Purchasing Basics for Municipal, Joint and County Public Libraries Gordon Ball Procurement Specialist, Division of Local Government Services, State Department of Community Affairs Presentation created by: Victoria Rosch Associate State Librarian, Library Support Services New Jersey State Library

Local Agency Procurement Laws NJSA 40A:11-1 governs the award of contracts for services for boards and public entities including municipal, joint and county libraries Association libraries (non-profits) do not have to comply, but may want to as a “best practice” since they accept public funding Resources:  NJ Local Agency Procurement Laws at http://www.state.nj.us/dca/divisions/dlgs/programs/lpcl.html

Purchasing Processes There are three main processes for most purchases: bid, quote or use of sound business judgment Which process to use is determined by many factors such as what is being purchased, the cost of the purchase (threshold), and whether or not the library has a Qualified Purchasing Agent There are Statutes that exempt certain categories (not many) from this process

Thresholds and Qualified Staff Designation as a Qualified Purchasing Agent (QPA) requires a certificate issued by the Division of Local Government Services as well as ongoing training Most libraries do not have a QPA and must meet the threshold standards for those local government units without a QPA

Business Judgment? Quote? Bid? Less than $2,625 Use sound business judgment $2,625 - $17,499 Get 2 quotes for services from 15% of bid threshold up to the bid threshold $17,500 Requires the bidding process - complicated procedure - work closely with municipal officials and lawyer *current as of 02.14.14

Purchases Exempted By NJSA 40:54-12.1 and NJSA 40:33-8.1 The board of trustees (The county library commission…) … may, within the limits of funds appropriated, purchase the following without advertising for bids: 1. library materials including books, sound recordings, videos, and audiovisual materials; 2. Necessary rebinding; and 3. specialized library services (NJSA 40:54-12.1) “Specialized library services” must be determined cautiously – digitization may qualify, but an integrated library system does not – seek the advice of a QPA or the Division of Local Government Services

Exceptions Permitted Emergencies affecting public health, safety and welfare – adopt a resolution and file a report with the Division of Local Government Services Single Source (really rare) – apply for State Treasurer approval through the Division of Local Government Services

Alternate Methods of Purchase Competitive Contracting (NJSA 40A:11-4 Purchasing integrated library system which would exceed the bid threshold Concessions – for example, receiving funding from a book rental service (like Bookswim) in an amount exceeding the bid threshold might use competitive contracting Note: Private companies making money from a taxpayer-funded property (like a website hosting private advertising, or a link to Amazon) does not appear to be supported by law – check with your attorney

Alternate Methods of Purchase Concessions (NJAC 5:34-9.4 (g)) If it is estimated that the library will receive less than $17,500 from all vendors providing a certain service, and therefore this would be a non-competitive contract, the rationale for this decision must be documented and the quotation process may be used If it is estimated that the library will receive $17,500 or more from all vendors providing a certain service, the library will need to go through the formal bid or competitive contracting process  

How to Determine Thresholds Amount for determining whether to use the bid, quote or use of sound business judgment process is based on the aggregation of all purchases and anticipated purchases for the year (or contract period) for the provision or performance of any goods or services (whether one or more vendors) Pay-To-Play threshold ($17,500*) is based on the aggregation of a single vendor’s cumulative contracts Business Registration Certificate threshold ($2,625*) is based on a single vendor’s cumulative contracts *current as of 02.14.14

Business Registration Program PL. 2004, c.57 affects purchasing of goods and services over $2,625 (vendor’s cumulative contracts not aggregation by type of goods or services) Library materials are not exempt Only required to obtain one time unless business address changes For instructions on implementing the law see: http://www.state.nj.us/dca/divisions/dlgs/programs/lpcl.html#1 Effective September 1, 2004 Both in-state and out-of-state vendors, corporations and personal service contracts must submit a copy of a "Business Registration Certificate" to a public agency before the agency issues a purchase order and/or pays the vendor. No materials or services are exempt from this law even though the Local Public Contracts law otherwise exempts libraries from the quote and bid process for library materials The purpose of contractor registration is to have vendors comply with the law on non-government contracts so that they pay the required taxes.

