S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   572

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2009
                               ___________

Introduced  by  M. of A. CAHILL -- Multi-Sponsored by -- M. of A. GREENE
  -- read once and referred to the Committee on Governmental Operations

AN ACT to amend the state finance law, the economic development law, the
  general municipal law and the public authorities law, in  relation  to
  considering net economic impact in procurement contracts

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Short title. This act shall be known and may  be  cited  as
the "competitive procurement act".
  S  2. Legislative findings. The legislature hereby finds that in order
to assure the economically sound use of public funds for the benefit  of
the  entire  state  and  to facilitate the acquisition of facilities and
commodities of maximum quality, this article shall require  the  negoti-
ation  of  such  procurement  contracts  for  public  works  and  public
purchases to make the net economic impact of such contract a priority in
awarding such procurement contracts. Although the economic impact tradi-
tionally includes  evaluation  of  the  direct,  indirect,  and  induced
impacts  of  a  contract  on  the economy of this state, the legislature
further finds that the "net economic impact" must include  consideration
of  the  lowest  responsible  bid and best value as additional component
criteria in determining the overall economic impact of a contract on the
state's economy. Therefore, it is  in  the  public's  best  interest  to
incorporate  the lowest responsible bid and best value criteria into the
net economic impact criterion in order to award  the  most  economically
viable procurement contracts in New York state.
  S 3. The state finance law is amended by adding a new section 139-l to
read as follows:
  S  139-L.  NET  ECONOMIC IMPACT IN PROCUREMENT CONTRACTS.  1. NOTWITH-
STANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, WHERE A CONTRACT IS
TO BE AWARDED BY A STATE AGENCY, PUBLIC AUTHORITY OR MUNICIPALITY PURSU-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD00614-01-9

