twenty-one (21) day limit.
3.
A contractor, upon written request to a local contracting unit, is
entitled to receive, within seven (7) days of the request, an authorization
to proceed pursuant to terms of the contract on the date set forth
in a contract for work to commence.
4.
If no date is set forth in the contract, then work proceeds upon
receipt of authorization from the contracting unit.
9/15/08; 9/15/10
A.
The Contracts Law specifically requires all contracts to be in writing.
[N.J.S.A. 40A:11-14]
B.
The form in which contracts may be made and executed may be prescribed
by the Governing Body.
C.
For purchases over and under the formal bid threshold, a purchase
order may serve as a contract if properly designed, signed and executed.
[N.J.S.A. 40A:11-36] 9/15/08; 9/15/10
A.
A Governing Body by resolution may authorize by sealed bids or public
auction the: 9/15/08
1.
Sale of public personal property no longer needed for public use.
[N.J.S.A. 40A:1-36]
2.
If the estimated fair value of the personal property to be sold exceeds
fifteen percent (15%) of the bid threshold in any one (1) sale and
it is neither livestock nor perishable goods, it shall be sold at
public sale to the highest bidder.
3.
Sold at public sale to highest bidder except when a sale is made
to certain other governmental agencies. [N..S.A. 0A:11-36(2)]
4.
A public advertisement must include a notice of the date, time and
place of a public sale, together with a description of items to be
sold and terms and conditions of a sale. [N.J.S.A. 40A:11-36(3)]
5.
A sale must be held not less than seven (7) nor more than fourteen
(14) days after latest publication of a notice. [N.J.S.A. 40A:11-36(3)]
6.
If no bids are received, the personal property may then be sold at
private sale without further publication or notice, but in no event
for less than the estimated fair value; or the contracting unit may,
if it so chooses, reoffer the property at a public sale.
7.
A contracting unit may reject all bids if it determines such rejection
to be in the public interest. Where all bids have been rejected at
a second public sale, than the personal property can be sold, without
further publication or notice at a private sale. In no event shall
the negotiated price at private sale be less than the highest price
of any bid rejected at the preceding two public sales and provided
further that in no event the terms or conditions of sale be changed
or amended.
8.
By resolution of the Governing Body, a contracting agent may include
the sale of personal property no longer needed for public use as part
of specifications to offset the price of a new purchase. This is the
trade-in provision. [N.J.S.A. 40A:11-36(7)] 10/1/11
9.
"Estimated fair value" means the market value of the property between
a willing seller and a willing buyer less the cost to the contracting
unit to continue storage or maintenance of any personal property not
needed for public use.
10.
These provisions of law does not govern public (real) property transactions.
The Local Lands and Buildings Law [N.J.S.A. 40A:12-1 et seq.] is covered
in the Miscellaneous Duties Chapter.
9/15/10
A.
APPLICATION OF CHANGE ORDERS 9/15/08
1.
A Change Order is a properly prepared document that must be authorized
by a Governing Body.
2.
It authorizes a contractor, consultant or vendor performing work
to change the quantity or character of work, service, materials and
supplies to be performed or delivered from that originally specified
or estimated.
3.
There will be a corresponding change in payment(s) due.
4.
Quantities of items or work shall not be changed in such a manner
as to nullify the effect of a competitive bid or the determination
of lowest responsible price which was made at the time of contract
award, if at such time changes could have been reasonably foreseen.
5.
The rules also apply to Change Orders for construction, reconstruction
and major repair contracts. [N.J.A.C. 5:30-11.8] 10/31/04
6.
Change Orders can only be used to change the numbers of units or
items originally advertised and contracted for provided that:
a.
Unit prices or a price methodology were sought in an original set
of specifications and included in a contract; and
b.
An original set of specifications and a contract included a provision
that unit prices could be used.
c.
If a. and b. above were not included in an original set of specifications,
a change order cannot be issued.
7.
Before authorizing any Change Orders resulting in additional expenditures,
availability of funds shall be certified in writing by a Chief Financial
Officer in accordance with N.J.A.C. 5:30-5.1 et seq.
8.
Change Order authorizations shall not be withheld until completion
of an entire project.
