Consider Economic Impact in Contracts

Section 1. Short title. This act shall be known and may be cited as the "competitive procurement act".

§ 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 act shall require the negotiation 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 traditionally 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.

§ 3. The state finance law is amended by adding a new section 139-l to read as follows:

§ 139-l. Net economic impact in procurement contracts. 1. Notwithstanding 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.

LBD01399-01-7

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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 financial 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, municipal corporation, district corporation, district or any office, department 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 regulations, 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 promulgation of rules and regulations guidelines for agencies, authorities and

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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 organization, 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 decision with findings of fact whether the proposed contract bid awardee is valid. 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 awardee.

§ 4. The opening paragraph and paragraph c of subdivision 2, the opening 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 agency's mission while protecting the interests of the state and its taxpayers 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.

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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 council, 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 availability of a volume discount, prior use of the commodity among state agencies and the relative cost of establishing the contract, its anticipated use and expected actual savings for the state. The commissioner may also act as a broker for state agencies to procure commodities.

§ 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.

§ 6. Subdivision 7, paragraphs a and b of subdivision 9, the opening paragraph and paragraph a of subdivision 10, and the opening paragraph of subdivision 11 of section 163 of the state finance law, as added by chapter 83 of the laws of 1995, and subdivision 7 as amended by section 10 of part L of chapter 55 of the laws of 2012, are amended to read as follows:

7. Method of procurement. Consistent with the requirements of subdivisions 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 including submission of the statement of non-collusion required by section one hundred thirty-nine-d of this chapter and, starting April first, two thousand twelve, and ending March thirty-first, two thousand fifteen, may, for commodity, service and technology contracts require electronic submission as the sole method for the submission of bids for the solicitation. State agencies shall undertake no more than eighty-five such electronic bid solic-

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