public hearing 6.21.11 990542_1

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EXTRACTION OF MINUTES OF MEETING OF TOWN BOARD ADOPTINGLOCAL LAW NO. 1 OF 2011 AMENDING CHAPTER 51 OF THE TOWN OF

IRONDEQUOIT CODE RELATING TO PURCHASING POLICY

At a regular meeting of the Town Board of the Town of Irondequoit, Monroe County, New Yorkheld at the Town Hall, 1280 Titus Avenue, in said Town of Irondequoit, on Tuesday, the ___ dayof July 2011 at 7:00 P.M. local time; there were

PRESENT:

Mary Joyce DAurizio Town SupervisorStephanie Aldersley Town Board MemberDeborah Essley Town Board MemberPaul Marasco Town Board MemberJohn Perticone Town Board Member

Harter Secrest & Emery LLP Attorneys for the Town

Town Board Member ______________ offered the following resolution and moved its adoption:

WHEREAS, the Town of Irondequoit Purchasing Policies and Procedures, incorporated into

the Town Code as Chapter 51 have been recently reviewed by the Town Comptroller,department heads and the Attorneys for the Town as part of the annual review contemplated byGeneral Municipal Law Section 104-b(4); and

WHEREAS,the Town Comptroller has recommended several amendments and additions to theTown Code as adopted by Local Law No. 9 of 1999 (November 30, 1999), incorporated into adocument entitled Proposed Amendments: Town of Irondequoit Purchasing Policies andProcedures (Discussion Draft Rev. March 2011) which has been circulated to the Town Boardfor its review; and

WHEREAS, the amendments and additions proposed by the Town Comptroller would conformthe Town Code to amendments to the General Municipal Law relating to the dollar value ofcontracts for goods and services and for public works subject to formal bidding; would clarify

the role of the Town Board relative to appropriations for contracts; would authorize the TownSupervisor to implement regulations consistent with Board policy; and would establish policypreferences for (a) considering the life cycle costs or goods or services when evaluating bids orproposals and (b) encourage environmentally preferable purchasing whenever feasible andeconomically responsible; and

WHEREAS, the Town Board held a public hearing on the proposed amendments to the TownCode on Tuesday, June 21, 2011 at 7:35 p.m. local time and all parties entitled to and wishing tobe heard were heard at such hearing.

NOW, THEREFORE, BE IT RESOLVED that Chapter 51 of the Town Code is revised byamending Sections 51-1; 51-3; 51-4; 51-8; 51-9 and 51-10, and adding new Sections 51-1A and51-5 pursuant to the provisions of the following Local Law:

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Town of Irondequoit Local Law No. 1 of 2011

A local law to amend the Code of the Town of Irondequoit related to contract policy.

Be it enacted by the Town Board of the Town of Irondequoit, County of Monroe, Stateof New York as follows:

1. AMENDMENTS TO TOWN CODE. Chapter 51-1, of the Code of the Town ofIrondequoit is hereby amended to read as follows:

51-1. Compliance with State Law; Sealed Bidding; Exceptions to Sealed Bidding

A. The Town of Irondequoit has adopted the policies and procedures described herein to complywith General Municipal Law (GML), Section 103 and Section 104-b. Section 104-b requiresmunicipalities to further define how procurements were made in accordance with Sect. 103.

B. Public sealed bidding is required for the initial purchase of an item or group of similar itemscosting more than $20,000, or if it is reasonably anticipated purchasing in excess of $20,000during the fiscal year for an item or group of similar items. Sealed bids are also required for aPublic Works (Labor and Materials) or services contract where the cost exceeds $35,000

annually. A Public Works contract is defined as an improvement to a public facility in which themajority of the costs are labor. Any questions concerning whether items should be publicly bidshould be addressed to the attorneys for the Town.

C. Exceptions to sealed bidding would include:

Purchases from State, County and City contracts.Purchases of prison-made goods under Correction Law 184 and 186.Purchases of products from preferred sources (State Finance Law 162).Emergency purchases as defined by GML 103.Purchases from a proprietary source.Purchase of surplus supplies from federal, state and local governments, districts or public

benefit corporations (GML 103).Professional Services.

True Leases.

