N.Y. State Finance Law § 162: Preferred sources

§ 162. Preferred sources. 1. Purpose. To advance special social and

economic goals, selected providers shall have preferred source status

for the purposes of procurement in accordance with the provisions of

this section. Procurement from these providers shall be exempted from

the competitive procurement provisions of section one hundred

sixty-three of this article and other competitive procurement statutes.

Such exemption shall apply to commodities produced, manufactured or

assembled, including those repackaged to meet the form, function and

utility required by state agencies, in New York state and, where so

designated, services provided by those sources in accordance with this

section.

2. Preferred status. Preferred status as prescribed in this section

shall be accorded to:

a. Commodities produced by the correctional industries program of the

department of corrections and community supervision and provided to the

state pursuant to subdivision two of section one hundred eighty-four of

the correction law;

b. Commodities and services produced by any qualified charitable

non-profit-making agency for the blind approved for such purposes by the

commissioner of the office of children and family services;

c. Commodities and services produced by any special employment program

serving mentally ill persons, which shall not be required to be

incorporated and which is operated by facilities within the office of

mental health and is approved for such purposes by the commissioner of

mental health;

* d. Commodities and services produced by any qualified charitable

non-profit-making agency for other disabled persons approved for such

purposes by the commissioner of education, or incorporated under the

laws of this state and approved for such purposes by the commissioner of

education;

* NB Effective until October 4, 2028

* d. Commodities and services produced by any qualified charitable

non-profit-making agency for other severely disabled persons approved

for such purposes by the commissioner of education, or incorporated

under the laws of this state and approved for such purposes by the

commissioner of education;

* NB Effective October 4, 2028

* e. Commodities and services produced by a qualified veterans' entity

providing job and employment-skills training to veterans where such a

entity is operated by the United States department of veterans affairs

and is manufacturing products or performing services within this state

and where such entity is approved for such purposes by the commissioner

of education; or

* NB Effective until October 4, 2028

* e. Commodities and services produced by a qualified veterans'

workshop providing job and employment-skills training to veterans where

such a workshop is operated by the United States department of veterans

affairs and is manufacturing products or performing services within this

state and where such workshop is approved for such purposes by the

commissioner of education; or

* NB Effective October 4, 2028

* f. Commodities and services produced by any qualified charitable

non-profit-making entity for veterans approved for such purposes by the

commissioner of education, or incorporated under the laws of this state

and approved for such purposes by the commissioner of education.

* NB Effective until October 4, 2028

* f. Commodities and services produced by any qualified charitable

non-profit-making workshop for veterans approved for such purposes by

the commissioner of education, or incorporated under the laws of this

state and approved for such purposes by the commissioner of education.

* NB Effective October 4, 2028

3. Public list of services and commodities provided by preferred

sources.

a. By December thirty-first, nineteen hundred ninety-five, the

commissioner, in consultation with the commissioners of corrections and

community supervision, the office of children and family services, the

office of temporary and disability assistance, mental health and

education, shall prepare a list of all commodities and services that are

available and are being provided as of said date, for purchase by state

agencies, public benefit corporations or political subdivisions from

those entities accorded preference or priority status under this

section. Such list may include references to catalogs and other

descriptive literature which are available directly from any provider

accorded preferred status under this section. The commissioner shall

make this list available to prospective vendors, state agencies, public

benefit corporations, political subdivisions and other interested

parties. Thereafter, new or substantially different commodities or

services may only be made available by preferred sources for purchase by

more than one state agency, public benefit corporation or political

subdivision after addition to said list.

b. After January first, nineteen hundred ninety-six, upon the

application of the commissioner of corrections and community

supervision, the commissioner of the office of children and family

services, the office of temporary and disability assistance, the

commissioner of mental health or the commissioner of education, or a

non-profit-making facilitating agency designated by one of the said

commissioners pursuant to paragraph e of subdivision six of this

section, the state procurement council may recommend that the

commissioner: (i) add commodities or services to, or (ii) in order to

insure that such list reflects current production and/or availability of

commodities and services, delete at the request of a preferred source,

commodities or services from, the list established by paragraph a of

this subdivision. The council may make a non-binding recommendation to

the relevant preferred source to delete a commodity or service from such

list. Additions may be made only for new services or commodities, or for

services or commodities that are substantially different from those

reflected on said list for that provider. The decision to recommend the

addition of services or commodities shall be based upon a review of

relevant factors as determined by the council including costs and

benefits to be derived from such addition and shall include an analysis

by the office of general services conducted pursuant to subdivision six

of this section. Unless the state procurement council shall make a

recommendation to the commissioner on any such application within one

hundred twenty days of receipt thereof, such application shall be deemed

recommended. In the event that the state procurement council shall deny

any such application, the commissioner or non-profit-making agency which

submitted such application may, within thirty days of such denial,

appeal such denial to the commissioner of general services who shall

review all materials submitted to the state procurement council with

respect to such application and who may request such further information

or material as is deemed necessary. Within sixty days of receipt of all

information or materials deemed necessary, the commissioner shall render

a written final decision on the application which shall be binding upon

the applicant and upon the state procurement council.

c. The list maintained by the office of general services pursuant to

paragraph a of this subdivision shall be revised as necessary to reflect

the additions and deletions of commodities and services approved by the

state procurement council.

