Purchasing Laws and Contracts in NJ
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Questions and Answers

The formal organization of purchasing in NJ municipalities was created by the laws of?

1917

What type of contract is most common?

Firm fixed pricing

When is an emergency purchase acceptable?

Affecting public's health, safety & welfare

What is a requisition?

<p>The start of a P.O - dept. requesting item</p> Signup and view all the answers

What is the purpose of having a purchasing manual?

<p>To have guidelines to follow</p> Signup and view all the answers

Where can a government body authorize additional rules/procedure implementing emergency purchases?

<p>Purchasing manual - must list chain of commands</p> Signup and view all the answers

What is the time you have to make an award?

<p>60 days</p> Signup and view all the answers

What type of F.O.B is most advantageous?

<p>FOB destination</p> Signup and view all the answers

What is known as P.L 1999 C. 440 NJSA 40A:11-1 ET seq?

<p>Local public contracts law</p> Signup and view all the answers

Professional service contracts are for a period of how many years?

<p>1 year (12 months)</p> Signup and view all the answers

Award to contract must take place within how many days of receipt of purchase?

<p>21 days</p> Signup and view all the answers

If collusion is suspected, who do you notify?

<p>Governing body, county prosecutor, attorney general</p> Signup and view all the answers

When no bids are received, when can you negotiate with vendors?

<p>Rebid once more, then negotiate</p> Signup and view all the answers

Who can award a contract over the bid threshold?

<p>Governing body</p> Signup and view all the answers

For total aggregate, can contracts be broken down?

<p>No</p> Signup and view all the answers

Who regulates changes and establishes the law follow?

<p>DLGS - Division of Local Government Services</p> Signup and view all the answers

How can a governing body enact local law in furtherance of the contracts law?

<p>By resolution or ordinance</p> Signup and view all the answers

What is a specification?

<p>Set of requirements for a product</p> Signup and view all the answers

What does MSDS stand for?

<p>Material Safety Data Sheet</p> Signup and view all the answers

What act requires the MSDS?

<p>Workers right to know act</p> Signup and view all the answers

Advertisement must happen how many days before a bid, except solid waste?

<p>10 days, solid waste 60 days</p> Signup and view all the answers

What is the definition of bid bond?

<p>Your guarantee that the contractor will sign the contract if awarded</p> Signup and view all the answers

Bid bond is what % of contract, not to exceed what amount?

<p>10% &amp; 20,000</p> Signup and view all the answers

Consent of surety ensures that a contractor will be able to obtain what?

<p>Obtain a performance bond from the insurance company</p> Signup and view all the answers

What is a labor and material payment bond?

<p>Guarantees payment for labor and materials by the defaulting contractor</p> Signup and view all the answers

What is a maintenance bond?

<p>Guarantees to correct all defects of workmanship and materials for a specified period</p> Signup and view all the answers

Change orders can increase a contract by what percent?

<p>20%</p> Signup and view all the answers

Define aggregation.

<p>Total amount spent within a 12 month period for like items</p> Signup and view all the answers

What is certification of funds?

<p>Acknowledgment that money is available</p> Signup and view all the answers

Define encumbrance.

<p>Setting money aside against a budget by entering a P.O.</p> Signup and view all the answers

When should encumbrance happen?

<p>When charging a specific expense account</p> Signup and view all the answers

What does UCC stand for?

Signup and view all the answers

What types of transactions are governed by the UCC?

<p>Commercial, bank deposits, bill of lading</p> Signup and view all the answers

Why was the UCC formulated?

<p>To provide uniform statutes within the 50 states</p> Signup and view all the answers

Is there such a thing as an honest mistake?

<p>True</p> Signup and view all the answers

What is replevin?

<p>Retrieving something that was wrongfully taken</p> Signup and view all the answers

What are two types of law practiced?

<p>Common &amp; statutory</p> Signup and view all the answers

What is common rule?

<p>The policies and procedures that comply with State and Federal Law</p> Signup and view all the answers

When there is a dispute between terms of two agreements, is arbitration your only option?

