PROCUREMENT LOBBYING LAW
FREQUENTLY ASKED QUESTIONS (FAQs)

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4.15. Do §§139-k and 139-j of the State Finance Law apply to procurements over $15,000 that are purchased via Purchase Order, even though these types of procurements do not involve contracts or agreements that require review and approval by the Attorney General's Office? (Last Updated: 6/14/2010)
     

A: The issuance of a purchase order against an OGS centralized contract does not necessarily trigger the State Finance Law provisions. Generally in such an event, no action is undertaken that would create a Procurement Contract, and/or that would commence a Restricted Period. An exception occurs for purchases from centralized contracts that involve a solicitation that triggers a Restricted Period, such as "backdrop" contracts that by design require an Authorized User to engage in a “mini-bid” process with subsequent formal approval of the selected contractor.

     The defined terms used in State Finance Law §§139-j and k are of critical importance in determining the scope of its application. The definition of Restricted Period in general indicates that this time frame commences with the solicitation of a document from an Offerer that is intended to result in a Procurement Contract. Thus, there is only a Restricted Period when there is both a solicitation and the solicitation would result in a Procurement Contract. Solicitations that do not result in a Procurement Contract do not trigger the Restricted Period and the statutory requirements. The term Procurement Contract is also a defined term that references a contract or other agreement for an Article of Procurement involving an estimated annualized expenditure in excess of fifteen thousand dollars ($15,000). An Article of Procurement is defined as a commodity, service, technology, public work, construction, revenue contract, purchase, sale or lease of real property or an acquisition or granting of other interest in real property, that is the subject of a Governmental Procurement. The term Governmental Procurement is defined to include five specific activities, each of which relates to the process resulting in a Procurement Contract. The definition of Governmental Procurement, however, does not include the exercise of provisions of an existing Procurement Contract, such as making a purchase from the contract or other actions undertaken by the contractor to fulfill the contractual obligations.

     In general, all OGS centralized contracts include terms and conditions that authorize the Governmental Entity to obtain more favorable pricing from the contractors and several centralized contracts set forth a formalized process of exercising such terms and conditions. (For an example of processes to obtain better pricing see Appendix B and Appendix B-1, clause 40 entitled “Modification of Contract Terms” for the language regarding more advantageous pricing, and the document entitled “Networking Hardware and Software: How to Purchase off the Contract” at http://www.ogs.state.ny.us/purchase/snt/awardnotes/tcgNetworking.htm.) The exercise of such contractual terms and contracts do not result in a Procurement Contract.

     While the term “solicitation” is undefined in statute, in this context the term is being used as a noun to describe a written document that requests a response from an Offerer that is intended to result in a Procurement Contract. Common examples of documents that would be considered solicitations are requests for proposals and invitations for bids. Such term would not include a request for information (RFI) where such RFI is a tool used to collect information about possible options and solutions available in the market place, and is not itself designed to result in a Governmental Procurement. Even though this RFI is released to the public, ordinarily it does not constitute a “determination of need” and may not be intended to result in a Procurement Contract.

     In contrast, the group of centralized contracts referred to as “backdrop” contracts by design require an Authorized User to engage in a “mini-bid” process with subsequent formal approval of the selected contractor. The “backdrop” contracts establish a pool of pre-qualified contractors, subject to the same terms and conditions, with “not to exceed” pricing. A key feature of that “mini-bid” process is that the Authorized User must develop a project definition outlining the specific requirements of the acquisition, soliciting proposals from the backdrop contractors pre-qualified in the area of expertise called for the in project definition. A separate, unique contract number is assigned, thus establishing a Procurement Contract. Thus, in the “mini-bid” process there is both a solicitation, and the solicitation results in the issuance of a Procurement Contract.




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