D. All legal requirements must be complied with, including, but not limited to GeneralMunicipal Law 103, 104-a, 104-b, State Highway Law 142 and 284, State Finance Law andTown Law.

2. AMENDMENTS TO TOWN CODE. Chapter 51 of the Code of the Town ofIrondequoit is hereby amended to add a new Section 51-1A to read as follows:

Comment [L1]: Increasingthbiddingrequirementsfrom$10$20,000forgoods,andfrom$2$35,000forpublicworksisachmatchidenticalincreasesinNYS

GeneralMunicipalLawSectionsincethelastrevisionstotheTopurchasingcode.

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51-1A. General Statement of Policy

Stewardship of public funds will be best served if the elected legislative body of theTown has the opportunity to question proposals, review the selection process andexpressly authorize entry into contracts before they become a charge upon Townfunds; where purchases take into account the life cycle costs of products, and notmerely the initial cost; and where reasonable efforts have been made to use

environmentally preferable products whenever feasible.

(1). No contract for goods or services in excess of ten thousand dollars ($10,000)shall be awarded, and no payment shall be authorized, unless the Town Board hasby resolution approved such contract and authorized its execution by the TownSupervisor or his/her delegate or other Town official authorized by law to executecontracts, approved as to form by the Attorneys for the Town. No charge in excessof the amount appropriated will be authorized or paid unless and until the TownBoard has approved, by resolution, such additional expense.

(2). No contract for goods and services in any amount shall be awarded, and nopayment authorized, unless funds sufficient to cover such obligation have beenauthorized by the Town Board in the town budget or an amendment thereto.

(3). "Costs"1 as used in this policy shall be quantifiable and may include, withoutlimitation, the price of the given good or service being purchased; theadministrative, training, storage, maintenance or warranties, delivery schedules,financing costs and foregone opportunity life cycle costs of the given good orservice being costs or savings associated with construction, energy use,maintenance, operation, and salvage, recycling or disposal. "Price" unlessotherwise specified means the amount of money set as consideration for the saleof a commodity or service and may include, but is not limited to, when applicableand when specified in the solicitation, delivery charges, installation charges andother costs. As provided by General Municipal Law 104-a, with reference torecycled products, "reasonably competitive" shall mean that the cost of therecycled product does not exceed a cost premium of ten percent above the cost ofa comparable product that is not a recycled product or, if at least fifty percent

of the secondary materials utilized in the manufacture of that product aregenerated from the waste stream in New York state, the cost of the recycledproduct does not exceed a cost premium of fifteen percent above the cost of acomparable product that is not a recycled product.

(4). It is the policy of the Town of Irondequoit, whenever practicable, to opt forenvironmentally preferable purchasing, particularly with reference to use of non-toxic materials; and use of recovered, recycled, remanufactured or reusablematerials, as such terms are defined in State law; waste reduction and/or wasteprevention, consistent with State and Federal law and regulations applicable at thetime of contract. This policy includes, but is not limited to the provisions of

1

The definitions of cost and price are drawn from State Finance Law 160(5).

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General Municipal Law 104-a. The Administration is encouraged to use productsand components meeting minimum content standards for recycled or secondarymaterials as promulgated or amended by the U.S. Environmental Protection Agencyand/or the N.Y. State Department of Environmental Conservation, whenever suchmaterials meet the Towns use requirements and are economically responsible.


51-3. Purchasing Code of Ethics

A. To consider first, the interests of the Town of Irondequoit and the improvement ofits Government.

B. To endeavor to obtain the greatest value for every dollar expended. This includesconsideration, in planning specifications and in reviewing bids and proposals, life-span analysis for purchases, whenever appropriate (Initial cost plusmaintenance/replacement parts plus operating costs plus disposal costs).

C. To be receptive to advice and suggestions, insofar as such advice and suggestionsare not in conflict with legal or moral restrictions in purchasing procedures.

D. To strive for knowledge of municipal equipment and supplies in order torecommend items that may either reduce cost or increase efficiency.

E. To consider green or environmentally preferable alternatives in draftingspecifications whenever such products can meet performance requirements. Forexample, can a toxic or hazardous product be replaced with a non-hazardousalternative? Are there durable, reusable and/or remanufactured alternatives thateliminate waste? Can the product be purchased with recycled content? Whatrecycling opportunities exist regionally for the product?

