Purchasing Basics for Municipal, Joint and County Public Libraries

Victoria Rosch Associate State Librarian, Library Support

Services New Jersey State Library

2015

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 http://www.state.nj.us/dca/divisions/dlgs/programs/lpcl.html

Purchasing Processes

• There are three main processes for most purchases: bid, quote or use of sound business judgment

• 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 $2,625Use sound business judgment

• $2,625 - $17,499Get 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 02.05.15

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 Services

Exceptions Permitted

• Emergencies affecting public health, safety and welfare – adopt a resolution and file a report with the Division of Local Government Services

• Single Source (really rare) – apply for State Treasurer approval through the Division of Local Government Services

Alternate Methods of PurchaseCompetitive 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 contracting

• Note: Private companies making money from a taxpayer-funded 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 PurchaseConcessions (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 02.15.15

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:http://

www.state.nj.us/dca/divisions/dlgs/programs/lpcl.html#1

Pay-To-Play• Chapter 271, P.L. 2005 and Chapter 19, P.L. 2004

(as amended by P.L. 2005, c.51); N.J.S.A. 19:44A-20.4 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: http://www.state.nj.us/dca/divisions/dlgs/resources/poli_docs/p2pguide.pdf

Purchasing Requirements

Excellent information for any purchasing questions may be found at the Department of Community

Affairs Division of Local Government Services webpage on Local Public Contracts Law:

http://www.state.nj.us/dca/divisions/dlgs/programs/lpcl.html

See also: Part 6: Purchasing at

http://lss.njstatelib.org/library_law

Purchasing EssentialsSumming Up

• Local Public Contracts Law governs the award of contracts for materials and services for boards and public entities (NJSA 40A:11-1)

• Know the legal thresholds for when to use the sound business judgment, quote, or bid procedure

• Be aware that the municipality/county may have a cooperative agreement in which the library may participate and/or that there may be a state contract available for the particular goods you seek -http://www.state.nj.us/treasury/purchase/pricelists.shtml

• Library materials and specialized library services are exempt from the bid and quote process (NJSA 40:54-12.1), but not the Business Registration Program

• Note that the purchase of an Integrated Library System requires the competitive contracting procedure

Procurement/Purchasing Card

• Municipal, county and joint municipal libraries may accept credit cards as a form of payment, but may not use a credit card, debit card, in-house or store credit card to pay vendors

• Read Local Finance Notice 2013-17 at http://www.state.nj.us/dca/divisions/dlgs/lfns/13/2013-17.pdf before proceeding

• Requires a resolution, training of personnel, appointment of program manager, controls in accordance with law and policies and procedures must be in place

• $2,625 limit per purchase unless the library has a QPA

Getting a “P” Card

• Purchasing Card Program http://www.state.nj.us/treasury/purchase/pcard.shtml

• State contract available for Visa card with Bank of America (T-1654)

• Must have appropriate software that interfaces “P” card purchases with accounting software

Using a “P” Card

• Transactions cannot exceed 15% of the bid threshold ($2,625) without a QPA

• May not be used for items or services of a personal nature for employees, officials or volunteers (travel, food and accommodations)

• Using a P-card does not change how vendors are selected pursuant to the Local Public Contracts Law

• A service such as PayPal may be tied to a P-card

Purchasing Services from a Nonprofit

• Nonprofits that contract with government entities are not required to file the Business Entity Annual Statement (PL 2007, c304)

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 service

• 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 Contract

• National Cooperative contracts - carefully review Local Finance Notice 2012-10 (http://www.state.nj.us/dca/divisions/dlgs/lfns/12/2012-

10.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 bid process and if spending above the $17,500 threshold

Resolution for Hiring Professionals

"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

CONTRACT AWARDSAMPLE NEWSPAPER NOTICEThe following is a sample resolutions for publishing Notices of Contract Award for Professional Services. Professional Services - LocalNotice of Contract AwardThe (name of the local government unit) has awarded a contract without competitivebidding 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 clerk)Awarded to: _____________________________________________Duration: _____________________________________________Nature and type of contract: _________________________________Amount of Contract*: _________________________________*Indicate by dollar value of contract, per hour/per occurrence, pursuant to schedule ofrates/fees contained in the contract

Discarding/Selling 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 sale.