B.
TWENTY PERCENT (20%) CHANGE ORDER LIMITATION:
1.
Total number of Change Orders executed for a particular contract
shall not cause an originally awarded contract price to be exceeded
by more than twenty percent (20%) unless otherwise authorized by the
Change Order rules.
2.
If proposed Change Orders do exceed the twenty percent (20%) limitation,
no work shall be performed or purchases made until the procedures
of N.J.A.C. 5:30-11.1 et seq. have been completed. If a Governing
Body determines issuance of a Change Order is not justifiable, a new
contract shall be executed in accordance with the procedures of the
Contracts Law.
3.
The twenty percent (20%) limitation shall not apply to emergency
situations as defined within N.J.S.A. 40A:11-6.
4.
A Governing Body shall pass a resolution authorizing a written amended
contract to be entered into covering change(s) to be made.
a.
A resolution shall be passed before execution of a Change Order.
b.
Governing Body shall cause to be printed once, in an official newspaper,
a brief notice indicating the additional amount to be expended, the
original contract price, the nature of the original and additional
work, and why it is necessary to expend the additional funds. A copy
of the advertisement shall also be filed with the Municipal Clerk
and be available for inspection by the public. 12/01 [N.J.A.C. 5:30-11.9(c)6]
c.
The Municipal Clerk of the Governing Body shall report to the Director,
on an appendix to the contracting unit's annual budget, all change
orders from the previous fiscal year which exceeded the twenty percent
(20%) limitation. This report shall be made on a form provided by
the Director. A summary of the report shall be included as supplemental
materials in the annual audit of the contracting unit. [N.J.A.C. 5:30-11.9(d)]
A.
INTRODUCTION
1.
All business organizations that do business with a local contracting
unit are required to be registered with the State and provide proof
of that registration to the local contracting unit before it may enter
into a contract with the business.
B.
APPLICATION OF THE LAW
1.
A contractor shall provide the local contracting unit with the business
registration certificate of the contractor and that of any named subcontractor
(construction contracts) prior to the time a contract, purchase order,
or other contract document is awarded or authorized.
2.
For bids and requests for proposals, the local contracting unit must
retain the proof of business registration in the file where documents
relating to the contract are maintained. For all other contracts,
proofs of business registration shall be maintained in an alphabetical
order.
C.
NON-BID CONTRACTS
1.
Proof of registration for non-bid contracts (i.e. purchase orders
under the bid threshold) must be received before the contract is issued.
2.
In situations of an emergent nature, a local contracting unit may
enter into a contract with a business organization, provided the contractor
agrees to provide the BRC within two (2) weeks of the execution of
the contract.
9/15/10
A.
BACKGROUND OF P.L. 2004, c.19
1.
On January 1, 2006, N.J.S.A. 19:44A-20.4 et seq. took effect. The
Law affects all "municipalities and counties and their agencies and
instrumentalities," concerning certain business entities and county
political party committees.
a.
The law affects all contracting units subject to the Local Public
Contracts Law that enter into contracts with an anticipated value
in excess of seventeen thousand five hundred ($17,500) dollars.
b.
Contracts in excess of seventeen thousand five hundred ($17,500)
dollars that are exempt from the receipt of bids are covered. Therefore,
those exceptions, N.J.S.A. 40A:11-5(1)(a) through 40A:11-5(1)(hh),
are subject to the statutory requirements of the "fair and open" or
"non-fair and open" (The Alternate) process. 9/15/12
c.
Contracts with a value over seventeen thousand five hundred ($17,500)
dollars are not linked to a public agency's bid threshold. 9/15/12
2.
Contracts Covered by the Law
a.
Contracts covered are those awarded by formal public bidding, competitive
contracting, cooperative purchasing, informal quotations and contracts
that are exempt from the bidding process or for professional or extraordinary
unspecifiable services.
b.
Contracts issued by purchase orders, as well as by more formal contractual
agreements are covered, and are subject to the concept of aggregation.
Also, the Law applies to multi-year contracts.
B.
THE FAIR AND OPEN PROCESS
1.
The minimum requirements of a fair and open process are:
a.
