January 18, 2012

Written By: Jessica L. Perl

Governor Chris Christie recently signed legislation, A-2786/S-2721, P.L.2011, Chapter 139, allowing local contracting units to participate in competitively solicited contracts awarded previously by other contracting units pursuant to a “national” or “regional” cooperative purchasing agreement.

Put differently, the law allows local contracting units to buy goods using another contracting unit’s contract which was awarded through a cooperative purchasing agreement.

For example, if a municipality desires to procure office supplies, it may use another municipality’s contract with a vendor for office supplies awarded through a cooperative purchasing agreement. However, in order to purchase through this contract, a contracting unit must determine that use of such contract will result in cost savings, considering all charges for service, material and delivery.

Prior to enacting this law, local units could only purchase through State contracts awarded pursuant to cooperative purchasing agreements. Now, local units can contract directly with vendors using “national” or “regional” cooperative purchasing agreements.

As written, the law appears to limit one contracting unit’s use of another contracting unit’s contract to only those awarded “through the use of a nationally-recognized and accepted cooperative purchasing agreement that has been developed utilizing a competitive bidding process . . .” Thus, the new law does not appear to apply to those contracts competitively bid by a contracting unit without utilizing a “national” or “regional” cooperative purchasing agreement. However, this apparent limitation remains the subject of ongoing debate.

The Department of Community Affairs, Division of Local Government Services (“DLGS”) issued preliminary guidance on the new law, pending the issuance of more comprehensive guidance on the issue. DLGS recommends that local units consider the following when seeking to purchase goods using the new law:

• The law does not intend that New Jersey businesses are disadvantaged because of differences in New Jersey public contracting law and contracting laws of the jurisdiction awarding the cooperative contract.
• Local units should continue to follow laws relating to disclosure of political contributions, non-collusion, and ethics in order to maintain the public trust.
• Local contracting officials should still choose vendors through an open and transparent process to maintain the public’s confidence in the government spending. Additionally, DLGS opines that when national contracts are used, local units should review and follow the national cooperative’s membership and participation rules.

Hill Wallack LLP’s Government Contracting Practice Group has a long history providing cutting edge advice to vendors, as well as governmental contracting units, involved in government contracting, on a broad range of legal matters, including specification review and rule comments.

Our counsel on governmental processes keeps public entities and private sector vendors ahead of the curve in these ever-changing areas of law.

More information on Cooperative Purchasing Agreements can be found at the Division of Purchase and Property website.

This article provides information of general interest and is not intended, and should not be used, as a substitute for consultation with legal counsel. Any questions regarding the specific issues raised in this article should be directed to the authors or to your contacts at Hill Wallack LLP.