• 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 02.05.15

Deposits/Investments/Banking

• Follow Cash Management laws (NJSA 40A:5-14 and 15)• Deposit all funds paid to local unit within 48 hours of

receipt • Investments limited by law and may not risk principal

(NJSA 40:54-19.3 and NJ Cash Management Fund)• CDs, checking, savings permitted only at GUDPA approved

banks (Governmental Unit Deposit Protection Act see (http://www.state.nj.us/dobi/division_banking/depositories/gudpa.htm)

Ineligible Costs

• Gifts, scholarships, donations• Debt service• Lease payments on equipment or software exceeding

five years• Costs that exceed the actual or fair market value of

the goods or services provided• Rent paid to the municipality for library use of

municipal facilities or equipment • Capital expenses not meeting the criteria as defined in

N.J.A.C. 15:21-12.5 (c)

Purchase Order System

• Helps protect and control expenditures • No check is issued without a properly

authorized PO• Trustees designate by resolution at the annual

reorganization meeting the person/s who may approve purchase orders

Purchase Order SystemSample Process

• Prepared by requestor • Approved by the head of the department requesting

the expenditure (assurance that there funds available in the budget may be the responsibility of the department head or the business office)

• Returned to business office for submission to the director or CFO for signature

• Treasurer of the library board reviews purchase orders prior to the trustee meeting

Voucher SystemSample process

• Treasurer of the library board certifies to the board at the monthly meeting that sufficient funding is available in the budget for the purchases on the bills list (list of purchase orders)

• Assuming the board approves the bills list, the treasurer countersigns the POs

• POs are returned to the Purchasing Agent (may be municipality) for processing

Statutory Requirements for the Position of Treasurer (NJSA 40:54)

• Board must elect from its members a president, treasurer and secretary (54-11)

• Treasurer must be bonded (54-13)• The board shall, by its treasurer, upon its

warrant signed by its president, receive (municipal funding) from the disbursing officer of the municipality…(54-13)

Statutory Requirements for the Position of Treasurer (NJSA 40:54)

• Oversees the recording keeping and reports to the board regarding investments of the board (54-19.4)

• The treasurer does not make investment decisions for the board

• … authorization to invest funds …shall be by resolution adopted by a majority vote of all the members of the board of trustees at any regular or special meeting of the board (54-19.3)

Office of TreasurerCounty Library System

• The county treasurer shall be the custodian of the county library tax collected and of all other funds or moneys of the commission, and upon receipt of bills properly authorized by the commission, payment thereof shall be made if sufficient funds are on hand. (NJSA 40:33-12)

• Use municipal law as guidelines to assure proper authorization by the commission

Office of TreasurerCommonly Performed Duties

• Certifies that payroll is accurate• Presents and certifies the monthly financial

report to the Board• Presents and certifies the monthly bills list • Certifies that funds are available in support of

any resolution before the Board

Office of TreasurerCommonly Performed Duties

• Co-signs checks upon authorization by the board• Oversees any funds held outside of the

municipality if the municipality holds municipal funding for the library

• Reviews the annual audit and presents it to the board

• Trustees may authorize treasurer and/or director to transfer funds between subaccounts

Resources

• Gordon Ball, Procurement Specialist, DCA DLGS: Gordon.Ball@dca.state.nj.us or (609) 633-6152

• NJ Local Agency Procurement Laws http://www.state.nj.us/dca/divisions/dlgs/programs/lpcl.html

• http://lss.njstatelib.org/library_law ; Part 6: Purchasing

• Every director should be a member of the State Library’s listserv - njpublibs.

Purchasing Manual

New Jersey Local Public Contracts Law and Regulation

Reference Manual With Related and Supporting Information

N.J.S.A. 40A:11-1 et seq. and N.J.A.C. 5:34

Current as of April 1, 2014 Prepared by: Bloustein Local Government Research Center, Rutgers, the State University and New Jersey Division of Local

Government Serviceshttp://www.nj.gov/dca/divisions/dlgs/programs/lpcl_docs/Full%204-14%20LPCL-NJAC%20Reference%20Handbook.pdf