F. To insist on and expect honesty in sales representation whether offered verbally orin writing, through advertising or in a sample of a product submitted.

G. Local suppliers will be given first consideration when all factors are equal,including price.


51-4. Statutory provisions regarding procurement policies and procedures.

New York State statutes regulating purchasing and procurement by towns, including butnot limited to General Municipal Law Section 104-b, in effect at the time of the approvalof any Town of Irondequoit contract, and State regulations enacted pursuant to suchstatutes, as applicable to Town contracts, shall be deemed to be incorporated by referencein the Town of Irondequoit purchasing policy.

Comment [L2]: ExistingpolicverbatimrestatementofNYSGeMunicipalLawSection104b.TStatecananddoesrevisethestaoccasion.Inaddition,somelangapplicableprimarilytoentitiesthantowns,andcouldcauseconToensurethatourreferenceisatocurrentlaw,andtoavoidpotconfusion,werecommendremothestatutorytext,andreplacemwhichlanguagewhichincorpor

statestatutebyreference.

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5. AMENDMENTS TO TOWN CODE. Chapter 51 of the Code of the Town ofIrondequoit is hereby amended to add a new Section 51-5 to read as follows:

51-5. Administrative Regulations and Guidelines

The Town Board delegates to the Town Supervisor, in consultation with the TownComptroller, the function of specifying required actions and developing the detailedarrangements under which day-to-day purchasing functions of the Town will be

managed. These rules and detailed arrangements shall constitute the administrativeregulations governing the Town administration. They must be, in every respect,consistent with the policies adopted by the Board. The Board, itself, reserves the right todevelop and adopt regulations when required by Law; or where the Town Supervisorrecommends Board action, in light of strong community interest.


51-8. Competitive Bidding Categories; Exceptions to Competitive Bidding

A. It is the intention of the Irondequoit Town Board that the bidding levels forpurchase and public works contracts for the Town coincide with the bidding levelsestablished for State contracts under General Municipal Law 103, as such statutemay be amended from time to time. In the event that the dollar amounts forbidding state purchase or public works contracts are amended, such amendmentsshall be deemed to apply automatically to Town contracts under this section, andthis section shall be deemed to be amended accordingly.

B. Categories of Procurements: this list identifies whether these categories aresubject to the competitive bidding requirements of Section 103 or the local policiesrequired by Section 104-b.

Subject to Bidding(103)

Local Policies(104-b)

Purchase and Public Work Contracts

1. Purchase Contract - Above $20,000 X

2. Purchase Contract - Below $20,000 X

3. Contract for Public Work - Above $35,000? X

4. Contract for Public Work - Below $35,000? X

Procurements Excepted from both l03 and 104-b

5. Preferred Sources (State Finance Law, Section 162) X

Comment [L3]: Section51.5ireservedinthecurrentcode.Thmaterialisnew.

Comment [L4]: Here,too,thefiguresareadjustedtomatchthGeneralMunicipalLawSection

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6. Correctional Institutions (Correction Law, Sections 184, 186) X

7. State Contract (GML, Section 104) X

8. County Contract (GML, Section 103[3]) X

Procurements Excepted from l03

9. Emergencies (GML, Section 103[4]) X

10. Sole Source (e.g., patented or monopoly item) X

11. Professional Services X

12. True Leases X

13. Insurance X

14. Second-Hand Equipment from Another Government (GML,Section 103[6])

X

15. Certain Municipal Hospital Purchases (GML, Section 103[8] X

C. The following is a description of the various exceptions to the requirements of GML 103:

Preferred Sources. Under State Finance Law, 162, all suitable products and services, asdetermined and approved by the New York State Office of General Services, shall be procuredby any political subdivision in accordance with applicable specifications of the politicalsubdivision from qualified charitable non-profit agencies for the blind, qualified non-profitagencies for other severely handicapped, qualified special employment programs for thementally ill or veterans workshops, which have been approved by the Commissioner of SocialServices, Education or Mental Health, as the case may be, and which are organized under thelaws of New York State and are manufacturing such products or performing such services within

the State, whenever the products are available at a price determined by O.G.S. Competitivebidding requirements are not applicable to these purchases.