A. 572                              2

ANT TO A COMPETITIVE BIDDING PROCESS OR A REQUEST FOR PROPOSAL  PROCESS,
SUCH  STATE  AGENCY, PUBLIC AUTHORITY OR MUNICIPALITY SHALL REQUIRE THAT
ANY PROPOSAL SUBMITTED BY A PROSPECTIVE CONTRACTOR IN  RESPONSE  THERETO
INCLUDE  AN  ECONOMIC  IMPACT  STATEMENT  DETAILING  HOW AN AWARD OF THE
CONTRACT TO THE PARTICULAR CONTRACTOR WOULD BENEFIT THE ECONOMY  OF  NEW
YORK STATE AND SHALL PROVIDE THAT NET ECONOMIC IMPACT WILL BE CONSIDERED
IN  MAKING THE AWARD. THE WEIGHT TO BE GIVEN TO SUCH NET ECONOMIC IMPACT
CRITERION RELATIVE TO OTHER CRITERIA USED  TO  EVALUATE  THE  PROPOSALS,
INCLUDING  LOWEST RESPONSIBLE BIDDER AND BEST VALUE, SHALL BE DETERMINED
BY THE CONTRACTING AGENCY, AUTHORITY OR MUNICIPALITY ON A CASE  BY  CASE
BASIS.  THE  STATE  AGENCY, PUBLIC AUTHORITY, OR MUNICIPALITY SHALL GIVE
PRIORITY TO THE NET ECONOMIC IMPACT CRITERION WHEREVER  PRACTICABLE  AND
SET FORTH THE BASIS FOR ITS AWARD IN WRITING.
  2.  FOR  THE  PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE
THE FOLLOWING DEFINITIONS:
  (A) "NET ECONOMIC IMPACT" MEANS THE MEASURE  OF  ECONOMIC  STIMULATION
THAT  OCCURS  FROM PURCHASING TRANSACTIONS THAT HAVE OCCURRED WITHIN THE
LOCAL ECONOMY OF NEW YORK STATE AND  THE  LOWEST  RESPONSIBLE  BID.  NET
ECONOMIC  IMPACT SHALL BE MEASURED BY DIRECT IMPACT, INDIRECT IMPACT AND
INDUCED IMPACT, AS WELL AS LOWEST RESPONSIBLE BID AND BEST VALUE,  WHICH
ARE DEFINED AS:
  (1)  "DIRECT  IMPACT"  MEANS  THE  AMOUNT  OF DIRECT ECONOMIC ACTIVITY
GENERATED BY THE PURCHASING TRANSACTION, OR  BUSINESS  TRANSACTIONS,  IN
QUESTION.  THE  SETS  OF  NUMBERS  USED TO DETERMINE DIRECT IMPACT ARE A
RESULT OF DEVELOPING PER CAPITA NUMBERS BASED ON  ACTUAL  ECONOMIC  DATA
SUPPLIED BY TRANSACTION MANAGEMENT, ATTENDANCE FIGURES, AND OTHER FINAN-
CIAL  INFORMATION  FOR  ALL  TRANSACTION-RELATED  ACTIVITIES, AS WELL AS
USING AVAILABLE TRANSACTION  INDUSTRY  AVERAGE  PER  CAPITA  EXPENDITURE
LEVELS FOR VARIOUS ITEMS.
  (2) "INDIRECT IMPACT" INCLUDES ECONOMIC ACTIVITY FELT BY BUSINESSES AS
AN INDIRECT RESULT OF THE PURCHASING OR BUSINESS TRANSACTION.
  (3)  "INDUCED  IMPACT"  IS THE IMPACT GENERATED WHEN THOSE SURROUNDING
BUSINESSES PURCHASE ADDITIONAL PRODUCTS  AND  SERVICES,  AND  HIRE  MORE
EMPLOYEES TO MEET THE DEMAND BROUGHT ON BY DIRECT AND INDIRECT IMPACTS.
  (4)  "LOWEST  RESPONSIBLE BIDDER" MEANS ANY PERSON, FIRM, CORPORATION,
SUCCESSOR CORPORATION, CONTRACTOR OR SUBCONTRACTOR WHO (I)  SUBMITS  THE
LOWEST  RESPONSIBLE  BID  AND  (II)  IS  NOT  DISQUALIFIED ON ANY OF THE
GROUNDS PROVIDED BY LAW, RULE OR REGULATION.
  (5) "BEST VALUE" MEANS THE SAME AS IN SUBDIVISION ONE OF  SECTION  ONE
HUNDRED SIXTY-THREE OF THIS CHAPTER.
  (B) "MUNICIPALITY" SHALL MEAN ANY CITY, TOWN, VILLAGE, COUNTY, MUNICI-
PAL  CORPORATION,  DISTRICT CORPORATION, DISTRICT OR ANY OFFICE, DEPART-
MENT OR AGENCY, THEREOF.
  (C) "STATE AGENCY" SHALL, NOTWITHSTANDING ANY OTHER PROVISION OF  LAW,
MEAN  ANY  STATE  DEPARTMENT,  BOARD, BUREAU, DIVISION, OFFICE, COUNCIL,
COMMITTEE OR OFFICER OF THE STATE, OR THE STATE UNIVERSITY OF NEW  YORK,
OR THE SENIOR COLLEGES OF THE CITY UNIVERSITY OF NEW YORK, OR ANY PUBLIC
BENEFIT  CORPORATION  OR  COMMISSION  AT  LEAST ONE OF WHOSE MEMBERS ARE
APPOINTED BY THE GOVERNOR.
  3. THE COMPTROLLER AND THE COMMISSIONER OF THE DEPARTMENT OF  ECONOMIC
DEVELOPMENT SHALL ESTABLISH, THROUGH THE PROMULGATION OF RULES AND REGU-
LATIONS,  AND IN CONSULTATION WITH THE HEADS OF STATE AGENCIES, A METHOD
FOR STRUCTURING REQUESTS  FOR  PROPOSALS  TO  REQUIRE  INCLUSION  OF  AN
ECONOMIC  IMPACT  STATEMENT AND IN EVALUATING RESPONSES TO SUCH REQUESTS
FOR PROPOSALS. THE COMPTROLLER SHALL ALSO ESTABLISH THROUGH THE  PROMUL-
GATION OF RULES AND REGULATIONS GUIDELINES FOR AGENCIES, AUTHORITIES AND