Publicly advertised (a minimum of ten (10) calendar days) either
conventionally in newspapers or on the internet website maintained
by the public entity, in sufficient time to give notice in advance
of the contract; 10/1/11; 9/15/12
b.
Awarded under a process that provides for public solicitation of
proposals or qualifications; 10/1/11
c.
Established on the basis of an award and disclosure process under
criteria established in writing by the public entity prior to the
solicitation of proposals or qualifications; and 10/1/11
d.
Publicly opened and announced when awarded by the Governing Body.
10/1/11
Note: The decision of a public entity
as to what constitutes a fair and open process shall be final. 10/1/11
2.
Awards of fair and open contracts will be approved by resolution
of the Governing Body.
3.
All resolutions awarding contracts over the seventeen thousand five
hundred ($17,500) dollars threshold should include wording indicating
that the contract is awarded pursuant to a fair and open process or
to an "alternative" process, i.e. non-fair and open process. 10/1/11
4.
The requirement of "sufficient time to give notice" is met, at a
minimum, by the standard for newspaper publication of bids—ten
(10) calendar days. This applies for either newspaper or website advertising.
5.
The following guidance supersedes any prior guidance to the contrary
regarding the placement of a "Notice of Award" in the newspaper when
professional services or EUS contracts are awarded:
a.
"Window Contracts." A professional services
or EUS "window" contract is a contract between seventeen thousand
five hundred ($17,500) dollars and a contracting unit's bid threshold
(not to exceed forty thousand ($40,000) dollars). In these cases,
there is no requirement to publish a notice of award because the value
is less than the contracting unit's bid threshold and the professional
services bid exception is not used. Window contracts, however, are
still subject to the provisions of political contribution disclosure
requirements as they are contracts over seventeen thousand five hundred
($17,500) dollars. 10/1/11; 9/15/17
|
The governing body of a municipality or county (or any agency
or instrumentality thereof) may delegate the authority to award a
contract having an anticipated value in excess of $17,500 but below
the increased bid threshold of a Local Public Contracts Law contracting
unit with a qualified purchasing agent (i.e. a “window contract”)
to the QPA. This delegation of authority should be incorporated into
the resolution adopted pursuant to N.J.S.A. 40A:11-3 increasing the
bid threshold. 9/15/23
|
b.
Over the bid threshold. If a professional
services or EUS contract is over the contracting unit's bid threshold,
regardless of whether a fair and open or the "alternate" (non-fair
and open) process is used, the contract must be awarded by Governing
Body resolution. A notice of award must be published as the amount
of the contract exceeds the bid threshold and the professional services
bid exception is used. Please refer to N.J.S.A. 40A:11-5(1)(a)(i)
for the statutory requirements for publication.
c.
Less than $17,500. Professional services contracts
that are less than seventeen thousand five hundred ($17,500) dollars
are not subject to the requirement of a published notice of contract
award.
C.
THE "NON-FAIR AND OPEN" (ALTERNATE) PROCESS 9/15/12
1.
An "alternate " process can only be used when goods and services
are exempt from public bidding [N.J.S.A. 40A:11-5].
2.
The non-fair and open process does not require the competitive elements
of the fair and open process.
3.
The Law requires that for a non-fair and open contract to be awarded:
a.
The contractor must certify that no reportable contributions exceeding
two hundred ($200) dollars per election cycle were made during the
one year preceding the award of the contract [N.J.S.A. 19:44A-20.5].
9/15/12; 9/15/23
b.
The contractor may not make a reportable contribution during the
term of the contract.
4.
A model Business Entity Disclosure Certification (BED-C) has been
developed by the DLGS for use by municipalities. It contains the information
necessary to comply with the statutory requirements of certifying
that no reportable contributions were made in the year prior to the
award of contract.
a.
The governing body cannot award a contract without having the completed
certification on file.
b.
The Municipal Clerk must obtain the names of the political party
and candidate committees and individual officials from the elected
officials of the municipality, and provide the information to the
individual responsible for the contract.
