New Jersey
Local Public Contracts Law
and Regulation
Reference Manual
With Related and Supporting Information
N.J.S.A. 40A:11-1 et seq. and
N.J.A.C. 5:34
Current as of April 1, 2014
Prepared by:
Bloustein Local Government Research Center,
Rutgers, the State University
and
New Jersey Division of Local Government Services
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
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Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
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READ THIS FIRST!
HOW TO USE THIS HANDBOOK
This new handbook reprints the Local Public Contracts Law (LPCL, N.J.S.A. 40A:11) and Local
Public Contracting Rules (N.J.A.C. 5:34), and includes supplemental material not found in
earlier versions of these reprints. The statutory and regulatory text includes all changes
enacted through the 2012-2013 legislative session (P.L. 2012 and 2013) and Division of Local
Government Services (DLGS) rules adopted through the end of 2013. It is intended for
contracting units and their procurement professionals and advisors that fall under the LPCL.
The handbook is divided into two parts: Part One reprints the Local Public Contracts Law and
several related statutes; Part Two reprints the primary administrative rules related to the
Local Public and Public School Contracts Laws. The handbook includes clickable links that
make moving between the Table of Contents and related material convenient when viewed on
a computer.
In Part One, following the Local Public Contracts Law reprint, Appendix A displays the history
and current public bidding and quotation thresholds since 2000. The supplemental material
in Appendix B includes the text of several statutes not readily referenced elsewhere that are
related to the Law, and are shown in pertinent part.
Appendix C is intended to assist readers address the scope of local procurement laws and
regulations. To that end, the LPCL text highlights those sections of the law that have
associated N.J.A.C. regulations (i.e., 40A:11-3. Bid threshold; period of contracts) or have been
the subject of DLGS Local Finance Notices. The highlighted titles are linked to corresponding
listings in Appendix C where cited references have their own weblinks.
Appendix D is a standalone list of statutes and guidance with their related web references.
These references should be read in pari materia with the Local Public Contracts Law. It should
be reviewed by contracting professionals and their legal advisors.
Part Two is a reprint of N.J.A.C. 5:34, its Appendices (including fillable forms), along with
sections of N.J.A.C. 5:30 related to local government procurement practices.
Acknowledgements
Preparation and editing of this handbook is credited to Marc Pfeiffer, former DLGS Deputy
Director (retired) and Assistant Director of the Bloustein Local Government Research Center,
who was assisted by Joseph A. Valenti, former Chief of the Division’s Bureau of Local
Management Services, both of whom led administration of the State’s local public contracting
laws for several decades. Former DLGS Administrative Assistant Elaine Abel Holleran is also
credited for the original preparation and formatting of the document.
The Division thanks Bloustein Local for their efforts in this project and hopes that local
procurement professionals find it a valuable resource. It is the goal of the Division and
Bloustein Local to update this annually.
This document is online at: www.nj.gov/dca/divisions/dlgs/programs/lpcl.html#17
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
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Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
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TABLE OF CONTENTS
PART ONE – LOCAL PUBLIC CONTRACTS LAW
N.J.S.A. Section
Title
Page
40A:11-1
Short title; citation
1
40A:11-2
Definitions
1
40A:11-2.1
Civil action brought on behalf of local contracting unit.
5
40A:11-3
Bid threshold; period of contracts
5
40A:11-4
Contracts required to be advertised, disqualification of bidder
6
40A:11-4.1
Purposes for which competitive contracting may be used by local units
7
40A:11-4.2
Term of contract; exceptions
8
40A:11-4.3
Competitive contracting process; resolution, administration
8
40A:11-4.4
Request for proposals; documentation; provisions
8
40A:11-4.5
Competitive contracting proposal solicitation
9
40A:11-4.6
Implementation of energy savings improvement program by
contracting unit; definitions
10
40A:11-5
Exceptions
16
40A:11-5.1
Authority of city of first class to contract for water supply,
wastewater treatment services
21
40A:11-5.2
Applicability of C. 40A:11-1 et seq. to certain contracts by city of first
class
22
40A:11-6
Emergency contracts
22
40A:11-6.1
Award of contracts
22
40A:11-7
Contracts not to be divided
23
40A:11-7.1
Rules concerning determinations of aggregation
23
40A:11-8
Bids for provision or performance of goods or services
23
40A:11-9
Designation of contracting unit's purchasing agent, authority,
responsibility, accountability; qualifications
24
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 vi
N.J.S.A. Section
Title
Page
40A:11-9a
Current purchasing agent, lower bid threshold
26
40A:11-9.1
List of sources for green product purchasing
26
40A:11-10
Joint agreements for provision and performance of goods and
services; cooperative marketing; authorization
27
40A:11-11
Additional matters regarding contracts for the provision and
performance of goods and services
27
40A:11-12
Contracting unit purchases through State agency; procedure
29
40A:11-13
Specifications
29
40A:11-13.1
Payment from bequest, legacy or gift; conditions
30
40A:11-13.2
Rejection of bids; reasons
30
40A:11-14
Form of contracts
31
40A:11-15
Duration of certain contracts
31
40A:11-15.1
Insurance contract to fund actuarial liability
37
40A:11-15.2
Contracts for purchase of electricity for new county correction facility
37
40A:11-15.3
Contract for marketing of recyclable materials
37
40A:11-16
Separate plans for various types of work; bids; contracts
37
40A:11-16.1
$100,000 contracts for improvements to real property; retainage,
security
39
40A:11-16.2
Partial payments; deposit bonds
40
40A:11-16.3
Withholding of payments
40
40A:11-16.4
Partial payments for materials
40
40A:11-16.5
Renegotiation of contract to reflect increase in solid waste disposal
costs
41
40A:11-16.6
Definitions relative to value engineering change orders; requirement
for certain contracts
41
40A:11-17
Number of working days specified
42
40A:11-18
American goods and products to be used where possible
42
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 vii
N.J.S.A. Section
Title
Page
40A:11-19
Liquidated damages; void provisions as to contractor’s remedies
43
40A:11-20
Certificate of bidder showing ability to perform contract
43
40A:11-21
Guarantee to be furnished with bid
43
40A:11-22
Surety company certificate
43
40A:11-23
Advertisements for bids; bids; general requirements
44
40A:11-23.1
Plans, specifications, bid proposal documents; required contents
45
40A:11-23.1a
Approval of change order under certain circumstances.
47
40A:11-23.2
Required mandatory items for bid plans, specification
47
40A:11-23.3
Withdrawal of public works bid
47
40A:11-23.4
"Bulletin NJ"
48
40A:11-23.5
Rules and Regulations
49
40A:11-24
Time for making awards; deposits returned
49
40A:11-25
General power to provide qualification for bidders
49
40A:11-26
Standard questionnaire; effect of unsatisfactory answers
50
40A:11-27
Standard statements and questionnaires; prospective bidders;
responses
50
40A:11-28
Classification of prospective bidders; notice
51
40A:11-29
Reclassification of prospective bidders; request for; time limit
51
40A:11-30
Board of review upon classification; membership, et cetera
51
40A:11-31
Reconsideration by board of review; request for; time limit
51
40A:11-32
Rejection of bids after qualification of bidder; hearing
52
40A:11-33
Forfeiture of deposit in certain cases
52
40A:11-34
Penalties for false statements
52
40A:11-35
Indemnity agreements; Federal projects for benefit of municipality
52
40A:11-36
Sale or other disposition of personal property
53
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 viii
N.J.S.A. Section
Title
Page
40A:11-37
Division of Local Government Services to assist contracting units
53
40A:11-37.1
Rules
53
40A:11-38
Statutes repealed
54
40A:11-39
Effective date
54
40A:11-40
Authorization to purchase specific materials at auction; procedure
54
40A:11-41
Definitions
55
40A:11-42
Set-aside programs authorized
56
40A:11-43
Attainment of goals
56
40A:11-44
“Local Public Contracts Law” applicable
56
40A:11-45
Designation as set-aside
56
40A:11-46
Set-aside cancellation
57
40A:11-47
False information; penalties
57
40A:11-48
Annual agency report
58
40A:11-49
Rules, regulations
58
40A:11-50
Process of resolution for construction contract disputes
58
40A:11-51
Limitations on awarding public contracts to entities that made political
contributions; authority of local units, non-preemption by State law
59
Appendix A
Table of Bid Thresholds
60
Appendix B
Related Public Contracting Statutes:
1. Provisions concerning the purchasing agent and chief financial
officers (municipalities only)
2. Provisions regarding public contracts and the Country of
Iran, P.L. 2012, c.5
61
Appendix C
LPCL Statutory/Regulatory/Guidance Reference List
65
Appendix D
Important Public Procurement Related Law and Practice References
69
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 ix
PART TWO - LOCAL PUBLIC AND PUBLIC SCHOOL CONTRACT
LAWS ADMINISTRATIVE CODE
N.J.A.C. 5:34–1 et seq.
N.J.A.C. 5:30-5.1 et seq. and N.J.A.C. 5:30-11.1 et seq.
Section
Title
Page
5:34-1
General Provisions and Definitions
70
5:34-2
Extraordinary Unspecifiable Services
73
5:34-3
Certain Leases of Equipment and Service Agreements Beyond the
Fiscal Year
74
5:34-4
Administration of Competitive Contracting Process
75
5:34-5
Qualified Purchasing Agents and Increasing the Bid Threshold
79
5:34-6
Emergency Purchases and Contracts
82
5:34-7
Cooperative Purchasing
82
5:34-8
Contracts Subject to Public Bidding
98
5:34-9
Special Circumstances
100
5:34-9.1
Purchase of proprietary goods or services
100
5:34-9.2
Use of "brand name or equivalent" pursuant to N.J.S.A. 40A:11-
13 and 18A:18A-15
101
5:34-9.3
Cancellation or postponement of receipt of bids or proposals
102
5:34-9.4
Concessions
103
5:34-9.5
Miscellaneous circumstances
105
5:34-9.6
Purchasing at 10 percent less than a State cooperative contract
price
105
5:34-9.7
Use of the General Services Administration's Federal Supply
Schedules
106
Appendix A
Appendix A
108
Appendix B
Appendix B
110
Appendix C
Appendix C
111
5:30-5.1
Encumbrance Accounting and Certifications of Availability of Funds
112
5:30-11.1
Change Orders and Open-End Contracts
117
Part One
LOCAL PUBLIC CONTRACTS LAW
N.J.S.A. 40A:11-1 et seq.
40A:11-1. Short title; citation
This act shall be known and may be cited as the "Local Public Contracts Law."
L.1971, c. 198, s. 1, eff. July 1, 1971.
40A:11-2. Definitions
As used herein the following words have the following definitions, unless the context otherwise
indicates:
(1) "Contracting unit" means:
(a) Any county; or
(b) Any municipality; or
(c) Any board, commission, committee, authority or agency, which is not a State board,
commission, committee, authority, except as provided pursuant to P.L.2013, c.4, or agency,
and which has administrative jurisdiction over any district other than a school district,
project, or facility, included or operating in whole or in part, within the territorial
boundaries of any county or municipality which exercises functions which are appropriate
for the exercise by one or more units of local government, including functions exercised in
relation to the administration and oversight of a tourism district located in a municipality in
which authorized casino gaming occurs, and which has statutory power to make purchases
and enter into contracts awarded by a contracting agent for the provision or performance of
goods or services.
The term shall not include a private firm that has entered into a contract with a public entity
for the provision of water supply services pursuant to P.L.1995, c.101 (C.58:26-19 et al.).
"Contracting unit" shall not include a private firm or public authority that has entered into a
contract with a public entity for the provision of wastewater treatment services pursuant to
P.L.1995, c.216 (C.58:27-19 et al.).
"Contracting unit" shall not include a duly incorporated nonprofit association that has
entered into a contract with the governing body of a city of the first class for the provision of
water supply services or wastewater treatment services pursuant to section 2 of P.L.2002,
c.47 (C.40A:11-5.1).
"Contracting unit" shall not include a duly incorporated nonprofit entity that has entered
into a contract for management and operation services with a municipal hospital authority
established pursuant to P.L.2006, c.46 (C.30:9-23.15 et al.).
(2) "Governing body" means:
(a) The governing body of the county, when the purchase is to be made or the contract or
agreement is to be entered into by, or in behalf of, a county; or
(b) The governing body of the municipality, when the purchase is to be made or the contract
or agreement is to be entered into by, or on behalf of, a municipality; or
(c) Any board, commission, committee, authority or agency of the character described in
subsection (1) (c) of this section.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 2
(3) "Contracting agent" means the governing body of a contracting unit, or appointed
membership of a State authority authorized to enter into a cooperative purchasing agreement
pursuant to P.L.2013, c.4, or its authorized designee, which has the power to prepare the
advertisements, to advertise for and receive bids and, as permitted by this act, to make awards
for the contracting unit in connection with purchases, contracts or agreements.
(4) "Purchase" means a transaction, for a valuable consideration, creating or acquiring an
interest in goods, services and property, except real property or any interest therein.
(5) (Deleted by amendment, P.L.1999, c.440.)
(6) "Professional services" means services rendered or performed by a person authorized by
law to practice a recognized profession, whose practice is regulated by law, and the
performance of which services requires knowledge of an advanced type in a field of learning
acquired by a prolonged formal course of specialized instruction and study as distinguished
from general academic instruction or apprenticeship and training. Professional services may
also mean services rendered in the provision or performance of goods or services that are
original and creative in character in a recognized field of artistic endeavor.
(7) "Extraordinary unspecifiable services" means services which are specialized and qualitative
in nature requiring expertise, extensive training and proven reputation in the field of endeavor.
(8) (Deleted by amendment, P.L.1999, c.440.)
(9) "Work" includes services and any other activity of a tangible or intangible nature performed
or assumed pursuant to a contract or agreement with a contracting unit.
(10) "Homemaker--home health services" means at-home personal care and home management
provided to an individual or members of the individual's family who reside with the individual,
or both, necessitated by the individual's illness or incapacity. "Homemaker--home health
services" includes, but is not limited to, the services of a trained homemaker.
(11) "Recyclable material" means those materials which would otherwise become municipal
solid waste, and which may be collected, separated or processed and returned to the economic
mainstream in the form of raw materials or products.
(12) "Recycling" means any process by which materials which would otherwise become solid
waste are collected, separated or processed and returned to the economic mainstream in the
form of raw materials or products.
(13) "Marketing" means the sale, disposition, assignment, or placement of designated recyclable
materials with, or the granting of a concession to, a reseller, processor, materials recovery
facility, or end-user of recyclable material, in accordance with a district solid waste
management plan adopted pursuant to P.L.1970, c.39 (C.13:1E-1 et seq.) and shall not include
the collection of such recyclable material when collected through a system of routes by local
government unit employees or under a contract administered by a local government unit.
(14) "Municipal solid waste" means, as appropriate to the circumstances, all residential,
commercial and institutional solid waste generated within the boundaries of a municipality; or
the formal collection of such solid wastes or recyclable material in any combination thereof
when collected through a system of routes by local government unit employees or under a
contract administered by a local government unit.
(15) "Distribution" (when used in relation to electricity) means the process of conveying
electricity from a contracting unit that is a generator of electricity or a wholesale purchaser of
electricity to retail customers or other end users of electricity.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 3
(16) "Transmission" (when used in relation to electricity) means the conveyance of electricity
from its point of generation to a contracting unit that purchases it on a wholesale basis for
resale.
(17) "Disposition" means the transportation, placement, reuse, sale, donation, transfer or
temporary storage of recyclable materials for all possible uses except for disposal as municipal
solid waste.
(18) "Cooperative marketing" means the joint marketing by two or more contracting units of
the source separated recyclable materials designated in a district recycling plan required
pursuant to section 3 of P.L.1987, c.102 (C.13:1E-99.13) pursuant to a written cooperative
agreement entered into by the participating contracting units thereof.
(19) "Aggregate" means the sums expended or to be expended for the provision or performance
of any goods or services in connection with the same immediate purpose or task, or the
furnishing of similar goods or services, during the same contract year through a contract
awarded by a contracting agent.
(20) "Bid threshold" means the dollar amount set in section 3 of P.L.1971, c.198 (C.40A:11-3),
above which a contracting unit shall advertise for and receive sealed bids in accordance with
procedures set forth in P.L.1999, c.440 (C.40A:11-4.1 et al.).
(21) "Contract" means any agreement, including but not limited to a purchase order or a formal
agreement, which is a legally binding relationship enforceable by law, between a vendor who
agrees to provide or perform goods or services and a contracting unit which agrees to
compensate a vendor, as defined by and subject to the terms and conditions of the
agreement. A contract also may include an arrangement whereby a vendor compensates a
contracting unit for the vendor's right to perform a service, such as, but not limited to, operating
a concession.
(22) "Contract year" means the period of 12 consecutive months following the award of a
contract.
(23) "Competitive contracting" means the method described in sections 1 through 5 of P.L.1999,
c.440 (C.40A:11-4.1 thru 40A:11-4.5) of contracting for specialized goods and services in which
formal proposals are solicited from vendors; formal proposals are evaluated by the purchasing
agent or counsel or administrator; and the governing body awards a contract to a vendor or
vendors from among the formal proposals received.
(24) "Goods and services" or "goods or services" means any work, labor, commodities,
equipment, materials, or supplies of any tangible or intangible nature, except real property or
any interest therein, provided or performed through a contract awarded by a contracting agent,
including goods and property subject to N.J.S.12A:2-101 et seq.
(25) "Library and educational goods and services" means textbooks, copyrighted materials,
student produced publications and services incidental thereto, including but not limited to
books, periodicals, newspapers, documents, pamphlets, photographs, reproductions,
microfilms, pictorial or graphic works, musical scores, maps, charts, globes, sound recordings,
slides, films, filmstrips, video and magnetic tapes, other printed or published matter and
audiovisual and other materials of a similar nature, necessary binding or rebinding of library
materials, and specialized computer software used as a supplement or in lieu of textbooks or
reference material.
(26) "Lowest price" means the least possible amount that meets all requirements of the request
of a contracting agent.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 4
(27) "Lowest responsible bidder or vendor" means the bidder or vendor: (a) whose response
to a request for bids offers the lowest price and is responsive; and (b) who is responsible.
(28) "Official newspaper" means any newspaper designated by the contracting unit pursuant to
R.S.35:1-1 et seq.
(29) "Purchase order" means a document issued by the contracting agent authorizing a
purchase transaction with a vendor to provide or perform goods or services to the contracting
unit, which, when fulfilled in accordance with the terms and conditions of a request of a
contracting agent and other provisions and procedures that may be established by the
contracting unit, will result in payment by the contracting unit.
(30) "Purchasing agent" means the individual duly assigned the authority, responsibility, and
accountability for the purchasing activity of the contracting unit, and who has such duties as are
defined by an authority appropriate to the form and structure of the contracting unit, and
P.L.1971, c.198 (C.40A:11-1 et seq.) and who possesses a qualified purchasing agent certificate.
(31) "Quotation" means the response to a formal or informal request made by a contracting
agent by a vendor for provision or performance of goods or services, when the aggregate cost is
less than the bid threshold. Quotations may be in writing, or taken verbally if a record is kept
by the contracting agent.
(32) "Responsible" means able to complete the contract in accordance with its requirements,
including but not limited to requirements pertaining to experience, moral integrity, operating
capacity, financial capacity, credit, and workforce, equipment, and facilities availability.
(33) "Responsive" means conforming in all material respects to the terms and conditions,
specifications, legal requirements, and other provisions of the request.
(34) "Public works" means building, altering, repairing, improving or demolishing any public
structure or facility constructed or acquired by a contracting unit to house local government
functions or provide water, waste disposal, power, transportation, and other public
infrastructures.
(35) "Director" means the Director of the Division of Local Government Services in the
Department of Community Affairs.
(36) "Administrator" means a municipal administrator appointed pursuant to N.J.S.40A:9-136
and N.J.S.40A:9-137; a business administrator, a municipal manager or a municipal
administrator appointed pursuant to the "Optional Municipal Charter Law," P.L.1950, c.210
(C.40:69A-1 et seq.); a municipal manager appointed pursuant to "the municipal manager form
of government law," R.S.40:79-1 et seq.; or the person holding responsibility for the overall
operations of an authority that falls under the "Local Authorities Fiscal Control Law," P.L.1983,
c.313 (C.40A:5A-1 et seq.).
(37) "Concession" means the granting of a license or right to act for or on behalf of the
contracting unit, or to provide a service requiring the approval or endorsement of the
contracting unit, and which may or may not involve a payment or exchange, or provision of
services by or to the contracting unit.
(38) "Index rate" means the rate of annual percentage increase, rounded to the nearest half-
percent, in the Implicit Price Deflator for State and Local Government Purchases of Goods and
Services, computed and published quarterly by the United States Department of Commerce,
Bureau of Economic Analysis.
(39) "Proprietary" means goods or services of a specialized nature, that may be made or
marketed by a person or persons having the exclusive right to make or sell them, when the need
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 5
for such goods or services has been certified in writing by the governing body of the contracting
unit to be necessary for the conduct of its affairs.
(40) "Service or services" means the performance of work, or the furnishing of labor, time, or
effort, or any combination thereof, not involving or connected to the delivery or ownership of a
specified end product or goods or a manufacturing process. Service or services may also
include an arrangement in which a vendor compensates the contracting unit for the vendor's
right to operate a concession.
(41) "Qualified purchasing agent certificate" means a certificate granted by the director
pursuant to section 9 of P.L.1971, c.198 (C.40A:11-9).
(42) "Mistake" means, for a public works project, a clerical error that is an unintentional and
substantial computational error or an unintentional omission of a substantial quantity of labor,
material, or both, from the final bid computation.
L.1971, c.198, s.2; amended 1975, c.353, s.1; 1983, c.331, s.1; 1987, c.102, s.30; 1991, c.143, s.7; 1992, c.98, s.1;
1995, c.101, s.11; 1995, c.103, s.3; 1995, c.216, s.10; 1999, c.440, s.6; 2002, c.47, s.7; 2006, c.46, s.11; 2009, c.166,
s.1; 2010, c.108, s.1; 2013, c.4, s.2.
40A:11-2.1. Civil action brought on behalf of local contracting unit
1
a. A local contracting unit as defined in and subject to the provisions of the "Local Public Contracts
Law," P.L.1971, c.198 (C.40A:11-1 et seq.), shall implement and comply with the provisions of
P.L.2012, c.25 (C.52:32-55 et al.), except that the contracting unit shall rely on the list developed by
the State Department of the Treasury pursuant to section 3 of P.L.2012, c.25 (C.52:32-57).
b. If the local contracting unit determines that a person or entity has submitted a false certification
concerning its engagement in investment activities in Iran pursuant to section 4 of P.L.2012, c.25
(C.52:32-58), the local contracting unit shall report to the New Jersey Attorney General the name of
that person or entity, and the Attorney General shall determine whether to bring a civil action
against the person to collect the penalty prescribed in paragraph (1) of subsection a. of section 5 of
P.L.2012, c.25 (C.52:32-59). The local contracting unit may also report to the municipal attorney or
county counsel, as appropriate, the name of that person, together with its information as to the false
certification, and the municipal attorney or county counsel, as appropriate, may determine to bring
such civil action against the person to collect such penalty.
L.2012, c.25, s.7.
40A:11-3. Bid threshold; period of contracts
2
a. When the cost or price of any contract awarded by the contracting agent in the aggregate does
not exceed in a contract year the total sum of $17,500, the contract may be awarded by a
purchasing agent or other employee so designated by the governing body when so authorized by
ordinance or resolution, as appropriate to the contracting unit, without public advertising for bids,
except that the governing body of any contracting unit may adopt an ordinance or resolution to set
a lower threshold for the receipt of public bids or the solicitation of competitive quotations. If a
purchasing agent has been appointed, the governing body of the contracting unit may establish that
the bid threshold may be up to $25,000 or the threshold amount adjusted by the Governor pursuant
to subsection c. of this section. Such authorization may be granted for each contract or by a general
delegation of the power to negotiate and award such contracts pursuant to this section.
1
See Appendix B for full reprint of N.J.S. 52:32-55
2
A table of current and prior bid thresholds is found in Appendix A
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 6
b. Any contract made pursuant to this section may be awarded for a period of 24 consecutive
months, except that contracts for professional services pursuant to subparagraph (i) of paragraph
(a) of subsection (1) of section 5 of P.L.1971, c.198 (C.40A:11-5) may be awarded for a period not
exceeding 12 consecutive months. The Division of Local Government Services shall adopt and
promulgate rules and regulations concerning the methods of accounting for all contracts that do not
coincide with the contracting unit's fiscal year.
c. The Governor, in consultation with the Department of the Treasury, shall, no later than March 1
of every fifth year beginning in the fifth year after the year in which P.L.1999, c.440 takes effect,
adjust the threshold amount, in direct proportion to the rise or fall of the index rate as that term is
defined in section 2 of P.L.1971, c.198 (C.40A:11-2), and shall round the adjustment to the nearest
$1,000. The Governor shall, no later than June 1 of every fifth year, notify each governing body of
the adjustment. The adjustment shall become effective on July 1 of the year in which it is made.
L.1971, c. 198, s. 3; amended 1975, c. 353, s. 2; 1977, c. 53, s. 1; 1979, c. 350, s. 1; 1985, c. 60, s. 1; 1985, c. 469,
s. 6; 1991, c. 143, s. 1; 1996, c. 113, s. 18; 1999, c. 440, s. 7; 2009, c.166, s.2.
40A:11-4. Contracts required to be advertised, disqualification of bidder
a. Every contract awarded by the contracting agent for the provision or performance of any goods
or services, the cost of which in the aggregate exceeds the bid threshold, shall be awarded only by
resolution of the governing body of the contracting unit to the lowest responsible bidder after
public advertising for bids and bidding therefor, except as is provided otherwise in this act or
specifically by any other law. The governing body of a contracting unit may, by resolution approved
by a majority of the governing body and subject to subsections b. and c. of this section, disqualify a
bidder who would otherwise be determined to be the lowest responsible bidder, if the governing
body finds that it has had prior negative experience with the bidder.
b. As used in this section, "prior negative experience" means any of the following:
(1) the bidder has been found, through either court adjudication, arbitration, mediation, or
other contractually stipulated alternate dispute resolution mechanism, to have: failed to
provide or perform goods or services; or failed to complete the contract in a timely manner; or
otherwise performed unsatisfactorily under a prior contract with the contracting unit;
(2) the bidder defaulted on a contract, thereby requiring the local unit to utilize the services of
another contractor to provide the goods or perform the services or to correct or complete the
contract;
(3) the bidder defaulted on a contract, thereby requiring the local unit to look to the bidder's
surety for completion of the contract or tender of the costs of completion; or
(4) the bidder is debarred or suspended from contracting with any of the agencies or
departments of the executive branch of the State of New Jersey at the time of the contract
award, whether or not the action was based on experience with the contracting unit.
c. The following conditions apply if the governing body of a contracting unit is contemplating a
disqualification based on prior negative experience:
(1) The existence of any of the indicators of prior negative experience set forth in this section
shall not require that a bidder be disqualified. In each instance, the decision to disqualify shall
be made within the discretion of the governing body and shall be rendered in the best interests
of the contracting unit.
(2) All mitigating factors shall be considered in determining the seriousness of the prior
negative experience and in deciding whether disqualification is warranted.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 7
(3) The bidder shall be furnished by the governing body with a written notice (a) stating that a
disqualification is being considered; (b) setting forth the reason for the disqualification; and (c)
indicating that the bidder shall be accorded an opportunity for a hearing before the governing
body if the bidder so requests within a stated period of time. At the hearing, the bidder shall
show good cause why the bidder should not be disqualified by presenting documents and
testimony. If the governing body determines that good cause has not been shown by the bidder,
it may vote to find the bidder lacking in responsibility and, thus, disqualified.
(4) Disqualification shall be for a reasonable, defined period of time which shall not exceed five
years.
(5) A disqualification, other than a disqualification pursuant to which a governing body is
prohibited by law from entering into a contract with a bidder, may be voided or the period
thereof may be reduced, in the discretion of the governing body, upon the submission of a good
faith application under oath, supported by documentary evidence, setting forth substantial and
appropriate grounds for the granting of relief, such as reversal of a judgment, or actual change
of ownership, management or control of the bidder.
(6) An opportunity for a hearing need not be offered to a bidder whose disqualification is based
on its suspension or debarment by an agency or department of the executive branch of the State
of New Jersey. The term of such a disqualification shall be concurrent with the term of the
suspension or debarment by the State agency or department.
L.1971, c. 198, s. 4; amended 1975, c. 353, s. 3; 1979, c. 350, s. 2; 1985, c. 60, s. 2; 1985, c. 469, s. 7; 1999, c.
440, s. 8.
40A:11-4.1. Purposes for which competitive contracting may be used by local units
Notwithstanding the provisions of any law, rule or regulation to the contrary, competitive
contracting may be used by local contracting units in lieu of public bidding for procurement of
specialized goods and services the price of which exceeds the bid threshold, for the following
purposes:
a. The purchase or licensing of proprietary computer software designed for contracting unit
purposes, which may include hardware intended for use with the proprietary software. This
subsection shall not be utilized for the purpose of acquiring general purpose computer
hardware or software;
b. The hiring of a for-profit entity or a not-for-profit entity incorporated under Title 15A of the
New Jersey Statutes for the purpose of:
(1) the operation and management of a wastewater treatment system or a water supply or
distribution facility of the type described in subsection (37) of section 15 of P.L.1971, c.198
(C.40A:11-15), provided that competitive contracting shall not be used as a means of awarding
contracts pursuant to P.L.1985, c.37 (C.58:26-1 et al.) and P.L.1985, c.72 (C.58:27-1 et al.);
(2) the operation, management or administration of recreation or social service facilities or
programs, which shall not include the administration of benefits under the Work First New
Jersey program established pursuant to P.L.1997, c.38 (C.44:10-55 et seq.), or under
General Assistance; or
(3) the operation, management or administration of data processing services;
c. (Deleted by amendment, P.L.2009, c.4).
d. Homemaker--home health services;
e. Laboratory testing services;
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 8
f. Emergency medical services;
g. Contracted food services;
h. Performance of patient care services by contracted medical staff at county hospitals,
correctional facilities and long-term care facilities;
i. At the option of the governing body of the contracting unit, any good or service that is exempt
from bidding pursuant to section 5 of P.L.1971, c.198 (C.40A:11-5);
j. Concessions;
k. The operation, management or administration of other services, with the approval of the
Director of the Division of Local Government Services.
Any purpose included herein shall not be considered by a contracting unit as an extraordinary
unspecifiable service pursuant to paragraph (a)(ii) of subsection (1) of section 5 of P.L.1971, c.198
(C.40A:11-5).
L.1999, c. 440, s. 1; amended 2009, c. 4, s. 7.
40A:11-4.2. Term of contract; exceptions
Unless an exception is provided for under section 15 of P.L.1971, c.198 (C.40A:11-15) permitting a
longer contract duration, contracts awarded pursuant to section 5 of P.L.1999, c.440 (C.40A:11-4.5)
may be for a term not to exceed five years.
L.1999, c. 440, s. 2.
40A:11-4.3. Competitive contracting process; resolution, administration
a. In order to initiate competitive contracting, the governing body shall pass a resolution
authorizing the use of competitive contracting each time specialized goods or services enumerated
in section 1 of P.L.1999, c.440 (C.40A:11-4.1) are desired to be contracted. If the desired goods or
services have previously been contracted for using the competitive contracting process then the
original resolution of the governing body shall suffice.
b. The competitive contracting process shall be administered by a purchasing agent qualified
pursuant to subsection b. of section 9 of P.L.1971, c.198 (C.40A:11-9), or, by legal counsel of the
contracting unit, or by an administrator of the contracting unit. Any contracts awarded under this
process shall be made by resolution of the governing body of the contracting unit, subject to the
provisions of subsection e. of section 5 of P.L.1999, c.440 (C.40A:11-4.5).
L.1999, c. 440, s. 3.
40A:11-4.4. Request for proposals; documentation; provisions
The competitive contracting process shall utilize request for proposals documentation in
accordance with the following provisions:
a. The purchasing agent or counsel or administrator shall prepare or have prepared a request
for proposal documentation, which shall include: all requirements deemed appropriate and
necessary to allow for full and free competition between vendors; information necessary for
potential vendors to submit a proposal; and a methodology by which the contracting unit will
evaluate and rank proposals received from vendors.
b. The methodology for the awarding of competitive contracts shall be based on an evaluation
and ranking, which shall include technical, management, and cost related criteria, and may
include a weighting of criteria, all developed in a way that is intended to meet the specific needs
of the contracting unit, and where such criteria shall not unfairly or illegally discriminate
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 9
against or exclude otherwise capable vendors. When an evaluation methodology uses a
weighting of criteria, at the option of the contracting unit the weighting to be accorded to each
criterion may be disclosed to vendors prior to receipt of the proposals. The methodology for
awarding competitive contracts shall comply with such rules and regulations as the director
may adopt, after consultation with the Commissioner of Education, pursuant to the
"Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
c. At no time during the proposal solicitation process shall the purchasing agent or counsel or
administrator convey information, including price, to any potential vendor which could confer
an unfair advantage upon that vendor over any other potential vendor. If a purchasing agent or
counsel or administrator desires to change proposal documentation, the purchasing agent or
counsel or administrator shall notify only those potential vendors who received the proposal
documentation of any and all changes in writing and all existing documentation shall be
changed appropriately.
d. All proposals and contracts shall be subject to the provisions of section 1 of P.L.1977, c.33 (C.52:25-
24.2) requiring submission of a statement of corporate ownership and the provisions of P.L.1975,
c.127 (C.10:5-31 et seq.) concerning equal employment opportunity and affirmative action.
L.1999, c. 440, s. 4.
40A:11-4.5. Competitive contracting proposal solicitation
Competitive contracting proposals shall be solicited in the following manner:
a. A notice of the availability of request for proposal documentation shall be published in an
official newspaper of the contracting unit at least 20 days prior to the date established for the
submission of proposals. The contracting unit shall promptly reply to any request by an
interested vendor by providing a copy of the request for proposals. The contracting unit may
charge a fee for the proposal documentation that shall not exceed $50.00 or the cost of
reproducing the documentation, whichever is greater.
b. Each interested vendor shall submit a proposal which shall include all the information
required by the request for proposals. Failure to meet the requirements of the request for
proposals may result in the contracting unit disqualifying the vendor from further
consideration. Under no circumstances shall the provisions of a proposal be subject to
negotiation by the contracting unit.
c. If the contracting unit, at the time of solicitation, utilizes its own employees to provide the
goods or perform the services, or both, considered for competitive contracting, the governing
body shall, at any time prior to, but no later than the time of solicitation for competitive
contracting proposals, notify affected employees of the governing body's intention to solicit
competitive contracting proposals. Employees or their representatives shall be permitted to
submit recommendations and proposals affecting wages, hours, and terms and conditions of
employment in such a manner as to meet the goals of the competitive contract. If employees
are represented by an organization that has negotiated a contract with the contracting unit,
only the bargaining unit shall be authorized to submit such recommendations or
proposals. When requested by such employees, the governing body shall provide such
information regarding budgets and the costs of performing the services by such employees as
may be available. Nothing shall prevent such employees from making recommendations that
may include modifications to existing labor agreements in order to reduce such costs in lieu of
award of a competitive contract, and agreements implementing such recommendations may be
considered as cause for rejecting all other proposals.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 10
d. The purchasing agent or counsel or administrator shall evaluate all proposals only in
accordance with the methodology described in the request for proposals. After proposals have
been evaluated, the purchasing agent or counsel or administrator shall prepare a report
evaluating and recommending the award of a contract or contracts. The report shall list the
names of all potential vendors who submitted a proposal and shall summarize the proposals of
each vendor. The report shall rank vendors in order of evaluation, shall recommend the
selection of a vendor or vendors, as appropriate, for a contract, shall be clear in the reasons why
the vendor or vendors have been selected among others considered, and shall detail the terms,
conditions, scope of services, fees, and other matters to be incorporated into a contract. The
report shall be made available to the public at least 48 hours prior to the awarding of the
contract, or when made available to the governing body, whichever is sooner. The governing
body shall have the right to reject all proposals for any of the reasons set forth in section 21 of
P.L.1999, c.440 (C.40A:11-13.2).
e. Award of a contract shall be made by resolution of the governing body of the contracting unit
within 60 days of the receipt of the proposals, except that the proposals of any vendors who
consent thereto, may, at the request of the contracting unit, be held for consideration for such
longer period as may be agreed.
f. The report prepared pursuant to subsection d. of this section shall become part of the public
record and shall reflect the final action of the governing body. Contracts shall be executed
pursuant to section 14 of P.L.1971, c.198 (C.40A:11-14).
g. The clerk or secretary of the contracting unit shall publish a notice in the official newspaper
of the contracting unit summarizing the award of a contract, which shall include but not be
limited to, the nature, duration, and amount of the contract, the name of the vendor and a
statement that the resolution and contract are on file and available for public inspection in the
office of the clerk or secretary of the municipality, county, local public authority or special
district of the governing body.
h. All contract awards shall be subject to rules concerning certification of availability of funds
adopted pursuant to section 3 of P.L.1971, c.198 (C.40A:11-3) and section 15 of P.L.1971, c.198
(C.40A:11-15).
i. The director, after consultation with the Commissioner of Education, may adopt additional
rules and regulations, in accordance with the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.), as may be necessary to effectuate the provisions of sections 1 through 5 of
P.L.1999, c.440 (C.40A:11-4.1 through C.40A:11-4.5).
L.1999, c. 440, s. 5.
40A:11-4.6. Implementation of energy savings improvement program by contracting unit;
definitions
a. (1) A contracting unit, as defined in P.L.1971, c.198 (C.40A:11-1 et seq.), may implement an
energy savings improvement program in the manner provided by this section whenever it
determines that the savings generated from reduced energy use from the program will be
sufficient to cover the cost of the program's energy conservation measures as set forth in an
energy savings plan. Under such a program, a contracting unit may enter into an energy savings
services contract with an energy services company to implement the program or the
contracting unit may authorize separate contracts to implement the program. The provisions of
P.L.1971, c.198 (C.40A:11-1 et seq.) shall apply to any contracts awarded pursuant to this
section to the extent that the provisions of such law are not inconsistent with any provision of
this section.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 11
(2) A contracting unit facility alteration required to properly implement other energy efficiency
or energy conservation measures, or both, may be included as part of an energy savings
services contract, in which case, notwithstanding any other provision of law, rule, regulation, or
order to the contrary, the facility alteration may be undertaken or supervised by the energy
services company performing the energy savings services contract if:
(a) the total cost of the improvement does not exceed 15 percent of the total cost of the
work to be performed under the energy savings services contract; and
(b) (i) the improvement is necessary to conform to a law, rule, or regulation, or order, or (ii)
an analysis within an approved proposal, or the contracting unit, at the time of the award of
the proposal, demonstrates that there is an economic advantage to the contracting unit
implementing the improvement as part of the energy savings services contract, and the
savings rationale for the improvement is documented and supported by reasonable
justification.
b. (1) To be eligible to enter into an energy savings services contract, an energy services company
shall be a commercial entity that is qualified to provide energy savings services in accordance
with the provisions of this section. A contracting unit may determine to enter into an energy
savings services contract either through public advertising for bids and the receipt of bids
therefor or through competitive contracting in lieu of public bidding in the manner provided by
sections 1 through 5 of P.L.1999, c.440 (C.40A:11-4.1 et seq.).