A. 572                              3

MUNICIPALITIES  TO  INCORPORATE  CONSIDERATION OF THE LOWEST RESPONSIBLE
BIDDER CRITERIA INTO THE NET ECONOMIC IMPACT FORMULA. SUCH NET  ECONOMIC
IMPACT  SHALL  INCLUDE,  BUT  NOT  BE LIMITED TO, CONSIDERATION OF WHERE
SUBCONTRACTORS  USED  BY  CONTRACTORS TO FULFILL A CONTRACT ARE LOCATED,
HOW MANY JOBS IN THE STATE, IF ANY, WILL BE CREATED BY THE  AWARDING  OF
SUCH  A  CONTRACT,  AND THE ESTIMATED TAX REVENUE AND ANCILLARY ECONOMIC
ACTIVITY THAT WOULD BE GENERATED IN THE STATE THROUGH  THE  AWARDING  OF
SUCH  CONTRACTS AND SUBSEQUENT SUBCONTRACTS, LOWEST RESPONSIBLE BID, AND
BEST VALUE. SUCH RULES AND REGULATIONS SHALL INCLUDE A PROCEDURE WHEREBY
A STATE AGENCY, PUBLIC AUTHORITY OR MUNICIPALITY MAY  REQUEST  A  WAIVER
FROM THE REQUIREMENTS OF THIS SECTION.
  4. (A) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO CONTRACTS FOR
WHICH  A  STATE AGENCY, PUBLIC AUTHORITY, OR MUNICIPALITY RECEIVES FUNDS
ADMINISTERED BY THE FEDERAL GOVERNMENT, EXCEPT TO THE  EXTENT  THAT  THE
FEDERAL  GOVERNMENT  WOULD  NOT  WITHHOLD  SUCH FUNDS OWING TO THE STATE
AGENCY'S, PUBLIC AUTHORITY'S, OR  MUNICIPALITY'S  COMPLIANCE  WITH  THIS
SECTION.
  (B)  THE  PROVISIONS  OF  THIS  SECTION  SHALL  NOT APPLY TO CONTRACTS
BETWEEN A STATE AGENCY, PUBLIC AUTHORITY, OR MUNICIPALITY IN  NEGOTIATED
RECIPROCITY  FOR  GOODS  OR SERVICES, EXCEPT TO THE EXTENT THAT SUCH NET
ECONOMIC IMPACT SHALL NOT UNDERMINE SUCH RECIPROCAL CONTRACT AGREEMENT.
  5. ANY PERSON, FIRM, CORPORATION, SUCCESSOR CORPORATION, LABOR  ORGAN-
IZATION, CONTRACTOR OR SUBCONTRACTOR MAY, WITHIN TEN DAYS AFTER A BID IS
ACCEPTED,  FILE  AN  APPLICATION  TO CHALLENGE THE DETERMINATION.   UPON
RECEIPT OF SUCH APPLICATION, THE COMPTROLLER, OR HIS  OR  HER  DESIGNEE,
SHALL  CONDUCT  A  HEARING TO DETERMINE THE VALIDITY OF THE APPLICATION.
NOTICE SHALL BE GIVEN TO THE APPLICANT AND TO THE PROPOSED CONTRACT  BID
AWARDEE  OF  THE  DATE, TIME AND PLACE OF THE HEARING. THE APPLICANT AND
THE PROPOSED CONTRACT BID AWARDEE SHALL  BE  GIVEN  THE  OPPORTUNITY  TO
PRESENT  EVIDENCE AND WITNESSES ON THEIR BEHALF. THE COMPTROLLER, OR HIS
OR HER DESIGNEE, PRESIDING OVER SUCH HEARING SHALL ISSUE A WRITTEN DECI-
SION WITH FINDINGS OF FACT WHETHER THE PROPOSED CONTRACT BID AWARDEE  IS
VALID  DETERMINATION.  SUCH  CONTRACT SHALL NOT BE AWARDED PRIOR TO SUCH
DECISION. THE AWARDING AGENCY, AUTHORITY, OR MUNICIPALITY  SHALL  NOTIFY
ALL  BIDDERS  REGARDING THE SELECTION OF ITS PROPOSED CONTRACT BID AWAR-
DEE.
  S 4. The opening paragraph and paragraph c of subdivision 2, the open-
ing paragraph and subparagraphs (ii), (v) and (vi) of  paragraph  a  and
subparagraph  (i)  of paragraph b of subdivision 3 of section 163 of the
state finance law, as added by chapter 83  of  the  laws  of  1995,  are
amended to read as follows:
  The  objective  of state procurement is to facilitate each state agen-
cy's mission while protecting the interests of the state and its taxpay-
ers and promoting fairness in contracting with the  business  community.
The  state's  procurement  process  shall  be guided by the NET ECONOMIC
IMPACT, PURSUANT TO SECTION ONE HUNDRED THIRTY-NINE-L OF  THIS  CHAPTER,
OF A CONTRACT ON THE STATE AND THE following principles:
  c.  To  encourage  the  investment  of  the private and not-for-profit
sectors in New York state by making reasonable efforts  to  ensure  that
offerers  are  apprised  of procurement opportunities; by specifying the
elements of a responsive bid and disclosing  the  process  for  awarding
contracts  including,  if  applicable,  the  relative  importance and/or
weight of [cost] NET ECONOMIC IMPACT and the overall technical criterion
for evaluating offers; and by  ensuring  the  procurement  is  conducted
accordingly.