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State Pay-to-Play Law Now Preempts Local Pay-to-Play Restrictions
Local government entities are now prohibited from imposing pay-to-play
provisions that are more restrictive than those in State law. Section
37 of the Act repealed N.J.S.A. 40A:11-51, the law that previously
authorized counties, municipalities, independent authorities, fire
districts, and boards of education to adopt additional local pay-to-play
restrictions to further limit the award of public contracts to business
entities making political contributions, and limited the contributions
that individuals or entities awarded a contract can make during the
term of the contract. The repeal is effective retroactive to January
1, 2023. As a matter of housekeeping, any local pay-to-play ordinances
or resolutions originally authorized or grandfathered by N.J.S.A.
40A:11-51 that are currently in effect should be repealed. 9/15/23
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D.
BACKGROUND OF P.L. 2005, C.271
1.
On January 1, 2006, P.L. 2005, c.271 was signed into law. Key elements
of the law are:
a.
Permits municipalities and their agencies to formally adopt local
pay-to-play restrictions. All local pay-to-play policies must be filed
with the Secretary of State.
b.
Requires that businesses receiving non-fair and open contracts submit
a list of contributions made to a broader range of elected officials.
c.
Requires that businesses awarded contracts in excess of fifty thousand
($50,000) dollars a year file an annual disclosure of contributions
with ELEC.
2.
Disclosure of contributions to local units
a.
P.L. 2005, c.271 created a new disclosure requirement for businesses
and public contracts with a value exceeding seventeen thousand five
hundred ($17,500) dollars awarded pursuant to a non-fair and open
process.
b.
Businesses receiving these contracts must submit a "Chapter 271 Political
Contribution Disclosure" to the municipality no later than ten (10)
days prior to the contract being awarded. (Disclosure Form has been
developed by DLGS).
c.
This disclosure is in addition to the BED-C required under Chapter
19 that must be on file prior to award.
d.
The business must disclose all reportable political contributions
that exceed two hundred ($200) dollars (per election cycle) made during
the twelve-month period preceding the award of the contract. 9/15/23
e.
Both disclosure forms shall be kept on file with other documents
related to the contract.
NOTE: For a basic understanding of the Pay-to-Play Law, please
review the "Local Unit Pay-to-Play Decision Tree," at the end of this
section and consult with the municipal attorney. 9/15/12; 9/15/18
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TO:
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Members of the Governing Body
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FROM:
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Name and Title of the Contracting Unit's
Designated Administrative Official
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DATE:
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___________________
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SUBJECT:
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This is a contract for
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This is to request your approval of a resolution authorizing
a contract to be executed as follows:
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Firm
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Cost
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Duration
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Purpose
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This is to request an award of a contract without the receipt
of formal bids as an Extraordinary Unspecifiable Service [N.J.S.A.
40A:11-5(1)(a)(ii) and N.J.A.C. 5:34-2.3(b)]. I do hereby certify
to the following:
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1.
Provide a clear description of the nature of the work to be
done:
(Provide a complete description)
2.
Describe in detail why the contract meets the provisions of
the statute and rules:
(Do not just rewrite or paraphrase the statute or rule,
or merely state a desire to have a reliable job performed - provide
a complete explanation. However, pursuant to N.J.S.A. 40A:11-5(I)(m),
it is permissible by law that insurance contracts and/or services
can cite the statutory provision)
3.
The service(s) is of such a specialized and qualitative nature
that the performance of the service(s) cannot be reasonably described
by written specifications because:
(Describe why it is "qualitative in nature requiring
the need for expertise, extensive training and proven reputation."
Provide a complete explanation of why it is not reasonably possible
to draft specifications. Please note this provision does not apply
to insurance contracts and/or services and should thus be marked as
non-applicable.)
4.
Describe the informal solicitation of quotations:
(List vendors contacted, prices and terms provided.
If this has not been done, explain in detail. The lowest quotation
is: If no quotation(s) is received, explain why in detail)
5.
I have reviewed the rules of the Division of Local Government
Services pursuant to N.J.A.C. 5:34-2.1 et seq. and certify that the
proposed contract may be considered an extraordinary unspecifiable
service in accordance with the requirements thereof.
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Respectfully,
Name
Title
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(Signature)
_______________________________
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[Original to be retained by Governing Body's Clerk with
the affirmed copy of the resolution; signed duplicate to be kept by
appropriate official.]
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