(2) (a) Public works activities performed under an energy savings improvement program shall
be subject to all requirements regarding public bidding, bid security, performance
guarantees, insurance and other public contracting requirements that are applicable to
public works contracts, to the extent not inconsistent with this section. A general
contractor, energy services company serving as general contractor, or any subcontractor
hired for the furnishing of plumbing and gas fitting and all kindred work, and of steam and
hot water heating and ventilating apparatus, steam power plants and kindred work, and
electrical work, structural steel and ornamental iron work, shall be classified by the Division
of Property Management and Construction in the Department of the Treasury in order to
perform public works activities under an energy savings improvement program.
(b) Individuals or organizations performing energy audits, acting as commissioning agents,
or conducting verification of energy savings plans, implementation of energy conservation
measures, or verifying guarantees shall be prequalified by the Division of Property
Management and Construction in the Department of the Treasury to perform their work
under an energy savings improvement program.
(3) (a) An energy services company may be designated as the general contractor for
improvements to be made pursuant to an energy savings plan, provided that the hiring of
subcontractors that are required to be classified pursuant to subparagraph (a) of paragraph
(2) of this subsection shall be performed in accordance with the procedures and
requirements set forth pursuant to the public bidding requirements of the contracting
unit. A contract with an energy savings company shall include, but not be limited to:
preparation of an energy savings plan; the responsibilities of the parties for project
schedules, installations, performance and quality, payment of subcontractors, project
completion, commissioning, savings implementation; a requirement that the savings to be
achieved by energy conservation measures be verified upon commissioning of the
improvements; allocation of State and federal rebates and tax credits; and any other
provisions deemed necessary by the parties.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 12
(b) All workers performing public works activities for subcontractors awarded contracts by
an energy services company pursuant to this section shall be paid prevailing wages in
accordance with the “New Jersey Prevailing Wage Act,” P.L.1963, c.150 (C.34:11-56.25 et
seq.). All subcontractors shall comply with the provisions of "The Public Works Contractor
Registration Act," P.L.1999, c.238 (C.34:11-56.48 et seq.). Only firms appropriately
classified as contractors by the Division of Property Management and Construction shall be
eligible to be awarded a contract as a subcontractor of an energy services company under
this section for performing public works activities pursuant to regulations adopted by the
Division of Property Management and Construction.
(c) In order to expedite communications with an energy services company and facilitate the
implementation of an energy savings improvement program, a contracting unit may
designate or appoint an employee of the contracting unit with decision-making authority to
coordinate with the energy services company and to address issues associated with the
implementation of an energy savings improvement program as they arise, provided that
any decision requiring a change order shall be made only upon the approval of the
contracting unit.
(4) Except as provided in paragraph (5) of this subsection, a subsidiary or wholly-owned or
partially-owned affiliate of the energy services company shall not be an eligible contractor or
subcontractor under an energy savings services contract.
(5) When the energy services company is the manufacturer of direct digital control systems and
contracts with the contracting unit to provide a guaranteed energy savings option pursuant to
subsection f. of this section, the specification of such direct digital control systems may be
treated as proprietary goods and if so treated, the bid specification shall set forth an allowance
price for its supply by the energy services company which shall be used by all bidders in the
public bidding process. Direct digital controls shall be open protocol format and shall meet the
interoperability guidelines established by the American Society of Heating, Refrigerating and
Air-Conditioning Engineers. Each contract to be entered into pursuant to this section between
a contracting unit and an energy services company that is the manufacturer of direct digital
control systems where such direct digital control systems are treated as proprietary goods as
part of the contract, shall first be reviewed and approved by the Board of Public Utilities for the
purpose of affirming the reasonableness of such allowance price. If the board does not
disapprove of the contract within 14 days of receipt thereof, the contract shall be deemed
approved.
c. An energy savings improvement program may be financed through a lease-purchase agreement
or through the issuance of energy savings obligations pursuant to this subsection.
(1) An energy savings improvement program may be financed through a lease-purchase
agreement between a contracting unit and an energy services company or other public or
private entity. Under a lease-purchase agreement, ownership of the energy savings equipment
or improved facilities shall pass to the contracting unit when all lease payments have been
made. Notwithstanding the provisions of any other law to the contrary, the duration of such a
lease-purchase agreement shall not exceed 15 years, except that the duration of a lease
purchase agreement for a combined heat and power or cogeneration project shall not exceed 20
years. For the purposes of this paragraph, the duration of the repayment term of a lease-
purchase agreement shall commence on the date upon which construction and installation of
the energy savings equipment, “combined heat and power facility” or “cogeneration facility,” as
those terms are defined pursuant to section 3 of P.L.1999, c.23 (C.48:3-51), or other energy
conservation measures undertaken pursuant to the energy savings plan, have been completed.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 13
(2) Any lease-purchase agreement entered into pursuant to this subsection, may contain: a
clause making it subject to the availability and appropriation annually of sufficient funds as may
be required to meet the extended obligation; and a non-substitution clause maintaining that if
the agreement is terminated for non-appropriation, the contracting unit may not replace the
leased equipment or facilities with equipment or facilities that perform the same or similar
functions.
(3) A contracting unit may arrange for incurring energy savings obligations to finance an energy
savings improvement program. Energy savings obligations may be funded through
appropriations for utility services in the annual budget of the contracting unit and may be
issued as refunding bonds pursuant to N.J.S.40A:2-52 et seq., including the issuance of bond
anticipation notes as may be necessary, provided that all such bonds and notes mature within
the periods authorized for such energy savings obligations. Energy savings obligations may be
issued either through the contracting unit or another public agency authorized to undertake
financing on behalf of the unit.
(4) Lease-purchase agreements and energy savings obligations shall not be used to finance
maintenance, guarantees, or verification of guarantees of energy conservation
measures. Lease-purchase agreements and energy savings obligations may be used to finance
the cost of an energy audit or the cost of verification of energy savings as part of adopting an
energy savings plan. Notwithstanding any law to the contrary, lease-purchase agreements and
energy savings certificates shall not be excepted from any budget or tax levy limitation
otherwise provided by law. Maturity schedules of lease-purchase agreements or energy savings
obligations shall not exceed the estimated average useful life of the energy conservation
measures.
d. (1) The energy audit component of an energy savings improvement program shall be conducted
either by the contracting unit or by a qualified independent third party retained by the
governing body for that purpose. It shall not be conducted by an energy services company
subsequently hired to develop an energy savings improvement program. The energy audit shall
identify the current energy use of any or all facilities and energy conservation measures that
can be implemented in which the energy savings and energy efficiency could be realized and
maximized.
(2) To implement an energy savings improvement program, a contracting unit shall develop a
plan that consists of one or more energy conservation measures. The plan shall:
(a) contain the results of an energy audit;
(b) describe the energy conservation measures that will comprise the program;
(c) estimate greenhouse gas reductions resulting from those energy savings;
(d) identify all design and compliance issues that require the professional services of an
architect or engineer and identify who will provide these services;
(e) include an assessment of risks involved in the successful implementation of the plan;
(f) identify the eligibility for, and costs and revenues associated with the PJM Independent
System Operator for demand response and curtailable service activities;
(g) include schedules showing calculations of all costs of implementing the proposed energy
conservation measures and the projected energy savings;
(h) identify maintenance requirements necessary to ensure continued energy savings, and
describe how they will be fulfilled; and
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 14
(i) if developed by an energy services company, a description of, and cost estimates of an
energy savings guarantee.
All professionals providing engineering services under the plan shall have errors and
omissions insurance.
(3) Prior to the adoption of the plan, the contracting unit shall contract with a qualified third
party to verify the projected energy savings to be realized from the proposed program have
been calculated as required by subsection e. of this section.
(4) Upon adoption, the plan shall be submitted to the Board of Public Utilities, which shall post
it on the Internet on a public webpage maintained for such purpose. If the contracting unit
maintains its own website, it shall also post the plan on that site. The board may require
periodic reporting concerning the implementation of the plan.
(5) Verification by a qualified third party shall be required when energy conservation measures
are placed in service or commissioned, to ensure the savings projected in the energy savings
plan shall be achieved.
(6) Energy-related capital improvements that do not reduce energy usage may be included in
an energy savings improvement program but the cost of such improvements shall not be
financed as a lease-purchase or through energy savings obligations authorized by subsection c.
of this section. Nothing herein is intended to prevent financing of such capital improvements
through otherwise authorized means.
(7) A qualified third party when required by this subsection may include an employee of the
contracting unit who is properly trained and qualified to perform such work.
e. (1) (a) The calculation of energy savings for the purposes of determining that the energy
savings resulting from the program will be sufficient to cover the cost of the program's
energy conservation measures, as provided in subsection a. of this section, shall involve
determination of the dollar amount saved through implementation of an energy savings
improvement program using the guidelines of the International Performance Measurement
and Verification Protocol or other protocols approved by the Board of Public Utilities and
standards adopted by the Board of Public Utilities pursuant to this section. The calculation
shall include all applicable State and federal rebates and tax credits, but shall not include
the cost of an energy audit and the cost of verifying energy savings. The calculation shall
state which party has made application for rebates and credits and how these applications
translate into energy savings.
(b) During the procurement phase of an energy savings improvement program, an energy
service company’s proposal submitted in response to a request for proposal shall not
include a savings calculation that assumes, includes, or references capital cost avoidance
savings, the current or projected value of a “solar renewable energy certificate,” as defined
pursuant to section 3 of P.L.1999, c.23 (C.48:3-51), or other environmental or similar
attributes or benefits of whatever nature that derive from the generation of renewable
energy, and any costs or discounts associated with maintenance services, an energy savings
guarantee, or third party verification of energy conservation measures and energy
savings. The calculation of energy savings shall utilize and specifically reference as a
benchmark the actual demand and energy components of the public utility tariff rate
applicable to the contracting unit then in effect, and not a blended rate that aggregates,
combines, or restates in any manner the distinct demand and energy components of the
public utility tariff rate into a single combined or restated tariff rate. If an energy services
company submits a proposal to a contracting unit that does not calculate projected energy
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 15
savings in the manner required by this subsection, such proposal shall be rejected by the
contracting unit.
(2) For the purposes of this section, the Board of Public Utilities shall adopt standards and
uniform values for interest rates and escalation of labor, electricity, oil, and gas, as well as
standards for presenting these costs in a life cycle and net present value format, standards for
the presentation of obligations for carbon reductions, and other standards that the board may
determine necessary.
f. (1) When an energy services company is awarded an energy savings services contract, it shall
offer the contracting unit the option to purchase, for an additional amount, an energy savings
guarantee. The guarantee, if accepted by a separate vote of the governing body of the
contracting unit, shall insure that the energy savings resulting from the energy savings
improvement program, determined periodically over the duration of the guarantee, will be
sufficient to defray all payments required to be made pursuant to the lease-purchase agreement
or energy savings obligation, and if the savings are not sufficient, the energy services company
will reimburse the contracting unit for any additional amounts. Annual costs of a guarantee
shall not be financed or included as costs in an energy savings plan but shall be fully disclosed
in an energy savings plan.
(2) When a guaranteed energy savings option is purchased, the contract shall require a
qualified third party to verify the energy savings at intervals established by the parties.
(3) When an energy services company is awarded an energy savings services contract to
provide or perform goods or services for the purpose of enabling a contracting unit to conserve
energy through energy efficiency equipment, including a “combined heat and power facility” as
that term is defined pursuant to section 3 of P.L.1999, c.23 (C48:3-51), on a self-funded basis,
such contract shall extend for a term of up to 15 years for energy efficiency projects, and for up
to 20 years for a combined heat and power facility after construction completion. If a
contracting unit shall elect to contract with an energy services company for an energy savings
guarantee in connection with a contract awarded pursuant to this section, such guarantee may
extend for a term of up to 15 years for energy efficiency projects, or up to 20 years for a
combined heat and power facility after construction completion.
g. As used in this section:
"direct digital control systems" means the devices and computerized control equipment that
contain software and computer interfaces that perform the logic that control a building's
heating, ventilating, and air conditioning system. Direct digital controls shall be open protocol
format and shall meet the interoperability guidelines established by the American Society of
Heating, Refrigerating and Air-Conditioning Engineers;
"energy conservation measure" means an improvement that results in reduced energy use,
including, but not limited to, installation of energy efficient equipment; demand response
equipment; combined heat and power systems; facilities for the production of renewable
energy; water conservation measures, fixtures or facilities; building envelope improvements
that are part of an energy savings improvement program; and related control systems for each
of the foregoing;
"energy related capital improvement" means a capital improvement that uses energy but does
not result in a reduction of energy use;
"energy saving obligation" means a bond, note or other agreement evidencing the obligation to
repay borrowed funds incurred in order to finance energy saving improvements;
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 16
"energy savings" means a measured reduction in fuel, energy, operating or maintenance costs
resulting from the implementation of one or more energy conservation measures services when
compared with an established baseline of previous fuel, energy, operating or maintenance costs,
including, but not limited to, future capital replacement expenditures avoided as a result of
equipment installed or services performed as part of an energy savings plan;
"energy savings improvement program" means an initiative of a contracting unit to implement
energy conservation measures in existing facilities, provided that the value of the energy
savings resulting from the program will be sufficient to cover the cost of the program's energy
conservation measures;
"energy savings plan" means the document that describes the actions to be taken to implement
the energy savings improvement program;
"energy savings services contract" means a contract with an energy savings company to
develop an energy savings plan, prepare bid specifications, manage the performance, provision,
construction, and installation of energy conservation measures by subcontractors, to offer a
guarantee of energy savings derived from the implementation of an energy savings plan, and
may include a provision to manage the bidding process;
"energy services company" means a commercial entity that is qualified to develop and
implement an energy savings plan in accordance with the provisions of this section;
"public works activities" means any work subject to the provisions of P.L.1963, c.150 (C.34:11-
56.25 et seq.); and
"water conservation measure" means an alteration to a facility or equipment that reduces water
consumption, maximizes the efficiency of water use, or reduces water loss.
h. (1) The Director of the Division of Local Government Services in the Department of Community
Affairs, the State Treasurer, and the Board of Public Utilities may take such action as is deemed
necessary and consistent with the intent of this section to implement its provisions.
(2) The Director of the Division of Local Government Services in the Department of Community
Affairs, the State Treasurer, and the Board of Public Utilities may adopt implementation
guidelines or directives, and adopt such administrative rules, pursuant to the "Administrative
Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary for the implementation of
those agencies' respective responsibilities under this section, except that notwithstanding any
provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the Director of the Division of
Local Government Services in the Department of Community Affairs, the State Treasurer, and
the Board of Public Utilities may adopt, immediately upon filing with the Office of
Administrative Law, such rules and regulations as deemed necessary to implement the
provisions of this act which shall be effective for a period not to exceed 12 months and shall
thereafter be amended, adopted or re-adopted in accordance with the provisions of P.L.1968,
c.410 (C.52:14B-1 et seq.).
L.2009, c.4, s.6; amended 2012, c.55, s.3.
40A:11-5. Exceptions
Any contract the amount of which exceeds the bid threshold, may be negotiated and awarded by the
governing body without public advertising for bids and bidding therefor and shall be awarded by
resolution of the governing body if:
(1) The subject matter thereof consists of:
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 17
(a) (i) Professional services. The governing body shall in each instance state supporting
reasons for its action in the resolution awarding each contract and shall forthwith cause to
be printed once, in the official newspaper, a brief notice stating the nature, duration, service
and amount of the contract, and that the resolution and contract are on file and available for
public inspection in the office of the clerk of the county or municipality, or, in the case of a
contracting unit created by more than one county or municipality, of the counties or
municipalities creating such contracting unit; or (ii) Extraordinary unspecifiable
services. The application of this exception shall be construed narrowly in favor of open
competitive bidding, whenever possible, and the Division of Local Government Services is
authorized to adopt and promulgate rules and regulations after consultation with the
Commissioner of Education limiting the use of this exception in accordance with the
intention herein expressed. The governing body shall in each instance state supporting
reasons for its action in the resolution awarding each contract and shall forthwith cause to
be printed, in the manner set forth in subsection (1) (a) (i) of this section, a brief notice of
the award of such contract;
(b) The doing of any work by employees of the contracting unit;
(c) The printing of legal briefs, records and appendices to be used in any legal proceeding in
which the contracting unit may be a party;
(d) The furnishing of a tax map or maps for the contracting unit;
(e) The purchase of perishable foods as a subsistence supply;
(f) The supplying of any product or the rendering of any service by a public utility, which is
subject to the jurisdiction of the Board of Public Utilities or the Federal Energy Regulatory
Commission or its successor, in accordance with tariffs and schedules of charges made,
charged or exacted, filed with the board or commission;
(g) The acquisition, subject to prior approval of the Attorney General, of special equipment
for confidential investigation;
(h) The printing of bonds and documents necessary to the issuance and sale thereof by a
contracting unit;
(i) Equipment repair service if in the nature of an extraordinary unspecifiable service and
necessary parts furnished in connection with such service, which exception shall be in
accordance with the requirements for extraordinary unspecifiable services;
(j) The publishing of legal notices in newspapers as required by law;
(k) The acquisition of artifacts or other items of unique intrinsic, artistic or historical
character;
(l) Those goods and services necessary or required to prepare and conduct an election;
(m) Insurance, including the purchase of insurance coverage and consultant services, which
exception shall be in accordance with the requirements for extraordinary unspecifiable
services;
(n) The doing of any work by handicapped persons employed by a sheltered workshop;
(o) The provision of any goods or services including those of a commercial nature,
attendant upon the operation of a restaurant by any nonprofit, duly incorporated, historical
society at or on any historical preservation site;
(p) (Deleted by amendment, P.L.1999, c.440.)
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 18
(q) Library and educational goods and services;
(r) (Deleted by amendment, P.L.2005, c.212).
(s) The marketing of recyclable materials recovered through a recycling program, or the
marketing of any product intentionally produced or derived from solid waste received at a
resource recovery facility or recovered through a resource recovery program, including, but
not limited to, refuse-derived fuel, compost materials, methane gas, and other similar
products;
(t) (Deleted by amendment, P.L.1999, c.440.)
(u) Contracting unit towing and storage contracts, provided that all such contracts shall be
pursuant to reasonable non-exclusionary and non-discriminatory terms and conditions,
which may include the provision of such services on a rotating basis, at the rates and
charges set by the municipality pursuant to section 1 of P.L.1979, c.101 (C.40:48-2.49). All
contracting unit towing and storage contracts for services to be provided at rates and
charges other than those established pursuant to the terms of this paragraph shall only be
awarded to the lowest responsible bidder in accordance with the provisions of the "Local
Public Contracts Law" and without regard for the value of the contract therefor;
(v) The purchase of steam or electricity from, or the rendering of services directly related to
the purchase of such steam or electricity from a qualifying small power production facility
or a qualifying cogeneration facility as defined pursuant to 16 U.S.C.s.796;
(w) The purchase of electricity or administrative or dispatching services directly related to
the transmission of such purchased electricity by a contracting unit engaged in the
generation of electricity;
(x) The printing of municipal ordinances or other services necessarily incurred in
connection with the revision and codification of municipal ordinances;
(y) An agreement for the purchase of an equitable interest in a water supply facility or for
the provision of water supply services entered into pursuant to section 2 of P.L.1993, c.381
(C.58:28-2), or an agreement entered into pursuant to P.L.1989, c.109 (N.J.S.40A:31-1 et al.),
so long as such agreement is entered into no later than six months after the effective date of
P.L.1993, c.381;
(z) A contract for the provision of water supply services entered into pursuant to P.L.1995,
c.101 (C.58:26-19 et al.);
(aa) The cooperative marketing of recyclable materials recovered through a recycling
program;
(bb) A contract for the provision of wastewater treatment services entered into pursuant to
P.L.1995, c.216 (C.58:27-19 et al.);
(cc) Expenses for travel and conferences;
(dd) The provision or performance of goods or services for the support or maintenance of
proprietary computer hardware and software, except that this provision shall not be
utilized to acquire or upgrade non-proprietary hardware or to acquire or update non-
proprietary software;
(ee) The management or operation of an airport owned by the contracting unit pursuant to
R.S.40:8-1 et seq.;
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 19
(ff) Purchases of goods and services at rates set by the Universal Service Fund administered
by the Federal Communications Commission;
(gg) A contract for the provision of water supply services or wastewater treatment services
entered into pursuant to section 2 of P.L.2002, c.47 (C.40A:11-5.1), or the designing,
financing, construction, operation, or maintenance, or any combination thereof, of a water
supply facility as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15)
or a wastewater treatment system as defined in subsection (19) of section 15 of P.L.1971,
c.198 (C.40A:11-15), or any component part or parts thereof, including a water filtration
system as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15);
(hh) The purchase of electricity generated from a power production facility that is fueled by
methane gas extracted from a landfill in the county of the contracting unit.
(2) It is to be made or entered into with the United States of America, the State of New Jersey,
county or municipality or any board, body, officer, agency or authority thereof or any other
state or subdivision thereof.
(3) Bids have been advertised pursuant to section 4 of P.L.1971, c.198 (C.40A:11-4) on two
occasions and (a) no bids have been received on both occasions in response to the
advertisement, or (b) the governing body has rejected such bids on two occasions because it has
determined that they are not reasonable as to price, on the basis of cost estimates prepared for
or by the contracting agent prior to the advertising therefor, or have not been independently
arrived at in open competition, or (c) on one occasion no bids were received pursuant to (a) and
on one occasion all bids were rejected pursuant to (b), in whatever sequence; any such contract
may then be negotiated and may be awarded upon adoption of a resolution by a two-thirds
affirmative vote of the authorized membership of the governing body authorizing such contract;
provided, however, that:
(i) A reasonable effort is first made by the contracting agent to determine that the same or
equivalent goods or services, at a cost which is lower than the negotiated price, are not
available from an agency or authority of the United States, the State of New Jersey or of the
county in which the contracting unit is located, or any municipality in close proximity to the
contracting unit;
(ii) The terms, conditions, restrictions and specifications set forth in the negotiated contract
are not substantially different from those which were the subject of competitive bidding
pursuant to section 4 of P.L.1971, c.198 (C.40A:11-4); and
(iii) Any minor amendment or modification of any of the terms, conditions, restrictions and
specifications, which were the subject of competitive bidding pursuant to section 4 of
P.L.1971, c.198 (C.40A:11-4), shall be stated in the resolution awarding such contract;
provided further, however, that if on the second occasion the bids received are rejected as
unreasonable as to price, the contracting agent shall notify each responsible bidder
submitting bids on the second occasion of its intention to negotiate, and afford each bidder
a reasonable opportunity to negotiate, but the governing body shall not award such contract
unless the negotiated price is lower than the lowest rejected bid price submitted on the
second occasion by a responsible bidder, is the lowest negotiated price offered by any
responsible vendor, and is a reasonable price for such goods or services.
Whenever a contracting unit shall determine that a bid was not arrived at independently in
open competition pursuant to subsection (3) of this section it shall thereupon notify the county
prosecutor of the county in which the contracting unit is located and the Attorney General of the
facts upon which its determination is based, and when appropriate, it may institute appropriate
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 20
proceedings in any State or federal court of competent jurisdiction for a violation of any State or
federal antitrust law or laws relating to the unlawful restraint of trade.
(4) The contracting unit has solicited and received at least three quotations on materials,
supplies or equipment for which a State contract has been issued pursuant to section 12 of
P.L.1971, c.198 (C.40A:11-12), and the lowest responsible quotation is at least 10% less than
the price the contracting unit would be charged for the identical materials, supplies or
equipment, in the same quantities, under the State contract. Any such contract entered into
pursuant to this subsection may be awarded only upon adoption of a resolution by the
affirmative vote of two-thirds of the full membership of the governing body of the contracting
unit at a meeting thereof authorizing such a contract. A copy of the purchase order relating to
any such contract, the requisition for purchase order, if applicable, and documentation
identifying the price of the materials, supplies or equipment under the State contract and the
State contract number shall be filed with the director within five working days of the award of
any such contract by the contracting unit. The director shall notify the contracting unit of
receipt of the material and shall make the material available to the State Treasurer. The
contracting unit shall make available to the director upon request any other documents relating
to the solicitation and award of the contract, including, but not limited to, quotations, requests
for quotations, and resolutions. The director periodically shall review material submitted by
contracting units to determine the impact of such contracts on local contracting and shall
consult with the State Treasurer on the impact of such contracts on the State procurement
process. The director may, after consultation with the State Treasurer, adopt rules in
accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to
limit the use of this subsection, after considering the impact of contracts awarded under this
subsection on State and local contracting, or after considering the extent to which the award of
contracts pursuant to this subsection is consistent with and in furtherance of the purposes of
the public contracting laws.
(5) Notwithstanding any provision of law, rule or regulation to the contrary, the subject matter
consists of the combined collection and marketing, or the cooperative combined collection and
marketing of recycled material recovered through a recycling program, or any product
intentionally produced or derived from solid waste received at a resource recovery facility or
recovered through a resource recovery program including, but not limited to, refuse-derived
fuel, compost materials, methane gas, and other similar products, provided that in lieu of
engaging in such public advertising for bids and the bidding therefor, the contracting unit shall,
prior to commencing the procurement process, submit for approval to the Director of the
Division of Local Government Services, a written detailed description of the process to be
followed in securing said services. Within 30 days after receipt of the written description the
director shall, if the director finds that the process provides for fair competition and integrity in
the negotiation process, approve, in writing, the description submitted by the contracting
unit. If the director finds that the process does not provide for fair competition and integrity in
the negotiation process, the director shall advise the contracting unit of the deficiencies that
must be remedied. If the director fails to respond in writing to the contracting unit within 30
days, the procurement process as described shall be deemed approved. As used in this section,
"collection" means the physical removal of recyclable materials from curbside or any other
location selected by the contracting unit.
(6) Notwithstanding any provision of law, rule or regulation to the contrary, the contract is for
the provision of electricity by a contracting unit engaged in the distribution of electricity for
retail sale, or for the provision of administrative or dispatching services related to the
transmission of such electricity, provided that in lieu of engaging in public advertising for bids
and the bidding therefor, the contracting unit shall, prior to commencing the procurement
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 21
process, submit for approval to the Director of the Division of Local Government Services, a
written detailed description of the process to be followed in securing such services. Such
process shall be designed in a way that is appropriate to and commensurate with industry
practices, and the integrity of the government contracting process. Within 30 days after receipt
of the written description, the director shall, if the director finds that the process provides for
fair competition and integrity in the negotiation process, approve, in writing, the description
submitted by the contracting unit. If the director finds that the process does not provide for fair
competition and integrity in the negotiation process, the director shall advise the contracting
unit of the deficiencies that must be remedied. If the director fails to respond in writing to the
contracting unit within 30 days, the procurement process, as submitted to the director pursuant
to this section, shall be deemed approved.
L.1971, c. 198, s. 5; amended 1975, c. 353, s. 4; 1976, c. 20; 1977, c. 53, s. 2; 1982, c. 208; 1983, c. 209; 1983, c.
331, s. 2; 1985, c. 436; 1986, c. 61; 1987, c. 102, s. 32; 1989, c. 92; 1989, c. 159, s. 1; 1991, c. 142, s. 1; 1991, c.
143, s. 2; 1991, c. 368; 1993, c. 381, s. 4; 1995, c. 101, s. 12; 1995, c. 103, s. 4; 1995, c. 216, s. 11; 1997, c. 387,
s. 2; 1999, c. 440, s. 9; 2002, c. 47, s. 8; 2003, c. 150, s. 2; 2005, c. 212, s. 2; 2005. c. 296, s. 1.
40A:11-5.1. Authority of city of first class to contract for water supply, wastewater
treatment services
The Legislature finds and declares it to be in the public interest and to be the public policy of the
State to foster and promote by all reasonable means the collection, storage and distribution of an
adequate supply of water for the inhabitants and businesses of the counties and municipalities of
this State and to foster and promote the public health by providing for the collection and treatment
of sewerage through adequate sewerage facilities.
To further promote these interests, and notwithstanding the provisions of any other law, rule or
regulation to the contrary, the governing body of a city of the first class may enter into a contract
with a duly incorporated nonprofit association for the provision of water supply services as defined
in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15), or for the provision of wastewater
treatment services as defined in subsection (19) of section 15 of P.L.1971, c.198 (C.40A:11-15), or
both, as the case may be.
The governing body of a city of the first class that has entered into a contract with a duly
incorporated nonprofit association pursuant to this section shall obtain the written opinion of bond
counsel as to the effect of the contract on the tax exempt status of existing and future financing
instruments executed by the parties given the terms of the contract and the federal laws or
regulations concerning this matter.
Any concession fee or monetary benefit paid by a duly incorporated nonprofit association to the
governing body of a city of the first class shall be used for the purposes of reducing or off-setting
property taxes, reducing water supply services or wastewater treatment services charges, rates or
fees, one-time nonrecurring expenses or capital asset expenditures related to water supply facilities
or wastewater treatment systems.
Upon executing such contract, the duly incorporated nonprofit association shall be deemed to be
providing essential governmental functions on behalf of the city of the first class and, to the extent
permitted in the contract, shall exercise all powers and responsibilities of the city of the first class
related to the provision of water supply services and wastewater treatment services now or
hereinafter provided under law.
The authorization provided in this section shall be subject to the provisions of sections 3 through 6
of P.L.2002, c.47 (C.58:28-4 through 58:28-7).
L.2002, c. 47, s. 2.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 22
40A:11-5.2. Applicability of C.40A:11-1 et seq. to certain contracts by city of first class
Notwithstanding the provisions of P.L.2002, c.47 (C.40A:12-17.1 et al.) to the contrary, any
expenditure of funds by a duly incorporated nonprofit association that has entered into a contract
with the governing body of a city of the first class pursuant to sections 1 and 2 of P.L.2002, c.47
(C.40A:12-17.1 and 40A:11-5.1) for any capital improvements to, or construction of, water supply
facilities or wastewater treatment systems shall be subject to the provisions of the "Local Public
Contracts Law," P.L.1971, c.198 (C.40A:11 -1 et seq.) whenever the funds have been derived from
the proceeds of obligations or other available public moneys of any public entity including, but not
limited to, debt issued by the New Jersey Environmental Infrastructure Trust established pursuant
to P.L.1985, c.334 (C.58:11B-1 et seq.), as amended and supplemented by P.L.1997, c.224, or a city
of the first class.
L.2002, c. 47, s. 12.
40A:11-6. Emergency contracts
Any contract may be negotiated or awarded for a contracting unit without public advertising for
bids and bidding therefor, notwithstanding that the contract price will exceed the bid threshold,
when an emergency affecting the public health, safety or welfare requires the immediate delivery of
goods or the performance of services; provided that the awarding of such contracts is made in the
following manner:
a. The official in charge of the agency wherein the emergency occurred, or such other officer or
employee as may be authorized to act in place of that official, shall notify the purchasing agent,
a supervisor of the purchasing agent, or a designated representative of the governing body, as
may be appropriate to the form of government, of the need for the performance of a contract,
the nature of the emergency, the time of its occurrence and the need for invoking this section. If
that person is satisfied that an emergency exists, that person shall be authorized to award a
contract or contracts for such purposes as may be necessary to respond to the emergent
needs. Such notification shall be reduced to writing and filed with the purchasing agent as soon
as practicable.
b. Upon the furnishing of such goods or services, in accordance with the terms of the contract,
the contractor furnishing such goods or services shall be entitled to be paid therefor and the
contracting unit shall be obligated for said payment. The governing body of the contracting unit
shall take such action as shall be required to provide for the payment of the contract price.
c. The Director of the Division of Local Government Services in the Department of Community
Affairs shall prescribe rules and procedures to implement the requirements of this section.
d. The governing body of the contracting unit may prescribe additional rules and procedures to
implement the requirements of this section.
L.1971, c. 198, s. 6; amended 1975, c. 353, s. 5; 1977, c. 53, s. 3; 1979, c. 350, s. 3; 1985, c. 60, s. 3; 1985, c. 469,
s. 8; 1999, c. 440, s. 10.
40A:11-6.1. Award of contracts
All contracts enumerated in this section shall be awarded as follows:
a. For all contracts that in the aggregate are less than the bid threshold but 15 percent or more
of that amount, and for those contracts that are for subject matter enumerated in subsection (1)
of section 5 of P.L.1971, c.198 (C.40A:11-5), except for paragraph (a) of that subsection
concerning professional services and paragraph (b) of that subsection concerning work by
employees of the contracting unit, the contracting agent shall award the contract after soliciting
at least two competitive quotations, if practicable. The award shall be made to a vendor whose
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 23
response is most advantageous, price and other factors considered. The contracting agent shall
retain the record of the quotation solicitation and shall include a copy of the record with the
voucher used to pay the vendor.
b. When in excess of the bid threshold, and after documented effort by the contracting agent to
secure competitive quotations, a contract for extraordinary unspecifiable services may be
awarded upon a determination in writing by the contracting agent that the solicitation of
competitive quotations is impracticable. Any such contract shall be awarded by resolution of
the governing body.
c. If authorized by the governing body by resolution or ordinance, all contracts that are in the
aggregate less than 15 percent of the bid threshold may be awarded by the contracting agent
without soliciting competitive quotations.
d. Whenever two or more responses to a request of a contracting agent offer equal prices and
are the lowest responsible bids or proposals, the contracting unit may award the contract to the
vendor whose response, in the discretion of the contracting unit, is the most advantageous,
price and other factors considered. In such a case, the award resolution or purchase order
documentation shall explain why the vendor selected is the most advantageous.
L.1975, c. 353, s. 6; amended 1977, c. 53, s. 4; 1983, c. 418; 1999, c. 440, s. 11.
40A:11-7. Contracts not to be divided
a. No contract in the aggregate which is single in character or which necessarily or by reason of the
quantities required to effectuate the purpose of the contract includes the provision or performance of
additional goods or services, shall be divided, so as to bring it or any of the parts thereof under the bid
threshold, for the purpose of dispensing with the requirement of public advertising and bidding therefor.
b. In contracting for the provision or performance of any goods or services included in or incidental
to the provision or performance of any work which is single in character or inclusive of the
provision or performance of additional goods or services, all of the goods or services requisite for
the completion of such contract shall be included in one contract.
L.1971, c. 198, s. 7; amended 1975, c. 353, s. 7; 1979, c. 350, s. 4; 1985, c. 60, s. 4; 1985, c. 469, s. 9;1999, c.
440, s. 12.
40A:11-7.1. Rules concerning determinations of aggregation
For the purpose of ensuring consistency between the "Local Public Contracts Law," P.L.1971, c.198
(C.40A:11-1 et seq.), and the "Public School Contracts Law," N.J.S.18A:18A-1 et seq., the Director of the
Division of Local Government Services in the Department of Community Affairs, after consultation with
the Commissioner of Education and pursuant to the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.), shall adopt rules concerning determinations of aggregation for the purposes of
whether a contract is subject to public bidding as set forth in sections 3, 4 and 7 of P.L.1971, c.198
(C.40A:11-3, 40A:11-4 and 40A:11-7) and N.J.S.18A:18A-3, N.J.S.18A:18A-4, and N.J.S.18A:18A-8.
L.1999, c. 440, s. 13.
40A:11-8. Bids for provision or performance of goods or services
Every contracting agent shall, at intervals to be fixed by the governing body, solicit by public
advertisement the submission of bids for the provision or performance of goods or services which
are and which under section 4 of P.L.1971, c.198 (C.40A:11-4) can be contracted to be provided or
performed only after public advertisement for bids and bidding therefor and all contracts for the
provision or performance of such goods or services shall be awarded only in that manner.
L.1971, c. 198, s. 8; amended 1999, c. 440, s. 14.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 24
40A:11-9. Designation of contracting unit's purchasing agent, authority, responsibility,
accountability; qualifications
a. The governing body of any contracting unit may by ordinance, in the case of a municipality, by
ordinance or resolution, as the case may be, in the case of a county, or by resolution in all other
cases, designate an individual to serve as the contracting unit's purchasing agent. The individual
designated as the purchasing agent pursuant to this subsection shall be assigned the authority,
responsibility, and accountability for the purchasing activity for the contracting unit, to prepare
public advertising for bids and to receive bids for the provision or performance of goods or services
on behalf of the contracting unit and to award contracts permitted pursuant to subsection a. of
section 3 of P.L.1971, c.198 (C.40A:11-3) in the name of the contracting unit, and conduct any
activities as may be necessary or appropriate to the purchasing function of the contracting unit as
its contracting agent. The individual designated to serve as the purchasing agent of a contracting
unit pursuant to this subsection shall possess a qualified purchasing agent certificate pursuant to
this section. The individual designated as the purchasing agent pursuant to this subsection may be
a part-time or full-time employee of the contracting unit, an independent contractor, or an
individual employed by another contracting unit through a shared services agreement.
b. The Director of the Division of Local Government Services, after consultation with the
Commissioner of Education, shall establish criteria to qualify individuals who have completed
appropriate training and possess such purchasing experience as deemed necessary to serve as a
purchasing agent, and, when determined to be necessary by the director, have passed an
examination administered by the director pursuant to this section. The criteria established by the
director shall include, but are not limited to, the following:
(1) is a citizen of the United States;
(2) is of good moral character;
(3) is a high school graduate or equivalent;
(4) has at least two years of higher education, and two years of full time governmental
experience performing duties relative to those of public procurement provided, however, that
additional years of experience may be substituted for years of higher education, on a one to one
basis;
(5) has successfully received certificates indicating satisfactory completion of a series of
training courses in public procurement as determined by the director and provided by either
the Division of Local Government Services, or, with the approval of the director, by a county
college or Rutgers, The State University of New Jersey, all under the supervision of instructors
who meet criteria established by the director;
(6) has submitted completed application forms, including proof of education and experience, as
set forth in this subsection, accompanied by a fee in the amount of $150 payable to the State
Treasurer, to the Director of the Division of Local Government Services at least 30 days prior to
the administration of a State examination;
(7) has successfully passed a State examination for a qualified purchasing agent certificate. The
director shall hold examinations semi-annually or at such times as the director may deem
appropriate. An individual shall be eligible to take the State examination for a qualified
purchasing agent certificate without having taken the courses required pursuant to paragraph
(5) of this subsection if the individual has been certified by the division as a certified municipal
finance officer, a certified county finance officer, or a certified county purchasing officer.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 25
The director shall issue a qualified purchasing agent certificate to an individual who passes the
examination upon payment to the director of a fee of $25 which shall be payable to the State
Treasurer.
c. The criteria established by the director to authorize purchasing agents, pursuant to subsection b.
of this section, shall include, but are not limited to, completion of a course in green product
purchasing, as established by the director pursuant to regulation. Any person qualified pursuant to
subsection b. of this section prior to the establishment of the course in green product purchasing,
shall in order to continue to be qualified, take and successfully complete the course within four
years from the date the course is established. For the purposes of this subsection and section 2 of
P.L.2007, c.332 (C.40A:11-9.1), "green product" means any commodity or service that has a lesser
or reduced negative effect on human health and the environment when compared with competing
commodities or services. Items considered in this comparison may include, but are not limited to:
raw materials acquisition, production, manufacturing, packaging, distribution, reuse, operation,
maintenance, disposal, energy efficiency, recycled content resource use, transportation, and
durability.
d. (1) Renewal of the qualified purchasing agent certification shall be required every three
years, subject to the applicant's fulfillment of continuing education requirements, the submission of
an application for renewal, and the payment of a renewal fee, all as determined by the director.
