Relates to procurement in support of the state university

Sections 3 and 4 amend State Finance Law §163(3) (a) (iv) and (4) (e), respectively, to authorize auxiliary services corporations, campus related foundations and other non-profit corporations organized in furtherance of the objects and purposes of the State University to make purchases of commodities and services through centralized contracts of the New York State Office of General Services. The proposal bars the use of commodities and services so purchased by for profit entities, and bars the resale of such commodities.

Sections 5 through 7 enhance the operations of the State University Construction Fund.

Education Law §373(12) is amended to provide that the Fund's procurement activities shall be governed by the Fund's procurement guidelines as adopted annually by the trustees of the Fund, which shall conform to the procurement requirements applicable to public authorities other than Public Authorities Law §2879-a (relating to State Comptroller approval of contracts). Education Law §373 (15) is amended to authorize the Fund to determine its own staffing and equipment needs. Education Law §376 (8) is amended to make corresponding changes and to authorize the Fund to waive performance and labor and material bonds for contracts less than $250,000. Further, Education Law §376(8) (a) is amended to eliminate the requirement to publish procurement solicitations in a newspaper published in the City of Albany, and to authorize the Fund to publish procurement solicitations involving contracts less than $250, 000 in the Procurement Opportunity Newsletter in lieu of newspaper publication. Education Law §376 (8) (d) is amended to provide that contracts of the Fund shall not be subject to the approval of the Attorney General and State Comptroller.

Section 7 amends Education Law §377(4) to authorize the Fund to hold its operating funds in its own accounts.

Sections 8 through 11 enhance the operational and procurement flexibility of the State University's health sciences centers. Sections Band 9 make technical and clarifying amendments to Civil Service Law §130 (14) and Education Law §350 (6), respectively. Consistent with the proposed amendments to the Education Law and State Finance Law set forth in sections 1 and 2 of the legislation, section 10 amends Education Law §355 (16) (b) to provide that approval by the Attorney General and State Comptroller of contracts for the purchase goods, including joint or group purchasing of goods, is not required. Contracts for the purchase of services over $75,000 remain subject to approval by the Attorney General and State Comptroller. Section 11 authorizes the inclusion in contracts for managed care and other joint and cooperative arrangements of provisions to resolve disputes through binding arbitration.

Existing law

State Finance Law §112(2) provides that contracts by State agencies in excess of $50,000 are subject to prior approval by the State Comptroller. The provisions of State Finance Law §112 notwithstanding, State University is authorized by Education Law §355(5), and by Education Law §355(16) (b) with respect to hospital contracts, to negotiate with the State Comptroller higher thresholds for contract approval. Presently, the negotiated thresholds require State University to obtain approval by the State Comptroller of contracts for goods and services by approved campuses over $125,000, if single or sole source procurements, and $250, 000 otherwise, and for leases over $50,000 for the lease term.

State Finance Law §163(3)(a) (iv) authorizes State and local entities, fire companies and volunteer ambulance services to participate in centralized commodities contracts of the Office of General Services. State Finance Law §163(4) (e) authorizes political subdivisions, the Port Authority and State public authorities to participate in centralized services contracts. The non-profit affiliates of the State University are not authorized presently to participate in Office of General Services centralized- contracts for commodities and services.

Under Education Law §376(8) (d), the Attorney General and the State Comptroller must approve all Fund construction contracts. Since the appropriations to the Fund for the State University capital budget are advance appropriations, the Attorney General and State Comptroller also approve Fund design and all other contracts as they do with State agencies. All Fund procurements, therefore, are subject to State procurement rules. Under current law, the Fund may waive a performance bond and bond for the payment of labor and material where the estimated expense of a contract is less than $50,000.

The Fund's staffing, support services and equipment are funded by State appropriations, and the Division of the Budget monitors and approves expenditures.

Education Law §376(8)(a) requires the Fund to advertise all of its construction projects in a newspaper published in the City of Albany even if the projects are to be constructed elsewhere in the State.

Pursuant to Education Law §355(16) and negotiations with the State Comptroller authorized thereby, State University health care facilities may enter into contracts for goods and services up to $250,000, including joint or group purchasing arrangements, without approval by the State Comptroller and Attorney General.

Legislative history

In the 2010 legislative session, S6607-A/A9707-A, an omnibus budget bill, included these and other SUNY flexibility provisions.

Justification

The purpose of the legislation is to give the State University tools to more effectively contribute to economic growth, local workforce development and the quality of life of New York citizens.

The legislation eliminates approval by the Attorney General and State Comptroller of contracts for goods, but not services, of the State University, a process that can take months, and that is an anomaly among public higher education institutions. New York is one of only four states, including Kansas, Mississippi and South Dakota, which still require a pre-audit of university expenditures. Most public systems are subject to post-audit of expenditures, as the State University would continue to be, rather than to both pre-approval and post-audit.

The legislation allows affiliates of the State University to gain the benefit of centralized purchases by the Office of General Services, increasing efficiency and reducing transactional costs. Sections 163(3) (a) (iv) and 163(4) (e) of the State Finance Law provide that the Office of General Services may permit State agencies to purchase services and commodities, respectively, through its centralized contracts. Over the years, these sections have been amended to authorize local governments and schools, volunteer fire companies and ambulance services, county extension service associations, and others to purchase commodities through OGS centralized contracts. Authority to purchase services through OGS centralized contracts has been extended to public authorities and public benefit corporations. Al though many of these organizations are not governmental, they all fulfill a public purpose. Providing them the opportunity to purchase through OGS contracts has therefore been determined to mutually benefit both the State and the authorized parties, by increasing the negotiating power of OGS when entering into centralized contracts and at the same time simplifying the procurement of required goods and services by these organizations.

The statutory mission of the State University Construction Fund is to expedite the construction of facilities for the State University. As the State University strives to compete with the nation's best public university systems for students and research dollars, it must be able to have facilities on line in the quickest possible time. Giving the Fund procurement flexibility-will allow the Fund to deliver these

facilities in a time frame that will match the State University's need for them.

By increasing to $250,000 the value of contracts for which performance and labor and material bonds are required, the legislation would allow for additional bids on smaller projects that are pursued by the Fund, and, therefore, to lower costs. This is particularly important to smaller business which may be M/WOBEs because such companies may not have the financial history to secure a performance bond.

The purpose of sections 8 through 11 is to enhance the operational and procurement flexibility of the State University's health sciences centers. The legislation eliminates Attorney General and State Comptroller approvals of contracts for goods, so long as contracts comply with State University procurement, comparative review and conflict-of-interest guidelines, and collective bargaining agreements where applicable. This legislation strengthens strategic and operational initiatives of the State University hospitals which will enable the hospitals to better compete in the health care marketplace.

Fiscal implications

None to the State.

The proposal should reduce costs of the State University.

Effective date

This act shall take effect immediately provided that the amendments to section 163 of the state finance law made by sections three and four of this act shall not affect the repeal of such section and shall be deemed repealed therewith.