4. Priority accorded preferred sources. Except as provided in the New

York state printing and public documents law, priority among preferred

sources shall be accorded as follows:

a. (i) When commodities are available, in the form, function and

utility required by a state agency, public authority, commission, public

benefit corporation or political subdivision, said commodities must be

purchased first from the correctional industries program of the

department of corrections and community supervision;

* (ii) When commodities are available, in the form, function and

utility required by, a state agency or political subdivision or public

benefit corporation having their own purchasing agency, and such

commodities are not available pursuant to subparagraph (i) of this

paragraph, said commodities shall then be purchased from approved

charitable non-profit-making agencies for the blind, provided, however,

the preferred source shall perform fifty percent or more of the work;

* NB Effective until October 4, 2028

* (ii) When commodities are available, in the form, function and

utility required by, a state agency or political subdivision or public

benefit corporation having their own purchasing agency, and such

commodities are not available pursuant to subparagraph (i) of this

paragraph, said commodities shall then be purchased from approved

charitable non-profit-making agencies for the blind;

* NB Effective October 4, 2028

* (iii) When commodities are available, in the form, function and

utility required by, a state agency or political subdivision or public

benefit corporation having their own purchasing agency, and such

commodities are not available pursuant to subparagraphs (i) and (ii) of

this paragraph, said commodities shall then be purchased from a

qualified non-profit-making agency for other disabled persons, a

qualified special employment program for mentally ill persons, or a

qualified veterans' entity; provided, however, the preferred source

shall perform fifty percent or more of the work;

* NB Effective until October 4, 2028

* (iii) When commodities are available, in the form, function and

utility required by, a state agency or political subdivision or public

benefit corporation having their own purchasing agency, and such

commodities are not available pursuant to subparagraphs (i) and (ii) of

this paragraph, said commodities shall then be purchased from a

qualified non-profit-making agency for other severely disabled persons,

a qualified special employment program for mentally ill persons, or a

qualified veterans' workshop;

* NB Effective October 4, 2028

b. * When services are available, in the form, function and utility

required by, a state agency or political subdivision or public benefit

corporation having their own purchasing agency, equal priority shall be

accorded the services rendered and offered for sale by qualified

non-profit-making agencies for the blind and those for the other

disabled, by qualified special employment programs for mentally ill

persons and by qualified veterans' entities; provided, however, the

preferred source shall perform fifty percent or more of the work. In the

case of services:

* NB Effective until October 4, 2028

* When services are available, in the form, function and utility

required by, a state agency or political subdivision or public benefit

corporation having their own purchasing agency, equal priority shall be

accorded the services rendered and offered for sale by qualified

non-profit-making agencies for the blind and those for the other

severely disabled, by qualified special employment programs for mentally

ill persons and by qualified veterans' workshops. In the case of

services:

* NB Effective October 4, 2028

(i) state agencies or political subdivisions or public benefit

corporations having their own purchasing agency shall make reasonable

efforts to provide a notification describing their requirements to those

preferred sources, or to the facilitating entity identified in paragraph

e of subdivision six of this section, which provide the required

services as indicated on the official public list maintained by the

office of general services pursuant to subdivision three of this

section;

(ii) if, within ten days of the notification required by subparagraph

(i) of this paragraph, one or more preferred sources or facilitating

entities identified in paragraph e of subdivision six of this section

submit a notice of intent to provide the service in the form, function

and utility required, said service shall be purchased in accordance with

this section. If more than one preferred source or facilitating entity

identified in paragraph e of subdivision six of this section submits

notification of intent and meets the requirements, costs shall be the

determining factor for purchase among the preferred sources;

(iii) if, within ten days of the notification required by subparagraph

(i) of this paragraph, no preferred source or facilitating entity

identified in paragraph e of subdivision six of this section indicates

intent to provide the service, then the service shall be procured in

accordance with section one hundred sixty-three of this article. If,

after such period, a preferred source elects to bid on the service,

award shall be made in accordance with section one hundred sixty-three

of this article or as otherwise provided by law.

c. For the purposes of commodities and services produced by special

employment programs operated by facilities approved or operated by the

office of mental health, facilities within the office of mental health

shall be exempt from the requirements of subparagraph (i) of paragraph a

of this subdivision. When such requirements of the office of mental

health cannot be met pursuant to subparagraph (ii) or (iii) of paragraph

a of this subdivision, or paragraph b of this subdivision, the office of

mental health may purchase commodities and services which are

competitive in price and comparable in quality to those which could

otherwise be obtained in accordance with this article, from special

employment programs operated by facilities within the office of mental

health or other programs approved by the office of mental health.