(2) In the event that an individual holding a qualified purchasing agent certificate allows the
certificate to lapse by failing to renew the certificate, the individual shall be required to
apply to take the qualifying examination required pursuant to subsection b. of this section
and pay a fee as determined by the director, except that when an individual applies within
six months of the expiration of the certificate, the application may be made in the same
manner as renewal.
e. (1) An individual who obtained a qualified purchasing agent certificate prior to enactment
of P.L.2009, c.166 (C.40A:11-9a et al.) shall be exempt from taking the State qualifying
examination, but shall adhere to all requirements for renewal pursuant to subsection d. of
this section. If such a qualified purchasing agent certificate expires due to the failure of the
holder to renew the certificate as prescribed in subsection d. of this section, that individual
shall be required to pass the qualifying examination as provided pursuant to subsection b.
of this section in order to be issued a new qualified purchasing agent certificate.
(2) An individual who has been certified by the Department of Education as a school
business administrator and has performed duties relative to public procurement for at least
three years shall be exempt from taking the courses required pursuant to paragraph (5) of
subsection b. of this section and the state qualifying examination, and upon application to
the director and the payment of the fee imposed pursuant to subsection b. of this section,
shall be issued a qualified purchasing agent certificate.
f. Those persons who have been performing the duties of a purchasing agent for a contracting unit
pursuant to P.L.1971, c.198 (C.40A:11-1 et seq.), or school board pursuant to N.J.S.18A:18A-1 et seq.
for at least three continuous years, prior to the first day of the sixth month following the
promulgation of rules and regulations to effectuate the purposes of P.L.2009, c.166 (C.40A:11-9a et
al.), and did not possess a qualified purchasing agent certificate at that time, may take the State
qualifying examination, if not otherwise exempt under subsection e. of this section, without the
courses required in subsection b. of this section.
g. Following the appointment of a purchasing agent for a contracting unit pursuant to subsection a.
of this section, if the person appointed no longer performs such duties, the governing body or chief
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 26
executive officer, as appropriate to the form of government, may appoint, for a period not to exceed
one year commencing from the date of the vacancy, a person who does not possess a qualified
purchasing agent certificate to serve as a temporary purchasing agent. Any person so appointed
may, with the approval of the director, be reappointed as a temporary purchasing agent for a
maximum of one additional year following the end of the first temporary appointment. No
contracting unit shall employ a temporary purchasing agent for more than two consecutive years.
h. The director may revoke or suspend a qualified purchasing agent certificate for dishonest
practices or willful or intentional failure, neglect, or refusal to comply with the laws relating to
procurement, or for other good cause. The governing body, together with the chief executive officer
of any contracting unit, or a board of education, may request the director to review the behavior or
practices of a person holding a qualified purchasing agent certificate. Prior to taking any adverse
action against a person, the director or the director's designee shall convene a hearing, upon due
notice, affording the person an opportunity to be heard. If the qualified purchasing agent certificate
held by a person serving as a purchasing agent is revoked, the director shall order that person to no
longer perform the duties of purchasing agent, and the person shall not be eligible to serve as a
purchasing agent or to make application for recertification for a period of five years from the date
of revocation.
i. The director may adopt and promulgate rules and regulations to effectuate the purposes of this
act. Notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, any such
regulations shall be effective immediately upon filing with the Office of Administrative Law and
shall be effective for a period not to exceed 365 days and may thereafter be amended, adopted or
readopted by the director in accordance with the requirements of P.L.1968, c.410. In order to
better manage the workload of implementing the provisions of this act, the director may establish a
transition process for administering an examination for individuals serving as purchasing agents on
the effective date of this act, issuing and renewing qualified purchasing agent certificates to eligible
individuals, prescribing a schedule by which such certificates will be issued and renewed, and such
other matters as the director determines to be necessary to the implementation of this act.
L.1971, c.198, s.9; amended 1975, c.353, s.8; 1977, c.53, s.5; 1999, c.440, s.15; 2007, c.332, s.1;
2009, c.166, s.3.
40A:11-9a Current purchasing agent, lower bid threshold
An individual who is the duly authorized purchasing agent of a contracting unit and does not
possess a qualified purchasing agent certificate on the date of enactment of P.L.2009, c.166 may
continue to be referred to as the purchasing agent, but the bid threshold for that contracting unit
shall be set at $17,500 until such time as that individual obtains a qualified purchasing agent
certificate. A contracting unit exercising this authority shall file a letter to this effect with the
director.
L.2009, c.166, s.4.
40A:11-9.1. List of sources for green product purchasing
The State Treasurer, through the Division of Purchase and Property, in consultation with the Department
of Environmental Protection and any other appropriate State agencies, shall develop a list of sources for
green product purchasing by contracting units, and provide regular revisions of the list, on the Internet
web page of the Department of the Treasury and shall have the authority to specify appropriate and
reasonable standards for the identification of a list of sources for green products.
L.2007, c. 332, s. 2.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 27
40A:11-10. Joint agreements for provision and performance of goods and services;
cooperative marketing; authorization
(a) (1) The governing bodies of two or more contracting units may provide by joint agreement for
the provision and performance of goods and services for use by their respective jurisdictions.
(2) The governing bodies of two or more contracting units providing sewerage services
pursuant to the "sewerage authorities law," P.L.1946, c.138 (C.40:14A-1 et seq.), the "municipal
and county utilities authorities law," P.L.1957, c.183 (C.40:14B-1 et seq.), R.S.58:14-1 et seq. or
R.S.40:63-68 et seq. may provide by joint agreement for the purchase of goods and services
related to sewage sludge disposal.
(3) The governing body of two or more contracting units providing electrical distribution
services pursuant to and in accordance with R.S.40:62-12 through R.S.40:62-25, may provide by
joint agreement for the provision or performance of goods or services related to the
distribution of electricity.
(4) The governing bodies of two or more contracting units may provide for the cooperative
marketing of recyclable materials recovered through a recycling program.
(5) The governing bodies of two or more contracting units may provide by joint agreement for
the purchase of the services of a private aggregator for the purpose of facilitating the joint
action of two or more municipalities in granting municipal consent for the provision of cable
television service pursuant to R.S.40:48-1 et seq. and the "Cable Television Act," P.L.1972, c.186
(C.48:5A-1 et seq.) as amended and supplemented.
(6) The governing bodies of two or more contracting units may provide by joint agreement for
the purchase of fire equipment.
(b) The governing body of any contracting unit may provide by joint agreement with the board of
education of any school district or any State or county college for the provision and performance of
goods and services for use by their respective jurisdictions.
(c) Such agreement shall be entered into by resolution adopted by each of the participating bodies
and boards, which shall set forth the categories of goods or services to be provided or performed,
the manner of advertising for bids and of awarding of contracts, the method of payment by each
participating body and board, and other matters deemed necessary to carry out the purposes of the
agreement.
(d) Each participating body's and board's share of expenditures for purchases under any such
agreement shall be appropriated and paid in the manner set forth in the agreement and in the same
manner as for other expenses of the participating body and board.
L.1971, c. 198, s. 10; amended 1977, c. 182; 1985, c. 452, s. 1; 1991, c. 143, s. 3; 1995, c. 103, s. 5; 1995, c. 356,
s. 7; 1999, c. 440, s. 16; 2003, c. 38, s. 2; 2013, c.89; 2013, c.207, s.2.
40A:11-11. Additional matters regarding contracts for the provision and performance of
goods and services
(1) The contracting units entering into a joint agreement pursuant to section 10 of P.L.1971, c.198
(C.40A:11-10) may designate a joint contracting agent.
(2) Contracts made pursuant to a joint purchasing agreement shall be subject to all of the terms and
conditions of this act.
(3) Any contracting unit serving as a joint contracting agent pursuant to this section, may make an
appropriation to enable it to perform any such contract and may anticipate as revenue payments to be
made and received by it from any other party to the agreement. Any items so included in a local budget
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 28
shall be subject to the approval of the Director, Division of Local Government Services, who shall
consider the matter in conjunction with the requirements of chapter 4 of Title 40A of the New Jersey
Statutes. The agreement and any subsequent amendment or revisions thereto shall be filed with the
Director of the Division of Local Government Services in the Department of Community Affairs.
(4) Any joint contracting agent so designated pursuant to a joint purchasing agreement shall have
the sole responsibility to comply with the provisions of section 23 of P.L.1971, c.198 (C.40A:11-23).
(5) The governing bodies of two or more contracting units or boards of education or for purposes
related to the distribution of electricity, the governing bodies of two or more contracting units providing
electrical distribution services pursuant to R.S.40:62-12 through R.S.40:62-25, may by resolution
establish a cooperative pricing system as hereinafter provided. Any such resolution shall establish
procedures whereby one participating contracting unit in the cooperative pricing system shall be
empowered to advertise and receive bids to provide prices for all other participating contracting units
in such system for the provision or performance of goods or services; provided, however, that no
contract shall be awarded by any participating contracting unit for a price which exceeds any other
price available to the participating contracting unit, or for a purchase of goods or services in deviation
from the specifications, price or quality set forth by the participating contracting unit.
(6) The governing body of a county government may establish a cooperative pricing system for the
voluntary use of contracting units within the county.
No vendor shall be required or permitted to extend bid prices to participating contracting units in a
cooperative pricing system unless so specified in the bids.
No cooperative pricing system and agreements entered into pursuant to such system, or joint
purchase agreements established pursuant to this act, the "Interlocal Services Act," P.L.1973, c.208
(C.40:8A-1 et seq.) or any other provision of law, shall become effective without prior approval of
the Director of the Division of Local Government Services and said approval shall be valid for a
period not to exceed five years.
The director's approval shall be based on the following:
(a) Provision for maintaining adequate records and orderly procedures to facilitate audit and
efficient administration, and
(b) Adequacy of public disclosure of such actions as are taken by the participants, and
(c) Adequacy of procedures to facilitate compliance with all provisions of the "Local Public
Contracts Law" and corresponding regulations, and
(d) Clarity of provisions to assure that the responsibilities of the respective parties are understood.
Failure of the Director of the Division of Local Government Services to approve or disapprove a
properly executed and completed application to establish a cooperative pricing system and
agreements entered into pursuant to such system or other joint purchase agreement within 45 days
from the date of receipt of said application by the director shall constitute approval of said
application, which shall be valid for a period of five years, commencing from the date of receipt of
said application by the director.
The Director of the Division of Local Government Services is hereby authorized to promulgate rules
and regulations specifying procedures pertaining to cooperative pricing systems and joint purchase
agreements entered into pursuant to this act, the "Interlocal Services Act," P.L.1973, c.208 (C.40:8A-
1 et seq.) and any other provision of law.
L.1971, c. 198, s. 11; amended 1975, c. 353, s. 9; 1977, c. 53, s. 6; 1979, c. 420; 1991, c. 143, s. 4; 1995, c. 356, s.
8; 1999, c. 440, s. 17.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 29
40A:11-12. Contracting unit purchases through State agency; procedure
a. Any contracting unit under this act may without advertising for bids, or having rejected all bids
obtained pursuant to advertising therefor, purchase any goods or services under any contract or
contracts for such goods or services entered into on behalf of the State by the Division of Purchase
and Property in the Department of the Treasury.
b. A contracting unit may also use, without advertising for bids, or having rejected all bids obtained
pursuant to advertising, the Federal Supply Schedules of the General Services Administration or
schedules from other federal procurement programs promulgated by the Director of the Division of
Purchase and Property in the Department of the Treasury pursuant to section 1 of P.L.1996, c.16
(C.52:34-6.1), subject to the following conditions:
(1) the price of the goods or services being procured is no greater than the price offered to
federal agencies;
(2) (Deleted by amendment, P.L.2006, c.10);
(3) the contracting unit receives the benefit of federally mandated price reductions during the
term of the contract;
(4) the price of the goods or services being procured is no greater than the price of the same or
equivalent goods or services under the State contract, unless the contracting unit determines
that because of factors other than price, selection of a vendor from the Federal Supply
Schedules or schedules from other federal procurement programs would be more
advantageous to the contracting unit;
(5) a copy of the purchase order relating to any such contract, the requisition or request for
purchase order, if applicable, and documentation identifying the price of the goods or services
under the Federal Supply Schedules or schedules from other federal procurement programs
shall be filed with the Director of the Division of Purchase and Property in the Department of
the Treasury within five working days of the award of any such contract by the contracting unit.
c. Whenever a purchase is made, the contracting unit shall place its order with the vendor offering
the lowest price, including delivery charges, that best meets the requirements of the contracting
unit. Prior to placing such an order, the contracting unit shall document with specificity that the
goods or services selected best meet the requirements of the contracting unit.
L.1971, c. 198, s. 12; amended 1996, c. 16, s. 3; 1999, c. 440, s. 18; 2006, c. 10, s. 4.
40A:11-13. Specifications
Any specifications for the provision or performance of goods or services under this act shall be
drafted in a manner to encourage free, open and competitive bidding. In particular, no
specifications under this act may:
(a) Require any standard, restriction, condition or limitation not directly related to the purpose,
function or activity for which the contract is awarded; or
(b) Require that any bidder be a resident of, or that the bidder's place of business be located in,
the county or municipality in which the contract will be awarded or performed, unless the
physical proximity of the bidder is requisite to the efficient and economical performance of the
contract; except that no specification for a contract for the collection and disposal of municipal
solid waste shall require any bidder to be a resident of, or that the bidder's place of business be
located in, the county or municipality in which the contract will be performed; or
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 30
(c) Discriminate on the basis of race, religion, sex, national origin , creed, color, ancestry, age,
marital status, affectional or sexual orientation, familial status, liability for service in the Armed
Forces of the United States, or nationality; or
(d) Require, with regard to any contract, the furnishing of any "brand name," but may in all
cases require "brand name or equivalent," except that if the goods or services to be provided or
performed are proprietary, such goods or services may be purchased by stipulating the
proprietary goods or services in the bid specification in any case in which the resolution
authorizing the contract so indicates, and the special need for such proprietary goods or
services is directly related to the performance, completion or undertaking of the purpose for
which the contract is awarded; or
(e) Fail to include any option for renewal, extension, or release which the contracting unit may
intend to exercise or require; or any terms and conditions necessary for the performance of any
extra work; or fail to disclose any matter necessary to the substantial performance of the
contract.
Any specification which knowingly excludes prospective bidders by reason of the impossibility of
performance, bidding or qualification by any but one bidder, except as provided herein, shall be null
and void and of no effect and shall be readvertised for receipt of new bids, and the original contract
shall be set aside by the governing body.
Any specification for a contract for the collection and disposal of municipal solid waste shall
conform to the uniform bid specifications for municipal solid waste collection contracts established
pursuant to section 22 of P.L.1991, c.381 (C.48:13A-7.22).
Any specification may include an item for the cost, which shall be paid by the contractor, of creating
a file to maintain the notices of the delivery of labor or materials required by N.J.S.2A:44-128.
Any prospective bidder who wishes to challenge a bid specification shall file such challenges in
writing with the contracting agent no less than three business days prior to the opening of the
bids. Challenges filed after that time shall be considered void and having no impact on the
contracting unit or the award of a contract.
L.1971, c. 198, s. 13; amended 1991, c. 381, s. 48; 1996, c. 81, s. 7; 1999, c. 440, s. 19.
40A:11-13.1. Payment from bequest, legacy or gift; conditions
Goods or services, the payment for which utilizes only funds received by a contracting unit from a
bequest, legacy or gift, shall be subject to the provisions of P.L.1971, c.198 (C.40A:11-1 et seq.),
except that if such bequest, legacy or gift contains written instructions as to the specifications,
manufacturer or vendor, or source of supply of the goods or services to be provided or performed,
such instructions shall be honored, provided that the bequest, legacy or gift is used in a manner
consistent with N.J.S.40A:5-29.
L.1999, c. 440, s. 20.
40A:11-13.2. Rejection of bids; reasons
A contracting unit may reject all bids for any of the following reasons:
a. The lowest bid substantially exceeds the cost estimates for the goods or services;
b. The lowest bid substantially exceeds the contracting unit's appropriation for the goods or
services;
c. The governing body of the contracting unit decides to abandon the project for provision or
performance of the goods or services;
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 31
d. The contracting unit wants to substantially revise the specifications for the goods or services;
e. The purposes or provisions or both of P.L.1971, c.198 (C.40A:11-1 et seq.) are being violated;
f. The governing body of the contracting unit decides to use the State authorized contract
pursuant to section 12 of P.L.1971, c.198 (C.40A:11-12).
L.1999, c. 440, s. 21.
40A:11-14. Form of contracts
All contracts for the provision or performance of goods or services shall be in writing. The
governing body of any contracting unit may, subject to the requirements of law, prescribe the form
and manner in which contracts shall be made and executed, and the form and manner of execution
and approval of all guarantee, indemnity, fidelity and other bonds.
L.1971, c. 198, s. 14; amended 1975, c. 353, s. 10; 1999, c. 440, s. 22.
40A:11-15. Duration of certain contracts
All contracts for the provision or performance of goods or services shall be awarded for a period
not to exceed 24 consecutive months, except that contracts for professional services pursuant to
subparagraph (i) of paragraph (a) of subsection (1) of section 5 of P.L.1971, c.198 (C.40A:11-5)
shall be awarded for a period not to exceed 12 consecutive months. Contracts may be awarded for
longer periods of time as follows:
(1) Supplying of:
(a) (Deleted by amendment, P.L.1996, c.113.)
(b) (Deleted by amendment, P.L.1996, c.113.)
(c) Thermal energy produced by a cogeneration facility, for use for heating or air
conditioning or both, for any term not exceeding 40 years, when the contract is approved by
the Board of Public Utilities. For the purposes of this paragraph, "cogeneration" means the
simultaneous production in one facility of electric power and other forms of useful energy
such as heating or process steam;
(2) (Deleted by amendment, P.L.1977, c.53.)
(3) The collection and disposal of municipal solid waste, the collection and disposition of
recyclable material, or the disposal of sewage sludge, for any term not exceeding in the
aggregate, five years;
(4) The collection and recycling of methane gas from a sanitary landfill facility, for any term not
exceeding 25 years, when such contract is in conformance with a district solid waste
management plan approved pursuant to P.L.1970, c.39 (C.13:1E-1 et seq.), and with the
approval of the Division of Local Government Services in the Department of Community Affairs
and the Department of Environmental Protection. The contracting unit shall award the contract
to the highest responsible bidder, notwithstanding that the contract price may be in excess of
the amount of any necessarily related administrative expenses; except that if the contract
requires the contracting unit to expend funds only, the contracting unit shall award the contract
to the lowest responsible bidder. The approval by the Division of Local Government Services of
public bidding requirements shall not be required for those contracts exempted therefrom
pursuant to section 5 of P.L.1971, c.198 (C.40A:11-5);
(5) Data processing service, for any term of not more than seven years;
(6) Insurance, including the purchase of insurance coverages, insurance consulting or
administrative services, claims administration services and including participation in a joint
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 32
self-insurance fund, risk management program or related services provided by a contracting
unit insurance group, or participation in an insurance fund established by a local unit pursuant
to N.J.S.40A:10-6, or a joint insurance fund established pursuant to P.L.1983, c.372 (C.40A:10-
36 et seq.), for any term of not more than three years;
(7) Leasing or servicing of automobiles, motor vehicles, machinery and equipment of every
nature and kind, for a period not to exceed five years; provided, however, such contracts shall
be awarded only subject to and in accordance with the rules and regulations promulgated by
the Director of the Division of Local Government Services in the Department of Community
Affairs;
(8) The supplying of any product or the rendering of any service by a company providing voice,
data, transmission or switching services for a term not exceeding five years;
(9) Any single project for the construction, reconstruction or rehabilitation of any public
building, structure or facility, or any public works project, including the retention of the
services of any architect or engineer in connection therewith, for the length of time authorized
and necessary for the completion of the actual construction;
(10) The providing of food services for any term not exceeding three years;
(11) On-site inspections and plan review services undertaken by private agencies pursuant to
the "State Uniform Construction Code Act," P.L.1975, c.217 (C.52:27D-119 et seq.) for any term
of not more than three years;
(12) (Deleted by amendment, P.L.2009, c.4.)
(13) (Deleted by amendment, P.L.1999, c.440.)
(14) (Deleted by amendment, P.L.1999, c.440.)
(15) Leasing of motor vehicles, machinery and other equipment primarily used to fight fires, for
a term not to exceed ten years, when the contract includes an option to purchase, subject to and
in accordance with rules and regulations promulgated by the Director of the Division of Local
Government Services in the Department of Community Affairs;
(16) The provision of water supply services or the designing, financing, construction, operation,
or maintenance, or any combination thereof, of a water supply facility, or any component part
or parts thereof, including a water filtration system, for a period not to exceed 40 years, when
the contract for these services is approved by the Division of Local Government Services in the
Department of Community Affairs, the Board of Public Utilities, and the Department of
Environmental Protection pursuant to P.L.1985, c.37 (C.58:26-1 et al.), except that no such
approvals shall be required for those contracts otherwise exempted pursuant to subsection
(30), (31), (34), (35) or (43) of this section. For the purposes of this subsection, "water supply
services" means any service provided by a water supply facility; "water filtration system"
means any equipment, plants, structures, machinery, apparatus, or land, or any combination
thereof, acquired, used, constructed, rehabilitated, or operated for the collection, impoundment,
storage, improvement, filtration, or other treatment of drinking water for the purposes of
purifying and enhancing water quality and insuring its portability prior to the distribution of
the drinking water to the general public for human consumption, including plants and works,
and other personal property and appurtenances necessary for their use or operation; and
"water supply facility" means and refers to the real property and the plants, structures,
interconnections between existing water supply facilities, machinery and equipment and other
property, real, personal and mixed, acquired, constructed or operated, or to be acquired,
constructed or operated, in whole or in part by or on behalf of a political subdivision of the State
or any agency thereof, for the purpose of augmenting the natural water resources of the State
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 33
and making available an increased supply of water for all uses, or of conserving existing water
resources, and any and all appurtenances necessary, useful or convenient for the collecting,
impounding, storing, improving, treating, filtering, conserving or transmitting of water and for
the preservation and protection of these resources and facilities and providing for the
conservation and development of future water supply resources;
(17) The provision of resource recovery services by a qualified vendor, the disposal of the solid
waste delivered for disposal which cannot be processed by a resource recovery facility or the
residual ash generated at a resource recovery facility, including hazardous waste and recovered
metals and other materials for reuse, or the design, financing, construction, operation or
maintenance of a resource recovery facility for a period not to exceed 40 years when the
contract is approved by the Division of Local Government Services in the Department of
Community Affairs, and the Department of Environmental Protection pursuant to P.L.1985, c.38
(C.13:1E-136 et al.); and when the resource recovery facility is in conformance with a district
solid waste management plan approved pursuant to P.L.1970, c.39 (C.13:1E-1 et seq.). For the
purposes of this subsection, "resource recovery facility" means a solid waste facility constructed
and operated for the incineration of solid waste for energy production and the recovery of
metals and other materials for reuse; or a mechanized composting facility, or any other facility
constructed or operated for the collection, separation, recycling, and recovery of metals, glass,
paper, and other materials for reuse or for energy production; and "residual ash" means the
bottom ash, fly ash, or any combination thereof, resulting from the combustion of solid waste at
a resource recovery facility;
(18) The sale of electricity or thermal energy, or both, produced by a resource recovery facility
for a period not to exceed 40 years when the contract is approved by the Board of Public
Utilities, and when the resource recovery facility is in conformance with a district solid waste
management plan approved pursuant to P.L.1970, c.39 (C.13:1E-1 et seq.). For the purposes of
this subsection, "resource recovery facility" means a solid waste facility constructed and
operated for the incineration of solid waste for energy production and the recovery of metals
and other materials for reuse; or a mechanized composting facility, or any other facility
constructed or operated for the collection, separation, recycling, and recovery of metals, glass,
paper, and other materials for reuse or for energy production;
(19) The provision of wastewater treatment services or the designing, financing, construction,
operation, or maintenance, or any combination thereof, of a wastewater treatment system, or
any component part or parts thereof, for a period not to exceed 40 years, when the contract for
these services is approved by the Division of Local Government Services in the Department of
Community Affairs and the Department of Environmental Protection pursuant to P.L.1985, c.72
(C.58:27-1 et al.), except that no such approvals shall be required for those contracts otherwise
exempted pursuant to subsection (36) or (43) of this section. For the purposes of this
subsection, "wastewater treatment services" means any services provided by a wastewater
treatment system, and "wastewater treatment system" means equipment, plants, structures,
machinery, apparatus, or land, or any combination thereof, acquired, used, constructed, or
operated for the storage, collection, reduction, recycling, reclamation, disposal, separation, or
other treatment of wastewater or sewage sludge, or for the final disposal of residues resulting
from the treatment of wastewater, including, but not limited to, pumping and ventilating
stations, facilities, plants and works, connections, outfall sewers, interceptors, trunk lines, and
other personal property and appurtenances necessary for their operation;
(20) The supplying of goods or services for the purpose of lighting public streets, for a term not
to exceed five years;
(21) The provision of emergency medical services for a term not to exceed five years;
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 34
(22) Towing and storage contracts, awarded pursuant to paragraph u. of subsection (1) of
section 5 of P.L.1971, c.198 (C.40A:11-5) for any term not exceeding three years;
(23) Fuel for the purpose of generating electricity for a term not to exceed eight years;
(24) The purchase of electricity or administrative or dispatching services related to the
transmission of such electricity, from a supplier of electricity subject to the jurisdiction of a
federal regulatory agency, from a qualifying small power producing facility or qualifying
cogeneration facility, as defined by 16 U.S.C.s.796, or from any supplier of electricity within any
regional transmission organization or independent system operator or from such organization
or operator or their successors, by a contracting unit engaged in the generation of electricity for
retail sale, as of May 24, 1991, for a term not to exceed 40 years, or by a contracting unit
engaged solely in the distribution of electricity for retail sale for a term not to exceed ten years,
except that a contract with a contracting unit, engaged solely in the distribution of electricity for
retail sale, in excess of ten years, shall require the written approval of the Director of the
Division of Local Government Services. If the director fails to respond in writing to the
contracting unit within 10 business days, the contract shall be deemed approved;
(25) Basic life support services, for a period not to exceed five years. For the purposes of this
subsection, "basic life support" means a basic level of prehospital care, which includes but need
not be limited to patient stabilization, airway clearance, cardiopulmonary resuscitation,
hemorrhage control, initial wound care and fracture stabilization;
(26) (Deleted by amendment, P.L.1999, c.440.)
(27) The provision of transportation services to elderly, disabled or indigent persons for any
term of not more than three years. For the purposes of this subsection, "elderly persons" means
persons who are 60 years of age or older. "Disabled persons" means persons of any age who, by
reason of illness, injury, age, congenital malfunction, or other permanent or temporary incapacity
or disability, are unable, without special facilities or special planning or design to utilize mass
transportation facilities and services as effectively as persons who are not so affected. "Indigent
persons" means persons of any age whose income does not exceed 100 percent of the poverty
level, adjusted for family size, established and adjusted under section 673(2) of subtitle B, the
"Community Services Block Grant Act," Pub.L.97-35 (42 U.S.C.s.9902 (2));
(28) The supplying of liquid oxygen or other chemicals, for a term not to exceed five years,
when the contract includes the installation of tanks or other storage facilities by the supplier, on
or near the premises of the contracting unit;
(29) The performance of patient care services by contracted medical staff at county hospitals,
correction facilities and long term care facilities, for any term of not more than three years;
(30) The acquisition of an equitable interest in a water supply facility pursuant to section 2 of
P.L.1993, c.381 (C.58:28-2), or a contract entered into pursuant to the "County and Municipal
Water Supply Act," N.J.S.40A:31-1 et seq., if the contract is entered into no later than January 7,
1995, for any term of not more than forty years;
(31) The provision of water supply services or the financing, construction, operation or
maintenance or any combination thereof, of a water supply facility or any component part or
parts thereof, by a partnership or copartnership established pursuant to a contract authorized
under section 2 of P.L.1993, c.381 (C.58:28-2), for a period not to exceed 40 years;
(32) Laundry service and the rental, supply and cleaning of uniforms for any term of not more
than three years;
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 35
(33) The supplying of any product or the rendering of any service, including consulting services,
by a cemetery management company for the maintenance and preservation of a municipal
cemetery operating pursuant to the "New Jersey Cemetery Act," N.J.S.8A:1-1 et seq., for a term
not exceeding 15 years;
(34) A contract between a public entity and a private firm pursuant to P.L.1995, c.101 (C.58:26-
19 et al.) for the provision of water supply services may be entered into for any term which,
when all optional extension periods are added, may not exceed 40 years;
(35) A contract for the purchase of a supply of water from a public utility company subject to
the jurisdiction of the Board of Public Utilities in accordance with tariffs and schedules of
charges made, charged or exacted or contracts filed with the Board of Public Utilities, for any
term of not more than 40 years;
(36) A contract between a public entity and a private firm or public authority pursuant to
P.L.1995, c.216 (C.58:27-19 et al.) for the provision of wastewater treatment services may be
entered into for any term of not more than 40 years, including all optional extension periods;
(37) The operation and management of a facility under a license issued or permit approved by
the Department of Environmental Protection, including a wastewater treatment system or a
water supply or distribution facility, as the case may be, for any term of not more than ten
years. For the purposes of this subsection, "wastewater treatment system" refers to facilities
operated or maintained for the storage, collection, reduction, disposal, or other treatment of
wastewater or sewage sludge, remediation of groundwater contamination, stormwater runoff,
or the final disposal of residues resulting from the treatment of wastewater; and "water supply
or distribution facility" refers to facilities operated or maintained for augmenting the natural
water resources of the State, increasing the supply of water, conserving existing water
resources, or distributing water to users;
(38) Municipal solid waste collection from facilities owned by a contracting unit, for any term of
not more than three years;
(39) Fuel for heating purposes, for any term of not more than three years;
(40) Fuel or oil for use in motor vehicles for any term of not more than three years;
(41) Plowing and removal of snow and ice for any term of not more than three years;
(42) Purchases made under a contract awarded by the Director of the Division of Purchase and
Property in the Department of the Treasury for use by counties, municipalities or other
contracting units pursuant to section 3 of P.L.1969, c.104 (C.52:25-16.1), for a term not to
exceed the term of that contract;
(43) A contract between the governing body of a city of the first class and a duly incorporated
nonprofit association for the provision of water supply services as defined in subsection (16) of
this section, or wastewater treatment services as defined in subsection (19) of this section, may
be entered into for a period not to exceed 40 years;
(44) The purchase of electricity generated through class I renewable energy or from a power
production facility that is fueled by methane gas extracted from a landfill in the county of the
contacting unit for any term not exceeding 25 years;
(45) The provision or performance of goods or services for the purpose of producing class I
renewable energy or class II renewable energy, as those terms are defined in section 3 of
P.L.1999, c.23 (C.48:3-51), at, or adjacent to, buildings owned by, or operations conducted by,
the contracting unit, the entire price of which is to be established as a percentage of the
resultant savings in energy costs, for a term not to exceed 15 years; provided, however, that
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 36
such contracts shall be entered into only subject to and in accordance with guidelines
promulgated by the Board of Public Utilities establishing a methodology for computing energy
cost savings and energy generation costs.
Any contract for services other than professional services, the statutory length of which contract is
for three years or less, may include provisions for no more than one two-year, or two one-year,
extensions, subject to the following limitations: a. The contract shall be awarded by resolution of
the governing body upon a finding by the governing body that the services are being performed in
an effective and efficient manner; b. No such contract shall be extended so that it runs for more than
a total of five consecutive years; c. Any price change included as part of an extension shall be based
upon the price of the original contract as cumulatively adjusted pursuant to any previous
adjustment or extension and shall not exceed the change in the index rate for the 12 months
preceding the most recent quarterly calculation available at the time the contract is renewed; and
d. The terms and conditions of the contract remain substantially the same.
All multiyear leases and contracts entered into pursuant to this section, including any two-year or
one-year extensions, except contracts involving the supplying of electricity for the purpose of
lighting public streets and contracts for thermal energy authorized pursuant to subsection (1)
above, construction contracts authorized pursuant to subsection (9) above, contracts for the
provision or performance of goods or services or the supplying of equipment to promote energy
conservation through the production of class I renewable energy or class II renewable energy
authorized pursuant to subsection (45) above, contracts for water supply services or for a water
supply facility, or any component part or parts thereof authorized pursuant to subsection (16),
(30), (31), (34), (35), (37) or (43) above, contracts for resource recovery services or a resource
recovery facility authorized pursuant to subsection (17) above, contracts for the sale of energy
produced by a resource recovery facility authorized pursuant to subsection (18) above, contracts
for wastewater treatment services or for a wastewater treatment system or any component part or
parts thereof authorized pursuant to subsection (19), (36), (37) or (43) above, and contracts for the
purchase of electricity or administrative or dispatching services related to the transmission of such
electricity authorized pursuant to subsection (24) above and contracts for the purchase of
electricity generated from a power production facility that is fueled by methane gas authorized
pursuant to subsection (44) above, shall contain a clause making them subject to the availability
and appropriation annually of sufficient funds as may be required to meet the extended obligation,
or contain an annual cancellation clause.
The Division of Local Government Services in the Department of Community Affairs shall adopt and
promulgate rules and regulations concerning the methods of accounting for all contracts that do not
coincide with the fiscal year.
All contracts shall cease to have effect at the end of the contracted period and shall not be extended
by any mechanism or provision, unless in conformance with the "Local Public Contracts Law,"
P.L.1971, c.198 (C.40A:11-1 et seq.), except that a contract may be extended by mutual agreement
of the parties to the contract when a contracting unit has commenced rebidding prior to the time
the contract expires or when the awarding of a contract is pending at the time the contract expires.
L.1971, c. 198, s. 15; amended 1975, c. 326, s. 33; 1975, c. 353, s. 11; 1977, c. 53, s. 7; 1978, c. 154; 1981, c. 2, s.
1; 1981, c. 551, s. 1; 1982, c. 67, s.1; 1983, c. 176; 1983, c. 195; 1983, c. 398; 1983, c. 426; 1985, c. 37, s. 19;
1985, c. 38, s. 37; 1985, c. 72, s. 19; 1985, c. 452, s. 2; 1986, c. 47; 1986, c. 177; 1987, c. 102, s. 31; 1989, c. 159,
s. 2; 1991, c. 142, s. 2; 1991, c. 143, s. 5; 1991, c. 312; 1991, c. 356; 1991, c. 381, s. 49; 1991, c. 407; 1991, c.
451; 1992, c. 63; 1992, c. 98, s. 2; 1993, c. 381, s. 5; 1994, c. 71; 1995, c. 3; 1995, c. 41, s. 2; 1995, c.1 01, s. 13;
1995, c. 216, s. 12; 1995, c. 371; 1996, c. 113, s. 19; 1997, c. 288; 1999, c. 23, s. 64; 1999, c. 440, s. 23; 2002, c.
47, s. 9; 2003, c. 150, s. 3; 2005, c. 296, s. 2; 2008, c. 83, s. 3; 2009, c. 4, s. 8.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 37
40A:11-15.1. Insurance contract to fund actuarial liability
Notwithstanding the provisions of subsection (6) of section 15 of P.L.1971, c.198 (C.40A:11-15) to
the contrary, a county or a municipality in which a pension fund has been established pursuant to
P.L.1943, c.160 (C. 43:10-18.1 et seq.), R.S.43:10-1 through R.S.43:10-18, P.L.1948, c.310 (C.43:10-
18.50 et seq.), or P.L.1954, c.218 (C.43:13-22.3 et seq.), may enter into an insurance contract to
fund the actuarial liability of its pension system, for a term which may not exceed the term of the
actuarial liability covered by the contract.
L.1985, c. 68, s. 1; amended 1994, c. 185, s. 2.
40A:11-15.2. Contracts for purchase of electricity for new county correction facility
In the case of construction of a new county correction facility, in addition to the purchase of thermal
energy, contracts for the purchase of electricity shall be permitted pursuant to subsection (1)(c) of
section 15 of P.L.1971, c.198 (C.40A:11-15).
L.1999, c. 23, s. 63.
40A:11-15.3. Contract for marketing of recyclable materials
a. Notwithstanding the provisions of section 15 of P.L.1971, c.198 (C.40A:11-15) to the contrary, a
county government contracting unit may enter into or extend a contract for the marketing of
recyclable materials recovered through a recycling program subject to the following conditions:
(1) The program includes one or more interlocal services agreements with municipalities in
that county for the delivery of recyclable materials to a contractor; and
(2) The contract for the marketing of recyclable material includes fixed or formula based fees
for the marketing services so provided and the contractor owns the buildings and equipment
necessary to perform the contract.
b. Whenever an existing contract satisfies the conditions contained in subsection a. of this section,
the contract may be extended for a period of up to 10 years; however, the length of the existing
contract together with any extension thereof shall not exceed a total of 12 years. A new contract for
the marketing of recyclable materials shall not exceed 10 years. Notwithstanding the provisions of
section 5 of P.L.1971, c.198 (C.40A:11-5) to the contrary, a new contract for the marketing of
recyclable materials for a term exceeding five years shall be entered into pursuant to public bidding
or competitive contracting.
L.2003, c. 150, s. 1.
40A:11-16. Separate plans for various types of work; bids; contracts
a. (1) In the preparation of plans and specifications for the construction, alteration or repair
of any public building by any contracting unit, when the entire cost of the work will excee d
the bid threshold, the architect, engineer or other person preparing the plans and
specifications may prepare separate plans and specifications for branches of work in the
following categories:
(1) The plumbing and gas fitting and all kindred work;
(2) Steam power plants, steam and hot water heating and ventilating and
refrigeration apparatus and all kindred work;
(3) Electrical work, including any electrical power plants, tele-data, fire alarm, or
security system;
(4) Structural steel and ornamental iron work; and
(5) General construction, which shall include all other work required for the
completion of the project.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 38
(2) With regard to the branch work categories in paragraph (1) of this subsection, the
contracting agent shall advertise for and receive, in the manner provided by law, either (a)
separate bids for each of said categories, or (b) single bids by general contractors for all the
work, goods and services required to complete the public building to be included in a single
overall contract, or (c) both. In the case of separate bids under (a) or (c) of this paragraph,
contractors for categories (1) through (4) shall not be required to name subcontractors in
their bid. In the case of a single bid under (b) or (c), there shall be set forth in the bid the
name or names of all subcontractors to whom the general contractor will subcontract for
categories (1) through (4). Subcontractors who furnish general construction work
pursuant to category (5), or subcontractors who furnish work to named subcontractors
pursuant to categories (1) through (4) shall not be named in the bid. Notwithstanding the
foregoing provisions of this paragraph, a contracting unit may choose to require in its bid
specification that a subcontractor shall be named in a bid when, in the case of (a) of this
paragraph, separate bids for each category, the work of that subcontractor exceeds 35
percent of the contracting unit's estimated amount of value of the work, which shall be set
forth in the bid specification.