A. 572                              4

  State  agency  procurement practices for commodities shall incorporate
NET ECONOMIC IMPACT, PURSUANT TO SECTION ONE  HUNDRED  THIRTY-NINE-L  OF
THIS CHAPTER, AND THEN the following:
  (ii)  Commodities  contracts  shall be awarded on the basis of [lowest
price to] NET ECONOMIC IMPACT OF a responsive and  responsible  offerer;
or,  in  the  case of multiple awards, in accordance with paragraph c of
subdivision ten of this section.
  (v) Consistent with guidelines issued by the state  procurement  coun-
cil,  state  agencies may competitively purchase commodities procured in
accordance with this article in lieu of using centralized contracts when
the resultant [price is less] NET ECONOMIC IMPACT IS  GREATER  than  the
centralized contract [price].
  (vi)  When  justified  by [price] NET ECONOMIC IMPACT, state agencies,
and hospitals and facilities managed and controlled  by  state  agencies
eligible  pursuant to section twenty-eight hundred three-a of the public
health law, shall be eligible to make purchases pursuant  to  guidelines
issued  by the state procurement council from a consortium or comparable
entity in lieu of using centralized contracts for commodities.
  (i) determine, in cooperation with the state procurement  council  and
state  agencies,  the  identity,  form,  function  and  utility of those
commodities which shall be made  available  on  or  through  centralized
contracts. CRITERIA SHALL INCLUDE THE NET ECONOMIC IMPACT, AS DEFINED IN
SECTION  ONE  HUNDRED THIRTY-NINE-L OF THIS CHAPTER, ON NEW YORK STATE'S
ECONOMY. Criteria may include, but need not be limited  to,  the  avail-
ability  of  a  volume  discount, prior use of the commodity among state
agencies and the relative cost of establishing the contract, its  antic-
ipated  use  and expected actual savings for the state. The commissioner
may also act as a broker for state agencies to procure commodities.
  S 5. The opening paragraph and paragraph d of subdivision 4 of section
163 of the state finance law, as added by chapter  83  of  the  laws  of
1995, are amended to read as follows:
  State  agency procurement practices for services shall incorporate THE
NET ECONOMIC IMPACT, AS DEFINED IN SECTION ONE HUNDRED THIRTY-NINE-L  OF
THIS CHAPTER, AND THEN the following:
  d.  Service contracts shall be awarded on the basis of [best value to]
NET ECONOMIC IMPACT OF a responsive and responsible offerer; or, in  the
case  of  multiple awards, in accordance with paragraph c of subdivision
ten of this section.
  S 6. Subdivision 7, paragraphs a and b of subdivision 9,  the  opening
paragraph  and  paragraph  a of subdivision 10, the opening paragraph of
subdivision 11 and paragraph (i) of subdivision 14 of section 163 of the
state finance law, as added by chapter 83 of the laws of 1995,  subdivi-
sion 7 as separately amended by sections 12 and 20 of chapter 137 of the
laws  of 2008, and paragraph (i) of subdivision 14 as amended by chapter
95 of the laws of 2000, are amended to read as follows:
  7. Method of procurement. Consistent with the requirements of subdivi-
sions three and four of this section, state agencies shall select  among
permissible  methods  of  procurement  including, but not limited to, an
invitation for bid, request for proposals or other means of solicitation
pursuant to guidelines issued by the state  procurement  council.  State
agencies   may  accept  bids  electronically  and  may,  for  technology
contracts only, require electronic submission as the sole method for the
submission of bids for the solicitation, provided that  the  agency  has
made  a  determination,  which  shall  be  documented in the procurement
record, that such method affords a fair and equal opportunity for offer-
ers to submit responsive offers. Except where otherwise provided by law,

