The Mandate: Pursuant to General Municipal Law § 103, local governments are required to follow complex and cumbersome procedures to purchase goods exceeding $20,000 and to enter into public works contracts exceeding $35,000.  In November 2009, the public works contract threshold was raised from $20,000 to $35,000, while the threshold for purchases was raised from $10,000 to $20,000 in April 2010.  While these increases are a step in the right direction, further reform is still needed.  The thresholds impose rigid requirements on essentially every project local governments engage in, as the total cost of all but the most minor of procurements exceed the current statutory parameters.

Furthermore, local governments are precluded from piggybacking off of out-of-state cooperative contracts which, because of the nature of the contracts, can often result in significant cost savings to municipalities.  Such a prohibition works to the detriment of local governments and their taxpayers.

The Cost: The current competitive bidding thresholds decrease local government efficiency, as compliance with the statute imposes mandatory waiting periods and draws out the procurement of uncomplicated transactions for weeks at a time.  Moreover, General Municipal Law § 103 does not allow local governments to negotiate the bidders for a better price or terms.  These limit restrictions ensure that the bidding process is fraught with complications and heavy expenses for local governments and their taxpayers, when it should be a relatively streamlined procedure.

Cooperative purchasing can reduce the cost of products and services, increase efficiency and reduce administrative expenses for municipalities by pooling the purchasing power of public agencies nationwide.  Oftentimes, there are no user fees or minimum purchasing requirements associated with cooperative contracts, and providing such an option to local governments will enable municipalities across the state to obtain the best goods and services available at the lowest possible cost.

The Solution: New York’s competitive bidding thresholds are among the lowest in the country.  In fact, other states have thresholds that greatly exceed New York’s spending limits.
•    Alaska’s competitive bidding requirements apply to goods and services procurements that exceed $50,000 and $100,000;
•    Georgia requires competitive bidding for the procurement of goods and services exceeding $100,000; and
•    Indiana’s competitive bidding threshold for goods and services is $50,000.

It is clear that, based upon the above figures, New York’s local governments are at a competitive disadvantage as a result of the outdated competitive bidding thresholds.  As a result, New York’s bidding thresholds should be raised from $20,000 for purchase contracts and $35,000 for public works contracts, to $25,000 and $50,000 respectively.  Increasing the thresholds to more accurately reflect the cost of projects that the statute was originally intended to cover will enable local governments to operate more efficiently and with greater flexibility.

Local governments should also be given the ability to utilize out-of-state cooperative contracts.  Providing municipalities with this alternative ensures that the goods received on the contract were of the highest quality available at the lowest possible price.