Goods Made in Correctional Institutions. Under Correction Law, 184, the Commissioner ofCorrectional Services is required to cause to be manufactured by inmates in state correctionalinstitutions items as are required by the state and political subdivisions, and to furnish theseitems at prices as shall be fixed and determined, upon requisition. That section provides: Noarticle so manufactured ... shall be purchased from any other source ... unless the commissioner... shall certify that the same cannot be furnished upon such requisition, and no claim thereforshall be audited or paid without such certificate. (see also Correction Law, 186)

Since the Legislature has provided a purchasing requirement for articles manufactured incorrectional institutions which is contrary to section 103, section 103 has no application to suchpurchases. Under the Correction Law, a Town may apply to the Department of Correctional

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Services for a waiver which would allow the Town to make the purchase from other sourcespursuant to normal competitive bidding requirement. In addition, a Town may appeal thepurchase price on the basis that it unreasonably exceeds fair market price (Correction Law,186). For further information on this program, political subdivisions may contact theDepartment of Correctional Services, Division of Correctional Industries.

State Contracts. Pursuant to General Municipal Law, 104, political subdivisions and districtstherein are authorized to make purchases, in excess of $500.00, of materials, equipment, andsupplies (except printed material) through the NYS Office of General Services (OGS), subject torules established by OGS (see State Finance Law, 163). Section 104 provides that purchases bythe Town through OGS are excepted from competitive bidding requirements. A Town maypurchase numerous items at the same prices and under the same terms and conditions as theState. Under section 104, all purchases are subject to audit and inspection by the politicalsubdivision and the political subdivision must accept sole responsibility for payment to thevendor. No official may make a purchase through the OGS when bids have already beenreceived unless the purchase may be made upon the same terms, conditions and specifications,but at a lower price, through OGS. Information on these items contained in specific statecontracts may be obtained by calling (518) 474-6717.

County Contracts. Pursuant to General Municipal Law, 103(3), purchases through the countyare exempted from the competitive bidding requirements of General Municipal Law, 103. As

with purchases through OGS, all purchases are subject to audit and inspection by the Town andthe Town must accept sole responsibility for payment to the vendor. No local official may makea purchase through the county when bids have already been received unless the purchase may bemade upon the same terms, conditions and specifications, but a lower price, through the county.Information relative to county purchase contracts may be obtained from the Monroe Countypurchasing office by calling 428-5400.

Limitations on State or County Contracts. The exception for State or county contractpurchases applies only when purchases are made from the current State or county vendor, or incertain cases, a listed agent or distributor, whose contract has been extended to politicalsubdivisions. Thus, the Town may not, as an exception to bidding requirements, purchase from avendor other than a vendor holding a current State or county contract which has been extended topolitical subdivisions, even if the purchase is equal to or below the State or county price. For

example, if a quote or bid were less than the state or county contract price the Town cannotsimply accept that lower price without going through the normal bid or quotation process.

Purchases from vendors holding State or county contracts may not be made upon terms andconditions which materially or substantially vary from the State or county contract. Also, theseexceptions relate to both purchase contracts, and contracts for public work.

Other Governmental Entities. There is no general exception for purchases through federalcontracts or contracts of municipalities other than counties. So, for example, the Town may notpurchase through a contract of the U.S. Government, a village, city, school district or BOCES, oranother town. It should be noted, however, that pursuant to Article 5-G of the GeneralMunicipal Law (119-m, et seq.), municipal corporations are authorized to enter intocooperative purchase agreements (See City of Rochester Contracts).

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City of Rochester Contracts. In December, 1995, the Town Board adopted a resolution toallow the Town to be named on the City of Rochester contracts and thus be able to purchasefrom these contracts. All above policies concerning State/county contracts apply to these.

True Leases. The courts have held that true lease agreements are neither purchases norcontracts for public work and, thus, are not subject to bidding under General Municipal Law,103. Competitive bidding requirements may not be avoided by simply casting an agreement,which is truly a purchase or contract for public work, as a lease or rental.

Although, no one factor is determinative, the following factors are to be considered whendetermining whether an agreement is a true lease or an installment purchase contract:

1. Transaction is a device intended to circumvent the competitive bidding statutes;2. Intent to transfer title to Town, present or not;3. Town assumes indicia of ownership (i.e. risk of loss, maintenance, repairs, insurance);4. Principal and interest component present in payment;5. Useful life of property involved;6. Acquisition of equity by Town during term of the agreement;7. Fair market rental value;8. Value of option to purchase at end of the agreement; and/or9. Total cost of payments in comparison to fair market value of property at inception ofcontract.