A. 572                              5

procurements shall be competitive,  and  state  agencies  shall  conduct
formal competitive procurements to the maximum extent practicable. State
agencies  shall  document the determination of the method of procurement
and  the  basis  of award in the procurement record. Where the basis for
award is the best [value] NET ECONOMIC IMPACT offer,  the  state  agency
shall  document, in the procurement record and in advance of the initial
receipt of offers, the determination of the evaluation  criteria,  which
whenever  possible, shall be quantifiable, and the process to be used in
the determination of best [value] NET ECONOMIC IMPACT and the manner  in
which the evaluation process and selection shall be conducted.
  a.  The  commissioner  or a state agency shall select a formal compet-
itive procurement process in accordance with guidelines  established  by
the  state  procurement  council  and  document its determination in the
procurement record. The process shall include, but is not limited to,  a
clear  statement  of  need; a description of the required specifications
governing performance and related  factors;  a  reasonable  process  for
ensuring  a competitive field; a fair and equal opportunity for offerers
to submit responsive offers; and a balanced and fair  method  of  award.
Where  the  basis  for  the  award  is best [value] NET ECONOMIC IMPACT,
documentation  in  the  procurement  record  shall,  where  practicable,
include  a  quantification  of  the  application  of the criteria to the
rating of proposals and the evaluation results, or, where not  practica-
ble,  such  other justification which demonstrates that best [value] NET
ECONOMIC IMPACT will be achieved.
  b. The solicitation shall  prescribe  the  minimum  specifications  or
requirements  that  must be met in order to be considered responsive and
shall describe and disclose the general manner in which  the  evaluation
and  selection  shall  be conducted. Where appropriate, the solicitation
shall identify the relative  importance  and/or  weight  of  [cost]  NET
ECONOMIC  IMPACT and the overall technical criterion to be considered by
a state agency in its determination of best [value] NET ECONOMIC IMPACT.
  Contracts for commodities shall be awarded on  the  basis  of  [lowest
price  to]  NET ECONOMIC IMPACT OF a responsive and responsible offerer,
PURSUANT  TO  SECTION  ONE  HUNDRED  THIRTY-NINE-L  OF   THIS   CHAPTER.
Contracts for services shall be awarded on the basis of best [value] NET
ECONOMIC  IMPACT  from a responsive and responsible offerer, PURSUANT TO
SECTION ONE HUNDRED THIRTY-NINE-L OF THIS CHAPTER.  Multiple awards  for
services and commodities shall be conducted in accordance with paragraph
c of this subdivision.
  a.  Selection  and  award  shall  be  a  written  determination in the
procurement record made by the commissioner  or  a  state  agency  in  a
manner  consistent with the provisions of the solicitation. In the event
two offers are found to be substantially equivalent, [price] NET ECONOM-
IC IMPACT shall be the basis for determining  the  award  recipient  or,
when  [price]  NET  ECONOMIC  IMPACT  and  other factors are found to be
substantially equivalent, the determination of the commissioner or agen-
cy head to award a contract to one or more  of  such  bidders  shall  be
final.  The  basis  for determining the award shall be documented in the
procurement record.
  It shall be the responsibility of the head of  each  state  agency  to
periodically  sample  the results of the procurement process to test for
reasonableness; to ensure that the results withstand public scrutiny and
that the quality and the price of  the  purchase  makes  sense;  and  to
ensure that purchasing is conducted in a manner consistent with the best
NET ECONOMIC IMPACT interests of the state.

