A brief overview of competitive bidding in NY construction contracts

General Municipal law §103 governs all contracts for public work involving an expenditure of more than $35,000 and all purchase contracts involving an expenditure of more than $20,000.  It requires that the contract be awarded to the lowest responsible bidder whom furnished the required security following the proper advertisement for sealed bids.  The statute permits purchase contracts to be awarded on the basis of “best value” to a “responsive and responsible bidder or offerer,” pursuant to the manner provided by in this statute.

However, in certain circumstances, where a political subdivision awards the contract based on “best value,” it must receive authorization of the award from the local law, and in situations involving school districts, the award must be authorized by regulation or rule adopted at a public meeting.

For determining the best value, the gross price listed by the responsible bidders shall be reduced, when appropriate, by an allowance for the value of used machinery and equipment.  Furthermore, where there are multiple responsible bidders listing identical bids, the officer may award the contract to whichever bidder it prefers.

The statute sets forth factors for the officer to consider when determining whether a purchase is an expenditure within the appropriate threshold amount, which consists of “the reasonable expected aggregate amount of all purchases of the same commodities, services or technology to be made within the 12 month period commencing on the date of purchase.”  However, if a change to or a renewal of a discretionary purchase “would bring the reasonably expected aggregate amount of all purchases of the same commodities…to an amount greater than the discretionary buying threshold amount,” it will not be permitted.

 

Submission of Bids

Bids and offers can be submitted through an electronic format, provided that the officer has authorized such a method.  Such bids need to comply with article 3 of the state technology law.  Rules and regulations developed thereunder must, at a minimum, require the documentation of the time and date of receipt for each bid received electronically, identity of the sender is to be authenticated, and to ensure security of the transmitted information and the confidentiality of the bid until the opening date of the bids is established.

It is important to note that this statute explicitly states that it is the sole responsibility of the sender to ensure that the bid has been timely submitted.  The receiver of the bids shall not be liable for any delays or interruptions that occur in receiving the bid.

 

Stock Item Specifications

The officer may use the stock item specifications of any manufacturer or similar entity located in NYS to guide in the development of specifications for items to be let for bid in its purchasing contracts.

 

Advertisements

Advertisements for bids shall be published in the official newspaper(s) and contain the time and place where all bids received will be publicly opened wherein identities of each bidder will be revealed.  There should be at least 5 days between the advertisement and the opening and revealing of the bids received.

 

Exceptions to Competitive Biding

Exceptions to the requirement for competitive bidding arise in situations where there is a public emergency affecting public buildings and property, or the life, health or safety of the inhabitants of a political subdivision; where it is for the purchase of surplus and second-hand supplies, material or equipment; and when the officer is a municipal hospital receiving federal, state or local funding for goods, supplies and services (subject to the commissioner of agriculture).  Furthermore, when a board of education on behalf of its school district is purchasing eggs, livestock, fish, dairy products, juice, grains, and certain fruits and vegetables (subject to the commissioner of education), it may do so separately.

 

Non-Compliance

Any person found to conspire or prevent competitive bidding for public work from occurring shall be guilty of a misdemeanor.

 

Bid Mistakes

In situations where a unilateral error occurred in a bid, the bid may be withdrawn upon a showing that the mistake was known or was made known to the officer prior to the awarding of the contract or within 3 days of opening the bid (whichever is shorter); the price bid was based on an error of such magnitude that it would be unconstitutional to enforce it; it was submitted in good faith and the mistake was a clerical error; the error was due to an unintentional and substantial arithmetic error or unintentional omission of substantial labor or material (which can be proven by an inspection of the original paper work); and the officer can be placed in status quo ante.

The remedy for a bid mistake is a withdrawal of that bid and a return of the bid bond or security, wherein the officer can award the contract to the next lowest bidder.

 

Pre-Qualified Bidders List

An officer of a state with a population of 50,000 or more is entitled to establish guidelines governing qualifications for potential bidders.  The statute sets forth factors for the officer to use in establishing which bidders should be placed on the pre-qualified bidders list.  Such factors include consideration of the experience and record of performance of the potential bidder in similar work, the prospective bidder’s ability to perform the particular type of work, and the financial capability and the record of compliance with existing labor standards of the prospective bidder.

The officer shall publish, no less than once a year, in a circulating newspaper an advertisement requesting qualification statements from prospective bidders.  Furthermore, the officer is to provide for an appeals process for those denied a place on the pre-qualified list and any denial must be based on substantial evidence and cannot be arbitrary and capricious.

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