Pay-To-Play Chapter 271, P.L. 2005 and Chapter 19, P.L. 2004 (as amended by P.L. 2005, c.51); N.J.S.A. 19:44A-20.4 et seq. Applies to any aggregate amount per vendor of $17,500 or more per year or contract period and this includes library materials For information see: http://www.state.nj.us/dca/divisions/dlgs/resources/poli_docs/p2pguide.pdf

Purchasing Services from a Nonprofit Nonprofits that contract with government entities are not required to file the Business Entity Annual Statement (PL 2007, c304) Review of process/issues regarding purchasing services through library consortia fees

State Contract and State Cooperative Purchasing A good place to start is Treasury’s FAQ on this subject (http://www.state.nj.us/treasury/purchase/coop_faq.shtml) You may search by vendor or specific product or service If a vendor states they are on State contract, check to make sure this is true for the item you are purchasing Using this method eliminates the need for the library to obtain bids, quotes, the Business Registration and follow Pay to Play rules

Local or National Cooperative Contract National Cooperative contracts - carefully review Local Finance Notice 2012-10 (http://www.state.nj.us/dca/divisions/dlgs/lfns/12/2012-10.pdf), state laws affecting the agency’s contracting authority, and relevant case law affecting the use of national cooperatives. Local Cooperative contracts (for example utilities) may be available

Hiring Professionals Attorneys, engineers, architects, etc. must all file a Business Registration if the professional services are over the 15% bid threshold Bidding is not required (NJSA 40A:11-5 (1)(a)(i)), but it is best to use the Competitive Contracting procedure as found in NJSA 40A:11-4.1 for hiring professionals (also see the administrative code at NJAC 5:34-4.1 et seq.) Pay-to-Play laws must be followed if not using a "transparent" method and if spending above the $17,500 threshold

Resolution for Hiring Professionals "The governing body shall in each instance state supporting reasons for its action in the resolution awarding each contract and shall forthwith cause to be printed once, in the official newspaper, a brief notice stating the nature, duration, service and amount of the contract, and that the contract is on file and available for public inspection in the office of the clerk..."

Sample Newspaper Notice for Contract Award CONTRACT AWARD SAMPLE NEWSPAPER NOTICE The following is a sample resolutions for publishing Notices of Contract Award for Professional Services. Professional Services - Local Notice of Contract Award The (name of the local government unit) has awarded a contract without competitive bidding as a professional service pursuant to N.J.S.A. 40A:11-5(1)(a)(i). The contract and the resolution authorizing it are on file and available for public inspection in the office of (municipal clerk) Awarded to: _____________________________________________ Duration: _____________________________________________ Nature and type of contract: _________________________________ Amount of Contract*: _________________________________ *Indicate by dollar value of contract, per hour/per occurrence, pursuant to schedule of rates/fees contained in the contract

Discarding/Selling Government Property Estimated fair value of the property or group of items to be sold at the same time is: Below 15% of the bid threshold ($2,625*), item/s may be disposed of as deemed appropriate for a government entity - trash, recycle, given to association library or sold at private sale without advertising for bids (NJSA (40A:11-36 (6)). Equal to or over 15% of the bid threshold and the purchaser is another government entity, a mutually agreeable price is negotiated and both units pass resolutions verifying the sale.    Equal to or over 15% of the bid threshold and the purchaser is NOT another government entity, publically offer the item/s through a sealed bid or auction process by live auction or an on-line auction. *current as of 02.14.14

Resources Gordon Ball: Gordon.Ball@dca.state.nj.us or (609) 633-6152. http://www.nj.gov/dca/divisions/dlgs/ http://lss.njstatelib.org/library_law ; Part 6: Purchasing Every director should be a member of the State Library’s listserv - njpublibs.