<p>False</p> Signup and view all the answers

Can an expressed contract be written or oral?

<p>False</p> Signup and view all the answers

Can a purchase order serve as a contract?

<p>True</p> Signup and view all the answers

The fundamental philosophy of our competitive bidding statute is?

<p>Economy be secured and extravagance, fraud and favoritism be prevented</p> Signup and view all the answers

During a bid, when the amount in words is different from the equivalent figures, what shall be binding?

<p>Amount in words</p> Signup and view all the answers

During a bid, when there is a difference between the unit prices and the extended totals, which should prevail?

<p>Unit price</p> Signup and view all the answers

Under the NJ Prevailing Wage Act, how many days does the contractor have to submit their certified payroll records?

<p>10 days</p> Signup and view all the answers

The stockholder disclosure statement lists names & addresses of all stockholders in the corp/partnership which owns what percent or more?

<p>10%</p> Signup and view all the answers

When it is necessary to make changes to the specifications being bid upon, what must be issued to all prospective bidders?

<p>An addendum &amp; goods/services must be advertised</p> Signup and view all the answers

Can you charge a fee for bidding specifications to prospective bidders?

<p>True</p> Signup and view all the answers

When using F.O.B shipping point, origin, when does the ownership of goods occur?

<p>When the item leaves the seller's dock</p> Signup and view all the answers

Can you use a GSA Account for materials & supplies?

<p>False</p> Signup and view all the answers

Up to what amount can be contributed to a political party and still be able to bid?

<p>$300</p> Signup and view all the answers

How many times must a lead agent of a CO-OP advertise?

<p>1 time per year</p> Signup and view all the answers

Can a governing body award over the bid threshold?

<p>True</p> Signup and view all the answers

What is the best way to ship?

<p>F.O.B Destination, become responsible for items once in your possession</p> Signup and view all the answers

What must all RFP participants sign in order to be on the evaluating committee?

<p>No conflict of interest certification</p> Signup and view all the answers

A municipality may alter a budget appropriation which is no longer needed during its budget year with?

<p>Change in text and title resolution</p> Signup and view all the answers

What is the quote threshold?

<p>15% of the bid threshold</p> Signup and view all the answers

What are the branches of law?

<p>Legislative, executive, judicial</p> Signup and view all the answers

Contracts shall be signed within how many days of the award of contract unless both parties agree to an extension?

<p>21 days</p> Signup and view all the answers

The statutes are designed to?

<p>Safeguard the public good &amp; enforced by courts</p> Signup and view all the answers

How, when and by whom is the bid threshold increased?

<p>Every 5 years, no later than March 1st, becomes effective July 1st, by the governor</p> Signup and view all the answers

What is S.O.W?

<p>Scope of work</p> Signup and view all the answers

What is a window contract and who can award?

<p>Contracts between 17,500 &amp; bid threshold &amp; governing body</p> Signup and view all the answers

What is competitive contracting?

<p>Based on price and other factors, specialized goods/services through formal proposals are solicited from vendors</p> Signup and view all the answers

When bid threshold is changed, is it rounded to the nearest $1,000.00?

<p>True</p> Signup and view all the answers

What is a warranty?

<p>A confirmation of the quality or performance of a good or service</p> Signup and view all the answers

What is a guarantee?

<p>Reduces the buyer's sense of risk at the time of purchase</p> Signup and view all the answers

What is NJSA 40A:12?

<p>Local public land &amp; buildings law</p> Signup and view all the answers

What is NJSA 19:44A-A?

<p>Pay to Play Law</p> Signup and view all the answers

Define bid bond.

<p>Ensures the contract will be signed by the contractor or vendor</p> Signup and view all the answers

Define consent of surety.

<p>Ensures that a prospective contractor will be able to obtain a performance bond from an insurance carrier</p> Signup and view all the answers

Define labor & material bond.

<p>Ensures employees will get paid &amp; for all products used on the job</p> Signup and view all the answers

Define maintenance bond.

<p>Protection of the products from breakdown</p> Signup and view all the answers

Advertisement must appear how many days before bid?