(3) The contracting unit shall require evidence of performance security to be submitted
simultaneously with the bid. Evidence of performance security may be supplied by the
bidder on behalf of himself and any or all subcontractors, or by each respective
subcontractor, or by any combination thereof which results in evidence of performance
security equaling, but in no event exceeding, the total amount bid.
b. Whenever a bid sets forth more than one subcontractor for any of the categories (1) through
(4) in paragraph 1 of subsection a. of this section, the bidder shall submit to the contracting
unit a certificate signed by the bidder listing each subcontractor named in the bid for that
category. The certificate shall set forth the scope of work, goods and services for which the
subcontractor has submitted a price quote and which the bidder has agreed to award to each
subcontractor should the bidder be awarded the contract. The certificate shall be submitted to
the contracting unit simultaneously with the list of the subcontractors. The certificate may take
the form of a single certificate listing all subcontractors or, alternatively, a separate certificate
may be submitted for each subcontractor. If a bidder does not submit a certificate or
certificates to the contracting unit, the contracting unit shall award the contract to the next
lowest responsible bidder.
c. Contracts shall be awarded to the lowest responsible bidder. In the event that a contract is
advertised for both separate bids for each branch of work and for bids for all work, goods, and
services, said contract shall be awarded in the following manner: If the sum total of the
amounts bid by the lowest responsible bidder for each branch is less than the amount bid by
the lowest responsible bidder for all the work, goods and services, the contracting unit shall
award separate contracts for each of such branches to the lowest responsible bidder therefor,
but if the sum total of the amounts bid by the lowest responsible bidder for each branch is not
less than the amount bid by the lowest responsible bidder for all the work, goods and services,
the contracting unit shall award a single overall contract to the lowest responsible bidder for all
of such work, goods and services. In every case in which a contract is awarded for a single
overall contract, all payments required to be made under such contract for work, goods and
services supplied by a subcontractor shall, upon the certification of the contractor of the
amount due to the subcontractor, be paid directly to the subcontractor.
d. Any bid specification prepared
pursuant to this section that includes the use of 1,000 or more
tons of hot mix asphalt, shall include a pay item for any asphalt price adjustment reflecting
changes in the cost of asphalt cement. Any bid specification prepared pursuant to this
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 39
section that includes the use of less than 1,000 tons of hot mix asphalt, shall include a pay item
for an asphalt price adjustment for any quantity of hot mix asphalt exceeding 1,000 tons that
maybe used in the work in the event that performance of the work, including change orders,
requires more than 1,000 tons of hot mix asphalt.
The asphalt price adjustment shall be calculated in accordance with the formula and relevant
instructions published in the most recent edition of the New Jersey Department of
Transportation Standard Specifications for Road and Bridge Construction as revised by the
"Standard Inputs" periodically issued by the department. All invoices for payment shall be
accompanied by the calculation of any asphalt price adjustment and a showing of the current
month's Asphalt Price Index, the Basic Asphalt Price Index.
e. (1) Every bid specification prepared pursuant to this section may be eligible for a fuel price
adjustment. Fuel that is eligible for a fuel price adjustment shall be the sum of the
quantities of the eligible pay items in the contract times the fuel usage factors as
determined by the Department of Transportation. The types of fuel furnished shall be at the
option of the contractor.
(2) The fuel requirement for items not determined by the Department of Transportation to
be eligible, and for pay items in the bid specifications calling for less than 500 gallons of
fuel, shall not be eligible for a fuel price adjustment. If more than one pay item has the same
nomenclature but with different thicknesses, depths, or types, each individual pay item
must require 500 gallons or more of fuel to be eligible for a fuel price adjustment. If more
than one pay item has the exact same nomenclature, similar pay items shall be combined
and the this combination must require 500 gallons ore more of fuel to be eligible for the fuel
price adjustment.
(3) Fuel price adjustments shall not be made in those months for which the monthly fuel
price index has changed by less than five percent from the basic fuel price.
f. As used in subsections d. and e. of this section:
"Asphalt Price Index" means the Asphalt Price Index as determined and published by the
New Jersey Department of Transportation.
"Basic Asphalt Price Index" means the Basic Asphalt Price Index as published by the New
Jersey Department of Transportation in its "Standard Specifications for Road and Bridge
Construction," as revised by the "Standard Inputs" periodically issued by the New Jersey
Department of Transportation.
"Fuel Price Index" means the Fuel Price Index as determined and published by the New
Jersey Department of Transportation.
"Pay Item" means a specifically described item of work for which the bidder provides a per
unit or lump sum price in a bid specification as determined and published by the New Jersey
Department of Transportation.
L.1971, c.198, s.16; amended 1975, c.353, s.12; 1979, c.350, s.5; 1985, c.60, s.5; 1985, c.469, s.10; 1987, c.48,
s.1; 1997, c.408; 1999, c.440, s.24; 2009, c.187; 2012, c.59, s.5.
40A:11-16.1. $100,000 contracts for improvements to real property; retainage, security
Whenever any contract, the total price of which exceeds $100,000.00, entered into by a contracting
unit, for the construction, reconstruction, alteration or repair of any building, structure, facility or
other improvement to real property, requires the withholding of payment of a percentage of the
amount of the contract, the contractor may agree to the withholding of payments in the manner
prescribed in the contract, or may deposit with the contracting unit registered book bonds, entry
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 40
municipal bonds, State bonds or other appropriate bonds of the State of New Jersey, or negotiable
bearer bonds or notes of any political subdivision of the State, the value of which is equal to the
amount necessary to satisfy the amount that otherwise would be withheld pursuant to the terms of
the contract. The nature and amount of the bonds or notes to be deposited shall be subject to
approval by the contracting unit. For purposes of this section, "value" shall mean par value or
current market value, whichever is lower.
If the contractor agrees to the withholding of payments, the amount withheld shall be deposited,
with a banking institution or savings and loan association insured by an agency of the Federal
government, in an account bearing interest at the rate currently paid by such institutions or
associations on time or savings deposits. The amount withheld, or the bonds or notes deposited,
and any interest accruing on such bonds or notes, shall be returned to the contractor upon
fulfillment of the terms of the contract relating to such withholding. Any interest accruing on cash
payments withheld shall be credited to the contracting unit.
L.1979, c. 152, s. 1; amended 1991, c. 434, s. 1.
40A:11-16.2. Partial payments; deposit bonds
Any contract, the total price of which exceeds $100,000.00, entered into by a contracting unit
involving the construction, reconstruction, alteration, repair or maintenance of any building,
structure, facility or other improvement to real property, shall provide for partial payments to be
made at least once each month as the work progresses, unless the contractor shall agree to deposit
bonds with the contracting unit pursuant to P.L.1979, c.152 (C.40A:11-16.1).
L.1979, c. 464, s. 1; amended 1999, c. 440, s. 25.
40A:11-16.3. Withholding of payments
a. With respect to any contract entered into by a contracting unit pursuant to section 1 of P.L.1979,
c.464 (C.40A:11-16.2) for which the contractor shall agree to the withholding of payments pursuant
to P.L.1979, c.152 (C.40A:11-16.1), 2% of the amount due on each partial payment shall be withheld
by the contracting unit pending completion of the contract.
b. Upon acceptance of the work performed pursuant to the contract for which the contractor has
agreed to the withholding of payments pursuant to subsection a. of this section, all amounts being
withheld by the contracting unit shall be released and paid in full to the contractor within 45 days
of the final acceptance date agreed upon by the contractor and the contracting unit, without further
withholding of any amounts for any purpose whatsoever, provided that the contract has been
completed as indicated. If the contracting unit requires maintenance security after acceptance of
the work performed pursuant to the contract, such security shall be obtained in the form of a
maintenance bond. The maintenance bond shall be no longer than two years and shall be no more
than 100% of the project costs.
L.1979, c. 464, s. 2; amended 1991, c. 434, s. 2; 1999, c. 440, s. 26.
40A:11-16.4. Partial payments for materials
Any contract entered into by a contracting unit pursuant to section 1 of P.L.1979, c.464 (C.40A:11-
16.2) may also provide for partial payments at least once in each month with respect to all
materials placed along or upon the site, or stored at secured locations, which are suitable for use in
the execution of the contract, if the person providing the materials furnishes releases of liens for
the materials at the time each estimate of work is submitted for payment. The total of all the partial
payments shall not exceed the cost of the materials.
L.1979, c. 464, s. 3; amended 1999, c. 440, s. 27.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 41
40A:11-16.5. Renegotiation of contract to reflect increase in solid waste disposal costs
Any person entering into a contract with a contracting unit pursuant to the provisions of P.L.1971,
c.198 (C.40A:11-1 et seq.), which contract requires the contractor to provide for the disposal of
solid waste, shall have the right to renegotiate the contract to reflect any increase in solid waste
disposal costs whenever:
a. the increase occurred as a result of compliance with an order issued by the Department of
Environmental Protection, in conjunction with the Board of Public Utilities, directing the solid
waste be disposed at a solid waste facility other than the facility previously utilized by the
person to whom the contract has been awarded; or
b. the increase in solid waste disposal costs occurred as a result of lawful increases in the rates,
fees or charges imposed on the disposal of solid waste at the solid waste facility utilized by the
person to whom the contract has been awarded.
L.1989, c. 236, s. 1.
40A:11-16.6. Definitions relative to value engineering change orders; requirement for
certain contracts
a. For the purpose of this act:
"Construction" means the construction, reconstruction, demolition, erection, alteration, or
repair of a structure or other improvement to real property, other than the construction,
reconstruction, demolition, or renovation of a public building.
"Value engineering construction change order" means a change order that results in cost
reductions to a project or any portion of the work from the original bid specifications after a
construction contract is awarded.
"Value engineering construction proposal" means a cost reduction proposal based on analysis
by a contractor of the functions, systems, equipment, facilities, services, supplies, means and
methods of construction, and any other item needed for the completion of the contract
consistent with the required performance, quality, reliability, and safety.
b. All construction contracts issued by a contracting unit when the total price of the originally
awarded contract equals or exceeds $5,000,000, shall allow for value engineering construction
change orders to be approved after the award of the contract.
c. Value engineering construction change orders shall be subject to the following provisions:
(1) Value engineering construction change orders shall not be used to impair any of the
essential functions, or characteristics of the project, or any portion of the work involved.
(2) The contractor shall submit a value engineering construction proposal that completely
describes the changes to the original specifications or proposal, impact on other project
components, advantages and disadvantages of the proposed change, cost estimates and
calculations on which they are based, any impact on the contract time schedule, and any other
relevant information that the contracting unit may require in order to review the value
engineering construction proposal. The contractor's cost for developing the value engineering
construction proposal shall not be eligible for reimbursement by the contracting unit.
(3) The contractor shall be liable for all reasonable costs incurred by the contracting unit for the
technical evaluation and engineering review of a value engineering construction proposal
presented by the contractor.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 42
(4) The contracting unit's engineer shall prepare a written report for the governing body that
shall evaluate the value engineering construction proposal, make a recommendation on
whether or not it should be accepted, rejected, or modified, and state to the contracting unit and
contractor the amount of any projected cost savings.
(5) The proposal shall not be approved unless the engineer reports to the governing body that
the proposal appears consistent with the required performance, quality, reliability, and safety of
the project and does not impair any of the essential functions, or characteristics of the project,
or any portion of the work involved.
(6) The contracting unit shall have the sole discretion to approve or disapprove a value
engineering construction proposal.
(7) The contractor and the contracting unit shall equally share in the cost savings generated on
the contract as a result of an approved value engineering construction change order. Once the
project is completed, the contracting unit's engineer shall verify the cost savings to reflect the
actual cost of the work, and such verified cost saving shall be the basis for the savings shared
equally with the contractor.
(8) The contractor shall have no claim against the contracting unit as a result of the contracting
unit's disapproval of a value engineering construction proposal.
(9) A contracting unit shall include in its bid specifications and contract documents procedures to
regulate the value engineering construction change order process. Such procedures shall be based
on procedures established by the New Jersey Department of Transportation, or any other
appropriate State agency, or rules adopted by the director of the Division of Local Government
Services.
d. This section shall not invalidate or impair rules regarding change orders adopted by the director
of the Division of Local Government Services prior to the effective date of this act. Notwithstanding
any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the director may adopt,
immediately upon filing with the Office of Administrative Law, such rules and regulations as the
director deems necessary to implement the provisions of P.L.2005, c.67 (C.40A:11-16.6) which shall
be effective for a period not to exceed 12 months. The regulations shall thereafter be amended,
adopted or readopted in accordance with the provisions of P.L.1968, c.410 (C.52:14B-1 et seq.).
L.2005, c. 67, s. 1.
40A:11-17. Number of working days specified
All specifications for the doing of any public work for a contracting unit shall fix the date before which
the work shall be completed, or the number of working days to be allowed for its completion; and
every such contract shall contain a provision for a deduction, from the contract price, or any wages
paid by the contracting unit to any inspector or inspectors necessarily employed by it on the work, for
any number of days in excess of the number allowed in the specifications.
L.1971, c. 198, s. 17, eff. July 1, 1971.
40A:11-18. American goods and products to be used where possible
Each local unit shall provide, in the specifications for all contracts for county or municipal work or
for work for which it will pay any part of the cost, or work which by contract or ordinance it will
ultimately own and maintain, that only manufactured and farm products of the United States,
wherever available, be used in such work.
L.1971, c. 198, s. 18, eff. July 1, 1971. Amended by L.1982, c. 107, s. 1.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 43
40A:11-19. Liquidated damages; void provisions as to contractor's remedies
Any contract made pursuant to P.L.1971, c.198 (C.40A:11-1 et seq.) may include liquidated
damages for the violation of any of the terms and conditions thereof or the failure to perform said
contract in accordance with its terms and conditions, or the terms and conditions of P.L.1971, c.198
(C.40A:11-1 et seq.). Notwithstanding any other provision of law to the contrary, it shall be void,
unenforceable and against public policy for a provision in a contract entered into under P.L.1971,
c.198 (C.40A:11-1 et seq.) to limit a contractor's remedy for the contracting unit's negligence, bad
faith, active interference, tortious conduct, or other reasons uncontemplated by the parties that
delay the contractor's performance, to giving the contractor an extension of time for performance
under the contract. For the purposes of this section, "contractor" means a person, his assignees or
legal representatives with whom a contract with a contracting unit is made.
L.1971, c. 198, s. 19; amended 1999, c. 440, s. 28; 2001, c. 206, s. 1.
40A:11-20. Certificate of bidder showing ability to perform contract
There may be required from any bidder submitting a bid on public work to any contracting unit,
duly advertised for in accordance with law, a certificate showing that he owns, leases, or controls
all the necessary equipment required by the plans, specifications and advertisements under which
bids are asked for and if the bidder is not the actual owner or lessee of any such equipment,
his certificate shall state the source from which the equipment will be obtained, and shall be
accompanied by a certificate from the owner or person in control of the equipment definitely
granting to the bidder the control of the equipment required during such time as may be necessary
for the completion of that portion of the contract for which it is necessary.
L.1971, c. 198, s. 20, eff. July 1, 1971.
40A:11-21. Guarantee to be furnished with bid
A person bidding on a contract for the erection, alteration or repair of a public building, structure,
facility or other improvement to real property, the total price of which exceeds $100,000, shall
furnish a guarantee as provided for herein. A contracting unit may provide that a person bidding
on any other contract, advertised in accordance with law, shall furnish a guarantee as provided for
herein. The guarantee shall be payable to the contracting unit so that if the contract is awarded to
the bidder, the bidder will enter into a contract therefor and will furnish any performance bond or
other security required as a guarantee or indemnification. The guarantee shall be in the amount of
10% of the bid, but not in excess of $20,000.00, except as otherwise provided herein, and may be
given, at the option of the bidder, by certified check, cashier's check or bid bond. In the event that
any law or regulation of the United States imposes any condition upon the awarding of a monetary
grant to any contracting unit, which condition requires the depositing of a guarantee in an amount
other than 10% of the bid or in excess of $20,000.00 the provisions of this section shall not apply
and the requirements of the law or regulation of the United States shall govern.
L.1971, c. 198, s. 21; amended 1974, c. 189; 1999, c. 39, s. 3; 1999, c. 440, s. 29.
40A:11-22. Surety company certificate
a. A person bidding on a contract for the erection, alteration or repair of a building, structure,
facility or other improvement to real property, the total price of which exceeds $100,000, shall
furnish a certificate from a surety company, as provided for herein. A contracting unit may provide
that a person bidding on any other contract shall furnish a certificate from a surety company, as
provided for herein.
b. When a surety company bond is required in the advertisement or specifications for a contract,
every contracting unit shall require from any bidder submitting a bid in accordance with plans,
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 44
specifications and advertisements, as provided for by law, a certificate from a surety company
stating that it will provide the contractor with a bond in such sum as is required in the
advertisement or in the specifications.
This certificate shall be obtained for a bond—
(1) For the faithful performance of all provisions of the specifications or for all matters which
may be contained in the notice to bidders, relating to the performance of the contract, and
(2) If any be required, for a guarantee bond for the faithful performance of the contract
provisions relating to the repair and maintenance of any work, project or facility and its
appurtenances and keeping the same in good and serviceable condition during the term of the
bond as provided for in the notice to bidders or in the specifications, or
(3) In such other form as may be provided in the notice to bidders or in the specifications.
If a bidder desires to offer the bond of an individual instead of that of a surety company, the bidder
shall submit with the bid a certificate signed by such individual similar to that required of a surety
company.
The contracting unit may reject any such bid if it is not satisfied with the sufficiency of the
individual surety offered.
L.1971, c. 198, s. 22; amended 1999, c. 39, s. 4; 1999, c. 440, s. 30.
40A:11-23. Advertisements for bids; bids; general requirements
a. All advertisements for bids shall be published in an official newspaper of the contracting unit
sufficiently in advance of the date fixed for receiving the bids to promote competitive bidding, but
in no event less than 10 days prior to such date; except that all advertisements for bids on contracts
for the collection and disposal of municipal solid waste shall be published in an official newspaper
of the contracting unit circulating in the county or municipality, and in at least one newspaper of
general circulation published in the State, sufficiently in advance of the date fixed for receiving the
bids to promote competitive bidding, but not less than 60 days prior to that date. For all contracts,
the date fixed for receiving the bids shall not fall on a Monday, or any day directly following a State
or federal holiday.
b. The advertisement shall designate the manner of submitting and the method of receiving the bids
and the time and place at which the bids will be received. If the published specifications provide for
receipt of bids by mail, those bids which are mailed to the contracting unit shall be sealed and shall
only be opened for examination at such time and place as all bids received are unsealed and
announced. At such time and place the contracting agent of the contracting unit shall publicly
receive the bids, and thereupon immediately proceed to unseal them and publicly announce the
contents, which announcement shall be made in the presence of any parties bidding or their agents,
who are then and there present, and shall also make proper record of the prices and terms, upon
the minutes of the governing body, if the award is to be made by the governing body of the
contracting unit, or in a book kept for that purpose, if the award is to be made by other than the
governing body, and in such latter case it shall be reported to the governing body of the contracting
unit for its action thereon, when such action thereon is required. No bids shall be received after the
time designated in the advertisement.
c. Notice of revisions or addenda to advertisements or bid documents shall be provided as follows:
1) For all contracts except those for construction work and municipal solid waste collection and
disposal service, notice shall be published no later than seven days, Saturdays, Sundays, and
holidays excepted, prior to the date for acceptance of bids, in an official newspaper of the
contracting unit and be provided to any person who has submitted a bid or who has received a
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 45
bid package, in one of the following ways: i) in writing by certified mail or ii) by certified
facsimile transmission, meaning that the sender's facsimile machine produces a receipt showing
date and time of transmission and that the transmission was successful or iii) by a delivery
service that provides certification of delivery to the sender.
2) For all contracts for construction work, notice shall be provided no later than seven days,
Saturdays, Sundays, or holidays excepted, prior to the date for acceptance of bids, to any person
who has submitted a bid or who has received a bid package in any of the following ways: i) in
writing by certified mail or ii) by certified facsimile transmission, meaning that the sender's
facsimile machine produces a receipt showing date and time of transmission and that the
transmission was successful or iii) by a delivery service that provides certification of delivery to
the sender.
3) For municipal solid waste collection and disposal contracts, notice shall be published in an
official newspaper of the contracting unit and in at least one newspaper of general circulation
published in the State no later than seven days, Saturdays, Sundays, and holidays excepted,
prior to the date for acceptance of bids.
d. Failure of the contracting unit to advertise for the receipt of bids or to provide proper notification
of revisions or addenda to advertisements or bid documents related to bids as prescribed by this
section shall prevent the contracting unit from accepting the bids and require the readvertisement
for bids pursuant to subsection a. of this section. Failure to obtain a receipt when good faith notice
is sent or delivered to the address or telephone facsimile number on file with the contracting unit
shall not be considered failure by the contracting unit to provide notice.
L.1971, c. 198, s. 23; amended 1975, c. 353, s. 13; 1983, c. 174; 1985, c. 429; 1991, c. 381, s. 50; 1997, c. 243.
1999, c. 440, s. 31; 2005, c. 191, s. 5; 2007, c. 4, s. 1.
40A:11-23.1. Plans, specifications, bid proposal documents; required contents
All plans, specifications and bid proposal documents for the erection, alteration, or repair of a
building, structure, facility or other improvement to real property, the total price of which
exceeds the amount set forth in, or the amount calculated by the Governor pursuant to, section
3 of P.L.1971, c.198 (C.40A:11-3), shall include:
a. a document for the bidder to acknowledge the bidder's receipt of any notice or revisions
or addenda to the advertisement or bid documents; and
b. a form listing those documentary and informational forms, certifications, and other
documents that the contracting agent requires each bidder to submit with the bid. The form
shall list each of the items to be submitted with the bid proposal and a place for the bidder
to indicate, by initialing each entry, that the bidder has included those required items with
the completed bid proposal. Each bidder shall complete this form and submit it with the bid
proposal in addition to those documentary and informational forms, certifications, and
other documents that are listed on the form; and
c. a statement indicating whether uniformed law enforcement officers will be required for
the project. The statement shall include a line item allowance, which shall be a good faith
effort on the part of the contracting unit, to reasonably estimate the total cost of traffic
control personnel, vehicles, equipment, administrative, or any other costs associated with
additional traffic control requirements required by the contracting unit, or any other public
entity affected by the project, above and beyond the bidder's traffic control personnel,
vehicles, equipment, and administrative costs. The individuals responsible for the
assignment of uniformed law enforcement officers for any municipalities affected by a
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 46
project shall be required to determine where traffic safety control is needed for a project,
and calculate the number and placement of all necessary personnel, equipment, and the
costs associated with these, including hourly rates, and submit this information to the
contracting unit.
The contracting unit shall not be responsible for additional traffic control costs beyond the
number of working days specified in the construction contract in accordance with section
17 of P.L.1971, c.198 (C.40A:11-17), when such a delay is caused by the contractor and
liquidated damages have been assessed.
The statement prescribed under this subsection shall not be required if the contracting unit
will provide for the direct payment of uniformed law enforcement officers and any
additional costs directly associated with the provision of those officers; and
d. at the option of the contracting unit, specified alternate proposals in addition to a base
specification. When the contracting unit specifies alternate proposals, the determination of
which bidder's response to a request for bids offers the lowest price shall be made on the
basis of the price of: (i) the base specification plus the price of any selected specified
alternate proposals; or (ii) a choice of specified alternative proposals within the limit of
funds that may be made available for a project. If a contracting unit provides for more than
one specified alternate proposal, the contracting unit shall specify in the bid specification
the criteria or ranked order by which specified alternate proposals shall be selected and
included in the award of the contract by the governing body, provided that this requirement
shall only apply to a project with a total estimated cost, including specified alternate
proposals, of greater than $500,000. The aggregate dollar value of accepted specified
alternative proposals shall not exceed 50 percent of the base bid. If a contracting unit is
found in a court of law to have chosen specific alternative proposals in a manner intended
to award a contract to a specific vendor, the bids shall be voided, the contracting unit shall
rebid the project, and a plaintiff who prevails in any proceeding shall be entitled to a
reasonable attorney’s fee.
For the purposes of this subsection:
"Specified alternate proposal" means a requirement of the bid specification for bidders
to submit prices for reduced, modified or supplemental work in addition to the base
proposal which may include, but not be limited to, a change in project scope or the use
of alternative materials or methods of construction;
"Base specification" means the plans and specifications for the erection, alteration or
repair of the building, structure, facility or other improvement to real property that are
required to be met by all bidders without exception; and
e. in the case of a project that includes the removal of soil from the site, disclosure of any
documentation relative to the known soil conditions at the site including, but not limited to,
any test results specifying the level of contamination, if any, of the soil that has been found
at the site of the project, or if a project is located on a site with historical or suspect ed
contamination, a line item allowance or minimum unit price line item for soil testing and
contaminated soil disposal, which shall be a good faith effort on the part of the contracting
unit to reasonably estimate the total cost of testing the soil and disposing of it.
L.1999, c.39, s.1; amended 2006, c.9; 2009, c.292; 2012, c.72, s.1.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 47
40A:11-23.1a. Approval of change order under certain circumstances.
In the case of a project for the erection, alteration, or repair of a building, structure, facility or other
improvement to real property, the total price of which exceeds the amount set forth in, or the
amount calculated by the Governor pursuant to, section 3 of P.L.1971, c.198 (C.40A:11-3), that does
not have historical or suspected soil contamination, or for which the plans, specifications and bid
proposal documents for the project do not include a line item allowance or minimum unit price line
item for soil testing and contaminated soil disposal pursuant to subsection e. of section 1 of
P.L.1999, c.39 (C.40A:11-23.1), and contaminated soil from the site cannot be disposed of pursuant
to the plans, specifications and bid proposal documents due to the contaminated soil being found to
be different from the type or quality originally disclosed, the contracting unit shall approve,
consistent with and subject to the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et
seq.), and any rules or regulations adopted pursuant thereto, a change order to reimburse the
contractor for the additional reasonable costs, as determined by the contracting unit, required to
test and dispose of the contaminated soil.
40A:11-23.2. Required mandatory items for bid plans, specification
When required by the bid plans and specifications, the following requirements shall be considered
mandatory items to be submitted at the time specified by the contracting unit for the receipt of the
bids; the failure to submit any one of the mandatory items shall be deemed a fatal defect that shall
render the bid proposal unresponsive and that cannot be cured by the governing body:
a. A guarantee to accompany the bid pursuant to section 21 of P.L.1971, c.198 (C.40A:11-21);
b. A certificate from a surety company pursuant to section 22 of P.L.1971, c.198 (C.40A:11-22);
c. A statement of corporate ownership pursuant to section 1 of P.L.1977, c.33 (C.52:25-24.2);
d. A listing of subcontractors pursuant to section 16 of P.L.1971, c.198 (C.40A:11-16);
e. A document provided by the contracting agent in the bid plans, specifications, or bid proposal
documents for the bidder to acknowledge the bidder's receipt of any notice or revisions or
addenda to the advertisement or bid documents; and
f. (Deleted by amendment, P.L.2009, c.315 .)
L.1999, c. 39, s. 2; amended 2004, c. 57, s. 1.
40A:11-23.3. Withdrawal of public works bid
a. In the case of a bidding process for a public works contract, a bidder may request withdrawal of a
bid, due to a mistake on the part of the bidder, within five business days after a bid opening. As used
in this section, “mistake” shall have the same meaning as provided in paragraph 42 of section 2 of
P.L.1971, c.198 (C.40A:11-2).
b. To request the withdrawal of a public works bid, a bidder shall submit a request for withdrawal
in writing by certified or registered mail to the address to which the bid was submitted. The
request shall be effective upon mailing. The request shall include evidence, including any pertinent
documents, demonstrating that a mistake was made and was of so great a consequence that:
(1) the enforcement of the contract, if actually made, would be unconscionable;
(2) the mistake relates to a material feature of the bid;
(3) the mistake occurred notwithstanding the fact that the bidder exercised reasonable care in
preparation of the bid; and
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 48
(4) the bidder making the mistake is able to get relief by way of withdrawing the bid without
serious prejudice to the contracting unit, except for the loss of the bargain to the contracting
unit.
c. A purchasing agent qualified pursuant to subsection b. of section 9 of P.L.1971, c.198 (C.40A:11-
9), or legal counsel for the contracting unit, or the chief administrative officer of the contracting
unit, shall review the request for bid withdrawal. No later than the next meeting of the governing
body of the contracting unit following receipt of the withdrawal request, the individual responsible
for reviewing the request shall make a recommendation to the governing body of the contracting
unit concerning the disposition of the request. The governing body of the contracting unit shall act
upon the request to withdraw the bid no later than at its next regular meeting.
d. The purchasing agent, legal counsel, or chief administrative officer responsible for reviewing the
request pursuant to subsection b. of this section, shall act in good faith in reviewing the request and
in making a recommendation to the governing body concerning the disposition of a request to
withdraw a bid.
e. A contracting unit whose governing body grants a request to withdraw a bid shall return the bid
guarantee to the bidder. Once the decision to approve the withdrawal is made, the contracting unit
shall continue the award process with the remaining bids.
f. If a bidder withdraws a bid, the bidder shall be disqualified from future bidding on the same
project, including whenever all bids are rejected pursuant to section 21 of P.L.1999, c.440
(C.40A:11-13.2).
L.2010, c.108, s.3.
40A:11-23.4. "Bulletin NJ"
a. The Division of Local Government Services in the Department of Community Affairs, in
consultation with the Office of Information Technology, shall design, develop, and maintain a single,
searchable Internet database, to be known as "Bulletin NJ," that contains and displays information
on requests for proposals and other government procurement opportunities published by a
contracting unit or a board of education, as defined by N.J.S.18A:18A-2.
b. Each entry in the Internet database shall include information as required pursuant to rules and
regulations adopted by the Division of Local Government Services.
c. In addition to the requirements specified in subsection a. of this section, the Internet database
shall:
(1) be accessible from the Division of Local Government Services Internet website;
(2) display all of the information required by subsection b. of this section;
(3) be searchable by the name of the contracting unit or board of education publishing the
request for proposals;
(4) be reviewed and updated at least once per month or more frequently as new information
becomes available or changes are necessary; and
(5) provide an opportunity for the public to submit input and feedback concerning the utility of the
Internet database and recommendations for its improvement.
d. All contracting units and boards of education, as defined by N.J.S.18A:18A-2, are directed to
submit information as required pursuant to rules and regulations adopted by the Division of Local
Government Services.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 49
e. Nothing in this section shall require the disclosure of information deemed confidential by State or
federal law.
f. Nothing in this section shall be interpreted to invalidate or otherwise impact an otherwise valid
contract entered in to pursuant to the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et
seq.) or the "Public School Contracts Law," N.J.S.18A:18A-1 et seq.
L.2011, c.71, s.1.
40A:11-23.5. Rules, regulations
The Division of Local Government Services in the Department of Community Affairs shall adopt,
pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and
regulations to effectuate the purposes of this act (L.2011,c.71; c.40A:11-23.4)
L.2011, c.71, s.2.
40A:11-24. Time for making awards; deposits returned
a. The contracting unit shall award the contract or reject all bids within such time as may be
specified in the invitation to bid, but in no case more than 60 days, except that the bids of any
bidders who consent thereto may, at the request of the contracting unit, be held for consideration
for such longer period as may be agreed. All bid security, except the security of the three apparent
lowest responsible bidders, shall be returned, unless otherwise requested by the bidder, within 10
days after the opening of the bids, Sundays and holidays excepted, and the bids of such bidders shall
be considered as withdrawn. Within three days, Sundays and holidays excepted, after the awarding
and signing of the contract and the approval of the contractor's performance bond, the bid security
of the remaining unsuccessful bidders shall be returned to them.
b. The contract shall be signed by all parties within the time limit set forth in the specifications,
which shall not exceed 21 days, Sundays and holidays excepted, after the making of the award;
provided, however, that all parties to the contract may agree to extend the limit set forth in the
specifications beyond the 21 day limit required in this subsection. The contractor, upon written
request to the contracting unit, is entitled to receive, within seven days of the request, an
authorization to proceed pursuant to the terms of the contract on the date set forth in the contract
for work to commence, or, if no date is set forth in the contract, upon receipt of authorization. If for
any reason the contract is not awarded and the bidders have paid for or paid a deposit for the plans
and specifications to the contracting unit, the payment or deposit shall immediately be returned to
the bidders when the plans and specifications are returned in reasonable condition within 90 days
of notice that the contract has not been awarded.
L.1971, c. 198, s. 24; amended by L. 1975, c. 353, s. 14; 1977, c. 53, s. 8; 1983, c. 175; 1987, c. 48, s. 2.
40A:11-25. General power to provide qualification for bidders
The governing body of any contracting unit may establish reasonable regulations appropriate for
controlling the qualifications of prospective bidders upon contracts to be awarded on behalf of the
contracting unit, by the class or category of goods or services to be provided or performed, which
may fix the qualifications required according to the financial ability and experience of the bidders
and the capital and equipment available to them pertinent to and reasonably related to the class or
category of goods or services to be provided or performed in the performance of any such contract,
and may require each bidder to furnish a statement thereof; and if such governing body is not
satisfied with the qualifications of any bidder as founded upon such statement, it may refuse to
furnish the bidder with any plans or specifications for any public contract or consider any bid made
by the bidder for any contract.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 50
Prior to the adoption of any such regulations, a contracting unit shall submit them to a public
hearing. Notice of the hearing and a general description of the subject matter of the regulations to be
adopted shall be published in not less than two newspapers circulating in the county or municipality
in which the contracting unit is located. Publication shall precede by at least 20 days the date set in
the notice for the hearing. The clerk or secretary of the governing body of the contracting unit shall
keep a record of the proceedings and of the testimony of any citizen or prospective bidder. Within 10
days after the completion of the hearings, the proposed regulations and a true copy of the hearings
shall be forwarded to the Director of the Division of Local Government Services for the director's
approval. This approval shall be indicated by a letter from the director to the governing body of the
contracting unit. If the director fails to approve or disapprove the regulations within 30 days of their
receipt by the director, they shall take effect without the director's approval. The director may
disapprove such proposed regulations only if the director finds that:
(a) They are written in a manner which will unnecessarily discourage full, free and open
competition; or
(b) They unnecessarily restrict the participation of small businesses in the public bidding
process; or
(c) They create undue preferences; or
(d) They violate any other provision of this act, or any other law.
If the director disapproves such proposed regulations within the 30-day period prescribed, they
shall be of no force and effect and may not be required as a condition to the acceptance of a bid on
any public contract by the contracting unit. Any appeal from a decision of the director to the Local
Finance Board shall be subject to the provisions of the "Local Government Supervision Act (1947)",
P.L.1947, c.151 (C.52:27BB-1 et seq.).
No qualification rating of any bidder shall be influenced by the bidder's race, religion, sex, national
origin, nationality or place of residence or business.
Nothing contained in this act shall limit the right of any court to review a refusal to furnish any such
plans or specifications or to consider any bid on any contract advertised.
Any such governing body may adopt a standard form of statement or questionnaire for bidders on
public works contracts, and in such case their action shall be governed as provided herein.
L.1971, c. 198, s. 25; amended 1999, c. 440, s. 32.
40A:11-26. Standard questionnaire; effect of unsatisfactory answers
The governing body of any contracting unit may adopt a standard form of statement or
questionnaire for bidders and may require from any person proposing to bid upon any such
contract a statement or answers showing the bidder's financial ability and experience in
performing public sector work and describing the equipment available to such bidder in the
performance of such contract, and if not satisfied with the sufficiency of this statement or answers
may refuse to furnish plans and specifications to the bidder.
L.1971, c. 198, s. 26; amended 1999, c. 440, s. 33.
40A:11-27. Standard statements and questionnaires; prospective bidders; responses
Such statements and questionnaires shall be standardized for like classes of goods or services to be
submitted to prospective bidders who may be required to respond to questions under oath. The
statement or answer shall disclose fully the financial ability, adequacy of plant and equipment,
organization and prior experience of the prospective bidder, and such other pertinent and material
facts as may be required.
L.1971, c. 198, s. 27; amended 1999, c. 440, s. 34.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 51
40A:11-28. Classification of prospective bidders; notice
Prospective bidders shall be classified as to the character and amount of goods or services contracts
as to which they shall be qualified to submit bids, and bids shall be accepted only from persons so
qualified. The classification shall be made and an immediate notice thereof shall be sent to the
prospective bidders by certified or registered mail within eight days after the date of receipt of the
responsive statement or answers.
L.1971, c. 198, s. 28; amended 1999, c. 440, s. 35.
40A:11-29. Reclassification of prospective bidders; request for; time limit
If any person, after being notified of a classification, shall be dissatisfied therewith or with the
classification of other bidders, that person may request in writing a hearing before such governing
body, and may present such further evidence with respect to the financial responsibility,
organization, plant and equipment, or experience of that person or other prospective bidders as
might tend to justify a different classification.
Where a request is made for the change of classification of another prospective bidder, the
applicant therefor shall notify such other bidder by certified or registered mail of the time and place
of hearing, as fixed by the governing body, and at the hearing shall present satisfactory evidence
that the notice was served as herein required, before any matters pertaining to a change of
classification of such other bidder shall be taken up. After hearing such evidence the governing
body may, in its discretion, by appropriate action, change or retain the classification of any bidder.
No change in classification to be effective for any contract where bidding therefor has been duly
advertised, shall be made unless the written request therefor shall have been received at least 20
days before the final day for submission of bids.
All requests for change in classification and notice of any action sent by certified or registered mail
to the parties directly affected thereby, shall be acted upon by the governing body concerned at
least eight days prior to the date fixed for the next opening of bids on any contract or contracts for
which such persons might be qualified to bid as a result of the reclassification.
L.1971, c. 198, s. 29; amended 1999, c. 440, s. 36.
40A:11-30. Board of review upon classification; membership, et cetera
There is hereby established a board of review upon classification and reclassification of prospective
bidders. This board shall consist of one member of the governing body of the contracting unit concerned
and two citizens of the county or municipality to be designated by such governing body. In all counties
having a county supervisor, he shall be a member of the board of review instead of one of the
citizens. The clerk of the contracting unit shall be the secretary of the board of review and shall keep a
complete record of its proceedings and decisions. The members of the board shall serve
without compensation.
L.1971, c. 198, s. 30, eff. July 1, 1971.
40A:11-31. Reconsideration by board of review; request for; time limit
Any prospective bidder who is dissatisfied with an original classification or reclassification may
upon receipt of notice thereof, request in writing a hearing of the matter before the board of
review. The request shall be filed with the contracting agent and the secretary of the board.
The board shall hold a hearing at which the prospective bidder shall be entitled to be heard and to
submit additional information.
The board shall review the responsibility of all prospective bidders who have filed statements or
answers, considering both the statement, answers and any additional information given at the
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 52
hearing, and shall certify to the contracting unit concerned, its decision as to the original
classifications or reclassifications, if any. The decisions shall be made by a majority vote.
In order for any change in classification by the board to be effective for a contract previously
advertised, the request shall be filed not less than five days prior to the final day for submission of
bids, and the board shall hold a hearing and act upon the request not less than two days prior to the
date fixed for the next opening of bids on any public works contract for which such prospective
bidders might be qualified to bid as a result of the reclassification.
L.1971, c. 198, s. 31; amended 1999, c. 440, s. 37.
40A:11-32. Rejection of bids after qualification of bidder; hearing
Nothing herein contained shall be construed as depriving any governing body of the right to reject a
bid at any time prior to the actual award of a contract, where the circumstances of the prospective
bidder have changed subsequent to the qualification and classification of the bidder, which in the
opinion of the awarding contracting unit would adversely affect the responsibility of the
bidder. Before taking final action on any such bid, the contracting agent concerned shall notify the
bidder and afford the bidder an opportunity to present any additional information which might
tend to sustain the existing classification.
No person shall be qualified to bid on any contract unless that person shall have submitted a
statement or answers as herein required within a period of six months preceding the date of
opening of bids for the contract, if the bidders thereon are required to be classified hereunder. In
any case where the contracting unit shall require classification of the bidders in compliance with
these sections, each bidder on any contract shall be required to submit a statement listing the
changes in the statement or answers herein required as part of the bidder's bid submission.
L.1971, c. 198, s. 32; amended 1999, c. 440, s. 38.
40A:11-33. Forfeiture of deposit in certain cases
A deposit made by any person who makes or causes to be made a false, deceptive or fraudulent
statement or answers in response to a questionnaire or in the course of a hearing hereunder may
be caused to be forfeited, as liquidated damages by and to the contracting unit.
L.1971, c. 198, s. 33, eff. July 1, 1971.
