Revision: March 4, 2010, midnight
SB 493-FN – AS AMENDED BY THE SENATE
03/03/10 0828s
2010 SESSION
05/09
SENATE BILL 493-FN
AN ACT relative to the use of best value contracting by state agencies and establishing a best value procurement commission.
SPONSORS: Sen. DeVries, Dist 18; Sen. Lasky, Dist 13; Sen. Houde, Dist 5; Rep. P. McMahon, Merr 3; Rep. Schlachman, Rock 13
COMMITTEE: Executive Departments and Administration
This bill establishes a best value procurement commission and permits state agencies to use best value procurement methods.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/03/10 0828s
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05/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
AN ACT relative to the use of best value contracting by state agencies and establishing a best value procurement commission.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Best Value Procurement Commission Established. There is established a best value procurement commission to assess the feasibility of, and potential methods for implementing, best value contracting practices in state procurement and to propose a best value contracting pilot program.
2 Membership and Compensation.
I. The members of the commission shall be as follows:
(a) One member of the senate, appointed by the president of the senate.
(b) Two members of the house of representatives, appointed by the speaker of the house of representatives.
(c) The commissioner or the department of administrative services, or designee.
(d) The director of the division of plant and property management, department of administrative services, or designee.
(e) The commissioner of the department of transportation, or designee.
(f) The attorney general, or designee.
(g) Seven public members, appointed by the governor, representing the interests of business, labor, construction, health care, the environment, career development, and state government.
II. Members of the commission shall serve without compensation, except that legislative members of the commission shall receive mileage at the legislative rate when attending to the duties of the commission.
3 Duties. The commission shall:
I. Investigate and assess current methods used to procure state building and construction contracts in New Hampshire, identifying applicable statutes, rules, and guidelines used in this process and the methods used to make the assessment.
II. Investigate and assess best value contracting practices used by other states to procure state building and construction contracts, identify similarities and differences between such methods and those used in New Hampshire, provide the methods used to make the commission’s assessment, and seek analyses, if any, conducted relative to those other state’s methods.
III. Investigate and assess best value contracting practices used by entities within and outside the state of New Hampshire, identify the definition of best value used by that entity as well as the similarities and differences between methods used by the entity and those used by the state, provide the methods used to make the commission’s assessment, and seek analyses, if any, conducted relative to those entities’ methods.
IV. Solicit information and testimony from the public, which shall include holding at least 3 public hearings.
V. Assess the likely areas of fiscal impact if best value contracting were to be implemented either for a pilot program, for state building and construction contracts, or for all state contracts, including estimated savings or expenditures, or methods by which savings or expenditures may be calculated.
VI. Propose a pilot program for the implementation of best value contracting in specific state contracts, including in the proposal any statutory amendments or other legislation necessary to implement the program.
VII. Propose specific guidelines, standards, definitions, and criteria for use in a pilot program, as well as the proposed method for implementing those guidelines, standards, definitions, and criteria.
VIII. Propose specific standards to measure the success of the pilot program.
IX. Propose specific methods by which the pilot program, if successful, may be implemented in regard to all state contracting for buildings and construction, including, but not limited to, identifying specific amendments, enactments, or changes or additions to administrative rules or rulemaking authority that would be necessary to implement best value contracting in the area of buildings and construction and proposing specific methods by which guidelines, standards, definitions, and criteria may be established for use in building and construction contracts.
X. Propose specific methods by which the pilot program, if successful, may be implemented in regard to all state contracts, including, but not limited to, identifying specific amendments, enactments, or changes or additions to administrative rules or rulemaking authority that would be necessary to implement best value contracting and proposing specific methods by which guidelines, standards, definitions, and criteria may be established for use in all state contracts.
4 Chairperson; Quorum. The governor shall appoint a chairperson and vice-chairperson of the commission. The first meeting of the commission shall be called by the senate member, and the first meeting of the commission shall be held within 45 days of the effective date of this section. Seven members of the commission shall constitute a quorum. Legislative members shall serve a term coterminous with their term in office and non-legislative members shall serve a 3-year term. Any vacancy on the commission shall be filled in the same manner as the original appointment.
5 Report. The commission shall submit interim reports of its findings and any recommendations to the task force on state procurement policies and procedures, established in SB 495-FN of the 2010 legislative session, the president of the senate, the speaker of the house of representatives, the senate clerk, the house clerk, the governor, and state library on or before November 1, 2010, November 1, 2011, and November 1, 2012. The focus of the November 1, 2010 interim report shall be on the commission’s study of existing state contracting practices and the commission’s assessment of best value procurement methodologies used by other states and entities. Subsequent interim reports shall focus on the commission’s development, implementation, and assessment of the pilot program. The commission shall file a final report that summarizes the commission’s findings and recommendations for continued and expanded use of best value procurement by state agencies on or before June 30, 2013.
6 New Chapter; State Procurement. Amend RSA by inserting after chapter 21-R the following new chapter:
CHAPTER 21-S
21-S:1 State Procurement; Best Value Contracting.
I. Notwithstanding any other provision of law requiring an agency, as defined in RSA 21-G:5, III, to use the lowest responsible or qualified bidder, an agency may elect to award a contract on the basis of best value, in which case the election to award on the basis of best value, as well as the objective and quantifiable criteria that will be used to determine best value, shall be set forth in the invitation to bid. Any award made under this section shall not be made on criteria that are unknown to the parties submitting bids or proposals. Nothing in this section shall prevent the agency from making judgments on the capabilities of vendors to complete the work requested if this option is clearly stated in the body of the document and if used as the reason for the award, is so stated.
