Procurement

Competitive Bidding Reform

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 contract for public works exceeding $35,000.  In November 2009, the monetary threshold for public works contracts was raised from $20,000 to $35,000, and in April 2010, the threshold for purchase contracts was raised from $10,000 to $20,000.  While these increases are a step in the right direction, further reform is still needed.  Given the rising costs of construction, essentially every project pursued by a local governmentis subject to competitive bidding, as tall but the most minor of procurements exceed the current statutory parameters.

The Cost: The current competitive bidding thresholds decrease local government efficiency, as compliance with the statute imposes mandatory processes that draw out the procurement of uncomplicated transactions for weeks at a time.  Moreover, General Municipal Law § 103 prevents local governments from negotiating bidders for a better price or contract terms.  These limits ensure that the bidding process is fraught with complications and heavy expenses for local governments and their taxpayers, when procurement should be a relatively streamlined procedure.

The Solution: 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.