40A:11-34. Penalties for false statements
Any person who makes or causes to be made, a false, deceptive or fraudulent statement in the
statement or answers in response to the questionnaire, or in the course of any hearing hereunder,
shall be guilty of a misdemeanor, and upon conviction shall be punishable by a fine of not less than
$100.00 nor more than $1,000.00, and shall be permanently disqualified from bidding on all
public work or contracts of the contracting unit which submitted the questionnaire; or, in the case
of an individual or an officer or employee charged with the duty of responding to the questionnaire
for a person, firm, copartnership, association or corporation, by such fine or by imprisonment, not
exceeding 6 months, or both.
L.1971, c. 198, s. 34, eff. July 1, 1971.
40A:11-35. Indemnity agreements; Federal projects for benefit of municipality
Any contracting unit may enter into an agreement indemnifying the United States of America, or any
board, body, officer or agency thereof, from loss or damage to the property of others resulting from
the furtherance of any project, undertaken or to be undertaken by the Federal Government for the
benefit of such contracting unit where the cost or any part thereof is to be paid out of Federal funds.
L.1971, c. 198, s. 35, eff. July 1, 1971.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 53
40A:11-36. Sale or other disposition of personal property
Any contracting unit by resolution of its governing body may authorize by sealed bid or public
auction the sale of its personal property not needed for public use.
(1) If the estimated fair value of the property to be sold exceeds 15 percent of the bid threshold
in any one sale and it is neither livestock nor perishable goods, it shall be sold at public sale to
the highest bidder.
(2) The contracting unit need not advertise for bids when it makes any such sale to the United
States, the State of New Jersey, another contracting unit, any body politic to which it contributes
tax raised funds, any foreign nation which has diplomatic relations with the United States, or
any governmental unit in the United States.
(3) Notice of the date, time and place of the public sale together with a description of the items to
be sold and the conditions of sale shall be published in an official newspaper. Such sale shall be
held not less than seven nor more than 14 days after the latest publication of the notice thereof.
(4) If no bids are received the property may then be sold at private sale without further
publication or notice thereof, but in no event at less than the estimated fair value; or the
contracting unit may if it so elects reoffer the property at public sale. As used
herein, "estimated fair value" means the market value of the property between a willing seller
and a willing buyer less the cost to the contracting unit to continue storage or maintenance of
any personal property not needed for public use to be sold pursuant to this section.
(5) A contracting unit may reject all bids if it determines such rejection to be in the public
interest. In any case in which the contracting unit has rejected all bids, it may readvertise such
personal property for a subsequent public sale. If it elects to reject all bids at a second public sale,
pursuant to this section, it may then sell such personal property without further publication or
notice thereof at private sale, provided that in no event shall the negotiated price at private sale
be less than the highest price of any bid rejected at the preceding two public sales and provided
further that in no event shall the terms or conditions of sale be changed or amended.
(6) If the estimated fair value of the property to be sold does not exceed the applicable bid
threshold in any one sale or is either livestock or perishable goods, it may be sold at private sale
without advertising for bids.
(7) Notwithstanding the provisions of this section, by resolution of the governing body, a
contracting agent may include the sale of personal property no longer needed for public use as
part of specifications to offset the price of a new purchase.
L.1971, c. 198, s. 36; amended 1999, c. 440, s. 39.
40A:11-37. Division of Local Government Services to assist contracting units
The Division of Local Government Services in the Department of Community Affairs is hereby
authorized to assist contracting units in all matters affecting the administration of this law.
L.1971, c. 198, s. 37; amended 1999, c. 440, s. 40.
40A:11-37.1. Rules
Pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), the Director of
the Division of Local Government Services after consultation with the Commissioner of Education
may adopt rules implementing the provisions of the "Local Public Contracts Law," P.L.1971, c.198
(C.40A:11-1 et seq.) and the "Public School Contracts Law," N.J.S.18A:18A-1 et seq.
L.1999, c. 440, s. 44.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 54
40A:11-38. Statutes repealed
The following sections, chapter and acts, together with all amendments and supplements thereto,
are hereby repealed:
Chapter 25 of Title 40 of the Revised Statutes;
Sections 40:9-3; 40:15-1; 40:50-1 to 40:50-5 inclusive and 40:50-7, of the Revised Statutes;
Laws of 1943, c. 198 (C. 40:50-5.1 to C. 40:50-5.4 inclusive);
Laws of 1945, c. 158 (C. 40:50-5.5);
Laws of 1945, c. 160 (C. 40:50-5.6);
Laws of 1949, c. 67 (C. 40:50-8);
Laws of 1962, c. 168 (C. 40:50-5.7);
Laws of 1953, c. 395 (C. 40:25-1.1);
Laws of 1964, c. 245 (C. 40:50-7.1 to C. 40:50-7.3 inclusive);
Laws of 1967, c. 228 (C. 40:23-6.34 to C. 40:23-6.37 inclusive);
L.1969, c. 104, s. 1 (C. 40:25-4.5).
L.1971, c. 198, s. 38, eff. July 1, 1971.
40A:11-39. Effective date
This act shall take effect July 1, 1971 but any action, purchase, sale, contract or agreement taken,
made or entered into prior to this date pursuant to any of the acts, amendments and supplements
hereby repealed are hereby validated and confirmed, provided that in no event shall a lease entered
into prior to the effective date of this act be renewed or extended, except in accordance with the
terms and provisions of this act.
L.1971, c. 198, s. 39, eff. July 1, 1971.
40A:11-40. Authorization to purchase specific materials at auction; procedure
Notwithstanding any provisions of the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et
seq.), to the contrary, the governing body may by resolution authorize the purchasing agent of the
contracting unit to purchase specific materials at auction for a price not to exceed 85% of the price
of equivalent materials as determined pursuant to this section. Such resolution shall be adopted at
least 10 days prior to the auction and shall be filed with the Director of the Division of Local
Government Services within 3 days of its adoption. Any such auction shall be open to any person to
attend and bid on such materials, shall be conducted pursuant to N.J.S.12A:2-328, and shall be
conducted by a licensed auctioneer. Prior to adoption of the resolution, the purchasing agent shall
solicit at least three written quotations of prices for which new materials equivalent to those to be
purchased at auction were actually sold within the previous year. The lowest of the three prices so
quoted shall be the determining price quotation for the authorization to purchase at auction for a
price not to exceed 85% thereof. The authorizing resolution adopted by the governing body shall
set forth the three price quotations so quoted and the sources thereof, and shall state that the
expenditure of money for the purchase is not made in violation of N.J.S.40A:4-57, and has been
properly certified by the chief finance officer of the local unit.
Any purchasing agent who shall purchase materials at auction pursuant to this section shall, within
14 days of the occurrence of such auction, file a report with the clerk of the governing body and the
director, setting forth: the nature, quantity and price of the materials so purchased; the three price
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 55
quotations solicited prior to such auction, and the sources thereof; and, the name and license
number of the auctioneer who conducted such auction.
L.1979, c. 222, s. 1; amended 1994, c. 114, s. 10.
40A:11-41. Definitions
As used in this act:
a. "County or municipal contracting agency" shall mean the governing body of a county or
municipality or any department, board, commission, committee, authority or agency of a county
or municipality but shall not include school districts;
b. "Minority group members" shall mean persons who are black, Hispanic, Portuguese, Asian-
American, American Indian or Alaskan natives;
c. "Qualified women's business enterprise" shall mean a business which has its principal place
of business in this State, is independently owned and operated, is at least 51% owned and
controlled by women and is qualified pursuant to section 25 of P.L. 1971, c. 198 (C. 40A:11-25);
d. "Qualified minority business enterprise" shall mean a business which has its principal place
of business in this State, is independently owned and operated, is at least 51% owned and
controlled by minority group members and is qualified pursuant to section 25 of P.L. 1971, c.
198 (C. 40A:11-25);
e. "Qualified small business enterprise" shall mean a business which has its principal place of
business in this State, is independently owned and operated and meets all other qualifications
as may be established in accordance with P.L. 1981, c. 283 (C. 52:27H-21.1 et seq.);
f. "Set-aside contracts" shall mean (1) a contract for goods, equipment, construction, or services
which is designated as a contract for which bids are invited and accepted only from qualified
small business enterprises, qualified veteran business enterprises, qualified minority business
enterprises or qualified women's business enterprises, as appropriate, (2) a portion of a
contract when that portion has been so designated, or (3) any other purchase or procurement
so designated; and
g. "Total procurements" shall mean all purchases, contracts or acquisitions of a county or
municipal contracting agency, whether by competitive bidding, single source contracting, or
other method of procurement, as prescribed or permitted by law.
h. "Veteran" shall have the same meaning as set forth in subsection b. of N.J.S.11A:5-1, except
that the veteran shall present to the Adjutant General of the Department of Military and
Veterans' Affairs sufficient evidence of a record of service and receive a determination of status
no later than the date established for the submission of bids; and
i. "Qualified veteran business enterprise" shall mean a business which has its principal place of
business in this State, is independently owned and operated, is at least 51% owned and
controlled by a veteran or that wherein at least twenty five percent of the required workforce
for the contract are veterans, including new hires if additional workers are required to perform
the contract, and is qualified pursuant to section 25 of P.L.1971, c.198 (C.40A:11-25). The
business shall also submit forms quarterly to the contracting agency showing proof of veteran
status for all the veteran employees.
L.1985, c.482, s.1; amended 2013, c.5, s.1.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 56
40A:11-42. Set-aside programs authorized
a. The governing body of a county or municipality may, by ordinance or resolution, as appropriate,
establish a qualified minority business enterprise set-aside program. In authorizing such a
program, the governing body of a county or municipality shall establish a goal for its contracting
agencies of setting aside a certain percentage of the dollar value of total procurements to be
awarded as set-aside contracts to qualified minority business enterprises.
b. The governing body of a county or municipality may, by ordinance or resolution, as appropriate,
establish a qualified women's business enterprise set-aside program. In authorizing such a
program, the governing body of a county or municipality shall establish a goal for its contracting
agencies of setting aside a certain percentage of the dollar value of total procurements to be
awarded as set-aside contracts to qualified women's business enterprises.
c. The governing body of a county or municipality may, by ordinance or resolution, as appropriate,
establish a qualified small business enterprise set-aside program. In authorizing such a program,
the governing body of a county or municipality shall establish a goal for its contracting agencies of
setting aside a certain percentage of the dollar value of total procurements to be awarded as set-
aside contracts to qualified small business enterprises.
d. The governing body of a county or municipality may, by ordinance or resolution, as appropriate,
establish a qualified veteran business enterprise set-aside program. In authorizing such a program,
the governing body of a county or municipality shall establish a goal for its contracting agencies of
setting aside a certain percentage of the dollar value of total procurements to be awarded as set-
aside contracts to qualified veteran business enterprises.
L.1985, c.482, s.2; amended 2013, c.5, s.2.
40A:11-43. Attainment of goals
a. Any goal established pursuant to section 2 of this act may be attained by requiring that a portion
of a contract be subcontracted to a qualified small business enterprise, qualified veteran business
enterprise, qualified minority business enterprise or qualified women's business enterprise, in
addition to designating entire contracts to these enterprises.
b. Each contracting agency shall make a good faith effort to attain any goal established by its
governing body. The governing body shall evaluate each contracting agency's efforts by comparing
the percentage of the dollar value of a contracting agency's total procurements awarded to qualified
small business enterprises, qualified veteran business enterprise, qualified minority business
enterprises or qualified women's business enterprises, as appropriate, to the percentage of the
dollar value of the county's or municipality's total procurements awarded to qualified small
business enterprises, qualified veteran business enterprise, qualified minority business enterprises
or qualified women's business enterprises, as appropriate.
L. 1985, c. 482, s. 3, eff. Jan. 17, 1986.
40A:11-44. "Local Public Contracts Law" applicable
All provisions of the "Local Public Contracts Law," P.L. 1971, c. 198 (C. 40A:11-1 et seq.) and any
supplements thereto, shall apply to purchases, contracts and agreements made pursuant to this act
unless otherwise superseded by the provisions of this act.
L. 1985, c. 482, s. 4, eff. Jan. 17, 1986.
40A:11-45. Designation as set-aside
Notwithstanding the provisions of any law to the contrary, a contracting agency of a county or
municipality which has established a qualified small business enterprise set-aside program,
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 57
qualified veteran business enterprise set-aside program, a qualified minority business enterprise
set-aside program or a qualified women's business enterprise set-aside program shall designate
that a contract, subcontract or other means of procurement of goods, services, equipment, or
construction be awarded to a qualified small business enterprise, qualified veteran business
enterprise, a qualified minority business enterprise or a qualified women's business enterprise, if a
contracting agency is likely to receive bids from at least two qualified small business enterprises,
qualified veteran business enterprises, qualified minority business enterprises or qualified
women's business enterprises, as appropriate, at a fair and reasonable price.
Such designations shall be made prior to any advertisement for bids, if required. Once designated,
the advertisement for bids, if necessary, shall indicate that the contract to be awarded is a qualified
small business enterprise set-aside contract, qualified veteran business enterprise set-aside
contract, a qualified minority business enterprise set-aside contract or a qualified women's
business enterprise set-aside contract, as appropriate. All advertisements for bids shall be
published in at least one newspaper which will best provide notice thereof to qualified small
business enterprises, qualified veteran business enterprises, qualified minority business
enterprises or to qualified women's business enterprises, as appropriate, sufficiently in advance of
the date fixed for receiving the bids to promote competitive bidding, but shall not be published less
than 10 days prior to that date.
L. 1985, c. 482, s. 5, eff. Jan. 17, 1986.
40A:11-46. Set-aside cancellation
a. If the contracting agency determines that two bids from qualified small, qualified veteran, qualified
minority or qualified women's businesses cannot be obtained, the contracting agency may withdraw
the designation of the set-aside contract and resolicit bids on an unrestricted basis pursuant to the
provisions of P.L. 1971, c. 198 (C. 40A:11-1 et seq.). The cancelled designation shall not be considered
in determining the percentage of contracts awarded pursuant to subsection b. of section 3 of this act.
b. If the contracting agency determines that the acceptance of the lowest responsible bid will result
in the payment of an unreasonable price, the contracting agency shall reject all bids and withdraw
the designation of the set-aside contract. Qualified small business enterprises, qualified veteran
business enterprises, qualified minority business enterprises or qualified women's business
enterprises, as appropriate, shall be notified in writing of the set-aside cancellation, the reasons for
the rejection and the agency's intent to resolicit bids on an unrestricted basis pursuant to the
provisions of P.L. 1971, c. 198 (C. 40A:11-1 et seq.). The cancelled bid solicitation shall not be
considered in determining the percentage of contracts awarded pursuant to subsection b. of section
3 of this act.
L. 1985, c. 482, s. 6, eff. Jan. 17, 1986.
40A:11-47. False information; penalties
Where the governing body of a county or municipality determines that a business has been
classified as a qualified small business enterprise, qualified veteran business enterprise, qualified
minority business enterprise or qualified women's business enterprise on the basis of false
information knowingly supplied by the business and has been awarded a contract to which it would
not otherwise have been entitled under this act, the governing body shall have the authority to:
a. Assess against the business any difference between the contract and what the governing
body's cost would have been if the contract had not been awarded in accordance with the
provisions of this act;
b. In addition to the amount due under subsection a., assess against the business a penalty in an
amount of not more than 10% of the amount of the contract involved; and
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 58
c. Order the business ineligible to transact any business with the governing body or contracting
agency of the governing body for a period to be determined by the governing body.
Prior to any final determination, assessment or order under this section, the governing body shall
afford the business an opportunity for a hearing on the reasons for the imposition of the penalties
set forth in subsection a., b. or c. of this section.
L. 1985, c. 482, s. 7, eff. Jan. 17, 1986.
40A:11-48. Annual agency report
Each contracting agency of a county or municipality which has established a qualified small
business enterprise set-aside program, a qualified veteran business enterprise set-aside program, a
qualified minority business enterprise set-aside program or a qualified women's business
enterprise set-aside program shall submit a report to its governing body by January 31 of each year
describing the agency's efforts in attaining the set-aside goals and the percentage of the dollar value
of total procurements awarded pursuant to subsection b. of section 3 of this act. The governing
body shall publish a list of each agency's attainments in the immediately preceding local fiscal year,
to include the county or municipal average, in at least one newspaper circulating in the county or
municipality, as appropriate, by March 1 of each year.
L. 1985, c. 482, s. 8, eff. Jan. 17, 1986.
40A:11-49. Rules, regulations
The Director of the Division of Local Government Services in the Department of Community Affairs
may adopt rules and regulations pursuant to the provisions of the "Administrative Procedure Act," P.L.
1968, c. 410 (C. 52:14B-1 et seq.) as he may deem necessary to effectuate the purposes of this act.
L. 1985, c. 482, s. 9, eff. Jan. 17, 1986.
40A:11-50. Process of resolution for construction contract disputes
All construction contract documents entered into in accordance with the provisions of P.L.1971,
c.198 (C.40A:11-1 et seq.) after the effective date of P.L.1997, c.371 (C.40A:11-50) shall provide that
disputes arising under the contract shall be submitted to a process of resolution pursuant to
alternative dispute resolution practices, such as mediation, binding arbitration or non-binding
arbitration pursuant to industry standards, prior to being submitted to a court for
adjudication. Nothing in this section shall prevent the contracting unit from seeking injunctive or
declaratory relief in court at any time. The alternative dispute resolution practices required by this
section shall not apply to disputes concerning the bid solicitation or award process, bid withdrawal,
or to the formation of contracts or subcontracts to be entered into pursuant to P.L.1971, c.198
(C.40A:11-1 et seq.).
Notwithstanding industry rules or any provision of law to the contrary, whenever a dispute
concerns more than one contract, such as when a dispute in a contract involving construction
relates to a contract involving design, architecture, engineering or management, upon the demand
of a contracting party, other interested parties to the dispute shall be joined unless the arbitrator or
person appointed to resolve the dispute determines that such joinder is inappropriate. Notwithstanding
industry rules or any provision of law to the contrary, whenever more than one dispute of a similar nature
arises under a construction contract, or related construction contracts, upon the demand of a contracting
party, the disputes shall be joined unless the arbitrator or person appointed to resolve the dispute
determines that the disputes are inappropriate for joinder.
For the purposes of this section, the term "construction contract" means a contract involving construction,
or a contract related thereto concerning architecture, engineering or construction management.
L.1997, c.371, s.1; amended 2010, c.108, s.2.
Local Public Contracts Law N.J.S.A. 40A:11-1 et seq.
April, 2014 Page 59
40A:11-51. Limitations on awarding public contracts to entities that made political
contributions; authority of local units, nonpreemption by State law
a. A county, municipality, independent authority, board of education, or fire district is hereby
authorized to establish by ordinance, resolution or regulation, as may be appropriate, measures
limiting the awarding of public contracts therefrom to business entities that have made a
contribution pursuant to P.L.1973, c.83 (C.19:44A-1 et seq.) and limiting the contributions that the
holders of a contract can make during the term of a contract, notwithstanding the provisions and
parameters of sections 1 through 12 of P.L.2004, c.19 (C.19:44A-20.2 et al.) and section 22 of
P.L.1973, c.83 (C.19:44A-22).
b. The provisions of P.L.2004, c.19 shall not be construed to supersede or preempt any ordinance,
resolution or regulation of a unit of local government that limits political contributions by business
entities performing or seeking to perform government contracts. Any ordinance, resolution or
regulation in effect on the effective date of P.L.2004, c.19 shall remain in effect and those adopted
after that effective date shall be valid and enforceable.
c. An ordinance, resolution or regulation adopted or promulgated as provided in this section shall
be filed with the Secretary of State.
L.2005, c. 271, s. 1.
Appendix A
April, 2014 Page 60
APPENDIX A
Table of Local Public Contracts Law Bid Thresholds
N.J.S.A. 40A:11-3(a) and (c)
Bid Threshold
As of April 17,
2000
As of July 1,
2005
As of July 1,
2010
“Lower” Bid Threshold
$17,500
$21,000
$26,000
15% of Lower Bid Threshold
(Quotation limit)
$2,625
$3,150
$3,900
“Higher” Bid Threshold
$25,000
$29,000
$36,000
15% of Higher Bid Threshold
(Quotation limit)
$3,750
$4,350
$5,400
Appendix B
April, 2014 Page 61
APPENDIX B
RELATED PROCUREMENT STATUTES
1. Provisions concerning the purchasing agent and chief financial officers (pertinent part
in italics)
40A:9-140.1. Definitions
As used in this act:
a. "Director" means the Director of the Division of Local Government Services.
b. “Municipal finance officer” means a municipal director of finance, assistant director of finance, fiscal
officer, municipal comptroller, assistant comptroller, municipal treasurer, assistant municipal
treasurer or deputy treasurer who is not a member of the governing body of a municipality.
c. "Local unit" means a municipality or a utility owned by a single municipality or owned jointly by one
or more municipalities, which together do not comprise a county.
d. "Chief financial officer" means the official appointed pursuant to section 5 of P.L.1988, c.110
(C.40A:9-140.10) to be responsible for the proper financial administration of the municipality under
the "Local Government Supervision Act (1947)," P.L.1947, c.151 (C.52:27BB-1 et seq.); the "Local Bond
Law," (N.J.S.40A:2-1 et seq.); the "Local Budget Law," (N.J.S.40A:4-1 et seq.); the "Local Fiscal Affairs
Law," (N.J.S.40A:5-1 et seq.); and the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.) in
those municipalities that have not appointed a purchasing agent pursuant to that law; and such other
statutes, and such rules and regulations promulgated by the Director of the Division of Local
Government Services, the Local Finance Board, or any other State agency, as may pertain to the
financial administration of the municipality.
2. Provisions regarding public contracts and the Country of Iran, P.L. 2012, c.5
The following (in pertinent part) applies to state agencies, LPCL contracting units, boards of
education under the Public School Contracts Law, and county colleges under the County College
Contracts Law (all citations are found below).
52:32-55 Findings, declarations relative to certain public contracts.
(Omitted from this text)
52:32-56 Definitions relative to certain public contracts.
As used in this act:
a. “State agency” means any of the principal departments in the Executive Branch of the State
government, and any division, board, bureau, office, commission or other instrumentality within or
created by such department, the Legislature of the State and any office, board, bureau or
commission within or created by the Legislative Branch, and any independent State authority,
commission, instrumentality or agency which is authorized by law to award public contracts.
Appendix B
April, 2014 Page 62
b. “Energy sector” of Iran means activities to develop, invest in, explore for, refine, transfer,
purchase or sell petroleum, gasoline, or other refined petroleum products, or natural gas, liquefied
natural gas resources or nuclear power in Iran.
c. “Financial institution” means the term as used in Section 14 of the Iran Sanctions Act of 1996,
Section 14 of Pub.L.104-172 (50 U.S.C. 1701 note).
d. “Iran” means the government of Iran, and includes the territory of Iran and any other territory or
marine area, including the exclusive economic zone and continental shelf, over which the
government of Iran claims sovereignty, sovereign rights, or jurisdiction, provided that the
government of Iran exercises partial or total control over the area or derives a benefit from
economic activity in the area pursuant to international arrangements.
e. “Person or entity” means any of the following:
(1) A natural person, corporation, company, limited partnership, limited liability partnership,
limited liability company, business association, sole proprietorship, joint venture, partnership,
society, trust, or any other nongovernmental entity, organization, or group.
(2) Any governmental entity or instrumentality of a government, including a multilateral
development institution, as defined in Section 1701(c)(3) of the International Financial Institutions
Act, 22 U.S.C. 262r(c)(3).
(3) Any parent, successor, subunit, direct or indirect subsidiary, or any entity under common
ownership or control with, any entity described in paragraph (1) or (2).
f. For the purposes of this act, a person engages in investment activities in Iran, if:
the person provides goods or services of $20,000,000 or more in the energy sector of Iran,
including a person that provides oil or liquefied natural gas tankers, or products used to construct
or maintain pipelines used to transport oil or liquefied natural gas, for the energy sector of Iran; or
the person is a financial institution that extends $20,000,000 or more in credit to another
person, for 45 days or more, if that person will use the credit to provide goods or services in the
energy sector in Iran and is identified on a list created pursuant to subsection b. of section 3 of this
act as a person engaging in investment activities in Iran as described in subsection a. of section 3 of
this act.
The State Treasurer shall adopt regulations that reduce the amounts provided for in this
subsection if the State Treasurer determines that such change is permitted or required under
Section 202 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010.
52:32-57 Certain persons, entities prohibited from bidding on certain public contracts,
maintenance of list
a. A person or entity that, at the time of bid or proposal for a new contract or renewal of an existing
contract, is identified on a list created pursuant to subsection b. of this section as a person or entity
engaging in investment activities in Iran as described in subsection f. of section 2 of this act, shall
be ineligible to, and shall not, bid on, submit a proposal for, or enter into or renew, a contract with
a State agency for goods or services.
b. Within 90 days of the effective date of this act, the Department of the Treasury shall, using
credible information available to the public, develop a list of persons or entities it determines
engage in investment activities in Iran as described in subsection f. of section 2.
c. The department shall update the list every 180 days.
Appendix B
April, 2014 Page 63
d. Before finalizing an initial list pursuant to subsection b. of this section or an updated list
pursuant to subsection c. of this section, the department shall do the following before a person or
entity is included on the list:
(1) Provide 90 days’ written notice of its intent to include the person or entity on the list. The
notice shall inform the person or entity that inclusion on the list would make the person or entity
ineligible to bid on, submit a proposal for, or enter into or renew, a contract for goods or services
with a State agency; and
(2) Provide a person or entity with an opportunity to comment in writing that it is not engaged
in investment activities in Iran. If the person or entity demonstrates to the department that the
person or entity is not engaged in investment activities in Iran as described in subsection f. of
section 2 of this act, the person or entity shall not be included on the list, unless the person or
entity is otherwise ineligible to bid on a contract as described in paragraph (3) of subsection a. of
section 5 of this act.
(3) The department shall make every effort to avoid erroneously including a person or entity on
the list.
52:32-58 Certification required
a. A State agency shall require a person or entity that submits a bid or proposal or otherwise
proposes to enter into or renew a contract to certify, at the time the bid is submitted or the
contract is renewed, that the person or entity is not identified on a list created pursuant to
subsection b. of section 3 of this act as a person or entity engaging in investment activities in Iran
described in subsection f. of section 2 of this act.
b. The certification required shall be executed on behalf of the applicable person or entity by an
authorized officer or representative of the person or entity.
c. In the event that a person or entity is unable to make the certification required because it or one
of its parents, subsidiaries, or affiliates as defined in subsection e. of section 2 of this act has
engaged in one or more of the activities specified in subsection f. of section 2 of this act, the person
or entity shall provide to the State agency concerned, prior to the deadline for delivery of such
certification, a detailed and precise description of such activities, such description to be provided
under penalty of perjury.
d. The certifications provided under subsection a. of this section and disclosures provided under
subsection c. of this section shall be disclosed to the public.
52:32-59 False certification, penalties
a. If the department determines, using credible information available to the public and after
providing 90 days’ written notice and an opportunity to comment in writing for the person or
entity to demonstrate that it is not engaged in investment activities in Iran, that the person or
entity has submitted a false certification pursuant to section 4 of this act, and the person or entity
fails to demonstrate to the department that the person or entity has ceased its engagement in the
investment activities in Iran within 90 days after the determination of a false certification, the
following shall apply:
(1) Pursuant to an action under subsection b. of this section, a civil penalty in an amount that is
equal to the greater of $1,000,000 or twice the amount of the contract for which the false
certification was made.
(2) Termination of an existing contract with the State agency as deemed appropriate by the State
agency.
Appendix B
April, 2014 Page 64
(3) Ineligibility to bid on a contract for a period of three years from the date of the
determination that the person or entity submitted the false certification.
b. The department shall report to the New Jersey Attorney General the name of the person or enti ty
that the State agency determines has submitted a false certification under section 4 of this act,
together with its information as to the false certification, and the Attorney General shall determine
whether to bring a civil action against the person or entity to collect the penalty described in
paragraph (1) of subsection a. of this section.
Only one civil action against the person or entity to collect the penalty described in paragraph
(1) of subsection a. of this section may be brought for a false certification on a contract. A civil
action to collect such penalty shall commence within three years from the date the certification is
made.
40A:11-2.1 Civil action brought on behalf of local contracting unit
a. A local contracting unit as defined in and subject to the provisions of the “Local Public Contracts
Law,” P.L.1971, c.198 (C.40A:11-1 et seq.), shall implement and comply with the provisions of
P.L.2012, c.25 (C.52:32-55 et al.), except that the contracting unit shall rely on the list developed by
the State Department of the Treasury pursuant to section 3 of P.L.2012, c.25 (C.52:32-57).
b. If the local contracting unit determines that a person or entity has submitted a false
certification concerning its engagement in investment activities in Iran pursuant to section 4 of
P.L.2012, c.25 (C.52:32-58), the local contracting unit shall report to the New Jersey Attorney
General the name of that person or entity, and the Attorney General shall determine whether to
bring a civil action against the person to collect the penalty prescribed in paragraph (1) of
subsection a. of section 5 of P.L.2012, c.25 (C.52:32-59). The local contracting unit may also report
to the municipal attorney or county counsel, as appropriate, the name of that person, togethe r with
its information as to the false certification, and the municipal attorney or county counsel, as
appropriate, may determine to bring such civil action against the person to collect such penalty.
Note that the provisions of C.40A:11-2.1 (above) have identical provisions affecting public
schools (C.18A:18A-49.4), county colleges (C.18A:64A-25.43); apply the law to these
agencies.
Appendix C
April, 2014 Page 65
APPENDIX C
LOCAL PUBLIC CONTRACT REFERENCE CROSSWALK
(Note: LFN refers to Local Finance Notices, formal guidance issued by the
Division of Local Government Services)
40A:11-3 Bid threshold; period of contracts
LFN 2010-13R Adjustment of Public Bidding Threshold - July 1,2010
www.state.nj.us/treasury/purchase/adjpubbid05.shtml
www.state.nj.us/treasury/purchase/adjpubbid052yr.shtml
40A:11-4 Contracts required to be advertised; disqualification of bidder
N.J.A.C. 5:34-9.5(d) Miscellaneous Circumstances
40A:11-4.1 Purposes for which competitive contracting may be used by local units
N.J.A.C. 5:34-4 Administration of Competitive Contracting Process
LFN 2010-9 State Comptroller Report
LFN 2009-10 Contracting for Renewable Energy Services: Update on Power Purchase
Agreements
40A:11-4.3 Competitive contracting process; resolution, administration
N.J.A.C. 5:34-9.4 Concessions
40A:11-4.6 Implementation of energy savings improvement program by contracting unit;
definitions
LFN 2009-11 Implementing an Energy Savings Improvement Program
LFN 2011-17 Update on Implementing Energy Savings Improvement Programs
40A:11-5 Exceptions
N.J.A.C. 5:34-9.5(c) Notice of Award for Professional Services
LFN 2010-3 (A, B) Publication of Contract Award Notices
N.J.A.C. 5:34-2. Extraordinary Unspecifiable Services
LFN 2005-33 (A) Contracts for private inspection firms are subject to bidding and other
requirements of the LPCL
Appendix C
April, 2014 Page 66
N.J.A.C. 5:34-7.30 Purchases at 10 percent less than State contract price; Application of
N.J.S.A. 40A:11-5(4)
N.J.A.C. 5:34-9.6 Purchasing at 10 percent less than a State cooperative contract price
LFN 2010-3 (D) Contracting Unit Agreements with State Higher Education Institutions
(p5)
40A:11-6 Emergency contracts
N.J.A.C. 5:34-6 Emergency Purchases and Contracts
40A:11-6.1 Award of contracts
N.J.A.C. 5:34-9.5(b) Miscellaneous Circumstances
LFN 2010-13R Adjustment of Public Bidding Threshold
40A:11-7.1 Rules concerning determinations of aggregation
N.J.A.C. 5:34-8.2 Determinations of Aggregation
N.J.A.C. 5:34-8.3 When Determinations of Aggregation are Found to be Incorrect
N.J.A.C. 5:34-8.4 Intentional Miscalculations to Avoid Public Bidding
40A:11-9 Designation of contracting unit's purchasing agent, authority, responsibility,
accountability; qualifications.
N.J.A.C. 5:34-5 Qualified Purchasing Agents
LFN 2012-9 and 2012-17 Qualified Purchasing Agent Regulations
40A:11-9.1 List of sources for green product purchasing
www.state.nj.us/treasury/purchase/greencontracts.shtml
40A:11-11 Additional matters regarding contracts for the provision and performance of
goods and services
N.J.A.C. 5:34-7 Cooperative Purchasing
40A:11-12 Contracting unit purchases through State agency; procedure
N.J.A.C. 5:34-7.29 The State of New Jersey's Cooperative Purchasing Program
LFN 2012-10 Using National Cooperative Contracts: Application of P.L. 2011, c. 139
N.J.A.C. 5:34-9.7 Use of the General Services Administration's Federal Supply Schedules
Appendix C
April, 2014 Page 67
40A:11-13 Specifications
40A:11-13(d) N.J.A.C. 5:34-9.1 Purchase of Proprietary Goods or Services
40A:11-13(d) N.J.A.C. 5:34-9.2 Use of "Brand Name or Equivalent"
N.J.A.C. 7:26H-6.1 et seq. DEP Solid Waste Collection Standard Specifications and
Contract Model
LFN 2010-10 Solid Waste Collection and Transportation Contractor Wage Record
Keeping, N.J.S.A. 34:11-68
40A:11-15 Duration of certain contracts
N.J.A.C. 5:34-3 Certain Leases of Equipment and Service Agreements Beyond the Fiscal
Year
40A:11-15(3) N.J.A.C. 5:34-9.5(a) Collection of Solid Waste includes both municipal
solid waste and from facilities owner by the contracting unit
40A:11-15(7) N.J.A.C. 5.34-8.1 Multi-Year Contracts
40A:11-16 Separate plans for various types of work; bids; contracts
LFN 2010-4 (page 4-5) Price adjustments in local public contracts for asphalt cement,
and fuel
40A:11-16.6 Definitions relative to value engineering change orders; requirement for certain
contracts
LFN 2005-22 Implementation of Value Engineering Procedures in Construction
Contracts
40A:11-23 Advertisements for bids; bids; general requirements
N.J.A.C. 5:34-9.3 Cancellation or Postponement of Receipt of Bids or Proposals
LFN 2008-21R Online Auctions and Other Procurement Related Issues
LFN 2013-1 Limits on Bid Acceptance Dates (this is referenced an example; similar
subsequent Notices have not been issued)
40A:11-23.1 Plans, specifications, bid proposal documents; required contents
LFN 2010-4 Laws provides for base and alternate bids for public works contracts over
$500,000 (pp. 3-4)
Appendix C
April, 2014 Page 68
40A:11-23.3 Withdrawal of public works bid
LFN 2011-12 Local Public Contracts Law Amendment - Withdrawal of Bids for Public
Works Contracts
40A:11-23.4 "Bulletin NJ"
Program has not been implemented
40A:11-36 Sale or other disposition of personal property
LFN 2008-9 Selling Surplus Personal Property: Use of Online Auctions
LFN 2008-21R Online Auctions and Other Procurement Related Issues
40A:11-37.1. Rules
N.J.A.C. 5:34 Generally
Appendix D
April, 2014 Page 69
APPENDIX D
IMPORTANT PUBLIC PROCUREMENT AND PRACTICE RELATED
LAW REFERENCES
Division of Local Government Services Public Procurement website:
www.nj.gov/dca/divisions/dlgs/programs/lpcl.html
Business Registration Certificate
www.nj.gov/treasury/revenue/busregcert.shtml
Credit Cards: Limits on Government Use – LFN AU-98-1
www.nj.gov/dca/divisions/dlgs/lfns/98/au98-1.pdf
Electronic Procurement Practices
www.nj.gov/dca/divisions/dlgs/programs/lpcl.html#9
Energy/Power Supply Procurement Practices
www.nj.gov/dca/divisions/dlgs/programs/lpcl.html#3
Equal Employment Opportunity in Public Contracting
www.state.nj.us/treasury/contract_compliance/
Payment of Late Fees or Interest on Procurements – LFN 2010-3
www.nj.gov/dca/divisions/dlgs/lfns/10/2010-03.doc
Petroleum Price Change Price Adjustments – LFN 2005-24
www.nj.gov/dca/divisions/dlgs/lfns/05/2005-24.doc
Political Contribution Disclosure (Pay-to-Play)
www.nj.gov/dca/divisions/dlgs/resources/poli_contri_discl.html
Procurement Card Use – LFN 2013-17
www.nj.gov/dca/divisions/dlgs/lfns/13/2013-17.pdf
Prompt Payment of Construction Contracts
www.nj.gov/dca/divisions/dlgs/lfns/06/2006-21.doc
Public Works Contractor Registration
lwd.dol.state.nj.us/labor/wagehour/regperm/pw_cont_reg.html:
Public Works Prevailing Wages
lwd.dol.state.nj.us/labor/wagehour/regperm/public_contracts_general.html
April, 2014 Page 70
PART TWO
LOCAL PUBLIC CONTRACTS LAW REGULATIONS - N.J.A.C. 5:34
SUBCHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
5:34-1.1 Application and compliance
(a) Unless specifically stated to the contrary, the rules in this chapter apply to all local
government agencies that are encompassed by the definition of contracting unit in N.J.S.A. 40A:11-
2(1), and by all boards of education meeting the definition of board of education in N.J.S.A.
18A:18A-2a by whatever name called.
(b) Every governing body, chief executive officer, or chief school administrator shall take
reasonable steps to provide training so that all officials and employees responsible for the
administration of public contracts are aware of and are able to comply with the requirements of the
law and these rules.
(c) These rules are adopted by the Director of the Division of Local Government Services after
consultation with the Commissioner of Education pursuant to N.J.S.A. 40A:11-37.1 and 18A:18A-49.2.
(d) Public housing authorities that operate subject to the authority of the U.S. Department of
Housing and Urban Development will adhere to procurement procedures which reflect N.J.S.A.
40A:11-1 et seq. and related rules, provided that procurements conform to applicable Federal law
and the standards required therein and to 24 CFR 85.36(b) that requires where both State and
Federal law encompass the same procurement, the stricter or more limiting procedure which
encourages competition shall be used.
5:34-1.2 Definitions
The following words and terms, as used in this chapter, shall have the following meanings, unless
the context indicates otherwise:
"Aggregate" or "aggregation" means the sums expended or to be expended for the provision or
performance of any goods or services in connection with the same immediate purpose or task, or
the furnishing of similar goods or services, during the term of the contract awarded by a contracting
agency.
"Bid threshold" means the dollar amount set in N.J.S.A. 40A:11-3, and in N.J.S.A. 18A:18A-3, above
which a contracting unit shall advertise for and receive sealed bids
"Board of education" means and includes the board of education of any local school district,
consolidated school district, regional school district, educational services commission, county
special services school district, county vocational school and any other board of education or other
similar body other than the State Board of Education, the Commission on Higher Education or the
Presidents' Council, established and operating under the provisions of Title 18A of the New Jersey
Statutes and having authority to make purchases and to enter into contracts for the provision or
performance of goods or services. The term "board of education" also shall include the board of
trustees of a charter school established under P.L. 1995, c.426 (N.J.S.A. 18A:36A-1 et seq.).
April, 2014 Page 71
"Competitive contracting" means the method described in N.J.S.A. 40A:11-4.1 et seq. and 18A:18A-
4.1 et seq. of contracting for specialized goods and services in which formal proposals are solicited
from vendors.
