In Fiscal 2011, New York City procured almost $15 billion worth of supplies, services, and construction, through more than 55,000 transactions - more goods and services than any other municipality in the country. Procurement describes the process the City uses to purchase construction services, goods, human services, professional services, and standardized services. Generally, the City procurement process takes the following steps:
- An agency need is identified.
- A solicitation is written and published.
- A competition is held.
- A vendor is selected and a determination is made concerning its responsibility.
- A contract is negotiated and signed.
- The contract is registered by the Office of the Comptroller.
Needs Identification and Solicitation
In each New York City agency, dedicated procurement staff work with agency program staff to identify needs to support the agency mission. Each agency has an Agency Chief Contracting Office (ACCO) to ensure that the rules set by the Procurement Policy Board (PPB) and other applicable laws and initiatives are followed during the entire procurement process. Once a solicitation has been finalized, it is published in The City Record so vendors can view it and respond.
In Fiscal Year 2011, the size of City contracts was comparable to prior years. About 81% of all purchasing dollars flowed in contracts that exceeded $3 million, with only 2% in contracts of $100,000 or less.
Small purchases ($100,000 or less), totaled more than $112 million, with the Police Department (NYPD) leading in this category. Micropurchases ($5,000 or less) accounted for $56.1 million, with the Department of Housing Preservation and Development (HPD) leading City agencies in such awards. For micropurchases, 20% of City spending was accomplished through the use of innovative “procurement card” technology.
Using more than 1,100 requirement contracts, offered mainly by the Department of Citywide Administrative Services (DCAS), agencies placed over $762 million worth of orders for supplies and services. At the top of the list for total dollars were requirement contracts for security guard services and for fuel, while the most frequently-used requirement contract was for the purchase and rental of copy machines.
Agencies processed task orders worth $967 million under master agreements held by the Department of Information Technology and Telecommunications (DoITT) for technology services and by the Department of Design and Construction (DDC) for architecture and engineering services.
Contract Process: Promoting Competition and Efficiency
More than 63,000 vendors are enrolled on City bidders’ lists. The top lines of business include professional services, maintenance and other standardized services, and construction. Over half of all City procurement results from four competitive methods:
- Competitive sealed bids, with vendors selected on a low-bid basis.
- Accelerated procurements, a fast-track bid process for commodity purchases such as fuel that must be obtained quickly due to shortages and/or rapid price fluctuations.
- Competitive sealed proposals (also called requests for proposals or RFPs), with vendors chosen based on price and quality-based factors, and
- Small purchases, a less formal competitive process for purchases valued between $5,000 and $100,000.
The next largest group of procurements, amounting to 31% in Fiscal 2011, consists of six methods used to continue or expand existing contracts for limited periods:
- Renewals, used when the initial contract provides specific terms for continuation, typically at the City’s option.
- Amendment extensions, allowing the addition of one year to a current contract.
- Negotiated acquisition extensions, allowing a negotiated additional term on the same basis as the initial contract.
- Amendments, which allow the addition or subtraction of funds to a current contract to reflect programmatic needs;
- Construction change orders and design change orders, amending the contracts that support capital construction projects so that ongoing work can be completed.
City agencies also procure goods and services via selection processes based on determinations by other governmental agencies where the City “piggy-backs” on vendor contracts held by other government agencies, typically state or federal entities. Additionally, other procurement methods rely on a variety of other methods subject to more limited competition such as sole source awards, emergency contracts negotiated acquisitions or micropurchases.
In Fiscal Year 2011, 88% of contracts showed high levels of competition (three or more competitors), up from 80% last year. Competition for small purchases remained strong, with 85% of the transactions reflecting ten or more competitors.
Furthermore, the time between advertisement and contract registration for competitive bids climbed in Fiscal 2011 to 165 days. Shorter bid cycle time remains a goal for Fiscal 2012. Processing times for human services program contracts remain unduly long, sometimes resulting in cash flow challenges for the City’s nonprofit service partners. City agencies averaged 41 days late in registering these contracts, with a 11% of contracts delayed more than 30 days.
Efficiency in the change order process is another key performance indicator. The cost of design change orders averaged 9% of the original contract value, a significant decrease from last year, and processing time for such change orders decreased by 30%, to a citywide average of 109 days, as budget challenges led agencies to modify projects, seeking to lower overall their overall construction costs. With construction change orders, cost relative to the original contract remained at 3% of the original value.
