New York State Legislative Update: “Best Value” Option for Purchasing Contracts Signed Into Law

The PLDW Municipal Infrastructure Team takes great interest in following and participating in the legislative process in New York and other states it serves. Of special significance for the State of New York is Law Bill A-08692/S-6117, signed on January 27, 2012 by Governor Cuomo, which allows state and local governments to use “best value” methodology when purchasing a good or service. As a result, New York political subdivisions now have the option of procuring purchase contracts through either the traditional lowest responsible bidder method or based on best value procurement policies.

Best value is defined by the State Finance Law, as “awarding contracts for services to the offerer which optimizes quality, cost and efficiency, among responsive and responsible offerers.” The intent of the best value option is to allow governments the ability to purchase products and services that may not be the lowest in initial price, but due to factors such as product life or quality, may provide a cheaper long-term solution. The basis for best value awards must be objective and quantifiable analysis wherever possible. However, the legislative impact of this new law is limited because the best value standard does not apply to public works projects, which must still be awarded to the lowest responsible bidder.

Previously, political subdivisions were required to award to the lowest responsible bidder 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. This new legislation, which amended Section 103 of the General Municipal Law, provides that purchase contracts (including contracts for service work, but excluding any purchase contracts necessary for the completion of certain public works contracts) may be awarded on the basis of best value. Best value procurement links the procurement process directly to the municipality’s performance requirements, incorporating selection factors such as useful lifespan, quality and options and incentives for more timely performance and additional services. Even if the initial expenditure is higher, considering the total value over the life of the procurement may result in a better value and long-term investment of public funds.

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