"Concession" means the granting of a license or right to act for or on behalf of the contracting unit,
or to provide a service requiring the approval or endorsement of the contracting unit, and which
may or may not involve a payment or exchange, or provision of services by or to the contracting
unit.
"Contract" means any agreement, including, but not limited to, a purchase order or a formal
agreement, which is a legally binding relationship enforceable by law, between a vendor who
agrees to provide or perform goods or services and a contracting unit which agrees to compensate
a vendor, as defined by and subject to the terms and conditions of the agreement. A contract also
may include an arrangement whereby a vendor compensates a contracting unit for the vendor's
right to perform a service, such as, but not limited to, operating a concession.
"Contracting agent" means the governing body of a contracting unit or its authorized designee that
has the power to prepare the advertisements, to advertise for and receive bids and, as permitted by
law, to make awards for the contracting unit in connection with contracts.
"Contracting unit" means: any county; municipality; board of education; or any board, commission,
committee, authority or agency, which is not a State board, commission, committee, authority, or
agency, and which has administrative jurisdiction over any district project, or facility, included or
operating in whole or in part, within the territorial boundaries of any county or municipality which
exercises functions which are appropriate for the exercise by one or more units of local
government, and which has statutory power to make purchases and enter into contracts awarded
by a contracting agent for the provision or performance of goods or services.
"Contract year" means the period of 12 consecutive months following the award of a contract.
"Director" means the Director of the Division of Local Government Services in the Department of
Community Affairs.
"Division" means the Division of Local Government Services in the Department of Community
Affairs.
"Extraordinary unspecifiable services" or "EUS" means services which are specialized and qualitative
in nature requiring expertise, extensive training and proven reputation in the field of endeavor.
"Goods and services" or "goods or services" means any work, labor, commodities, equipment,
materials, or supplies of any tangible or intangible nature, except real property or any interest
therein, provided or performed through a contract awarded by a contracting agent, including goods
and property subject to N.J.S.A. 12A:2-101 et seq.
"Governing body" means: the governing body of the county, when the purchase is to be made or the
contract is to be entered into by, or in behalf of, a county; the governing body of the municipality,
when the purchase is to be made or the contract is to be entered into by, or on behalf of, a
municipality; a board of education, when the purchase is to be made or the contract is to be entered
into by, or on behalf of, a school district; or any board, commission, committee, authority or agency
of the character described in definition of contracting unit.
"Lowest price" means the least possible amount that meets all requirements of the request of a
contracting agent.
April, 2014 Page 72
"Lowest responsible bidder or vendor" means the bidder or vendor:
1. Whose response to a request for bids offers the lowest price and is responsive; and
2. Who is responsible.
"Multi-year contract" means a contract or other agreement operating in excess of 12 consecutive
months.
"Official newspaper" means any newspaper designated by the contracting unit pursuant to N.J.S.A.
35:1-1 et seq.
"Purchase" means a transaction, for a valuable consideration, creating or acquiring an interest in
goods, services and property, except real property or any interest therein.
"Purchase order" means a document issued by the contracting agent authorizing a purchase
transaction with a vendor to provide or perform goods or services to the contracting unit, which,
when fulfilled in accordance with the terms and conditions of a request of a contracting agent and
other provisions and procedures that may be established by the contracting unit, will result in
payment by the contracting unit.
"Purchasing agent" means the individual duly assigned the authority, responsibility, and
accountability for the purchasing activity of the contracting unit, and who has such duties as are
defined by an authority appropriate to the form and structure of the contracting unit; or in the case
of a board of education, the secretary, business administrator or the business manager of the board
of education duly assigned the authority, responsibility and accountability for the purchasing
activity of the board of education and having the power to prepare advertisements, to advertise for
and receive bids and to award contracts as permitted by N.J.S.A. 18A:18A-1 et seq., but if there be
no secretary, business administrator or business manager, such officer, committees or employees
to whom such power has been delegated by the board of education.
"Professional services" means services rendered or performed by a person authorized by law to
practice a recognized profession, whose practice is regulated by law, and the performance of which
services requires knowledge of an advanced type in a field of learning acquired by a prolonged
formal course of specialized instruction and study as distinguished from general academic
instruction or apprenticeship and training. Professional services may also mean services rendered
in the provision or performance of goods or services that are original and creative in character in a
recognized field of artistic endeavor.
"Public works" means building, altering, repairing, improving or demolishing any public structure or
facility constructed or acquired by a contracting unit to house local government or school district
functions or provide water, waste disposal, power, transportation (but not the contracting for
transportation services), and other public infrastructures.
"Remaining amount" means the value of similar goods and services that are needed for the
remainder of the current contract year, plus those similar goods and services to be needed in the
subsequent contract year.
"Responsible" means able to complete the contract in accordance with its requirements, including,
but not limited to, requirements pertaining to experience, moral integrity, operating capacity,
financial capacity, credit, and workforce, equipment, and facilities availability.
"Responsive" means conforming in all material respects to the terms and conditions, specifications,
legal requirements, and other provisions of the request.
April, 2014 Page 73
"Service or services" means the performance of work, or the furnishing of labor, time, or effort, or
any combination thereof, not involving or connected to the delivery or ownership of a specified end
product or goods or a manufacturing process. Service or services may also include an arrangement
in which a vendor compensates the contracting unit for the vendor's right to operate a concession.
SUBCHAPTER 2. EXTRAORDINARY UNSPECIFIABLE SERVICES
5:34-2.1 Use of extraordinary unspecifiable services
N.J.S.A. 40A:11-5(1)(a)ii and 18A:18A-5a(2) permit contracting units to award contracts without
competitive bidding for extraordinary unspecifiable services. The application of this exception for
extraordinary unspecifiable services shall be construed narrowly in favor of open competitive
bidding wherever possible.
5:34-2.2 General requirements limiting the use of the exception
(a) The assertion that the service can only be provided by a single contractor ("sole source")
shall not be sufficient to justify avoidance of competitive bidding as an extraordinary, unspecifiable
service (hereinafter referred to as EUS).
(b) The fact that the service is in the nature of a personal, human, social or training services
contract, or includes within its description such terms as "technical," "management," "consultant,"
or similar descriptions suggesting some special nature shall not in itself be sufficient to utilize this
exception. The need for expertise, extensive training and proven reputation in the field of endeavor
must be critical and essential to the project, and not merely a desire to have a reliable job
performed.
(c) The services must be of such a qualitative nature that the performance of the services
cannot be reasonably described by written specifications. However, services previously bid or
generally characterized as being of a continuous ongoing nature shall be subject to the presumption
that such services may not be classified as an EUS, unless a contracting unit can demonstrate in
writing its inability to prepare written specifications describing the qualitative nature of the
performance of the services required. If written specifications can be prepared describing the
qualitative nature of the performance of the services, then they shall be so written, but
notwithstanding that the other criteria of the definition may be met. Contracting unit officials might
also consider the use of competitive contracting pursuant to N.J.S.A. 40A:4.1(k) or 18A:18A-4.1(k).
(d) Services that meet the requirements of EUS may not be combined with other work in a
contract which is predominantly characterized as being a biddable activity so as to avoid the
necessity of bidding for the work which in its own right is subject to competitive bidding.
(e) No firm, having been previously contractually retained under this exception to study,
survey, or prepare specifications for a given system, function, or equipment, may be selected
without competitive bidding or competitive contracting to operate, implement, or provide any
material or services on the basis of intimate or specialized knowledge acquired as a result thereof.
Such a firm is not authorized to participate in competitive bidding or competitive contracting if its
earlier participation would give it unfair advantage.
5:34-2.3 Procedures for implementation of the exception
(a) If the estimated cost or price exceeds the 15 percent of the bid threshold of N.J.S.A. 40A:11-
6.1a or 18A:18A-37a, quotations as to the cost or price must be solicited by the contracting agent
April, 2014 Page 74
whenever practicable, and the contract shall be awarded in accordance with the requirements of
N.J.S.A. 40A:11-6.1a or 18A:18A-37a.
(b) Before the governing body awards a contract under the EUS provisions which exceeds the
bid threshold established in accordance with N.J.S.A. 40A:11- 6.1b or 18A:18A-37b, a designated
administrative official of the contracting unit must file a certificate with the governing body clearly
describing the nature of the work to be done, stating that it is not reasonably possible to draft
specifications, describing the informal solicitation of quotations, and describing in detail why the
contract meets the provisions of the statute and these rules. A mere recitation of the language in the
statute shall not be sufficient for this purpose. A standard certification format is available from the
Division of Local Government Services and must be utilized. The certification must be kept with the
resolution awarding the contract.
(c) The governing body, in addition to stating the supporting reasons for its action in the
resolution awarding the contract, shall place a notice of the action in an official newspaper pursuant
to N.J.S.A. 40A:11-5(1)(a) and 18A:18A-5(a)(2).
5:34-2.4 (Reserved)
SUBCHAPTER 3. CERTAIN LEASES OF EQUIPMENT AND SERVICE AGREEMENTS
BEYOND THE FISCAL YEAR
5:34-3.1 Duration of contract
(a) Leases (which term includes rental agreements) and service agreements for items
authorized by N.J.S.A. 40A:11-15(7) and 40A:11-15(15) or N.J.S.A. 18A:18A-42(f) shall not be
renewed or extended beyond the number of years set forth in each such statutory provision. The
specifications for rebidding after the maximum number of years should not require that the
equipment be in the possession or service of the contracting unit.
(b) Such leases and service agreements may be written for any period of time not to exceed the
maximum statutory period, or for shorter periods with provision for renewal at the option of the
contracting unit, provided that such renewal shall not cause the cumulative length to exceed the
permitted length of time. Such renewals may be authorized only by resolution of the governing
body.
5:34-3.2 Application of bidding requirements
(a) All multi-year contracts, including all multi-year leases and multi-year leases with option to
purchase, which are authorized under N.J.S.A. 40A:11- 15(7), 40A:11-15(15) or 18A:18A-42(f), and
other multi-year contracts subject to N.J.S.A. 40A:11-15 and 18A:18A-42 for the procurement of
goods or services shall be subject to competitive bidding if the cumulative amount to be expended
during the duration of the multi-year lease or contract exceeds the threshold for competitive
bidding for the contracting unit.
(b) Change orders to reflect price increases shall not be required for purchases that are part of
a contract where the bid specifications included provisions for price changes based on an objective
benchmark not under the direct control of the supplier.
(c) Leases of textbooks and services incidental thereto may be made, negotiated or awarded by
a board of education without public advertising for bids.
5:34-3.3 Option to purchase, prohibitions, cancellation clause
April, 2014 Page 75
(a) In addition to providing for the use of equipment during the period of the lease, the lease
may provide for rental payments to be credited towards the purchase price for purpose of
acquisition of the equipment if the contracting unit, at its sole option, decides to buy the
equipment, and said option was included in the original specifications and in the original contract.
(b) Leases shall not, however, provide for the acquisition of ownership at the beginning of the
lease term, with installment payments to be made thereafter.
(c) If the contracting unit anticipates that a lessor may desire to assign its right to receive
lease payments to an outside non-contractual third party, provision for such assignment must
have been permitted by the lease specifications and be included in the lease agreement, and the
lessee must be notified in writing by the lessor before payments may be made to a third party
pursuant to such an assignment.
(d) While N.J.S.A. 40A:11-15 and 18A:18A-42 authorize lease arrangements, such contractual
arrangements must contain a clause making them subject to the availability and appropriation
annually of sufficient funds as may be required to meet the extended obligation, or contain an
annual cancellation clause.
5:34-3.4 Equipment changes
(a) Equipment leased shall not be expanded, upgraded or otherwise materially changed or
increased in cost during the term of the lease without competitive bidding, except as follows:
1. Equipment changes which were specifically described, either by itemization or by
performance standards, in the original bidding specifications and for which all bidders
were requested to submit bid proposals, when in accordance with a formal written
plan of time-phased expansion, prepared prior to solicitation of bids, and when the bid
proposals for such changes were considered in the determination of the successful
bidder; or
2. An item of equipment which is discontinued by the vendor may be replaced with a
comparable model which performs the same or increased workload provided that
neither the workload nor the cost exceeds that specified in the original contract or the
plan of expansion referred to in (a)1 above.
(b) Any such changes made in accordance with this section shall be made by an amendatory
contract and the procedure followed shall be in compliance with the regulations regarding change
orders.
SUBCHAPTER 4. ADMINISTRATION OF COMPETITIVE CONTRACTING PROCESS
5:34-4.1 Definitions
The following words and terms, as used in this subchapter, shall have the following meanings,
unless the context clearly indicates otherwise.
"Administrator" means:
1. In the case of a municipality, a municipal administrator appointed pursuant to N.J.S.A.
40A:9-136 and N.J.S.A. 40A:9-137; a business administrator, a municipal manager or a
municipal administrator appointed pursuant to the Optional Municipal Charter Law, P.L.
1950, c.210 (N.J.S.A. 40:69A-1 et seq.); or a municipal manager appointed pursuant to the
municipal manager form of government law. N.J.S.A. 40:79-1 et seq.;
April, 2014 Page 76
2. In the case of a county, an individual appointed pursuant to N.J.S.A. 40A:9-42, 40:41A-42,
40:41A-47, or 40:41A-82;
3. In the case of an authority, as defined in the Local Authorities Fiscal Control Law, P.L. 1983,
c. 313 (N.J.S.A. 40A:5A-1 et seq.), a full-time professional employee of the authority found by
the governing body to possess the experience and skill necessary to properly administer the
competitive contracting process; or
4. In the case of a board of education, the administrator shall be defined pursuant to N.J.S.A.
18A:18A-4.3.b.
"Authorized agent" means a duly-appointed qualified purchasing agent, legal counsel, or
administrator of a contracting unit using competitive contracting in accordance with this
subchapter.
5:34-4.2 Model evaluation criteria
(a) The following, as appropriate to individual circumstances, shall be used as criteria for
evaluating requests for proposals (RFPs) under the competitive contracting process described in
N.J.S.A. 40A:11-4.1 et seq. and 18A:18A-4.1 et seq. These criteria are not intended to be limiting or
all-inclusive, and they may be adapted or supplemented in order to meet a contracting unit's
individual needs as competitive contracting may dictate. No criteria shall unfairly or illegally
discriminate or exclude otherwise capable vendors.
1. Technical criteria:
i. Proposed methodology:
(1) Does the vendor's proposal demonstrate a clear understanding of the
scope of work and related objectives?
(2) Is the vendor's proposal complete and responsive to the specific RFP
requirements?
(3) Has the past performance of the vendor's proposed methodology been
documented?
(4) Does the vendor's proposal use innovative technology and techniques?
ii. Are sound environmental practices such as recycling, energy efficiency,
and waste reduction used?
2. Management criteria:
i. Project management:
(1) How well does the proposed scheduling timeline meet the contracting
unit's needs?
(2) Is there a project management plan?
ii. History and experience in performing the work:
(1) Does the vendor document a record of reliability of timely delivery and
on-time and on-budget implementation?
(2) Does the vendor demonstrate a track record of service as evidenced by
on-time, on-budget, and contract compliance performance?
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(3) Does the vendor document industry or program experience?
(4) Does the vendor have a record of moral integrity?
iii. Availability of personnel, facilities, equipment and other resources:
(1) To what extent does the vendor rely on in-house resources vs.
contracted resources?
(2) Are the availability of in-house and contract resources documented?
iv. Qualification and experience of personnel:
(1) Documentation of experience in performing similar work by employees
and when appropriate, sub-contractors?
(2) Does the vendor make use of business capabilities or initiatives that
involve women, the disadvantaged, small and/or minority owned
business establishments?
(3) Does the vendor demonstrate cultural sensitivity in hiring and training
staff?
3. Cost criteria:
i. Cost of goods to be provided or services to be performed:
(1) Relative cost: How does the cost compare to other similarly scored
proposals?
(2) Full explanation: Is the price and its component charges, fees, etc.
adequately explained or documented?
ii. Assurances of performance:
(1) If required, are suitable bonds, warranties, or guarantees provided?
(2) Does the proposal include quality control and assurance programs?
iii. Vendor's financial stability and strength:
(1) Does the vendor have sufficient financial resources to meet its
obligations?
5:34-4.3 Opening and evaluating proposals and awarding competitive contracts
(a) The request for proposals document shall state the time and place for receiving and opening
the proposals, and shall specify the criteria that will be used to evaluate proposals.
(b) At the time and place proposals are due, the names of all the vendors and the price of their
respective proposals shall be announced in public. Prior to opening such proposals, the authorized
agent shall, if not provided as part of the request for proposals document, describe the specific
weighting of any evaluation criteria, which may be used for evaluating the proposals.
(c) The evaluation of request of proposals shall be subject to the following requirements:
1. The request for proposals document shall state the criteria for evaluating the proposals.
2. Where not otherwise required to do so by other applicable Federal, State and local
regulations, the authorized agent may appoint a committee to assist in the evaluation of
the proposals. Committees shall be subject to the following requirements:
April, 2014 Page 78
i. If a committee is to be used, the names of the individuals who serve as
committee members shall not be publicly disclosed until the evaluation
report is presented to the governing body. Committee members shall be
familiar with the need for the goods to be provided or the services to be
performed in the request for proposals.
ii. Committee members may conduct their work separately or together.
iii. While a member of the governing body is not required to be a committee
member, no more than one less than the majority of the current
membership of the governing body may serve on a committee.
iv. The committee may use advisors, as it deems necessary to give opinions
on evaluating proposals, except that the advisors shall be subject to the
provisions of (e) below. The names of such advisors shall be included in
the report submitted to the governing body.
v. Meetings of the committee are advisory in nature and are not subject to
the Open Public Meetings Act, N.J.S.A. 10:4-1 et seq.
3. At the option of the contracting unit, the request for proposals document may, after
proposals are received and opened, but prior to completing the evaluation of the
proposals, provide the opportunity for vendors to provide clarification regarding their
submission. The presentation shall address only those matters specified by the
contracting unit. The presentation shall not be used for negotiation of a contract
contrary to law.
(d) The process of establishing weighting criteria and evaluating proposals shall result in a
finding that a specific proposal is the most advantageous, price and other factors considered, or that
all proposals should be rejected.
(e) Before reviewing any proposals, each person evaluating a proposal shall assess their own
affiliations and financial interest and those of their families that relate to their duties as someone
evaluating a proposal to ensure they do not have a conflict of interest. For these purposes, a person
has a conflict of interest with a proposal if that person or spouse, parent, or child would be in
violation of the Local Government Ethics Law, N.J.S.A. 40A:9- 22.1 et seq., or the School Ethics Act,
N.J.S.A. 18A:12-21 et seq. as appropriate. Any person with a conflict of interest related to the
competitive contracting proposal shall not participate in the evaluation process.
(f) Prior to evaluating the proposals, each individual participating in the evaluation of a proposal
shall execute a statement in accordance with (e) above certifying they do not have a conflict of
interest. Such statement shall reflect the provisions at (e) above, which relate to possible conflict of
interest situations. This statement shall be filed with the authorized agent, prior to the beginning of
the evaluation process. The certification shall be as follows:
I hereby certify that I have reviewed the conflict of interest standards in
the Local Government Ethics Law or the School Ethics Act, as
appropriate, and that I do not have a conflict of interest with respect to the
evaluation of this proposal. I further certify that I am not engaged in any
negotiations or arrangements for prospective employment or association
with any of those submitting proposals or their parent or subsidiary
organization.
April, 2014 Page 79
5:34-4.4 Use of competitive contracting for non-listed services
(a) The authorized agent shall apply to the Director for approval to use the provisions of N.J.S.A.
40A:11-4.1k and 18A:18A-4.1k requesting the use of competitive contracting for the operation,
management, or administration of services not otherwise listed in N.J.S.A. 40A:11-4.1a through j
and 18A:18A- 4.1a through j. The application shall be in letter form and shall provide the
information reasonably required for the Director to respond to the request. If the Director finds
that the subject matter of the application is consistent with the intent of the statutory provisions
encouraging competitive contracting, then the Director shall approve the request. The Director may
consider the level and characteristics of the service and competition in the market. Prior to
submitting an application, an applicant may request to consult with the Director or designee to
review issues regarding a potential application.
(b) Services that meet the requirements for procurement through competitive contracting may
not be combined or included in a contract with other services which are required to be procured
through competitive bidding so as to avoid the statutory obligation for the procurement of such
other services through competitive bidding.
5:34-4.5 Reserved
SUBCHAPTER 5.
QUALIFIED PURCHASING AGENTS AND INCREASING THE BID THRESHOLD
5:34-5.1 Qualified purchasing agent
(a) An individual shall be considered a qualified purchasing agent pursuant to N.J.S.A. 40A:11-
9.b to exercise the supplemental authority as set forth in N.J.S.A. 40A:11-3 and 40A:11-4.3 or N.J.S.A.
18A:18A-3 and 18A:18A-4.3 upon meeting the criteria relevant to the individual as set forth in
N.J.S.A. 40A:11-9:
(b) To meet the criteria of required training courses set forth in N.J.S.A. 40A:11-9.b(5), an
applicant shall successfully complete the following courses, provided by the Center for Government
Services at Rutgers, the State University, by the Division of Local Government Services, or, with the
approval of the director, an alternative State University or county college:
1. Principles of Public Purchasing I;
2. Principles of Public Purchasing II;
3. Principles of Public Purchasing III;
4. Municipal Finance Administration, or either of the following courses: Municipal Finance
Administration for Municipal Clerks, or Municipal Finance Administration for Purchasing
Agents; and
5. For individuals applying for a qualified purchasing agent certificate after June 30, 2014,
Environmentally Preferable Procurement.
(c) Applicants for a qualified purchasing agent examination and certification shall submit an
application form available under the Professional Certification section on the Division
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website (www.nj.gov/dca/divisions/dlgs) to the Director. The application submission shall
include proof(s) of meeting the requirements in N.J.S.A. 40A:11-9 and as described as part of
the application form. Applications may be submitted at any time. At the discretion of the
Director, additional documentation may be required upon receipt of an application. Upon
meeting the requirements of law the applicant shall be issued a certificate as a qualified
purchasing agent.
5:34-5.2 Continuing Education requirements
(a) Renewal of a qualified purchasing agent certificate shall be required every three years,
subject to the applicant's fulfillment of continuing education requirements and the submission of an
application for renewal.
1. Applicants shall obtain 20 continuing education contact hours in subject areas of
procurement procedures, office administrative/general duties, ethics, and information
technology.
2. Qualified purchasing agent certificates shall expire and be due for renewal according to
the following schedule:
i. All qualified purchasing agent certificates issued prior to January 1, 2005, shall
first expire and be due for renewal as of June 30, 2015, and every three years
thereafter.
ii. All qualified purchasing agent certificates issued on or after January 1, 2005, but
prior to January 1, 2010, shall first expire and be due for renewal as of January 1,
2016, and every three years thereafter.
iii. All qualified purchasing agent certificates issued between January 1, 2010 and
April 11, 2012 shall first expire and be due for renewal as of June 30, 2016, and
every three years thereafter. All qualified purchasing agent certificates issued after
April 11, 2012 shall first expire and be due for renewal either on June 30 or
December 31, whichever is sooner, at least three years from when they are first
issued, and every three years thereafter, except that no qualified purchasing agent
certificate issued after April 11, 2012 shall expire sooner than June 30, 2016.
3. Renewal of qualified purchasing agent certificates shall be requested on the renewal form
available under the Professional Certification section on the Division website
www.nj.gov/dca/divisions/dlgs, or an approved copy thereof. The form shall be submitted
to the Director.
4. An individual who holds a qualified purchasing agent certificate and allows such
certificate to lapse by failing to renew shall be required to apply to take the qualifying
examination required pursuant to N.J.A.C. 5:34-5.1(c), and pay the requisite fee for such
application in order to obtain a new qualified purchasing agent certification, except that,
when an individual applies within six months of the expiration of the certificate, the
application may be made in the same manner as a renewal.
April, 2014 Page 81
5:34-5.3 “Green Purchasing” course
(a) Commencing June 30, 2014, all applicants who are otherwise qualified to apply for the
examination for a qualified purchasing agent pursuant to N.J.S.A. 40A:11-9.b must complete the
course Environmentally Preferable Procurement, as provided by the Division of Local Government
Services, or, with the approval of the Director, the Center for Government Services at Rutgers, the
State University; an alternate State University, or a county college.
(b) Within four years from the date the course Environmentally Preferable Procurement is
established, individuals who have been issued a qualified purchasing agent certificate either before,
on, or after April 11, 2012 are required to complete the course, in order to continue to be qualified.
The course will be completed in addition to the continuing education requirements pursuant to
N.J.A.C. 5:34-5.2.
(c) Individuals who apply for the qualified purchasing agent examination after June 30, 2014,
pursuant to N.J.A.C. 5:34-5.1, are not required to complete the Environmentally Preferable
Procurement course a second time.
5:34-5.4 Procedures for increasing the bid threshold
A contracting unit with a purchasing agent who possesses a qualified purchasing agent certificate
pursuant to N.J.S.A. 40A:11-9 desiring to take advantage of the supplemental authority of N.J.S.A.
40A:11-3 and 40A:11-4.3 or N.J.S.A. 18A:18-3 and 18A:18A-4.3 shall have its governing body pass a
resolution authorizing the amount of a higher bid threshold for the contracting unit, the amount of
which shall not exceed the statutory maximum bid threshold.
5:34-5.5 Vacancy in the office of purchasing agent
(a) Following the appointment of a purchasing agent for a contracting unit, if the person
appointed no longer performs such duties, the governing body or chief executive officer, as
appropriate to the form of government, may appoint, for a period not to exceed one year
commencing from the date of the vacancy, a person who does not possess a qualified purchasing
agent certificate to serve as a temporary purchasing agent. Any person so appointed may, with the
approval of the Director, be reappointed as a temporary purchasing agent for a maximum of one
additional year following the end of the first temporary appointment. No contracting unit shall
employ a temporary purchasing agent for more than two consecutive years.
1. Prior to the end of the first year appointment of a temporary purchasing agent, the
governing body, or chief executive officer, as appropriate, shall request, in writing,
permission from the director to appoint a temporary purchasing agent for a second year.
2. During the term of appointment of a temporary purchasing agent, a contracting unit's bid
threshold may remain at the maximum amount allowed, as long as the governing body has
passed a resolution authorizing such amount.
April, 2014 Page 82
SUBCHAPTER 6. EMERGENCY PURCHASES AND CONTRACTS
5:34-6.1 General requirements
(a) The use of emergency purchasing pursuant to N.J.S.A. 40A:11-6 or 18A:18A-7 shall be
subject to the following requirements:
1. An actual or imminent emergency must exist requiring the immediate delivery of the
goods or the performance of the service;
2. As soon as reasonably possible, but within three days of declaring the emergency, the
chief school administrator of a board of education shall notify the superintendent of
education for the county of the nature of the emergency and the estimated needs for
goods and services necessary to respond to it;
3. The emergency purchasing procedure may not be used unless the need for the goods or
services could not have been reasonably foreseen or the need for such goods or services
has arisen notwithstanding a good faith effort on the part of the contracting unit to plan
for the purchase of any goods or services required by the contracting unit;
4. The contract shall be of such limited duration as to meet only the immediate needs of
the emergency; and
5. Under no circumstances shall the emergency purchasing procedure be used to enter
into a multi-year contract.
(b) The governing body of each contracting unit shall adopt rules or regulations as appropriate
to the contracting unit to ensure that there is a procedure for determining and confirming the
existence of an emergency and that the provisions for emergency purchasing pursuant to N.J.S.A.
40A:11-6 or 18A:18A-7 may be implemented. Such rules or regulations shall include such
provisions that ensure that if initially designated individuals are not available, there is a designated
chain of command to ensure that there are always appropriate individuals available to make such
decisions.
5:34-6.2 (Reserved)
5:34-6.3 (Reserved)
SUBCHAPTER 7. COOPERATIVE PURCHASING
5:34-7.1 Applicability and authority
(a) The rules in this subchapter shall be known as the Cooperative Purchasing Rules.
(b) These rules shall apply to all contracting units.
(c) This subchapter is adopted under the authority of P.L. 1999, c. 440 (N.J.S.A. 40A:11-11).
(d) Copies of all cooperative purchasing forms are available from the Division of Local Government
Services at PO Box 803, Trenton, New Jersey 08625-0803 or at the Division's web site at
www.nj.gov/dca/divisions/dlgs/programs/lpcl.html.
(e) When the lead agency of a cooperative pricing system, joint purchasing system or regional
cooperative pricing system established and properly registered with the Division is a board of
education or educational service commission the provision and performance of goods and services
April, 2014 Page 83
shall be conducted pursuant to the Public School Contracts Law (N.J.S.A. 18A:18A-1 et seq.). All
other lead agencies shall follow the Local Public Contracts Law (N.J.S.A. 40A:11-1 et seq.).
(f) Boards of education as defined in N.J.S.A. 18A:18A-2 that pursue joint purchasing as
described in N.J.S.A. 18A:18A-11 shall be subject to the rules set forth in this subchapter.
5:34-7.2 Definitions
The following words and terms, as used in this subchapter, shall have the following meanings,
unless the context clearly indicates otherwise.
"Application" means the forms and all supporting documents for creation, amendment or renewal
of a cooperative purchasing system.
"Commodity resale system" means a purchasing system in which a local contracting unit purchases
either gasoline, diesel fuel, snow removal chemicals, public works materials and supplies, including
road and roadway construction materials, or any other such materials as may be approved by the
Director for its own consumption and then sells all or a portion thereof to another local contracting
unit.
"Contracting unit" means any county; municipality; board of education; or any board, commission,
committee, authority or agency, which is not a State board, commission or committee, authority or
agency, and which has administrative jurisdiction over any district, project, or facility, included or
operating in whole or in part within the territorial boundaries of any county or municipality which
exercises functions which are appropriate for the exercise by one or more units of local government
or board of education and which has statutory power to make purchases and enter into contracts
awarded by a contracting agent for the provision or performance of goods or services.
"Cooperative pricing system" means a purchasing system in which a local contracting unit advertises
for bids and awards a master contract to a successful vendor for its own quantities and the
estimated quantities submitted by the individual registered members.
"Cooperative purchasing system" means a cooperative pricing system, joint purchasing system,
commodity resale system, county cooperative contract purchasing system or regional cooperative
pricing system which has been approved and registered pursuant to this subchapter.
"County cooperative contract purchasing system" means a cooperative purchasing system that shall
only be formed by a county and in which the county advertises for bids and awards a contract to the
successful vendor.
"Energy" means gas supply service or gas related service or electric generation service or electric
related service as set forth in the Electric Discount and Energy Competition Act (P.L. 1999, c.23)
and the Interim Government Energy Aggregation Program Standards promulgated by the Board of
Public Utilities on June 24, 1999.
"Form CCCP-1917" means Request For Registration Or Modification of a County Cooperative
Contract Purchasing System which contains the following information: action requested; name of
the county cooperative contract purchasing system; name of contract, address, and phone number
of lead agency; and certification of compliance with N.J.S.A. 40A:11-1 et seq.
"Form CP-2001" means Request For Registration Or Modification of a Cooperative Purchasing
System which contains the following information: action requested; name of cooperative
purchasing system; name of contact, address, and phone number of lead agency; name of
April, 2014 Page 84
participating contracting units affected by request; and certification of compliance with N.J.S.A.
40A:11-1 et seq. and 18A:18A-1 et seq., as appropriate.
"Form CP-2060" means a Request for Registration or Modification of a Commodity Resale System
which contains the following information: action requested, identification of the lead agency
(seller), participating contracting units (purchaser) and commodity being resold.
"Joint purchasing system" means a cooperative purchasing system in which the lead agency serves
as the purchasing agent for the membership of the system with all of the duties and responsibilities
attendant thereto. The lead agency advertises for bids and awards a single contract to a vendor
providing for the payment to the contractor for its own needs and for the needs of the participating
registered members of the system. The only contractual relationship is between the lead agency
and the vendor.
"Lead agency" means the contracting unit which is responsible for the management of the
cooperative purchasing system.
"Regional cooperative pricing system" means a cooperative pricing system composed of two or more
registered cooperative pricing systems and their participating contracting units which have agreed
to join together for the provision and performance of goods and services, including the purchase of
energy.
"Registered member" means a contracting unit which has been approved by the Director for
participation in a cooperative purchasing system.
"Snow removal chemicals" means snow grits, calcium chloride (rock salt), sand or similar substance
used for deicing or improving vehicular traction on snow or ice covered roadways.
5:34-7.3 Cooperative pricing system or joint purchasing system creation
(a) Two or more contracting units may join together to form a cooperative pricing system or a
joint purchasing system for the provision and performance of goods and services.
(b) The contracting unit designated as the lead agency shall authorize the creation of the
system by resolution. The authorizing resolution shall identify the system established as either a
joint purchasing system or a cooperative pricing system.
(c) Motions made, carried, and recorded in the written minutes of a business meeting of a
board of education shall be considered to be the same as a resolution.
5:34-7.4 Cooperative pricing system or joint purchasing system formal agreement
(a) A cooperative pricing system or joint purchasing system shall be based on a formal
agreement entered into between the lead agency and each contracting unit. Each agreement shall
be authorized by resolution.
(b) At a minimum, the formal agreement shall include the following:
1. Reference to the authorizing statute;
2. Identification of the type of purchasing system;
3. Description of the items of the goods and services to be purchased;
4. The manner of advertising for bids and of awarding contracts;
April, 2014 Page 85
5. Clear and specific assignment of responsibilities, duties and rights of all contracting
units;
6. Provision for any sharing of administrative costs and/or payment for goods and
services purchased, together with any necessary standards of performance;
7. Length of the agreement not to exceed 5 years pursuant to N.J.A.C. 5:34-7.5(f);
8. The name of the lead agency for the system:
i. As an option, the responsibility of serving as lead agency may rotate, at the
most once a year, among the registered members. Provision for this
rotation shall be included in the agreement;
ii. Rotation of lead agency responsibilities among registered members shall
not invalidate contracts or purchase orders with contractors that are in
effect at the time of rotation;
iii. The Director shall be notified in writing within 30 days of any change in
the lead agency; and
9. A requirement that the system identifier shall appear on all documentation related to
purchases made through the system, including bidding documents, purchase orders,
vouchers, contracts and records.
5:34-7.5 Cooperative pricing system or joint purchasing system registration
(a) A cooperative pricing system or joint purchasing system shall be subject to registration with
and approval by the Director.
(b) The lead agency of a proposed system shall apply to the Director on behalf of the system's
participating contracting units.
(c) Applications shall be made on Form CP-2001.
(d) The Director shall act upon the application within the time provided for review pursuant to
N.J.A.C. 5:34-7.28.
(e) In reviewing the application, the Director shall utilize the following criteria, as established
by N.J.S.A. 40A:11-11:
1. Provision for maintaining adequate records and orderly procedures to facilitate audit
and efficient administration;
2. Adequacy of public disclosure of such actions as are taken by the participants;
3. Adequacy of procedures to facilitate compliance with all provisions of the Local Public
Contracts Law, Public School Contracts Law and corresponding rules; and
4. Clarity of provisions to assure that the responsibilities of the respective parties are
understood.
(f) Approval shall be for a period not to exceed five years, and shall be limited to the terms,
participants and scope of services presented for approval. Any subsequent changes shall be
submitted to the Director on Form CP- 2001.
(g) The lead agency shall notify the Director in writing of a decision to terminate the
registration of the system prior to its approved expiration date.
April, 2014 Page 86
5:34-7.6 Cooperative pricing system or joint purchasing system membership
registration
(a) A contracting unit may apply for membership in an approved cooperative purchasing
system by passage of a resolution and executing a formal agreement with the lead agency.
(b) The lead agency shall apply to the Director for approval on behalf of the proposed new
member on Form CP-2001.
(c) The Director shall act upon the application within the time provided for review pursuant to
N.J.A.C. 5:34-7.28.
(d) Participation in the system for all registered members terminates on the system expiration
date assigned by the Director.
(e) The lead agency shall notify the Director in writing within five days of the withdrawal of any
registered member from an approved cooperative purchasing system.
(f) A registered member which has formally terminated its participation in an approved
cooperative purchasing system, may renew its membership by following the procedure defined in
this section.
(g) A registered member of a cooperative purchasing system shall retain membership in a
system until the member formally withdraws from participation or the system is dissolved.
5:34-7.7 Cooperative pricing system or joint purchasing system identifier
(a) The Director shall assign an alpha-numeric system identifier to each cooperative pricing
system or joint purchasing system at the time of its approval.
(b) The system identifier shall be included on all bidding documents, purchase orders,
vouchers, contracts and records relating to the operations of the approved cooperative purchasing
system.
5:34-7.8 Cooperative pricing system or joint purchasing system renewal
(a) Documents requesting the renewal of the registration of a cooperative pricing system or
joint purchasing system shall be submitted to the Director for review and approval prior to the date
set by the Director for the expiration of the system's registration.
(b) The lead agency shall authorize the renewal of the system by resolution.
(c) The lead agency shall apply to the Director on behalf of its membership for system renewal
for a period not to exceed five years.
(d) The renewal application package shall at a minimum include the following:
1. Form CP-2001;
2. Lead agency resolution reauthorizing the system; and
3. A list of the current membership of the System.
(e) The time for the review-approval period shall commence only upon the determination by
the Director that the application for system renewal is complete.
(f) The lead agency shall notify the Director in writing of a decision not to renew the system's
registration.
April, 2014 Page 87
5:34-7.9 Cooperative pricing system or joint purchasing system administrative
responsibilities
(a) Upon approval of system registration and annually thereafter either on the anniversary of
the registration of the system or in January of each succeeding year, the lead agency shall publish in
its official newspaper a notice similar in content to the following:
Notice of Cooperative Purchasing
(Name of lead agency) acts as lead agency in a cooperative purchasing
agreement in cooperation with (list number) registered members. Under
this system, the (name of lead agency) solicits competitive bids for certain
items purchased by registered members. This is a (specify, joint
purchasing system or cooperative pricing system) as defined and regulated
by N.J.A.C. 5:34-7. Interested citizens or vendors may obtain information
regarding the manner of operation of this system by contacting (name,
address and phone number of lead agency). System Identifier _______,
approved by the New Jersey Division of Local Government Services
through (expiration date of the system).
(b) Prior to the advertisement for bids, a registered member may request a review copy of the
bid specifications.
(c) Before seeking bids, the lead agency shall obtain from the registered members:
1. In the case of a joint purchasing system, the exact quantity of goods to be provided or
services to be performed that the lead agency shall purchase for the registered
members.
2. In the case of a cooperative pricing system, the estimated quantities that each registered
member proposes to contract for during the life of the master contract.
(d) The lead agency of a joint purchasing system shall disclose in the specifications, the
quantities and details of delivery required.
(e) The lead agency of a cooperative pricing system shall include in the specifications lead
agency requirements, stated in definite quantities; and registered member requirements, stated as
individual estimated needs.
1. The specification shall list the registered members who have submitted estimates, their
delivery address, their estimated maximum quantities and other relevant information to
permit the bidder to understand what is potentially involved.
(f) The lead agency in a joint purchasing system and the individual registered members in a
cooperative pricing system shall be responsible for compliance with the change order requirements
of N.J.A.C. 5:34-4.
(g) Each registered member may, by resolution, provide for and authorize payment in advance
for estimated administrative costs to be paid to the lead agency for a joint purchasing or
cooperative pricing system. Such administrative costs shall be budgeted by the lead agency as a
Special Item of Revenue offset with appropriations.
(h) No contract shall be made by any registered member for a price which exceeds any other
price available to the registered member.
