Purchasing Basics for Local Government Units

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Transcript Purchasing Basics for Local Government Units

Purchasing Basics for Municipal,
Joint and County Public
Libraries
Victoria Rosch
Associate State Librarian, Library Support
Services
New Jersey State Library
2015
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/program
s/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 02.05.15
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:11-4.1 )
• 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 taxpayerfunded 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 02.15.15
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
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. 19:44A20.4 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/resour
ces/poli_docs/p2pguide.pdf
Purchasing Requirements
Excellent information for any purchasing questions
may be found at the Department of Community
Affairs Division of Local Government Services
webpage on Local Public Contracts Law:
http://www.state.nj.us/dca/divisions/dlgs/progra
ms/lpcl.html
See also: Part 6: Purchasing at
http://lss.njstatelib.org/library_law
Purchasing Essentials
Summing Up
• Local Public Contracts Law governs the award of contracts for
materials and services for boards and public entities (NJSA
40A:11-1)
• Know the legal thresholds for when to use the sound business
judgment, quote, or bid procedure
• Be aware that the municipality/county may have a
cooperative agreement in which the library may participate
and/or that there may be a state contract available for the
particular goods you seek http://www.state.nj.us/treasury/purchase/pricelists.shtml
• Library materials and specialized library services are exempt
from the bid and quote process (NJSA 40:54-12.1), but not the
Business Registration Program
• Note that the purchase of an Integrated Library System
requires the competitive contracting procedure
Procurement/Purchasing Card
• Municipal, county and joint municipal libraries may accept
credit cards as a form of payment, but may not use a credit
card, debit card, in-house or store credit card to pay vendors
• Read Local Finance Notice 2013-17 at
http://www.state.nj.us/dca/divisions/dlgs/lfns/13/201317.pdf before proceeding
• Requires a resolution, training of personnel, appointment of
program manager, controls in accordance with law and
policies and procedures must be in place
• $2,625 limit per purchase unless the library has a QPA
Getting a “P” Card
• Purchasing Card Program
http://www.state.nj.us/treasury/purchase/pca
rd.shtml
• State contract available for Visa card with
Bank of America (T-1654)
• Must have appropriate software that
interfaces “P” card purchases with accounting
software
Using a “P” Card
• Transactions cannot exceed 15% of the bid
threshold ($2,625) without a QPA
• May not be used for items or services of a
personal nature for employees, officials or
volunteers (travel, food and accommodations)
• Using a P-card does not change how vendors are
selected pursuant to the Local Public Contracts
Law
• A service such as PayPal may be tied to a P-card
Purchasing Services from a
Nonprofit
• Nonprofits that contract with
government entities are not required
to file the Business Entity Annual
Statement (PL 2007, c304)
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/12/201210.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 bid
process 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 02.05.15
Deposits/Investments/Banking
• Follow Cash Management laws (NJSA 40A:5-14 and 15)
• Deposit all funds paid to local unit within 48 hours of
receipt
• Investments limited by law and may not risk principal
(NJSA 40:54-19.3 and NJ Cash Management Fund)
• CDs, checking, savings permitted only at GUDPA
approved banks (Governmental Unit Deposit
Protection Act see
(http://www.state.nj.us/dobi/division_banking/deposit
ories/gudpa.htm)
Ineligible Costs
• Gifts, scholarships, donations
• Debt service
• Lease payments on equipment or software
exceeding five years
• Costs that exceed the actual or fair market value
of the goods or services provided
• Rent paid to the municipality for library use of
municipal facilities or equipment
• Capital expenses not meeting the criteria as
defined in N.J.A.C. 15:21-12.5 (c)
Purchase Order System
• Helps protect and control expenditures
• No check is issued without a properly
authorized PO
• Trustees designate by resolution at the annual
reorganization meeting the person/s who may
approve purchase orders
Purchase Order System
Sample Process
• Prepared by requestor
• Approved by the head of the department
requesting the expenditure (assurance that there
funds available in the budget may be the
responsibility of the department head or the
business office)
• Returned to business office for submission to the
director or CFO for signature
• Treasurer of the library board reviews purchase
orders prior to the trustee meeting
Voucher System
Sample process
• Treasurer of the library board certifies to the
board at the monthly meeting that sufficient
funding is available in the budget for the
purchases on the bills list (list of purchase orders)
• Assuming the board approves the bills list, the
treasurer countersigns the POs
• POs are returned to the Purchasing Agent (may
be municipality) for processing
Statutory Requirements for the
Position of Treasurer (NJSA 40:54)
• Board must elect from its members a
president, treasurer and secretary (54-11)
• Treasurer must be bonded (54-13)
• The board shall, by its treasurer, upon its
warrant signed by its president, receive
(municipal funding) from the disbursing officer
of the municipality…(54-13)
Statutory Requirements for the
Position of Treasurer (NJSA 40:54)
• Oversees the recording keeping and reports to
the board regarding investments of the board
(54-19.4)
• The treasurer does not make investment
decisions for the board
• … authorization to invest funds …shall be by
resolution adopted by a majority vote of all the
members of the board of trustees at any regular
or special meeting of the board (54-19.3)
Office of Treasurer
County Library System
• The county treasurer shall be the custodian of
the county library tax collected and of all other
funds or moneys of the commission, and upon
receipt of bills properly authorized by the
commission, payment thereof shall be made if
sufficient funds are on hand. (NJSA 40:33-12)
• Use municipal law as guidelines to assure
proper authorization by the commission
Office of Treasurer
Commonly Performed Duties
• Certifies that payroll is accurate
• Presents and certifies the monthly financial
report to the Board
• Presents and certifies the monthly bills list
• Certifies that funds are available in support of
any resolution before the Board
Office of Treasurer
Commonly Performed Duties
• Co-signs checks upon authorization by the board
• Oversees any funds held outside of the
municipality if the municipality holds municipal
funding for the library
• Reviews the annual audit and presents it to the
board
• Trustees may authorize treasurer and/or director
to transfer funds between subaccounts
Resources
• Gordon Ball, Procurement Specialist, DCA DLGS:
[email protected] or (609) 633-6152
• NJ Local Agency Procurement Laws
http://www.state.nj.us/dca/divisions/dlgs/programs/lpcl.
html
• http://lss.njstatelib.org/library_law ; Part 6: Purchasing
• Every director should be a member of the State Library’s
listserv - njpublibs.
Purchasing Manual
New Jersey Local Public Contracts Law and
Regulation
Reference Manual
With Related and Supporting Information
N.J.S.A. 40A:11-1 et seq. and N.J.A.C. 5:34
Current as of April 1, 2014 Prepared by: Bloustein Local Government Research
Center, Rutgers, the State University and New Jersey Division of Local
Government Services
http://www.nj.gov/dca/divisions/dlgs/programs/lpcl_docs/Full%20414%20LPCL-NJAC%20Reference%20Handbook.pdf