Purchasing Basics for Local Government Units

Purchasing Basics for Municipal,
Joint and County Public
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
Purchasing Processes
• There are three main processes for most
purchases: bid, quote or use of sound business
• 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
Exceptions Permitted
• Emergencies affecting public health, safety
and welfare – adopt a resolution and file a
report with the Division of Local Government
• 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
• 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
(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:
• 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:
Purchasing Services from a
• 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
• 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
• 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
"transparent" method and if spending above the
$17,500 threshold
Resolution for Hiring
"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
The following is a sample resolutions for publishing Notices of Contract Award for Professional
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
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
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
• 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
• Gordon Ball: Gordon.Ball@dca.state.nj.us or (609)
• http://www.nj.gov/dca/divisions/dlgs/
• http://lss.njstatelib.org/library_law ; Part 6:
• Every director should be a member of the State
Library’s listserv - njpublibs.

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