A. 572                              6

  (i)  a  listing  of  individual  and  centralized contracts, including
vendor name, comptroller approval dates, NET  ECONOMIC  IMPACT  OF  SUCH
CONTRACTS,  dollar  value  of such contracts, the state agency which let
the contract and/or  state  agencies  which  purchased  off  centralized
contracts, expenditures made on each such contract and by which agencies
during the fiscal year and life to date, citing contract category codes,
source  selection  method, including ["lowest price", "best value",] NET
ECONOMIC IMPACT, sole source, single source,  negotiated  and  emergency
procurement subtotaled by agency and by type of commodity or service;
  S  7. Subdivision 1 of section 142 of the economic development law, as
amended by chapter 137 of the laws  of  2008,  is  amended  to  read  as
follows:
  1.  The  commissioner  shall  publish  on  a daily basis a procurement
opportunities newsletter, which shall  contain  notices  of  procurement
contract  opportunities and any other information the commissioner deems
necessary to effectuate the purposes of this article INCLUDING, BUT  NOT
LIMITED  TO,  ANY  CHANGES  IN  THE LAW, RULES AND REGULATIONS REGARDING
PROCUREMENT CONTRACTS. Notices  of  procurement  contract  opportunities
shall be available on the internet for at least fifteen days.
  S  8.  Section 100-a of the general municipal law, as added by chapter
363 of the laws of 1964, is amended to read as follows:
  S 100-a. Declaration of policy. [It] NOTWITHSTANDING ANY PROVISION  OF
THIS  ARTICLE TO THE CONTRARY, IT is hereby declared to be the policy of
this state that this article  shall  [be  construed]  CONSIDER  THE  NET
ECONOMIC  IMPACT, AS DEFINED IN SECTION ONE HUNDRED THIRTY-NINE-L OF THE
STATE FINANCE LAW, AS THE PRIORITY in the negotiation of  contracts  for
public  works  and  public purchases to which political subdivisions [or
and district] AND/OR DISTRICTS therein [is] ARE a party so as to  assure
the  prudent  and economical use of public moneys for the benefit of all
the inhabitants of the state and to facilitate the acquisition of facil-
ities and commodities of maximum quality [at the lowest possible cost].
  S 9. Subdivision 1 of section 2879 of the public authorities  law,  as
amended  by  chapter  564  of  the  laws  of 1988, is amended to read as
follows:
  1. Every public authority and public benefit corporation,  a  majority
of  the  members  of  which  consist  of persons either appointed by the
governor or who serve as members by virtue of holding a civil office  of
the state, or a combination thereof, (such entities to be hereinafter in
this  section  referred  to  as "corporation") shall adopt by resolution
comprehensive guidelines which detail the corporation's operative policy
and instructions regarding the use, awarding, monitoring  and  reporting
of  procurement contracts.   NOTWITHSTANDING ANY OTHER PROVISION OF LAW,
RULE OR REGULATION, SUCH GUIDELINES SHALL INCLUDE, BUT  NOT  BE  LIMITED
TO,  MAKING  CONSIDERATION  OF  THE  NET  ECONOMIC IMPACT, AS DEFINED IN
SECTION ONE HUNDRED THIRTY-NINE-L OF THE STATE FINANCE LAW, THE PRIORITY
IN AWARDING PROCUREMENT CONTRACTS. Guidelines  approved  by  the  corpo-
ration shall be annually reviewed and approved by the corporation.
  S  10.  This  act  shall  take effect on the one hundred eightieth day
after it shall have become a law; provided, however, the  provisions  of
this  act  shall  be  applied  to all contracts entered into on or after
April 1, 2009; provided, further, however, that the  amendments  to  the
provisions  of  section  163  of  the state finance law made by sections
four, five and six of this act shall  not  affect  the  repeal  of  such
section  and  shall be deemed repealed therewith; and provided, further,
that section seven of this act shall take effect on the same date and in
the same manner as section 6 of chapter 137 of the laws of  2008,  takes

A. 572                              7

effect.  Effective immediately, the addition, amendment and/or repeal of
any  rule  or regulation necessary for the implementation of this act on
its effective date is authorized and directed to be made  and  completed
on or before such date.