II. For purposes of this section, “best-value” means a procurement process where price and other key factors are considered in the evaluation and selection process to minimize impacts and enhance the long-term performance and value of the goods or services for which bids are solicited.
7 Effective Date.
I. Section 6 of this act shall take effect 60 days after its passage.
II. The remainder of this act shall take effect upon its passage.
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SB 493-FN - FISCAL NOTE
AN ACT establishing best value contracting practices in the state procurement system.
FISCAL IMPACT:
The Department of Administrative Services states this bill will increase state general fund expenditures by $1,838,037 in FY 2011, $1,825,395 in FY 2012, $1,919,498 in FY 2013, and $2,019,707 in FY 2014. There is no fiscal impact on state, county, and local revenue or on county and local expenditures.
METHODOLOGY:
The Department of Administrative Services states this bill establishes best value contracting practices to be used in the entire State procurement system. The Department states this bill has an impact on 3 of its bureaus: Purchase and Property, Public Works Design and Construction, and Graphic Services, on the Department of Transportation Contracts section, and on all other state agencies. The Department’s basic assumption is that this bill will increase the amount of time it takes to process requests for bids (RFB), requests for proposals (RFP), and requests for quotes (RFQ), hereafter referred to as ‘requests’.
Currently, the Department of Administrative Services estimates the eight employees of the Purchase and Property bureau, each assumed to work 230 days per year, process roughly 1,300 RFBs, RFPs, and RFQs each year, which translates to approximately 1.41 employee days to process each request ((8 employees × 230 working days) ÷ 1,300 documents). The Department estimates this bill’s requirements would add another day of processing time to each document, so the Purchase and Property bureau would need an additional six purchasing agents (labor grade 24) to comply with the proposed legislation ((1,300 documents × 1 additional day) ÷ 230 working days per year = 5.6 ≈ 6 additional employees).
The Department of Administrative Services estimates its Graphic Services bureau, which has one full-time employee and processes an average of 169 requests annually, would also need an additional purchasing agent (labor grade 24) in order to meet the requirements of this bill.
The Department of Administrative Services states it currently utilizes the Contract Administration section at the Department of Transportation (DOT) to prequalify and award construction and renovation contracts. If the proposed bill were to become law, the Department
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states it would continue to use this DOT section to prequalify contractors, however it assumes the bill’s changes to contract award criteria would require creation of its own contracts unit within the Public Works Design and Construction bureau. The Department states the new unit would modify requests, evaluate responses to requests, and create the eventual final contracts. To establish the new unit, the Department estimates it would need to hire a business administrator III (labor grade 27) to oversee the unit, a purchasing agent (labor grade 24) to customize bids and create contract documents, and three project manager III positions (labor grade 27) to serve as part of a team reviewing and evaluating all responses received.
The Department of Administrative Services states the Contract Administration section at the Department of Transportation (DOT) currently processes bids for 70 highway and bridge projects in a typical year. The Department states the DOT estimates the proposed legislation would entail two additional weeks (10 working days) of bid evaluation for each of the 70 projects, which translate to a need for three additional full time employees ((70 projects × 10 days) ÷ 230 working days per employee per year = 3.04 ≈ 3 additional employees). The Department states the DOT would also require two more employees to ensure it had the specialized bridge and highway expertise necessary to review and award bids in a manner consistent with this bill. The Department states the DOT estimates it would need a total of five additional employees: four project manager III positions (labor grade 27) and a purchasing agent (labor grade 24).
Because this bill changes the procurement system for the entire government, the Department of Administrative Services states contracts processed by all other state agencies would also be subject to the provisions of this bill. The Departments states in 2006 the Governor and Executive Council approved approximately 1,600 contracts. After accounting for those processed within its division of Plant and Property Management (30) and the Contracts Administration section of the DOT (70), the Department estimates 1,500 contracts are processed by all other state agencies within a typical year and that each contract will need an additional day of processing time under the proposed bill. To comply with these new procurement requirements, the Department estimates 7 additional purchasing agents (labor grade 24) will be needed across the state ((1,500 contracts × 1 additional day) ÷ 230 working days per year = 6.52 ≈ 7 additional employees).
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In total for the three bureaus, the DOT Contracts Administration section, and the balance of state agencies, the Department estimates it will need to hire 24 additional employees (16 purchasing agents at labor grade 24, 7 project managers at labor grade 27, 1 business administrator at labor grade 27), all with an assumed start date of July 1, 2010. For each of these employees, the Department also estimates annually $1,200 for phone, postage, and supplies, $2,700 for leased office space, $3,100 for equipment, and $300 for in-state mileage reimbursement. The Department also assumes the business administrator, 4 of the project managers, and the 16 purchasing agents would each need $1,300 for computer hardware and software in the first year and $250 for software renewals each year thereafter, and 3 of project managers would each need $2,400 for CADD hardware and software in the first year and $600 for software renewals each year thereafter. The Department estimates the total fiscal impact related to the 24 additional full-time employees as follows:
2011 2012 2013 2014
Salaries $ 1,075,620 $ 1,123,356 $ 1,172,652 $ 1,224,288
Benefits 552,717 594,189 638,996 687,569
Supplies, postage, etc. 28,800 28,800 28,800 28,800
Office space 64,800 64,800 64,800 64,800
Equipment 74,400 0 0 0
Computer hardware 20,400 0 0 0
Computer software 14,100 7,050 7,050 7,050
In-state travel 7,200 7,200 7,200 7,200
Total $ 1,838,037 $ 1,825,395 $ 1,919,498 $ 2,019,707
This bill does not contain an appropriation.