To view a complete list of all procurement terminology, click here.
Once a solicitation is finalized, it is printed in The City Record so vendors can view it and respond. To view current agency solicitation opportunities, click here.
Vendor Selection and Vendor Responsibility
Vendors respond to solicitations depending on the criteria contained in the solicitation document. The agency then evaluates the responses based upon the type of procurement method. At various stages of the procurement process, MOCS must review and approve certain procurement documents and issue what is called a Certificate of Procedural Requisite, as required by the PPB Rules and the New York City Charter in order for registration with the Comptroller to occur. The procurement review unit is responsible for overseeing procurement submissions from Mayoral agencies and performing all the related tasks associated with the approval process. The unit reviews and assesses procurement submissions from pre-solicitation documents to recommendations for award. In addition, the unit is responsible for coordinating efforts among other oversight entities and making recommendations to ensure that necessary goods and services are procured appropriately. Such other offices that approve procurement documents in the process include the Office of Management and Budget, the Law Department, the Division of Labor Services at the Department of Small Business Services, and the Office of the Deputy Mayor for Operations. MOCS recently implemented an Automated Procurement Tracking System (APT) allowing agencies to more accurately develop, track and report on agency procurement activity. The system allows agency procurement staff to electronically share documents and approve contract actions, thus increasing procurement accountability, transparency and timeliness.
City agencies are required to hold public hearings on proposed contracts valued in excess of $100,000 awarded by a method other than competitive sealed bidding. Click here to learn more about Public Hearings.
As part of the contract award process, the City must award contracts only to responsible contractors. A responsible contractor has the technical capability and financial capacity to fully perform the requirements of the contract, as well as the business integrity to justify the award of public tax dollars. Completing a responsibility determination includes agency verification of compliance with a number of requirements including City policy and VENDEX, the City’s database of information about current and past vendors. To learn more about vendor responsibility, click here. Additionally, MOCS operates a Public Access Center that provides access to the VENDEX system.
Vendor Evaluations - Documenting Satisfactory Performance
Documenting how a vendor performs is critical to agencies in helping determine whether a vendor’s contract should be renewed, extended or terminated and whether there is a need for a vendor to implement a corrective action plan or otherwise address its problems, preferably before performance is adversely affected. Under the City’s procurement rules, a prospective vendor that has performed unsatisfactorily is presumed to be non-responsible, unless the agency determines that the circumstances were beyond the vendor’s control or that the vendor has appropriately corrected the problems.
The PPB Rules require that all open contracts must be evaluated for performance at least once per year. The three major evaluation criteria are timeliness of performance, fiscal administration and accountability, and overall quality of performance. Agencies complete evaluations on line through the VENDEX system and MOCS handles communications with vendors centrally. Once the vendor has been given time to review and respond to the evaluation, MOCS posts it in the VENDEX system. The ratings provide an important resource to agencies that are involved in new contract actions. During Fiscal 2011, MOCS expanded the pool of contracts for which performance evaluations are required and tightened the timeframes for their completion. As a result, agencies' completion rate for performance evaluations fell slightly to 88%, from over 90% in Fiscal 2010. MOCS will continue to work with agencies to ensure that all vendors are appropriately evaluated for performance on their contracts.
Overall performance across all of the City’s vendors in Fiscal 2011 matched last year’s level, with 97% receiving a rating of satisfactory or better. Approximately 90% received such a rating with no underlying problems reported. For the 7% of such vendors that had at least one sub-criterion rating of less than satisfactory, the most frequently identified shortcoming was in financial administration.
Once all the appropriate oversight approvals are in place, the agency works with the selected vendor to negotiate and sign a contract. The signed contract is then registered with the Office of the Comptroller.
Lastly, as part of the ongoing contract administration process, evaluations on the performance of vendors are required to be completed on an ongoing basis and no less than once a year. The exceptions to this rule are for goods purchased through competitively sealed bids or procurements below the small purchase limit unless the vendor’s performance is deemed unsatisfactory. In that case, an evaluation must be done by the agency. Performance evaluations reflect the requirements of the contract, including, but not limited to, quality and timeliness of performance and fiscal administration. Agencies rate a vendor’s performance based on these criteria. From these subcategory ratings, an overall rating for a vendor is given. Ratings range from excellent to good, fair, poor, and unsatisfactory.