Insurance. The courts have held that insurance coverage is not subject to formal competitivebidding.

Emergencies. An exception to the competitive bidding requirements exists for emergencysituations (GML, 103 [4]). There are three basic statutory criteria to be met in order to fallwithin this exception. These are that (1) the situation arises out of an accident or otherunforeseen occurrence or condition; (2) the circumstances affect public buildings, publicproperty or the life, health, safety or property of the Towns residents; and (3) the situationrequires immediate action which cannot await competitive bidding. Generally, there must be apresent, immediate and existing condition which is creating an imminent threat or danger andwhich requires such immediate action that a further delay to comply with competitive biddingrequirements would be so detrimental to the public interest that it overcomes the strong publicpolicy in favor of bidding. Further, because the emergency must result from an accident orunforeseen occurrence, it is doubtful the Town may invoke the emergency exception in asituation which is the result of inaction or dilatory behavior on the part of local officials andwhich, therefore, could have been foreseen in time to advertise for bids. Even when the TownBoard passes a resolution that a public emergency exists, the public interest dictates that

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purchases are made at the lowest possible costs, seeking competition by informal solicitation ofquotes or otherwise, to the extent practicable under the circumstances.

Sole Source. Competitive bidding is not required under section 103 of the General MunicipalLaw in those limited situations when a Town, in the public interest, requires particular goods orservices which uniquely serve the public interest, for which there is no substantial equivalent andwhich are, in fact, available from only one source (see, gen, 1986 Op.St.Compt. No. 86-25,p. 41). Thus, for example, if the Town, acting in good faith and without intent to arbitrarilyinhibit or restrict competition, determines that a particular patented item is required in the publicinterest and it is further determined that such item is available only from one source so that nopossibility of competition exists, competitive bidding may not be required for the procurement ofthe item. A sample form is attached.

In making these determinations, the Town should document, among other things, the uniquebenefits of the item as compared to other items available in the marketplace, that no other itemprovides substantially equivalent or similar benefits; and that, considering the benefits received,the cost of the item is reasonable when compared to other products or services in themarketplace. In addition, the Town should document that, as a matter of fact, there is nopossibility of competition for the procurement.

Professional Services. The courts have held that professional services are not contracts for

public work, as that phrase is used in the bidding statutes, and, therefore, are not subject tocompetitive bidding procedures. The determination of whether the professional serviceexception is applicable in given situations must be made on a case-by-case basis, examining theparticular services to be acquired.

Generally, professional services involve specialized expertise, use of professional judgment,and/or high degree of creativity. Also, the services generally are to be performed by particulardesignated individuals. Finally, the courts have noted that professional service contracts ofteninvolve a relationship of personal trust and confidence. Among the services that have been heldto be exempt from competitive bidding under this exception are those of an engineer, architect,land surveyor, attorney, physician, and insurance brokers.

Generally, if the situation warrants a solicitation of costs, an effective method would be aRequest for Proposal (RFP). The extent of the RFP would be decided on a case-by-case basis.

Second-Hand Equipment from Other Governments. There is a statutory exception tocompetitive bidding requirements which permits the purchase of surplus and second-handsupplies, materials, or equipment without competitive bidding from the Federal or Stategovernment or from any other political or public benefit corporation within the State (GML,103[6]). However, purchases of used items from any other source (e.g. private sources likeauctions or going out-of-business sales) are not exempt from bidding requirements.


51-9. Determination of procedure; documentation of whether a procurement issubject to competitive bidding.

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A. Proposed procurements must be analyzed. This includes determining whether a proposedprocurement is subject to competitive bidding, and if not, documenting how the decision isreached. Three initial questions are involved: Is the proposed procurement a purchase contractor a contract for public work? If it is either, is the amount above the applicable threshold insection 103? If so, do any exceptions apply? If it is not, what type of procurement is it?

B. With the increase in the bidding limits under current State law, it is important to distinguishbetween contracts for public work and purchase contracts, as these terms are not defined in theGeneral Municipal Law. This distinction is especially important because there is a $15,000difference between the bidding thresholds and because the Town Board is responsible forestablishing procedures for procurements below the bidding thresholds.