April, 2014 Page 88
5:34-7.10 Cooperative purchasing system requirement for bids
(a) Each request for bids shall contain the following:
1. Language requiring uniform bid price(s) for both the lead agency and registered
members. A provision with respect to the registered members shall be included
substantially as follows:
REQUIREMENTS OF REGISTERED MEMBERS
[ ] Check here if willing to provide the goods or services herein bid upon to
registered members of the (System Name and System Identifier) who have
submitted estimates, without substitution or deviation from specifications, size,
features, quality, price or availability as herein set forth. It is understood that orders
will be placed directly by the registered members identified herein by separate
contract, subject to the overall terms of the master contract to be awarded by the
(name of the lead agency), and that no additional service or delivery charges will be
allowed except as permitted by these specifications.
[ ] Check here if not willing to extend prices to registered members of the (System
Name and System Identifier) who have submitted estimates as described above. It is
understood that this will not adversely affect consideration of this bid with respect
to the needs of (name of the lead agency).
2. A statement as to the procedure to be followed in the event that the lowest responsible
bidder, in the bid document, declines to extend prices to the registered members who
submitted estimates. Examples of such procedures include:
i. The contract for the stated needs of the lead agency will be awarded to the
lowest responsible bidder, and new bids will be sought and a master
contract subsequently awarded with respect to the needs of the registered
members who have submitted estimates;
ii. The contract for the needs of the lead agency will be awarded to the lowest
responsible bidder, and a master contract for the registered members who
have submitted estimates will be awarded to the next lowest bidder whose
bid agrees to extend prices; or
iii. The contract for the needs of the lead agency will be awarded, all other
bids shall be rejected and no further bids will be sought by the lead agency
on behalf of the registered members who have submitted estimates.
(b) The master contract shall state that the bid prices may be extended to registered members
who have not submitted estimates prior to the advertisement for bids with the written approval of
the lead agency and the contractor.
(c) A statement as to whether or not insurance certificates and/or performance bonds are
necessary.
5:34-7.11 Cooperative pricing system financial and contractual details
(a) The lead agency shall certify the funds available for its own needs.
(b) The master contract executed shall provide for the following:
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1. The quantities ordered for the lead agency's own needs; and
2. The estimated aggregate quantities to be ordered by the registered members who
submitted estimates, subject to the specifications and prices set forth in the master
contract.
(c) The lead agency shall supply the registered members of the cooperative pricing system who
have submitted estimates, the name of the successful bidder, prices awarded and the contract
identification number. A registered member may request a copy of the specifications. Each
registered member who submitted estimates may then order directly from the vendor. If the cost of
the order is under the bid threshold, and if the contracting agent is authorized to do so, then the
contracting agent may issue a purchase order, pursuant to N.J.S.A. 40A:11-3a or 18A:18A-3a, as
appropriate. If the cost of the order exceeds the bid threshold, then the contract must be awarded
by resolution of the governing body in accordance with N.J.S.A. 40A:11-4a or 18A:18A-4a, as
appropriate. The system identifier shall be affixed to each purchase order or contract and shown on
all forms pertaining thereto.
(d) Registered members who submit estimates shall not issue orders and contractors shall not
make deliveries, that deviate from the specifications or price as set forth in the master contract.
5:34-7.12 Cooperative pricing system use of pre-existing contracts
(a) A registered member of a cooperative pricing system which has not submitted estimates to
the lead agency before the advertisement for bids may participate in the resulting contract for that
particular item only with the prior written approval of the lead agency and the contractor.
(b) A contracting unit which is not a registered member of a cooperative pricing system at the
time of the awarding of a contract may participate in the contract once it has become a registered
member of the system and has received the written approval of the lead agency and the contractor.
(c) This section shall not apply to joint purchasing systems.
5:34-7.13 Regional cooperative pricing system
(a) Two or more registered cooperative pricing systems may join together for the provision
and performance of goods and services, including the purchasing of energy. The registered
membership of each individual cooperative pricing system shall be deemed to be a member of the
regional cooperative pricing system upon submission to the Director a list of the membership of
each system comprising the regional cooperative pricing system.
(b) Registration of a regional cooperative pricing system shall be pursuant to the requirements
set forth in N.J.A.C. 5:34-7.5.
(c) When a municipality which has aggregated its residents or business customers for gas
supply service or electric generation service becomes a member of a regional cooperative pricing
system for the purpose of purchasing energy, it shall simultaneously notify the lead agency of the
cooperative pricing system of which it is a member and the lead agency of the regional cooperative
pricing system of the participation of its residential or business customers and their respective
energy supply demands.
5:34-7.14 Joint purchasing systems financial and contractual details, exclusive of
boards of education
(a) The financial and contractual details set forth in this section shall apply only to contracting
units subject to the requirements of the Local Public Contracts Law (N.J.S.A. 40A:11-1 et seq.).
Boards of education shall be subject to the financial and contractual details set forth in the Public
April, 2014 Page 90
School Contracts Law (N.J.S.A. 18A:18A-1.1 et seq.) and the administrative requirements contained
in N.J.A.C. 6A:23A.
(b) In the case of a joint purchasing system, the lead agency shall comply with the certification
of funds requirement of N.J.A.C. 5:30-5 with respect to the full amount of the contract and Division
of Local Government Services' requirements for Encumbrance Accounting Systems.
(c) The funds of the lead agency applicable to its own share of the contract to be awarded shall
be charged to regular appropriations in its budget.
(d) Prior to handling the funds of the other registered members, the lead agency shall request
approval of the Director for a Dedication by Rider pursuant to N.J.S.A. 40A:4-39, entitled "Receipts
from Other Agencies participating in the (Name of System) joint purchasing system, System
Identifier _______." In order to meet the statutory requirement that expenditures under a Rider may
be made only in accordance with the availability of funds, the following steps shall be taken:
1. Prior to the award of contract, the chief financial officer of each registered member
(other than the lead agency) shall issue a certificate of available funds, in accordance
with N.J.A.C. 5:30-5.
2. The contracting agent of each registered member, with authorization by resolution of
the governing body if over the statutory bid limit, shall issue a purchase order to the
lead agency together with a copy of its certification of available funds.
3. The lead agency shall, in accordance with N.J.A.C. 5:30-5, issue its own certificate,
covering the full amount of the proposed contract including both its own share and
those of the registered members. The certificate shall be conditional with respect to the
amounts due from the registered members so that the certificate shall read in part as in
the following example:
$5,000 From (Lead Agency) appropriation number 207, Road Department, Other
Expenses.
$2,000 Due from (Name of registered member) pursuant to its purchase order number
70243 and Certification of Available Funds dated _______, (Lead Agency) Dedication by
Rider Account Number 7.
$1,000 Due from (Name of registered member) per its purchase order Number A- 402
and Certification of Available Funds dated _______, (Lead Agency) Dedication by Rider
Account Number 7.
$8,000 Total Certified.
4. The lead agency shall then award the total contract to the successful bidder.
5. The lead agency shall not advance funds of its own to cover the purchase on behalf of
the registered members but shall make payments only upon receipt of the funds.
Payments to the lead agency shall be made promptly in accordance with an agreed-upon
schedule, which may include making payment to the lead agency in advance of receipt of
goods. The voucher providing for the advance payment shall indicate:
"Transfer of funds to (name of lead agency) as cash advance to enable it to
purchase the following on behalf of (name of registered member) as Lead Agency
in (name of joint purchasing system), System Identifier _______." "(Then list
what is to be purchased.)"
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6. Funds received by the lead agency as advances from registered members shall be:
i. Placed in a separate bank account established within the Rider and held in
trust for the purpose of permitting the lead agency to serve as contracting
agent for the awarding of joint purchasing contracts;
ii. Used only for the payment of actual bills to the contractors pursuant to the
overall joint purchasing agreement; and
iii. Returned immediately to the registered member upon any determination
that the full amount is not needed for payments as initially expected.
5:34-7.15 Commodity resale system registration
(a) A contracting unit which purchases gasoline, diesel fuel or snow removal chemicals, public
works materials and supplies, including road and roadway construction materials or any other such
materials as may be approved by the Director directly from a vendor for its own consumption, may
resell a portion of that commodity to another local contracting unit.
(b) All commodity resale systems shall be subject to an initial registration with and approval by
the Director. In reviewing the application, the Director shall utilize the criteria set forth in N.J.A.C.
5:34-7.5(e).
(c) Approval shall be for a period not to exceed five years.
(d) The lead agency of the proposed system shall apply to the Director on behalf of the other
participating unit(s).
(e) Application shall be made on Form CP-2060.
(f) The lead agency shall authorize the creation of the resale system by resolution.
(g) The lead agency acting on behalf of itself and any participating contracting unit shall at the
time of initial system registration or when a new member is added to the system, submit to the
Director a copy of the purchase agreement or contract between the units and all confirming
resolutions.
(h) The Director shall act upon the application pursuant to N.J.A.C. 5:34-7.5.
(i) Any change in the status of the system, the addition or deletion of a member or commodity,
shall be submitted by the lead agency to the Director on Form CP-2060.
(j) The Director shall be notified in writing by the lead agency within 10 days of any change in
the status of the commodity resale system.
5:34-7.16 Commodity resale system renewal
(a) Documents requesting the renewal of the registration of a commodity resale system shall be
submitted to the Director for review and approval 45 days prior to the date set by the Director for
the expiration of the system's registration.
(b) The lead agency shall apply to the Director for renewal of the Commodity Resale System for
a period not to exceed five years.
(c) The renewal package shall include the following:
1. Form CP-2060;
2. The lead agency resolution reauthorizing the system; and
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3. A list of the current membership of the system.
(d) The time for the review-approval period shall commence upon the determination by the
Director that the application for system renewal is complete.
(e) The lead agency shall notify the Director in writing of a decision not to renew the system's
registration.
5:34-7.17 Accounting requirements for commodity resale systems
(a) The accounting requirements set forth in this section shall apply only to contracting units
subject to the requirements of the Local Public Contracts Law (N.J.S.A. 40A:11-1 et seq.). Boards of
education shall be subject to the financial and contractual details set forth in the Public School
Contracts Law (N.J.S.A. 18A:18A-1.1 et seq.) and the administrative requirements contained in
N.J.A.C. 6A:23A.
(b) Expenditure of lead agency funds applicable to its own use of the commodity shall be
charged to current fund appropriations in its annual budget.
(c) The lead agency shall request approval of the Director for a Dedication by Rider pursuant to
N.J.S.A. 40A:4-39, entitled "Receipts from Other Agencies participating in the (Name of System)
Commodity Resale System, System Identifier." In order to meet the statutory requirement that
expenditures under a Rider may be made only in accordance with the availability of funds, the
following steps shall be taken:
1. The authorized contracting agent of each registered member shall issue a purchase
order to the lead agency, together with a copy of its certification of available funds, and
resolution of the governing body if projected expenditures exceed the statutory bid
threshold;
2. The lead agency, at agreed upon intervals, shall submit to the participating members of
the system an invoice for the amount of the commodity consumed. Payments to the lead
agency shall be made by appropriation in the annual budget; and
3. Funds received by the lead agency from registered members shall be:
i. Placed in a bank account established by Rider and held in trust; and
ii. Used only for the payment or purchase of the resale commodity consumed.
5:34-7.18 Energy aggregation
(a) A municipality may provide energy supply to residents and businesses situated within its
territorial boundaries.
(b) A county government may enter into a contract for a government energy aggregation
program only if one or more constituent municipalities in the county adopt an ordinance
authorizing the county to enter into such a contract.
(c) A county government energy aggregation program shall only be conducted for residential
and business customers located within the constituent municipalities that have approved
participation in the county's government aggregation program.
(d) Only counties and municipalities acting pursuant to the conditions set forth in this chapter
may aggregate residential and business customers for gas supply or for electric generation services.
(e) A cooperative pricing system undertaking energy aggregation in which the lead agency is
not a county or municipality and the membership includes a mix of local contracting units including
April, 2014 Page 93
municipalities and counties, shall not include municipalities and counties who seek to provide
energy to residents and businesses.
5:34-7.19 Cooperative purchasing of energy
(a) Two or more contracting units may join together to form a cooperative pricing system for
the sole specific purpose of purchasing energy, or an existing registered cooperative purchasing
system may add energy as a commodity to be purchased, pursuant to the Electric Discount and
Energy Competition Act (P.L. 1999, c.23) and the Interim Government Energy Aggregation Program
Standards promulgated by the Board of Public Utilities.
(b) The purchase of energy shall be subject to the terms and conditions of the bid specifications
and a master contract. The specifications shall be drafted pursuant to Section 4.1a and 4.1b, Bidding
Specifications of the Interim Government Energy Aggregation Program Standards promulgated by
the Board of Public Utilities.
(c) Take and pay contracts for the purchase of energy where the government aggregator
commits to pay for a certain amount of energy, whether or not the energy is actually received or
used by the government aggregator or participants in a cooperative pricing system are specifically
prohibited.
5:34-7.20 Binding estimate option
Notwithstanding any of the restrictions or conditions set forth in this chapter, the lead agency of a
cooperative purchasing system shall determine prior to the solicitation of bids whether the
estimates submitted by a duly registered member of the system shall be considered firm and
binding or a member may withdraw its estimate even after a supplier has been selected. The
mechanism for determining systemwide consensus shall be the responsibility of the lead agency.
5:34-7.21 County cooperative contract purchasing system creation
(a) Only a county may establish a county cooperative contract purchasing system. The county,
at it discretion and with the approval of the vendor, may permit contracting units located within the
county's geographic boundaries to procure the provision and performance of goods and services
for their own needs, subject to the specifications, terms and conditions set forth in the contract
awarded by the county.
(b) A county shall authorize the establishment of a county cooperative contract purchasing
system by resolution.
5:34-7.22 County cooperative contract purchasing system registration
(a) A county cooperative contract purchasing system shall be subject to registration with and
approval by the Director.
(b) Application for registration shall be made on CCCP-1917.
(c) The Director shall act upon the application within the time provided for review pursuant to
N.J.A.C. 5:34-7.28.
(d) In reviewing the application, the Director shall utilize the following criteria, as established
by N.J.S.A. 40A:11-11(5):
1. Provision for maintaining adequate records and orderly procedures to facilitate audit
and efficient administration;
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2. Adequacy of public disclosure of such actions taken by the lead agency;
3. Adequacy of procedures to facilitate compliance with all provisions of the Local Public
Contracts Law and corresponding rules; and
4. Clarity of provision to assure that the responsibilities of the respective parties are
understood.
(e) Approval shall be for a period not to exceed five years, and shall be limited to the terms and
scope of services presented for approval. Any subsequent changes shall be submitted to the
Director on Form CCCP-1917 for county cooperative contract purchasing system.
(f) A county shall notify the Director in writing of a decision to terminate the registration of the
system.
5:34-7.23 County cooperative contract purchasing system identifier
(a) The Director shall assign a system identifier to each county cooperative contract purchasing
system at the time of its approval.
(b) The identifier shall be included on all contracts, purchase orders, bidding documents,
vouchers and records relating to the operations of the county cooperative contract purchasing
system.
(c) The identifier shall be provided to each local contracting unit purchasing under the terms
and conditions of a contract awarded by the county as a county cooperative contract purchasing
system. The participating contracting units shall include the system identifier on all contracts,
purchase orders, documents, vouchers and records relating to the purchases made through a
county cooperative contract purchasing system.
5:34-7.24 County cooperative contract purchasing system administrative
responsibilities
(a) Upon approval of a county cooperative contract purchasing system registration and
annually thereafter either on the anniversary of the registration of the system or in January of each
succeeding year, the lead agency shall publish in its official newspaper a notice similar in content to
the following:
Notice of County Cooperative Contract Purchasing System
The County of (name of county) acts as lead agency in a county cooperative contract
purchasing system. Under this system, the County solicits competitive bids for
certain items to be purchased. Local contracting units within the county may
purchase under the terms and conditions of selected contracts awarded by the
County without the necessity of securing formal bids. This is a county cooperative
contract purchasing system as defined and regulated by N.J.A.C. 5:34-7. Interested
citizens or vendors may obtain information regarding the manner of operation of
this system by contacting (name, address and phone number of system contact). The
System Name Is _______. The System Identifier is: _______. The Systems' establishment
was approved by the Director of the Division of Local Government Services and has
an expiration date of (expiration date).
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(b) The county shall make the contract number available to any contracting unit within the
county which seeks to purchase under the terms of a contract awarded by the county.
(c) A county managing a county cooperative contract purchasing system shall include in the
specifications the county's own requirements, stated in definite quantities. The county shall identify
the contracting units which may purchase under the terms of the contract if awarded.
5:34-7.25 County cooperative contract purchasing system county requirement for bids
(a) Each request for bids to be included in the county cooperative contract purchasing system
by the county shall contain the following:
1. Language requiring uniform bid price(s) for both the county and those contracting units
located within the county's geographic boundaries. A provision with respect to the
registered members shall be included substantially as follows:
ACCOMMODATION OF LOCAL CONTRACTING UNITS WITHIN THE COUNTY OF (Name of County)
[ ] Check here if willing to provide the goods and services herein bid upon to local
governmental contracting units located within the County of (insert name of county)
(System Name and Identifier) without substitution or deviation from specifications, size
features, quality, price or availability as herein set forth. It is understood that orders will be
placed directly by the contracting units, subject to the overall terms of the contract to be
awarded by the County of (name of the county), and that no additional service or delivery
charges will be allowed except as permitted by these specifications.
[ ] Check here if not willing to extend prices to contracting units located in the County of
(name of county) affect consideration of this bid with respect to the needs of (name of the
lead agency).
2. A statement as to the procedure to be followed in the event that the lowest responsible
bidder declines to extend prices to the contracting units located within the county's
geographic boundaries. The contract for the stated needs of the county will be awarded
to the lowest responsible bidder, and specifically not made available to contracting units
within the county.
5:34-7.26 County cooperative contract purchasing system renewal
(a) Documents requesting the renewal of the registration of a county cooperative contract
purchasing system shall be submitted to the Director for review and approval prior to the date set
by the Director for the expiration of the system's registration.
(b) The county shall authorize the renewal of the system by resolution.
(c) The county shall apply to the Director for system renewal for a period not to exceed five
years.
(d) The renewal application package shall at a minimum include the following:
1. Form CCCP-1917; and
2. County resolution reauthorizing the system.
(e) The 10-day period for the review and approval of the renewal of a county cooperative
contract purchasing system registration shall commence only upon the determination by the
Director that the application renewal is complete.
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(f) The county shall notify the Director in writing of a decision not to renew the system's
registration.
5:34-7.27 Member reports
At the discretion of the lead agency for a cooperative purchasing system, county cooperative
contract purchasing system and any energy cooperative pricing system, participants shall file such
reports, forms or documents designated by the lead agency, setting forth the use and expenditures
related to contracts executed by the participants of the cooperative purchasing system. Such
reports may be used to track and evaluate the utilization of the contracts executed by the lead
agency on behalf of the participants.
5:34-7.28 Time for review-all systems
(a) The Director shall approve or reject all applications within 45 days.
(b) The 45 day review period shall commence only upon the determination by the Director that
the application is complete.
(c) Failure of the Director to act upon an application within 45 days shall constitute a default
approval of the application for a period of five years or in the case of new membership, until the
date previously approved by the Director for the termination of system registration pursuant to
N.J.A.C. 5:34-7.5(f).
5:34-7.29 The State of New Jersey's cooperative purchasing program
(a) The system identifier of 1 NJCP shall represent the State of New Jersey Cooperative
Purchasing Program administered by the Division of Purchase and Property within the Department
of the Treasury. This identifier shall be used by all contracting units purchasing under the Division
of Purchase and Property's Cooperative Purchasing Program.
(b) Participation in the State Cooperative Purchasing (Pricing) Program does not require a
formal agreement with the Division of Purchase and Property, nor is approval of the Director
required.
(c) Contracts awarded under a State Cooperative Purchasing contract that are in excess of the
contracting units bid threshold shall be made by resolution of the governing body. A resolution of
the governing body shall not be required for State Cooperative Purchasing contracts for textbooks
or other educational material that were previously approved by a board of education as part of the
board's adopted curriculum policies.
(d) The terms and conditions of the contracts awarded by the State Division of Purchase and
Property shall be binding upon the contracting unit and the vendor. When using a State contract,
contracting units are not entitled to any bonding or indemnification protection that is provided to
the State unless specifically extended to the contracting unit by the vendor. A vendor is not
required to extend such protections, but may do so upon agreement with the contracting unit.
(e) A correctly prepared and properly executed purchase order by a contracting unit shall serve
as a contract between the contracting unit and a contractor awarded a contract pursuant to N.J.S.A.
40A:11-12 or 18A:18A-10. In addition to the system identifier, each purchase order shall include
the State contract number on which the purchase is based.
April, 2014 Page 97
5:34-7.30 Application of N.J.S.A. 40A:11-5(4) or 18A:18A-5.e: purchases at 10 percent
less than State contract price
(a) In applying the provisions of N.J.S.A. 40A:11-5(4) or 18A:18A-5.e, the purpose of purchasing
identical materials, supplies, or equipment, in the same quantities, under a State contract without
public bidding, the following conditions shall apply. For the purpose of this section, the term
contract item shall mean the item being purchased that is the identical material, supply, or
equipment.
1. Quotations for the contract item shall not be received from any vendor to whom the
State contract has been awarded and where such vendor has agreed to extend the
contract pricing for the item to local contracting units pursuant to N.J.S.A. 52:25-16.1.
2. When a State contract includes different prices based on the quantity or volume
purchased, the contracting unit shall base its quotations on identical quantities or
volume levels.
3. Terms and conditions of the State contract, as found in the Notice of Award related to
length of contract, warranty, delivery, and spotting terms, supply, costs, payment terms,
installation, and other related items (except bonding and indemnification provisions)
are met by the vendor providing the quotation.
4. If the specification for a contract item in a Notice of Award includes a specific
manufacturer's brand and model number, quotations shall be based on the same
manufacturer's brand and model number.
5. If the specification for a contract item in a Notice of Award for the contract item is based
on a performance specification, the contracting agent may receive quotations reflecting
different manufacturer's brand and models, and when making the contract award, the
contracting agent shall certify in writing that the item being purchased is identical to or
exceeds the specification of the contract item.
6. Only those options or alternatives that are provided for in a Notice of Award may be
purchased by a contracting unit. The addition of non-included options or alternates as a
part of a contract award under this section is prohibited.
5:34-7.31 Authority of Director
(a) The Director shall take whatever additional action deemed advisable to assure the orderly
conduct of cooperative purchasing systems in accordance with sound financial administration in
accordance with statutory responsibilities.
(b) The Director shall prepare such guidelines as determined necessary to assist contracting
units in the creation and administration of cooperative purchasing systems.
5:34-7.32 Enforcement
(a) All cooperative purchasing systems shall comply with the provisions of these rules at all
times. The lead agency of any cooperative purchasing system deemed by the Director to be in
noncompliance shall be notified by certified mail. The lead agency shall explain in writing within 10
working days the steps being taken to correct the noncompliance. Failure of the lead agency to
respond within the time provided shall result in the notification to the lead agency by the Director
by certified mail to appear before the Director, or his or her designee. Notice shall be given at least
10 working days prior to the date of appearance and shall detail the nature of the alleged
April, 2014 Page 98
noncompliance. Failure to appear may result in the suspension or termination of the registration of
the system.
(b) No later than five days after an appearance required herein, the Director shall issue a
written determination on the issue of regulatory compliance. A copy of the determination shall be
forwarded by certified mail to the lead agency.
(c) A determination of noncompliance shall result in the immediate commencement of a 15 day
grace period. During this time, the lead agency shall rectify all items of noncompliance, to the
satisfaction of the Director.
(d) Failure of the lead agency to undertake such action as required by the Director to resolve
the issue of noncompliance may result in the suspension or termination of the registration of the
system.
SUBCHAPTER 8. CONTRACTS SUBJECT TO PUBLIC BIDDING
5:34-8.1 Multi-year contracts
(a) All multi-year contracts, including all multi-year leases and multi-year leases with option to
purchase which are authorized under N.J.S.A. 40A:11- 15(7), 40A:11-15(15) or 18A:18A-42(f), and
other multi-year contracts subject to N.J.S.A. 40A:11-15 and 18A:18A-42 for the procurement of
goods or services shall be subject to competitive bidding if the cumulative amount to be expended
during the duration of the multi-year lease or contract exceeds the threshold for competitive
bidding for the contracting unit.
(b) Pursuant to the provisions of N.J.S.A. 40A:11-15 or 18A:18A-42, a contract award that was
based upon receipt of quotations shall not be extended if the total value of the contract exceeds the
bid threshold, which includes the original award plus any extension.
5:34-8.2 Determinations of aggregation
(a) This section shall affect determinations of aggregation for purposes of whether a contract is
subject to public bidding as set forth in N.J.S.A. 40A:11-3, 40A:11-4 and 40A:11-7, and as set forth in
N.J.S.A. 18A:18A- 3, 18A:18A-4, and 18A:18A-8, and is adopted pursuant to N.J.S.A. 40A:11-7.1 and
18A:18A-8.1. The provisions of this section shall not apply to those goods or services where the
work is single in character and for those goods or services that are necessary for the completion of
such a contract.
(b) To determine if goods or services that are expected to be used will reach the bid threshold
during the contract year, the contracting agent or purchasing agent, as defined at N.J.A.C. 5:34-1.2,
shall use professional judgment based on prior experience of the contracting unit, estimates and
plans for the upcoming contract year based on information such as the contracting unit's budget
and purchasing history, and the amount purchased in the previous contract year. When calculating
the amount purchased in the previous contract year, the calculation shall be based on the period of
12 consecutive months following the award of a contract.
(c) To determine if goods or services that are expected to be used during a contract year should
be combined with other similar goods or services in a single bid, the contracting agent or
purchasing agent shall use the following methods or techniques as may be appropriate:
1. The contracting agent or purchasing agent shall request the various organizational
components of the contracting unit to estimate and provide the contracting agent or
purchasing agent with their needs.
April, 2014 Page 99
2. Based upon appropriate study and evaluation of the competitive marketplace, the
contracting agent or purchasing agent shall determine the range of goods and services
that are best suited for aggregation to maximize potential cost savings and to maximize
vendor participation. This can be accomplished by:
i. Determining whether there are vendors capable of submitting bids on a
range of goods or services that are sufficiently similar; or
ii. Determining that commercial business practices related to the provision
or performance of the goods or services will result in a price advantage to
the contracting unit if the goods or services were made part of a separate
contract.
3. In considering if a particular good or service is subject to public bidding, the amount of
money spent with a given vendor shall not in itself be a determining factor of reaching
the threshold.
4. In determining if various expenditures are part of the same work or are similar goods or
services, the emphasis shall be placed on the purpose of the goods and services rather
than from whom they are purchased.
5. Where portions of any goods or services can be purchased through provision of law that
do not require the contracting unit to publicly bid, such as a State, county, or
cooperative purchasing contract, any remaining portions may be counted as separate
from the portion that is not required to be bid. Such purchases may be considered as a
separate aggregation calculation for the purpose of reaching the bid threshold.
5:34-8.3 When determinations of aggregation are found to be incorrect
(a) In each instance of (a)1 and 2 below, the amount required to be procured, is hereinafter
defined to be the "remaining amount." This section shall affect determinations of aggregation
pursuant to N.J.S.A. 40A:11-3, 40A:11-4 and 40A:11-7, and as set forth in N.J.S.A. 18A:18A-3,
18A:18A-4, and 18A:18A-8, and is adopted pursuant to N.J.S.A. 40A:11-7.1 and 18A:18A-8.1 when:
1. Initial estimates of goods or services needed during the contract year are incorrectly
anticipated to be less than the bid threshold; or
2. Initial estimates of goods or services needed during the contract year that had been
exempt from public bidding are later found to be incorrect.
(b) When either of the conditions in (a)1 or 2 above exist, the provisions of this section shall
apply.
(c) If the remaining amount exceeds the bid threshold, public bidding for the remaining amount
should take place as soon as practicable after the purchasing agent or contracting agent becomes
aware of the change in needs. (See chapter Appendix A.)
(d) Subject to the provisions of (d)1 and 2 below, the contracting agent or purchasing agent
may seek authorization from the governing body or its designee to solicit quotations or publicly bid
the remaining amount. If the remaining amount is between 15 percent and 100 percent of the
contracting unit's bid threshold, then:
1. The governing body may designate in advance an elected official to determine whether
public bidding or the solicitation of quotations would be most advantageous in these
circumstances; or
April, 2014 Page 100
2. If the governing body fails to designate an elected official, it retains the responsibility to make
the determination by resolution. (See chapter Appendix A.)
(e) If the remaining amount to be procured by the contracting unit is less than 15 percent of its
bid threshold, the contracting agent or purchasing agent may solicit quotations for the remaining
amount.
(f) In seeking the governing body's or its designee's authorization to solicit quotations under
(d) and (e) above, the contracting agent or purchasing agent shall:
1. Certify to the governing body or its designee, as appropriate, the need for additional
goods and services;
2. Provide a description of how similar goods or services have been procured during the
contract year to date;
3. Obtain a resolution from the governing body or written approval from its designee, as
appropriate, approving the purchase; and
4. Provide a report of all procurements made under this section to the full governing body.
(g) No additional goods or services shall be procured through the solicitation of quotations
under (d) above until the resolution or written approval approving the purchase has been passed
by the governing body or in the case of a designated elected official, other required form of written
approval has been obtained. (See chapter Appendix A.)
(h) If the actual need for goods or services that are publicly bid are found during the course of
the contract to be greater than the amount bid, the change order procedures set forth in N.J.A.C.
5:30-11 or 6A:23A-21.1 shall be used, as appropriate.
(i) Contracts issued pursuant to this section shall include a reference to the subsection under
which the purchase is authorized.
5:34-8.4 Intentional miscalculations to avoid public bidding
Under no circumstance shall a contracting unit avoid bidding by knowingly miscalculating
estimates, taking advantage of differences between contract year and fiscal year, or using another
mechanism or artifice intended to intentionally avoid public bidding.
SUBCHAPTER 9. SPECIAL CIRCUMSTANCES
5:34-9.1 Purchase of proprietary goods or services
(a) In determining whether a good or service meets the definition of "proprietary" set forth in
N.J.S.A. 40A:11-2(39) or 18A:18A-2cc, the terms used in the definition of "proprietary" shall be
defined as follows:
1. "Specialized nature" means that the purpose to which the goods or services will be used
has such unique characteristics that only the goods or services of a single vendor are
capable of meeting the contracting unit's needs. The following shall be considered as
non-limiting examples of goods or services that may, under appropriate conditions,
meet the test of being of a specialized nature:
April, 2014 Page 101
i. The use of a good or service other than the proprietary one will undermine
the functionality or operational performance of existing facilities; or
ii. The good or service is patented and the patented feature is essential for
operational performance.
2. "Necessary for the conduct of its affairs" means that the public need for the proprietary
designation is of such a compelling nature that the value to the public that is gained by
the proprietary designation overshadows the public benefit of permitting "brand name
or equivalent" and the benefits of such competition. The following shall be considered
as non-limiting examples of goods or services that may, under appropriate conditions,
meet the test of being necessary for the conduct of its affairs:
i. The contracting unit has a substantial investment in facilities, training,
replacement parts, or complimentary items that warrants reliance on a
specific manufacturer or vendor to maintain the value of the investment.
ii. Unique circumstances as to a facility or environment preclude the use of
other goods or services.
(b) Prior to advertising for the receipt of bids that includes proprietary goods or services, the
contracting agent or purchasing agent shall certify in writing to the chief executive officer of the
contracting unit an explanation of why the goods or services are of a specialized nature and
necessary for the conduct of the affairs of the local contracting unit. The description shall not
consist of rewriting or paraphrasing the statute or regulations but shall be specific to the
circumstances. Such certification shall be included as part of the bid documents.
(c) The resolution of the governing body required by N.J.S.A. 40A:11-13(d) or 18A:18A-15d
shall include a description of why the goods or services are specialized in nature and necessary for
the conduct of the affairs of the contracting unit. The description shall not consist of rewriting or
paraphrasing the statute or regulations but shall be specific to the circumstances.
(d) When taken in context of computer systems or dedicated software, the use of the
proprietary designation shall be interpreted to allow for competition within the purposes for which
the software is to be used. The competitive contracting process at N.J.S.A. 40A:11-4.1 et seq. and
18A:18A-4.1 et seq. is intended to allow for competition where there may be a limited number of
vendors selling certain types of application software, that is, financial, human resources, web site
hosting, computerized telephone systems, geographic information, police records, or computerized
dispatch systems. The competitive contracting process is not intended for those circumstances that
involve networking or telecommunications switching services.
5:34-9.2 Use of "brand name or equivalent" pursuant to N.J.S.A. 40A:11-13 and
18A:18A-15
(a) To encourage free, open, and competitive bidding, prior to referencing a "brand name or
equivalent" in a bid specification pursuant to N.J.S.A. 40A:11-13 or 18A:18A-15, a contracting agent
or purchasing agent shall first consider using a specification based on any of the following:
1. A standard issued by a national or international testing or standards setting
organization, including, but not limited to, the American Society for Testing and
Materials (ASTM), National Institute of Standards and Technology (NIST), Internet
Engineering Task Force (IETF), International Standards Organization (ISO), IEEE
Industry Standards and Technology Organization (IEEE- ISTO), any entity accredited to
set standards by the American National Standards Institute (ANSI);
April, 2014 Page 102
2. A generic specification available through a commercial or non-commercial service such
as MasterSpec® or similar service; or
3. Specialized programs such as a listing in the Building Products Pre Approval Program
maintained by the National Institute of Building Sciences.
(b) A contracting agent or purchasing agent shall not use a "brand name or equivalent" unless
they have knowledge that at least one equal exists. If there are no equals or if the nature of the
brand name good or service effectively restricts bidders to that single good or service, the
contracting agent or purchasing agent must consider the matter subject to the provisions of
proprietary goods or services at N.J.A.C. 5:34-9.1.
(c) When a specification uses "brand name or equivalent," the listed brand name shall serve as
a reference or point of comparison for the functional or operational characteristic desired for the
good or service being requested. Where a bidder submits an equivalent, it shall be the
responsibility of the bidder to document the equivalence claim. Failure to submit such
documentation shall be grounds for rejection of the claim of equivalence.
(d) Under no circumstance shall specifications require any form of "pre- approval" or "pre-
qualification" of an equivalent product before the submission of bids.
5:34-9.3 Cancellation or postponement of receipt of bids or proposals
(a) Publicly announced receipt of bids or competitive contracting proposals shall be considered
cancelled when the contracting unit must amend or modify the bid specifications and cannot meet
the requirements of N.J.S.A. 40A:11- 23 and 18A:18A-21. The following procedures shall be used in
the event a contracting unit cancels the receipt of publicly advertised bids or competitive
contracting proposals:
1. All vendors who have either submitted bids or proposals, or received specifications or
request for proposals, shall be notified by telephone, fax, or e-mail that the receipt
thereof has been cancelled, the reason therefore, and notification regarding the return
of the unopened bids pursuant to this section.
2. The contracting unit shall allow vendors to retrieve bids or proposals that had been:
i. Submitted at or before the time of cancellation;
ii. Previously sent but had not arrived by the time of cancellation; or
iii. For those not picked up by a vendor within 10 business days of being
notified of their availability, the contracting unit shall return them,
unopened, by certified mail or other delivery service that provides a
delivery receipt.
3. On the day and time originally scheduled for receipt of bids or proposals, a notice
shall be posted at the place where bids were to have been received, stating that the
receipt of bids or proposals has been cancelled. No bids or proposals are to be
received at this time.
4. All advertisements for the receipt of rescheduled bids or proposals must adhere to the
requirements of N.J.S.A. 40A:11-23 or 18A:18A-21, as appropriate to the contracting
unit for the statutory number of days between notice and when new bids or proposals
can be received.
April, 2014 Page 103
(b) Publicly announced receipt of bids or competitive contracting proposals shall be considered
postponed when an unforeseen circumstance occurs that would affect or prohibit the opening of
bids or proposals. The opening of the bids or proposals must occur within five days, excluding
Saturdays, Sundays, and holidays, of the original date of the receipt of bids or proposals. The
following procedures shall be used in the event a contracting unit must postpone the receipt of
publicly advertised bids or competitive contracting proposals:
1. As soon as practicable, all vendors who have either submitted bids or proposals, or
received specifications or request for proposals, shall be notified by telephone, fax, or e-
mail that the receipt thereof has been postponed and the reason therefore.
2. If possible, on the day and time originally scheduled for receipt of bids or proposals, a
notice shall be posted at the place where bids were to have been received, stating that
the receipt of bids or proposals has been postponed.
3. In the event of a postponement, no bids or proposals shall be opened.
5:34-9.4 Concessions
(a) The Local Public Contracts Law, N.J.S.A. 40A:11-1 et seq., and the Public School Contracts
Law, N.J.S.A. 18A:18A-1 et seq., define the term "concession" as the granting of a license or right to
act for or on behalf of the contracting unit, or to provide a service requiring the approval or
endorsement of the contracting unit, and which may or may not involve a payment or exchange, or
provision of services by or to the contracting unit. In the case of the Public School Contracts Law,
vending machines are specifically excluded from the definition. Further, a concession is only subject
to this section if it is awarded to or supports a for-profit organization or purpose.
(b) Concessions are specifically deemed to include, but are not limited to, the following:
1. The right to publish a map, newsletter, directory, or calendar containing the meeting
schedules and other information about contracting unit services or activities where the
contractor sells advertising as full or partial payment for providing the service;
2. Installation of "welcome to (name of entity)" signs on public property where a local
organization pays a fee to the sign manufacturer, who may or may not make a payment
to the contracting unit, and includes the name of the local organization on the sign;
3. Use of public space or facilities (such as scoreboards, bus shelter or facility advertising)
for advertising in exchange for fees or services, or discounts on services;
4. Installation of vending machines in public facilities (except for vending machines in
schools);
5. The donation, sale, installation, or maintenance of equipment or facilities for use of the
contracting unit;
6. The choice of a local or long distance telephone service for pay phones on public
property;
7. Copying machines in a government or library facility made available for public use;
8. The right to sell goods or services on public property; or
9. Other services, rights or use as may meet the definition of concession.
(c) A concession shall not be deemed to include contributions of goods, services, or financial
support for the sponsorship of the celebration of public events where the contributions offset in full
April, 2014 Page 104
or in part the cost of the specific event. For the purpose of providing examples, such public events
include, but are not limited to, seasonal recreation programs, concert series, holiday celebrations,
and tourism related programs. In addition, vending machines in public facilities that are considered
as protected speech under the United States Constitution, such as newspapers, or facilities used for
collection of material being sent through a pickup and delivery service are not deemed to be a
concession.
(d) Prior to commencing procurement of any concession, the governing body of the contracting
unit shall:
1. Obtain from legal counsel an opinion of the legality of procuring the concession; and
2. Pass a resolution authorizing the procurement of a concession. The resolution shall
include:
i. A description of the public need to award a concession;
ii. The concession to be awarded;
iii. The considerations, including the benefits and any risks the governing
body took into account in reaching the decision to award a concession;
iv. An estimate of the total value of the concession;
v. If any, an estimate of any revenue or services to be received by the
contracting unit;
vi. The basis of award of the concession is based upon the most advantageous
price and other factors or the lowest responsible bidder;
vii. An estimate of any costs to be incurred by the contracting unit as part of
the concession;
viii. Any services, facilities, or endorsement to be provided by the contracting
unit; and
ix. The method to be used to procure the concession pursuant to (g) below.
(e) The original legal opinion and resolution required in (d) above shall suffice for purposes of
the subsequent procurement of a particular concession where the entire procurement process had
been previously completed.
