The Division of Local Government Services (DLGS) recently issued a Local Finance Notice regarding the need for emergency procurement in light of the Coronavirus outbreak. The guidance, LFN 2020-06, also addresses public bidding concerns and the use of storm recovery reserves.
Emergency Procurement
As highlighted by the DLGS, the COVID-19 public health emergency has triggered the emergency procurement provisions of several state laws. Under both the Local Public Contracts Law (N.J.S.A. 40A:11-6) and Public School Contracts Law (N.J.S.A. 18A:18A-7), in situations where an emergency affecting the public health, safety or welfare requires the immediate delivery of goods or the performance of services, a contract may be awarded without public bidding regardless of the bid threshold.
The Local Finance Notice confirms that pursuant to N.J.S.A. 19:44A-20.12, emergency contracts awarded for purposes of coronavirus response are also excepted from Pay-to-Play due to public exigency. Moreover, the DLGS offers a reminder that contracting units awarding contracts that fall under the “exigency exception” to Pay-to-Play are no longer required to file an “emergency procurement report” with the State.
Contracting units may also enter into emergency contracts without first obtaining a vendor’s or contractor’s Business Registration Certificate (BRC). However, the contracting unit cannot make a payment until a copy of the BRC is provided to the contracting agency. The DLGS advises that the contacting unit should inform the vendor or contractor of the BRC requirement upon awarding an emergency contract. Contractors awarded public works contracts under emergency procedures must be notified of applicable Public Works Contractor Registration (PWCR) and prevailing wage requirements at the time of award. The contracting unit must also confirm compliance prior to making payment for completed work.
Public Bids
The DLGS strongly recommends cancellation of bid openings for non-essential goods and services.
Acknowledging that some public bidding will still be necessary, the Local Finance Notice addresses concerns regarding the hand delivery of bids and conducting public bid openings. In cases of bid openings for essential time-sensitive projects (e.g. summer roadwork), the DLGS recommends establishing a protocol for hand delivery of bids that limits exposure to pathogens, such as offering bidders use of a document lockbox if the building is closed or outside access restricted.
As the DLGS emphasizes, any such procedures must be affirmatively communicated to prospective bidders. “Because N.J.S.A. 40A:11-23 and N.J.S.A. 18A:18A-21 require bid openings to be public, any such bid openings should be done in a location and manner that enables adequate social distancing amongst all participants,” the guidance states. The DLGS also suggests that in addition to, but not in lieu of, the physical bid opening, contracting units may wish to offer bidders and the public the ability to witness the bid opening through an online livestream. Regardless, “Contracting units shall affirmatively communicate all measures taken for the bid opening in accordance with bid specification/RFP amendment and notice of amendment statutes and rules,” the guidance further advises.
The Local Finance Notice also provides a link to the Department of Treasury’s Division of Purchase and Property website that lists all State cooperative purchasing contracts available to local governments, as well.
Storm Recovery Reserves
The Local Finance Notice also emphasizes that municipalities and counties with storm recovery reserves may use those funds for the coronavirus response. N.J.S.A. 40A:4-62.1 specifically authorizes a municipality or county to adopt a resolution authorizing storm recovery reserve funds to be used for “any purpose necessary to protect the safety, security, health, and welfare, of its citizens from the damage caused by an emergency declared by the Governor or the President of the United States.” Any reimbursement of these expenditures must be deposited back into the reserve.
To establish a storm recovery reserve or convert a preexisting snow removal reserve to storm recovery, the governing body must adopt a resolution establishing the reserve and submit the resolution to the DLGS. Municipalities and counties need not have had a snow removal reserve to establish a storm recovery reserve.
We encourage local governments to review the Local Finance Notice with their purchasing agents, procurement officials, administrators, chief financial officers, and municipal counsel. As the DLGS and other New Jersey agencies continue to provide guidance to local governments, we will provide additional updates.