5. Prices charged by the department of corrections and community

supervision. The prices to be charged for commodities produced by the

correctional industries program of the department of corrections and

community supervision shall be established by the commissioner of

corrections and community supervision in accordance with section one

hundred eighty-six of the correction law.

a. The prices established by the commissioner of corrections and

community supervision shall be based upon costs as determined pursuant

to this subdivision, but shall not exceed a reasonable fair market price

determined at or within ninety days before the time of sale. Fair market

price as used herein means the price at which a vendor of the same or

similar product or service who is regularly engaged in the business of

selling such product or service offers to sell such product or service

under similar terms in the same market. Costs shall be determined in

accordance with an agreement between the commissioner of corrections and

community supervision and the director of the budget.

b. A purchaser of any such product or service may, at any time prior

to or within thirty days of the time of sale, appeal the purchase price

in accordance with section one hundred eighty-six of the correction law,

on the basis that it unreasonably exceeds fair market price. Such an

appeal shall be decided by a majority vote of a three-member price

review board consisting of the director of the budget, the commissioner

of corrections and community supervision and the commissioner or their

representatives. The decision of the review board shall be final.

6. Prices charged by agencies for the blind, other disabled and

veterans' entity.

a. Except with respect to the correctional industries program of the

department of corrections and community supervision, it shall be the

duty of the commissioner to determine, and from time to time review, the

prices of all commodities and to approve the price of all services

provided by preferred sources as specified in this section offered to

state agencies, political subdivisions or public benefit corporations

having their own purchasing office. The commissioner's price review and

approval shall not be required for any purchases below one hundred

thousand dollars.

b. In determining and revising the prices of such commodities or

services, consideration shall be given to the reasonable costs of labor,

materials and overhead necessarily incurred by such preferred sources

under efficient methods of procurement, production, performance and

administration; however, the prices of such products and services shall

be as close to prevailing market price as practicable, but in no event

greater than fifteen percent above the prevailing market prices for the

same or equivalent commodities or services.

c. Such qualified charitable non-profit-making agencies for the blind

and other disabled may make purchases of materials, equipment or

supplies, except printed material, from centralized contracts for

commodities in accordance with the conditions set by the office of

general services; provided that the qualified charitable

non-profit-making agency for the blind or other disabled shall accept

sole responsibility for any payment due the vendor.

d. Such qualified charitable non-profit-making agencies for the blind

and other disabled may make purchases of materials, equipment and

supplies directly from the correctional industries program administered

by the commissioner of corrections and community supervision, subject to

such rules as may be established from time to time pursuant to the

correction law; provided that the qualified charitable non-profit-making

agency for the blind or other disabled shall accept sole responsibility

for any payment due the department of corrections and community

supervision.

e. The commissioner of the office of children and family services

shall appoint the New York state commission for the blind, or other

non-profit-making agency, other than the agency representing the other

disabled, to facilitate the distribution of orders among qualified

non-profit-making charitable agencies for the blind. The state

commissioner of education shall appoint a non-profit-making agency,

other than the agency representing the blind, to facilitate the

distribution of orders among qualified non-profit-making charitable

agencies for the other disabled and the veterans' entities. The state

commissioner of mental health shall facilitate the distribution of

orders among qualified special employment programs operated or approved

by the office of mental health serving mentally ill persons.

f. The commissioner may request the state comptroller to conduct

audits and examinations to be made of all records, books and data of any

agency for the blind or the other disabled, any special employment

program for mentally ill persons or any veterans' entity qualified under

this section to determine the costs of manufacture or the rendering of

services and the manner and efficiency of production and administration

of such agency or special employment program or veterans' entity with

relation to any product or services purchased by a state agency or

political subdivision or public benefit corporation and to furnish the

results of such audit and examination to the commissioner for such

action as he or she may deem appropriate under this section.

7. Partnering with preferred sources. Private vendors may be accorded

preferred source status but only when a proposal to a soliciting agency

for commodities or services includes a binding agreement with one or

more of the entities accorded preferred source status under this

section. The binding agreement shall provide that:

(i) The preferred source shall perform the majority of the work

necessary to such offering, and

(ii) The partnering proposal includes bona fide long term employment

opportunities for persons who are clients of an entity accorded

preferred source status herein, and

(iii) The partnering proposal offers the solicited services or

commodities at a price less than the price that otherwise would be

charged by the preferred source.

8. The council shall report to the governor, legislative fiscal

committees and the director of the budget by December thirty-first,

nineteen hundred ninety-five and thereafter annually, a separate list

concerning the denial of any application made pursuant to paragraph b of

subdivision three of this section, the reasons for such denial, whether

such denial was appealed to the commissioner, and the final decision by

the commissioner on such application.

9. The provisions of this section shall supersede inconsistent

provisions of any general, special or local law, or the provisions of

any charter.