C. In general, purchase contracts involve the acquisition of commodities, materials, supplies, orequipment, while contracts for public work involve services, labor, or construction. Eachprocurement must be reviewed on a case by case basis to determine which kind of purchase itwould be. If it would involve a substantial amount of service, to the extent that the serviceprovided to the Town is the focal point and the acquisition of goods is incidental, then it wouldbe considered a contract for public work. Conversely, if the service or labor is only minimal orincidental to the acquisition of goods, it would be considered a purchase contract.

D. For example, a contract for interior painting of a building involves both material (paint) and

labor (painting). In most instances the labor component of the contract will be predominantmaking it a contract for public work. In contrast, replacing a boiler furnace, while involvingboth equipment (the boiler) and labor, will in most instances consist primarily of a charge for theequipment, making it a purchase contract.

E. In documenting whether a proposed procurement is below the bidding limits, records shouldinclude evidence of written or verbal quotes (telephone logs, etc.) to substantiate that the price ofthe item or service would not exceed the bidding limits. In addition, since similar procurementsto be made in a fiscal year must be considered in the aggregate for purposes of determiningwhether a particular item must be bid, the responsible individual could document the amountexpended in previous years and that the monetary thresholds are not anticipated to be exceededin the current year, and therefore, bidding would not be required. In this process, the amountanticipated to be spent in the current year should be documented because the amount involvedmay affect the method of competition to be sought. Documentation should also explain how itwas determined that the procurement was either a purchase or a public works contract.


51-10. Documentation required for purchase orders and contract awards for non-bid procurements

A.Verbal Quotations - A telephone log or other record should provide at a minimum: date, itemor service desired, price quoted, name of vendors representative.

Comment [L5]: CurrentcodeeffectiveJanuary1,1992and

notcurrentwithexistingStatel

Comment [L6]: Thecurrentcsays$10,000whichwasthedifferencebetweenthebiddingthresholdforgoodsandforpubworksunderthepriorversionolaw.

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B.Written Quotations -Vendors should provide at a minimum: date, description of item ordetails of service to be provided, price quoted, name of contract and signature. Quotestransmitted by fax are acceptable.

C. Procurements subject to Section 104-b are listed in the following chart with illustrativepolicies and procedures. It is the intention of the Irondequoit Town Board that the bidding levelsfor purchase and public works contracts for the Town coincide with the bidding levelsestablished for State contracts under General Municipal Law 103, as such statute may beamended from time to time. In the event that the dollar amounts for bidding state purchase orpublic works contracts are amended, such amendments shall be deemed to apply automatically toTown contracts under this section, and this section shall be deemed to be amended accordingly,and the upper and lower limits of the ranges set forth herein shall be adjusted proportionately.

Dollar Limits Verbal Quotes WrittenQuotes

PublicBid

1Or More

3Or More

3Or More

Purchase Contracts Below $20,000

Under 500 X

500 9,999 X

10,000 - 19,999 X

Purchase Contracts Above $20,000 X

Contract for Public Work Below

$35,000

Under 1,000 X

1,000 - 9,999 X

10,000 - 34,999 X

Contract for Public Work Above$35,000

X

D. Price Documentation Copies of the Verbal Quotation record or the written quotation (withthe above information) must be attached to each Purchase Order as it is processed for ordering.

Comment [L7]: ThebiddingthresholdsareadjustedtomatccurrentStatelaw.Therangesochartareadjustedproportionat

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Purchase Orders without this information will be returned to the ordering department. A sampleof the Town of Irondequoit Quotation Log is attached.

9. EFFECTIVE DATE. This local law shall be effective forty-five (45) daysfollowing the adoption of this Resolution, as provided by Municipal Home Rule Law Section 24(1)(a); or upon filing with the Secretary of State, as provided by Municipal Home Rule LawSection 27 (3), whichever shall occur later.

Seconded by Town Board member _______________ and duly put to vote, which resulted asfollows:

Town Supervisor DAurizio votingTown Board Member Aldersley votingTown Board Member Essley votingTown Board Member Marasco votingTown Board Member Perticone voting

public hearing 6.21.11 990542_1

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