(f) The total estimated value of the concession shall be considered as the aggregate value in
determining the procurement method that will be used. The concession shall be awarded in
accordance with the relevant procedure for the method used to procure the concession. The total
estimated value shall include all revenue, if any, that may be expected to be received by the
concessionaire, which shall be deemed to include the value of all payments, goods, and services
received by the contracting unit. A specific exception to this subsection shall be the use of bank
automated teller machines or other cash vending machines. The threshold for this service shall be
based on the estimated annual value of fees charged to users of the service and the value of all
payments, goods and services received by the contracting unit.
(g) Unless otherwise specifically provided for by law, concessions shall be awarded through
either of the following means:
1. By informal quotations, when the total estimated value of the concession is less than the
bid threshold; or
April, 2014 Page 105
2. By receipt of public bid or competitive contracting, when the total estimated value of the
concession exceeds the bid threshold or at any time at the option of the governing body.
(h) While contracting units that are boards of education are not required to use the concession
process for food and drink vending machines, the use of these provisions are recommended to
enhance the integrity of the procurement process. If a contracting unit that is a board of education
combines food and drink vending machines with concessions in a single procurement, the
procedures of this section shall apply for the entire procurement.
5:34-9.5 Miscellaneous circumstances
(a) When a single contract for the collection of solid waste includes both municipal solid waste,
pursuant to N.J.S.A. 40A:11-15(3), and collection from facilities owned by a contracting unit, pursuant
to N.J.S.A. 40A:11- 15(38), the contract may be granted for a term of not more than five years.
(b) When contracts for goods or services are less than 15 percent of the bid threshold, the
purchasing agent shall employ sound business practices in awarding the contract. For the purpose
of this subsection, sound business practice means employing such judgment that the price charged
to the contracting unit reflects current market conditions and the quantity and delivery needs of the
contracting unit.
(c) When a notice of award for professional services, competitive contracting, and
extraordinary unspecifiable services is required to be published in the official newspaper of the
contracting unit, such a notice shall be published no later than 20 calendar days after the passage of
the resolution awarding the contract.
(d) Pursuant to N.J.S.A. 40A:11-4b(1) and 18A:18A-4b(1) with regard to the use of mediation to
reach a finding of prior negative experience, if the mediation activity included a requirement of
confidentiality and if no final determination of responsibility was reached, such mediation activity
shall not be considered as a cause for a finding of prior negative experience, unless stipulation was
made to the contrary.
(e) In a contracting unit subject to the Public School Contracts Law, a purchasing agent may
appoint a "duly authorized designee" to act on behalf of and be responsible to the purchasing agent
for such actions as related to purchasing. The purchasing agent shall recommend such designee to
the board of education for their consideration and approval. The designee cannot act on behalf of
the purchasing agent until board approval is received. Under these circumstances, the purchasing
agent shall continue to hold the authority, responsibility, and accountability for the purchasing
activity of the contracting unit. The use of this provision does not permit a "duly authorized
designee" to exercise the authority of a duly-appointed qualified purchasing agent.
5:34-9.6 Purchasing at 10 percent less than a State cooperative contract price
(a) A contracting unit that procures materials, supplies, or equipment for at least 10 percent
less than the State cooperative contract price, pursuant to N.J.S.A. 40A:11-5(4) submit the following
documentation to the Director of the Division of Local Government Services within five working
days of the award of any such contract:
1. A copy of the purchase order;
2. A copy of the requisition or request for purchase order (if applicable);
3. The written certification of its purchasing agent stating that the purchase price of the
materials, supplies or equipment is at least 10 percent less than the State contract price;
April, 2014 Page 106
4. Documentation verifying that the materials, supplies or equipment purchased by the
contracting unit are identical to the materials, supplies or equipment on State contract;
5. A copy of each request for quotation issued by the purchasing agent;
6. Copies of each of the three quotations received by the purchasing agent, which shall
include the vendor's name, address, identification of items offered, prices quoted, and
the percent discount (if applicable); and
7. A copy of the adopted resolution, approving or awarding the contract for the purchase
of materials, supplies, or equipment, approved by two-thirds affirmative vote of the full
membership of the governing body.
(b) All purchase orders or contract documents shall include the identifier "N.J.A.C. 5:34-9.6" and
the State contract number in order to validate the legal basis under which the purchase was made,
and to assist in the conduct of audits and other reviews for statutory compliance.
(c) The Division has provided an optional submission checklist in chapter Appendix B,
"Purchasing At 10 Percent Less Than The State Cooperative Contract Price N.J.S.A. 40A:11-5(4)."
The checklist is intended to help contracting units comply with the provisions of this section. The
checklist is available in the public contracts law section of the Division's website
http://www.state.nj.us/dca/divisions/dlgs.
5:34-9.7 Use of the General Services Administration's Federal Supply Schedules
(a) A contracting unit statutorily subject to the Local Public Contracts Law, N.J.S.A. 40A:11-1 et
seq., or the Public School Contracts Law, N.J.S.A. 18A:18A-1 et seq., may use without advertising for
bids, or having rejected all bids obtained pursuant to N.J.S.A. 40A:11-13.2 or 18A:18A-22, as
appropriate, the Federal Supply Schedules procurement programs, or update thereto. A contracting
unit shall, pursuant to N.J.S.A. 40A:11-12.b or 18A:18A-10.b, submit the following documentation to
the Director of the Division of Purchase and Property within five working days of the award of any
such contract:
1. A copy of the purchase order;
2. A copy of the requisition or request for purchase order (if applicable); and
3. Documentation identifying the price of the goods or services, under the Federal Supply
Schedules or schedules from other Federal procurement programs.
(b) All purchase orders or contract documents shall include the identifier "N.J.A.C. 5:34-9.7" and
if available, the State contract number issued by the Division of Purchase and Property in order to
validate the legal basis under which the purchase was made, and to assist in the conduct of audits
and other reviews for statutory compliance.
(c) Contracting units statutorily authorized to contract under the Local Public Contracts Law,
N.J.S.A. 40A:11-1 et seq. or the Public School Contracts Law, N.J.S.A. 18A:18A-1 et seq. and procuring
goods or services under the General Services Administration's Federal Supply Schedules or
schedules from other Federal procurement programs or update thereto, shall comply with
administrative rule promulgated by the Department of the Treasury Purchase Bureau at N.J.A.C.
17:12-1A.5, Use of Federal Supply Schedules.
(d) The Division has provided an optional submission checklist in chapter Appendix C, "Use of
the General Services Administration's Federal Supply Schedules N.J.S.A. 40A:11-12b and N.J.S.A.
April, 2014 Page 108
APPENDIX A
The examples that follow relate to N.J.A.C. 5:34-8.3, which identifies practices that should be used in
instances where the initial estimates of goods or services needed during the current contract year
were anticipated to be less than the bid threshold, or had been exempt from public bidding, but are
later found to be incorrect. The rule sets forth practices to follow in determining if the remaining
amount should be publicly bid, or if quotations should be solicited. The following situations repeat
each rule and provide an interpretative model.
In the following situations, the remaining amount (as previously defined) means: the value of similar
goods and services that are needed for the remainder of the current contract year, plus the value of
similar goods and services needed in the subsequent contract year. In reviewing these examples, be
mindful that pursuant to the Public School Contracts Law, N.J.S.A. 18A:18A-1 et seq., the bid threshold
for boards of education without an appointed Qualified Purchasing Agent differs from the bid
threshold for contracting agencies subject to the Local Public Contracts Law, N.J.S.A. 40A:11-1 et seq.
SITUATION 1
N.J.A.C. 5:34-8.3(c): If the remaining amount exceeds the bid threshold, public bidding
should take place as soon as possible.
Example: Assume that a contracting unit has a bid threshold of $17,500 and is on a calendar year
budget cycle. To date they have purchased $15,000 worth of chain link fence through solicitation of
quotations. In December, the Recreation Director advises the purchasing agent that one field and a
parking area were excluded from the initial solicitation and that an additional $10,000 worth of
chain link fence needs to be purchased for the remainder of the year. The Recreation Director
further advises that an additional $21,000 worth of chain link fence is required for anticipated
projects in the next year.
Solution: The purchasing agent or contracting agent would have to immediately initiate public
bidding procedures to procure the remaining chain link fence, because the additional need this
year, plus the need next year, exceeds the bid threshold.
SITUATION 2
N.J.A.C. 5:34-8.3(d): If the remaining amount is between 15 percent and 100 percent of the
contracting unit's bid threshold, and the contracting unit has previously designated an
elected official to determine whether public bidding or the solicitation of quotations is most
advantageous to the contracting unit, then the purchasing agent or contracting agent may
seek authorization from the governing body or its designee to solicit quotations or publicly
bid the remaining amount.
Example: The following example relates to situations where similar goods or services will not be
required in the subsequent contract year, and the contracting agent or purchasing agent has the
option to either publicly bid the remaining amount, or seek authorization from the governing body
or its designee to solicit quotations.
Assume that a contracting unit has a bid threshold of $17,500 and is on a calendar year budget
cycle. To date they have purchased $15,000 worth of chain link fence through solicitation of
quotations. In December, the Recreation Director informs the purchasing agent or contracting agent
that one field was excluded from the initial solicitation, resulting in an additional current year
April, 2014 Page 109
purchase of $10,000. The Recreation Director further advises that no purchases of chain link fence
are required for the subsequent year.
Solution: The purchasing agent or contracting agent may seek authorization from the governing
body or its designee to solicit quotations or publicly bid the remaining amount because it is
between 15 percent and 100 percent of the contracting unit's bid threshold.
SITUATION 3
N.J.A.C. 5:34-8.3(d): If the remaining amount is between 15 percent and 100 percent of the
contracting unit's bid threshold, and the contracting unit has previously designated an
elected official to determine whether public bidding or the solicitation of quotations is most
advantageous to the contracting unit, then the purchasing agent or contracting agent may
seek authorization from the governing body or its designee to solicit quotations or publicly
bid the remaining amount.
Example: The following example relates to situations where the remaining amount equals the
value of similar goods or services to be purchased for the current contract year plus the value of
similar goods or services for the subsequent contract year and is equal to between 15 percent and
100 percent of the contracting unit's bid threshold.
Assume that a contracting unit has a bid threshold of $17,500 and is on a calendar year budget. To
date, they have purchased $15,000 worth of chain link fence through solicitation of quotations. In
December, the Recreation Director informs the purchasing agent or contracting agent that one field
was excluded from the initial solicitation resulting in an additional need for $5,000 worth of chain link
fence for the remainder of the current contract year. The Recreation Director advises further that
$10,000 worth of additional chain link fence needs to be purchased during the subsequent year. The
additional $15,000 of new chain link fence ($5,000 for the remainder of the current contract year, and
$10,000 for the subsequent contract year) is less than the bid threshold of $17,500.
Solution: Since the remaining amount is between 15 percent and 100 percent of the contracting
unit's bid threshold, the purchasing agent or contracting agent may seek authorization from the
governing body or its designee to solicit quotations or publicly bid the remaining amount.
SITUATION 4
N.J.A.C. 5:34-8.3(e): If the remaining amount is less than 15 percent of the contracting unit's
bid threshold, the contracting agent or purchasing agent is authorized to solicit quotations
for the purchase of the remaining amount.
Example: Assume that a contracting unit has a bid threshold of $17,500 and is on a calendar year
budget cycle. To date they have purchased $15,000 worth of chain link fence through solicitation of
quotations. In December, the Recreation Director informs the purchasing agent or contracting agent
that the engineer miscalculated the area, and that an additional 40 linear feet of chain link fence
needs to be purchased. The cost for the additional chain link fence is $2,600.
Solution: The purchasing agent or contracting agent would be able to solicit quotations for the
remaining chain link fence, because $2,600 (the remaining amount of goods to be purchased) is less
than 15 percent of the contracting unit's bid threshold.
April, 2014 Page 110
APPENDIX B
N.J. DIVISION OF LOCAL GOVERNMENT SERVICES SUBMISSION CHECKLIST
Purchase At 10 Percent Less Than The State Cooperative Contract Price (N.J.S.A. 40A:11-5(4)
Contracting Unit's Name:
County:
Item(s) Purchased:
Date:
The Local Public Contracts Law at N.J.S.A. 40A:11-5(4) requires information on this particular type of
purchasing transaction(s) to be filed with the Director of the Division of Local Government Services.
The rule, N.J.A.C. 5:34-9.6, codifies and supplements the requirements of the provisions of law. The
rule requires documentation to be submitted to the Director within five (5) working days of the award of
any such contract. The following documentation is submitted:
DOCUMENTATION INCLUDED WITH SUBMISSION
Yes
No
1
Copy of the purchase order with the reference N.J.A.C. 5:34-9.6 included
2
Copy of the requisition or request for purchase order (if applicable);
3
Written certification by the purchasing agent stating that the purchase price of
the materials, supplies or equipment is at least 10 percent less than the State
contract price.
4
Documentation verifying that the materials, supplies or equipment purchased
by the contracting unit are identical to the materials, supplies or equipment on
State contract.
5
Copy of each request for quotation issued by the purchasing agent; and,
6
Copy of each of the three (3) quotations received by the purchasing agent,
which shall include the vendor's name and address and identification of items
offered, prices quoted, and percent discount (if applicable); and,
7
Copy of the adopted resolution approved by two-thirds affirmative vote of the
full membership of the governing body.
OTHER COMMENTS: Please use a separate sheet of paper and attach to Checklist.
FORM SUBMITTED BY:
(Please Print Name)
(Title)
(Telephone or E-mail)
(Date)
Please return this form with all the required documentation to the Bureau of Local Management Services
at the Division of Local Government Services, at PO Box 803, Trenton, NJ 08625-0803.
April, 2014 Page 111
APPENDIX C
N.J. DIVISION OF LOCAL GOVERNMENT SERVICES SUBMISSION CHECKLIST
Use Of The General Services Administration's Federal Supply Schedules
(N.J.S.A. 40A:11-12b. and N.J.S.A. 18A:18A-10b.)
Contracting Unit's Name:
County:
Item(s) Purchased:
Date:
The Local Public Contracts Law at N.J.S.A. 40A:11-12b and the Public School Contracts Law at N.J.S.A.
18A:18A-10b require information on this particular type of purchasing transaction(s) to be filed with the
Director of the Division of Purchase and Property. The rule, N.J.A.C. 5:34-9.7, codifies and supplements the
requirements of the provisions of law. The rule requires documentation to be submitted to the Director within
five (5) working days of the award of any such contract under the General Services Administration's Federal
Supply Schedules or schedules from other Federal procurement programs pursuant to N.J.S.A. 40A:11-12(b) or
18A:18A-10(b). The following documentation is submitted:
DOCUMENTATION INCLUDED WITH SUBMISSION
Yes
No
1
Copy of the purchase order with the reference N.J.A.C. 5:34-9.7 included;
2
Copy of the requisition or request for purchase order (if applicable);
3
Documentation identifying the price of goods or services under the
General Services Administration’s Federal Supply Schedules or schedules
from other Federal procurement programs pursuant to N.J.S.A. 40A:11-
12.b of 18A:18A-10.b.
OTHER COMMENTS: Please use a separate sheet of paper and attach to Checklist.
FORM SUBMITTED BY:
(Please Print Name)
(Title)
(Telephone or E-mail)
(Date)
Please return this form with all the required documentation to the Division of Purchase and Property,
Attn: Co-op Liaison, PO Box 230, Trenton, New Jersey 08625-0230.
April, 2014 Page 112
LOCAL PUBLIC CONTRACTS LAW APPLICATION OF
N.J.A.C. 5:30-5.1 ET SEQ.
SUBCHAPTER 5. ENCUMBRANCE ACCOUNTING AND CERTIFICATIONS OF AVAILABILITY
OF FUNDS
5:30-5.1 General authority
(a) This subchapter shall apply to all government agencies subject to the authority of the Local
Finance Board pursuant to the Local Budget Law (N.J.S.A. 40A:4-1 et seq.) or the Local Authorities
Fiscal Control Act (N.J.S.A. 40A:5A-1 et seq.). For the purpose of this subchapter, such government
agencies shall be referred to as local units.
(b) Every governing body and chief executive officer shall take reasonable steps as necessary so
that all officials and employees responsible for the administration of public contracts are aware of
and are able to comply with the requirements of the law and these rules.
5:30-5.2 Encumbrance systems
(a) All local units except those subject to the Local Authorities Fiscal Control Act (N.J.S.A.
40A:5A-1 et seq.) shall maintain an encumbrance accounting system for all funds as follows:
1. The system shall be designed at a minimum to record charges to amounts appropriated
for "Other Expenses" in the same or greater level of detail as "Other Expenses" are
maintained in the adopted budget. This shall be done in such a way to record charges
against amounts appropriated at the time the charges are authorized so that the funds
allocated for such purposes are reserved and cannot be used for other charges within
that line item. Examples of such authorization actions include the issuance of a purchase
order or the execution of a contract.
2. If the local unit budget uses a greater detail level through the use of object accounts,
transactions shall be encumbered at the object level detail.
3. Local units shall maintain internal controls that ensure that all purchases charged to
"Other Expense" or other non-salary line items shall be sequentially numbered either
through pre-printed multiple copy purchase orders or a computerized system that
produces appropriate purchasing internal control.
(b) The Director of the Division of Local Government Services shall make available such
technical documents as may be advisable to local units to provide further guidance on encumbrance
systems.
(c) The provisions of this section codify and continue the provisions of Technical Accounting
Directive No. 1, issued in April of 1985 and effective January 1, 1986.
5:30-5.3 General requirements
(a) The chief financial officer of a local unit, appointed pursuant to N.J.S.A. 40A:9-140.1 et seq.
or N.J.S.A. 40A:9-28.1 et seq., shall be responsible for determining the availability of sufficient funds
April, 2014 Page 113
for all contracts and amendments thereto. The delegation of this duty by the chief financial officer
does not relieve him or her of this responsibility.
(b) The governing bodies of all other local units shall designate by resolution or ordinance, as
appropriate, an individual to serve as the certifying finance officer. The certifying finance officer
shall be responsible for determining the availability of sufficient funds for all contracts and
amendments thereto. The delegation of this duty by the certifying finance officer does not relieve
him or her of this responsibility.
(c) If a purchase or the execution of a contract does not require, either by State law or any State
or local regulation, specific authorization by formal action of the governing body, then the
individual approving the contract or release of the purchase order shall ascertain from the chief
financial officer or certifying finance officer, as appropriate, that there are available sufficient
uncommitted appropriations to provide for the payment. The administrative official or employee
shall be so authorized pursuant to N.J.S.A. 40A:11-3.
5:30-5.4 Procedure
(a) The following procedure shall be utilized for the certification of funds when a contract is to
be awarded by the governing body of the local unit:
1. The chief financial officer or certifying finance officer, as appropriate, charged with the
responsibility of maintaining the financial records of the contracting unit shall certify in
writing to the governing body the availability or lack thereof of adequate funds for each
contract which is pending approval by the governing body. Said certification shall
designate specifically the line item appropriation(s) of the official budget to which the
contract will be properly charged, ensuring that the same funds shall not be certified as
available for more than one pending contract. Said officer shall be solely responsible for
the accuracy of the certification.
2. No resolution authorizing the entering into of any contract pursuant to N.J.S.A. 40A:11-
1 et seq. or any other law for the expenditure of public funds to a vendor shall be
enacted unless it shall recite that such a certificate showing availability of funds has
been provided. The resolution shall specify the exact line item appropriation(s) or
ordinance which shall be charged.
3. The certification of availability of funds shall be attached to the original copy of the
resolution or ordinance and kept in the files of the municipal clerk, clerk of the board of
chosen freeholders or secretary to the governing body.
4. Before a governing body approves a resolution or ordinance authorizing the entering
into of a contract, the local unit's attorney shall be satisfied that a certificate of
availability of funds has been provided.
5. A local unit's governing body shall not enter into or execute a contract unless it has been
presented with a written certification from its chief financial officer or certifying finance
officer, as appropriate, stating the availability of sufficient funds for the contract(s)
pending approval by the governing body.
6. When a contract is issued as a purchase order or amendment thereto, the certification of
availability of funds shall be executed through the budgetary accounting encumbrance
process.
(b) When a contract is awarded and a resolution of the governing body is not required, the
availability of funds shall be certified by the chief financial officer or certifying finance officer shall
April, 2014 Page 114
make an appropriate entry into the local unit's encumbrance system pursuant to N.J.A.C. 5:30-5.1
and 5.2 prior to the issuance of a contract.
5:30-5.5 Methods of accounting for and certifying available funds for special situations
(a) Temporary budget: When a local unit is operating under a temporary budget, as provided
for in N.J.S.A. 40A:4-19, it may enter into a contract for a period extending beyond the time period
funded in the temporary budget, subject to the following:
1. The full cost of the contract for that fiscal year shall be certified against the temporary
budget, which must contain sufficient appropriations therefor; or
2. If the full cost of that year is not charged against the temporary budget, at least the
prorated amount reflecting all liability to be incurred during the temporary budget
period must be charged and certified, and the contract must contain a clause making its
continuation past such date subject to the appropriation of sufficient funds. Immediately
after the final budget adoption, a certificate of available funds shall be prepared for the
remaining balance and filed with the original ordinance or resolution.
(b) Open end contracts: When a contract provides for certain goods or services to be provided
upon request, up to an established maximum, and the local unit is not obligated to order, accept or
pay for said goods or services except when it orders them, then the certification of available funds
shall be as follows:
1. The full maximum amount covered by the contract shall be charged against the budget
at the time the contract is awarded, and the full amount shall be certified; or
2. No amount shall be chargeable or certified until such time as goods or services are
ordered or otherwise called for. Prior to incurring the liability by placing the order, the
certification of available funds shall be made by the chief financial officer or certifying
finance officer, as appropriate, and attached to the file copy of the purchase order or
other such document. It shall be the responsibility of the official responsible for issuing
the purchase order to notify and seek the certification of availability of funds from the
chief financial officer or certifying finance officer, as appropriate.
(c) Contracts up to 12 months not coinciding with fiscal year: When a contract is awarded for a
period of up to 12 months not coinciding with the established fiscal year of the local unit, the
following methods shall be followed for purposes of accounting and providing the certification of
available funds.
1. If the contract is for a professional service or is essentially a single undertaking or
project with one basic work project required (such as, but not limited to, contracts for
revaluation, codification, management studies and feasibility surveys), rather than
being divisible into separate steps or actions which in themselves are independently
acceptable as complete work products, then the full cost of the contract shall be
chargeable to and certified against the budget or appropriation of the year in which the
contract is awarded. This method may also, at local option, be followed for contracts
described in (c)2 below.
2. If the contract is not of the character described in (c)1 above, and provides for goods or
services to be provided at separate intervals over the contract period, then the amounts
for which liability is to be incurred shall be charged and certified to the two respective
years' appropriations at the times, as appropriate, of the contract being awarded (with
respect to the amount from the first fiscal year); the adoption of the temporary budget
April, 2014 Page 115
and the adoption of the final budget (for the remainder of the contract for the second
fiscal year).
(d) Multi-year contract requirements are as follows:
1. Contracts entered into pursuant to N.J.S.A. 40A:11-15 for periods in excess of 12
months shall be charged and certified as follows:
i. For construction and related services authorized by N.J.S.A. 40A:11- 15(9),
to the budget or appropriation in full at the time of contract award;
ii. For other contracts, to the respective budgets in accordance with the
time(s) at which the respective work or services are performed or liability
for payment otherwise incurred, and subject to such requirements of this
section as might apply with respect to temporary budgets, open-end
contracts or contracts not commencing at the beginning of the fiscal year.
2. All multi-year leases and contracts except contracts specifically exempted pursuant
to N.J.S.A. 40A:11-15 shall contain a clause making them subject to the availability
and appropriation annually of sufficient funds as may be required to meet the
extended obligation or contain an annual cancellation clause.
(e) Advance award of contracts: No contract shall be awarded in one fiscal year if the date on
which it properly takes effect falls in the next fiscal year unless the contract includes a provision
making it subject to the availability and appropriation of sufficient funds in the year in which it
takes effect.
(f) Payment from proceeds shall be as follows:
1. Under the circumstances when a contractual liability may be lawfully incurred and a
payment may lawfully be made without an appropriation, such as for professional
services for liquidation or foreclosure of tax title liens as provided by N.J.S.A. 40:50-6,
the certification of available funds should recite that fact and cite the statute.
2. Contracts for services to be paid from savings generated by or from State or Federal aid
funds not yet received and appropriated are not permitted unless an appropriation is
made prior to the time the expenditure of funds is authorized.
5:30-5.6 Accounting for governmental fixed assets
(a) All local units shall have and maintain a fixed assets accounting and reporting system that:
1. Establishes and maintains a physical inventory of fixed assets of nonexpendable,
tangible property as defined and limited by the U.S. Office of Management and Budget
Circular A-87, Cost Principals for State, Local and Indian Governments, incorporated
herein by reference, as amended by 62FR45934 (August 29, 1997(, and published at
http://www.whitehouse.gov/omb/circulars_a087_2004. A local unit may establish a
capitalization level less than but not in excess of the threshold in Circular A-87, except
that the useful life of such property is at least five years;
2. Places a value on all fixed assets whether constructed or acquired through purchase,
grant, or gift. Fixed assets acquired after December 31, 1985 shall be valued on the
basis of actual cost; prior to that time, they may be valued at cost or estimated historical
cost, the basis of which shall be disclosed in the local unit’s annual financial statement;
April, 2014 Page 116
3. Has a subsidiary ledger, consisting of detailed property records for controlling
additions, retirements and transfers of fixed assets. Such ledger shall be maintained and
reconciled periodically and at the end of every fiscal year with the general ledger
control accounts for fixed assets;
4. Provides property management standards for fixed assets that ensures that:
i. Property records are maintained accurately, to reflect a description and source of
the property, its ownership, the acquisition cost and date, the percentage of Federal
participation in the acquisition, and the location, use, and condition of the property.
ii. Property owned by the Federal government is marked as such.
iii. Periodic physical inventories are taken and reconciled with property records,
with any differences being investigated to reflect the cause of difference;
iv. Provides a control system with adequate safeguards against loss, damage, or
theft of property, and full investigation and documentation of any losses; and
v. Property is adequately maintained to keep the property in good condition; and
5. Provide a Statement of General Fixed Assets in every annual audit report.
(b) The provisions of this section codify and continue the provisions of Technical Advisory
Directive No. 2, issued in April of 1985 and effective January 1, 1986, and as amended by Local
Finance Notice CFO 96-13.
5:30-5.7 General ledger accounting systems
(a) All local units shall have and maintain a general ledger for at least the current fund. Nothing
shall prohibit a local unit from maintaining a general ledger for other funds.
(b) The general ledger shall be the official permanent financial record of the local unit. It shall
provide a summary of all financial transactions as they have been recorded in the books of original
entry, using a double entry, self-balancing accounting system with the general ledger facilitating the
preparation of the financial statements. The general ledger, together with the books of original
entry and supporting subsidiary ledgers shall constitute the complete accounting system.
(c) The provisions of this section codify and continue the provisions of Technical Advisory
Directive No. 3, issued in April of 1985 and effective January 1, 1986.
April, 2014 Page 117
LOCAL PUBLIC CONTRACTS LAW APPLICATION OF
N.J.A.C. 5:30-11.1 ET SEQ.
SUBCHAPTER 11. CHANGE ORDERS AND OPEN-END CONTRACTS
5:30-11.1 Application, compliance and penalties
(a) Unless specifically stated to the contrary, the rules in this subchapter apply to all local
government agencies that are encompassed by the definition of contracting unit in N.J.S.A. 40A:11-
2(1) by whatever name called, and referred to in this subchapter as contracting units.
(b) Every governing body and chief executive officer shall take all steps necessary so that all
officials and employees shall be aware of and comply with the requirements of these rules.
5:30-11.2 Definitions
The following words and terms, as used in this subchapter, shall have the following meanings,
unless the context clearly indicates otherwise.
"Change order" means a properly prepared document authorized by the governing body which
directs and authorizes a vendor providing goods or performing services to a contracting unit
pursuant to a contract awarded by governing body resolution to change the quantity or character of
goods provided or services performed from that originally specified or estimated and to
correspondingly change the payment due therefore.
"Chief executive officer" means the elected or appointed individual with the highest level of
administrative authority of the contracting unit. In the case of a municipality, this may refer to the
mayor as appropriate to the form of government; in the case of a county, the director of a board of
chosen freeholders, county executive, or county manager as appropriate to the form of government;
in the case of an authority, the chair of the authority; and, in the case of a fire district, the president
or other presiding officer of the board of fire commissioners.
"Open-end contracts" means those contracts for which price bids were solicited on a unit basis
because exact quantities needed were not known at the time bids were sought. Such contracts,
when advertised and awarded, must include a minimum and a maximum number of units that can
be ordered for each item under the contract. Zero is an acceptable minimum. Orders placed under
such open-end contracts shall not be considered as change orders for purposes of this section, but
shall be subject to the requirements specified in N.J.A.C. 5:30-11.10. Examples include, but are not
limited to, blacktopping and office supplies such as stationery.
5:30-11.3 General requirements for all change orders
(a) No changes in quantities, work performed, services rendered, materials, supplies or
equipment delivered or provided shall be authorized, permitted or accepted except by the
procedures established herein. All change orders unless otherwise stated in this subchapter shall be
subject to the following:
1. Each change order shall be in writing and shall be numbered consecutively (beginning
with number one) and attached to the original purchase order or contract for each
project.
April, 2014 Page 118
2. Change orders which result in payment reduction below the originally contracted price
may be made by locally established procedure, provided that any change orders
increasing cost on the same contract shall include reference to such reductions.
3. Quantities of items or work shall not be changed in such a manner as to nullify the effect
of the competitive determination of lowest responsible bidder which was made at the
time of contract award, if at said time the changes could have been reasonably foreseen.
4. Responsibility required by these rules to be exercised specifically by the governing
body, including authorization of change orders, shall not be delegated except for minor
field (site) modifications pursuant to N.J.A.C. 5:30-11.4.
5. Change orders may be executed by the representative appointed by the governing body
but the responsibility for the authorization of change orders shall not be delegated by
the governing body except for minor field (site) modifications pursuant to N.J.A.C. 5:30-
11.4.
6. Change orders shall be used to change the number of units or items originally
advertised and contracted for, provided that:
i. Unit prices or a price methodology were sought in the original
specifications and included in the contract;
ii. The original specification and the contract included a provision that the
unit prices could be so used; and
iii. If (a)6i and ii above were not contained in the original specification, a
change order shall not be issued.
7. Change orders shall not be used to substantially change the quality or character of the
items or work to be provided, inasmuch as such would have been a determining factor
in the original bidding.
8. Change orders shall not serve the purpose of escalation clauses and, therefore, shall not
be utilized to effectuate upward price adjustments.
9. Total number of change orders executed for a particular contract shall not cause the
originally awarded contract price to be exceeded by more than 20 percent unless
otherwise authorized by these rules.
10. If proposed change orders do exceed the 20 percent limitation of (a)9 above, no work
shall be performed or purchases made until the procedures of N.J.A.C. 5:30-11.9 have
been completed. If the governing body determines issuance of the change order is not
justifiable, a new contract shall be executed in accordance with the Local Public
Contracts Law.
11. Before authorizing any change orders resulting in additional expenditures, the
availability of funds shall be certified in writing by the chief financial officer or certifying
finance officer, as appropriate.
12. The 20 percent limitation of (a)9 above shall not apply to emergency situations as
defined within N.J.S.A. 40A:11-6.
13. Change order authorizations shall not be withheld until the completion of the entire
project.
April, 2014 Page 119
5:30-11.4 Procedures for minor field (site) modifications
The governing body shall be required to authorize all change orders, except that minor field (site)
modifications (for example, additional fill stone needed, modifications of footings, additional rock
blasting) may be authorized, provided that they do not affect the overall scope of work of the
contract, by the designated representative of the governing body. These change orders shall result
only in minor price increases to the originally awarded contract price.
5:30-11.5 General procedures for change orders
(a) The governing body approval process for change orders shall be as follows:
1. The chief executive officer of the contracting unit or his or her designee shall file with
the governing body a request for the change order, stating the facts involved and
indicating that the proposed change order may be allowed under these rules. If the
request and justification are prepared by other than an official of the contracting unit,
they must be countersigned by the chief executive officer or his or her designee.
2. The governing body shall take such steps as it may find appropriate to assure that a
change is necessary and that the work will be completed.
3. The governing body shall then pass a resolution authorizing a written amendment to a
contract covering the change(s) to be made. The exact form of this amendatory contract
shall be at the discretion of the contracting unit attorney.
4. The resolution described in (a)3 above shall be passed before execution of the change
order. No work shall be performed or purchases made on the involved phase of the
contract until the resolution is passed.
5:30-11.6 Change orders for professional services and extraordinary unspecifiable
services
(a) This section shall apply only to change orders for professional and extraordinary,
unspecifiable services contracts.
(b) In case of conflict with the general requirements of N.J.A.C. 5:30- 11.3, the specific language
of this section shall prevail but, otherwise, the requirements of N.J.A.C. 5:30-11.3 shall be satisfied.
(c) Changes should be within the scope of activities of the original contract, and not for the
purpose of undertaking new or different work or projects. Changes in payments for activities within
the scope of activities of the contract shall be in accordance with a schedule of specific charges or
rates contained in the contract and shall be effectuated by a written change order authorized by the
governing body. If such a schedule is not included in the contract, the contract should be amended
to provide for same.
(d) The 20 percent limitation of N.J.A.C. 5:30-11.3(a)9 shall not apply to professional and
consultant contracts.
(e) If the change is not within the scope of activities of the original contract and the contract
was awarded without competitive bidding being required by law or rule, as is the case for
professional services and certain authorized extraordinary unspecifiable services in accordance
with N.J.S.A. 40A:11-5(1)(a)(i), any change beyond the original scope of activities shall be made by
amendatory contract approved by the governing body.
April, 2014 Page 120
5:30-11.7 Change orders for materials, supplies and equipment which are part of
construction contract
(a) The requirements of this section shall apply only to change orders for materials, supplies
and equipment which are part of construction contracts.
(b) In case of conflict with the general requirements of N.J.A.C. 5:30- 11.3, the specific language
of this section shall prevail but, otherwise, the requirements of N.J.A.C. 5:30-11.3 shall be satisfied.
(c) Change orders for materials, supplies and equipment items which are part of a contract
which is primarily a construction contract shall be processed in accordance with the rules
governing construction contracts. Contracts awarded on a unit price basis (including, but not
limited to, asphalt overlays, curbing) as an open-end contract shall be handled under the section
dealing with open-end contracts. However, contracts awarded for the paving, construction or
reconstruction of specifically described streets, parking lots, or sections shall be treated as
construction contracts.
5:30-11.8 Change orders for construction, reconstruction and major repair contracts
(a) The requirements of this section shall apply only to the particular type of contract in
question.
(b) In case of conflict with the general requirements of N.J.A.C. 5:30- 11.3, the specific language
of this section shall prevail but, otherwise, the requirements of N.J.A.C. 5:30-11.3 shall be satisfied.
(c) Change orders for construction, reconstruction and major repair contracts shall be limited
to the following types:
1. Unforeseeable problems, which are defined as conditions or circumstances that
could not be foreseen at the time the specifications were written and the contract
awarded; provided that a substantial amount of the construction would be delayed,
which would result in substantial increases in costs above the original contract
amount or substantial inconvenience to the public if bidding were to be required;
and
2. Minor modifications to effect economies, improve service or resolve minor
problems with affected property owners.
(d) Change orders for construction, reconstruction and major repair contracts shall not be
made for the following:
1. Changes that materially expand upon the size, nature or scope of the project as it
was originally described in the bid specifications; or
2. Extra work that could reasonably be effectuated by a separately bid contract
without unduly disrupting the basic work or imposing adverse cost consequences.
5:30-11.9 Procedures for change orders which exceed 20 percent limitation
(a) General provisions regarding the procedures for change orders which exceed the 20
percent limitation are as follows:
1. The procedures in this section shall only be followed when a particular change order on
any type of contract, except professional and extraordinary unspecifiable service
contracts, will cause the total amount of change orders executed for the particular
contract to exceed the originally awarded contract price by more than 20 percent. The
April, 2014 Page 121
purpose of the procedures is to allow for such a change only in limited instances. Such a
change shall not be permitted when the factual circumstances make it reasonably
possible to execute a new contract for the additional work. Such a change may be
allowed, for example, when an unforeseen circumstance or differing site condition is
combined with a situation which renders execution of a new contract an unreasonable
interference with the efficient completion of the work.
2. Generally such change orders are not justifiable and the ready issuance of them by
contracting units would constitute an abuse of these rules.
(b) A written certification justifying the performance of the work or the furnishing of the
services which would necessitate issuance of such a change order shall be filed by the contractor
with the chief executive officer or designee. This certification shall include an explanation of the
factual circumstances which necessitate issuance of the change order; a statement indicating why
these circumstances could not have been foreseen; a statement indicating why issuance of the
change order would be in the best interests of the contracting unit and would not constitute an
abuse of these rules; and, if the nature of the change order is technical, the certification shall include
a certified statement from the contractor's appropriate expert, such as an engineer or architect.
This statement shall explain in detail the factual circumstances which necessitate issuance of the
proposed change order. A rewrite or paraphrase of the rules in this subchapter is not acceptable.
(c) The governing body approval process for change orders which exceed the 20 percent
limitation is as follows:
1. The chief executive officer or his or her designee shall file a request for the change order
with the governing body. This request shall include a statement indicating why the
proposed change may be allowed under this subchapter. A copy of the certification
required under (b) above must also be attached to the request.
2. If the certification required pursuant to (b) above includes a certified statement from an
engineer or other expert as required by (b) above, the request to the governing body
shall also include a statement from the contracting unit's engineer or an official or
employee with the appropriate expertise. This statement shall explain in detail the
factual circumstances which justify issuance of the proposed change order. A rewrite or
paraphrase of the rules in this subchapter is not acceptable.
3. The governing body shall take appropriate steps to assure that the change order is
proper and allowable under this subchapter.
4. The governing body shall then pass a resolution authorizing a written amendatory
contract to be entered into covering the change(s) to be made. The exact form of this
amendatory contract shall be at the discretion of the contracting unit attorney.
5. The resolution described in (c)4 above shall be passed before execution of the change
order.
6. The governing body shall cause to be printed once, in an official newspaper, a brief
notice indicating the additional amount to be expended, the original contract price, the
nature of the original and additional work and why it is necessary to expend the
additional funds. A copy of the advertisement shall also be filed with the clerk or
secretary of the governing body and be available for inspection by the public.
(d) The clerk or secretary of the governing body of each contracting unit shall report to the
Director on an appendix to the contracting unit's annual budget all change orders from the previous
fiscal year which exceeded the 20 percent limitation. This report shall be made on a form provided
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by the Director. A summary of the report shall be included as supplemental material in the annual
audit of the contracting unit.
5:30-11.10 Open-end contracts
(a) The issuance of purchase orders pursuant to an open-end contract shall be considered to be
the carrying out of the contract and not a change order. The following requirements shall apply:
1. Purchase orders under open-end contracts shall not be used for purposes such as
changing the quality or character of items to be provided, nor to exceed the maximum
number(s) of items or units provided for in the original specifications and contract. Such
changes would constitute a change order.
2. Each time a purchase order is placed, the contracting agent shall ensure that funds are
available for the purchase through either an encumbrance or certification of availability
of funds.
3. Purchase orders shall be placed by the contracting agent, subject to such controls or
approval requirements as the governing body, chief executive or other administrative
officer may lawfully impose.