<p>10</p> Signup and view all the answers

How many days must you advertise solid waste?

<p>60</p> Signup and view all the answers

What are the 3 ways authority is given to agents to deal with 3rd parties?

<p>Express authority, implied authority, apparent authority</p> Signup and view all the answers

Define implied authority.

<p>Unstated guidelines to purchase within guidelines</p> Signup and view all the answers

Define express authority.

<p>Given in writing to the agent's limits on products, quantity &amp; dollar amount</p> Signup and view all the answers

Define apparent authority.

<p>Supplier believes someone to have authority to make purchases</p> Signup and view all the answers

What is the statute for local public contract law?

<p>P.L.1999 C. 440</p> Signup and view all the answers

F.O.B terms most advantageous to an entity is?

<p>F.O.B Destination</p> Signup and view all the answers

How can a local governing body enact local law in furtherance of the LPCL?

<p>Ordinance, code or resolution</p> Signup and view all the answers

When a contracting unit determines that a bid was not arrived at independently, who must you notify?

<p>Governing body, attorney general, county prosecutor</p> Signup and view all the answers

Two types of laws we are governed by?

<p>Statutory &amp; common</p> Signup and view all the answers

List the forms of bid rigging.

<p>Price fixing, rotating bids, bid suppression, collusion, horizontal/vertical price fixing</p> Signup and view all the answers

Advisories from the Division of Local Government Services that have the force of regulation are called?

<p>Local Finance Notice</p> Signup and view all the answers

Advertising/bidding not needed for sale or disposition of property selling to?

<p>U.S, State of NJ, Government unit in US, contracting unit/municipality</p> Signup and view all the answers

What are the advertising guidelines?

<p>7 days addenda, 10 days for bid, 20 days for competitive contract, 60 days for solid waste contract</p> Signup and view all the answers

List the reasons for bid rejection.

<p>Lowest bid exceeds cost estimate/appropriations for project, governing body revise specifications, use state contract</p> Signup and view all the answers

List types of concessions.

<p>Pay Phones, Copiers (i.e., Library), Welcome sign with organization's name on it, Canopies/Bus stops, Golf Course, Scoreboards/Billboards</p> Signup and view all the answers

List the three purposes of the UCC.

<p>Simplify, clarify, modernize the law, permit continued expansion of commercial practices, make uniform the law</p> Signup and view all the answers

List the four elements of a contract.

<p>Capable parties, mutual consent, lawful objective, consideration</p> Signup and view all the answers

List the 6 R's in purchasing.

<p>Right time, right quality, right quantity, right price, right source, right manner</p> Signup and view all the answers

General contractor must submit names of these subcontractors with bid.

<p>Plumbing, electrical, HVAC, structural steel &amp; ironwork</p> Signup and view all the answers

List the forms of municipal government.

<p>Borough, township, village, town, city</p> Signup and view all the answers

Three optional forms of government in NJ are?

<p>Commission act, municipal manager act, optional manager act</p> Signup and view all the answers

List method of source selection.

<p>Competitive sealed bids, competitive contracting, competitive quotes, proprietary purchases, emergency purchases</p> Signup and view all the answers

List items required in a bid and if missing is not curable.

<p>Bid bond, consent of surety, stockholder agreement, list of subcontractors, addenda</p> Signup and view all the answers

What are the types of cooperative purchasing systems?

<p>Cooperative, joint, commodity resale, county regional national cooperative</p> Signup and view all the answers

What is required for a fair & open contract?

<p>Draft RFP/RFQ with criteria of award, AD in paper 10 days prior to opening, publicly open and announce results, review proposals and recommend award, governing body will make award including all cooperative contracts over $17,500</p> Signup and view all the answers

Study Notes

Purchasing Laws and Contracts in New Jersey

  • The formal organization of purchasing in NJ Municipalities established in 1917.
  • Most common contract type is firm fixed pricing.
  • Emergency purchases allowed for public health, safety, and welfare needs.
  • A requisition initiates a Purchase Order, signaling a department's request for items.
  • Purchasing manuals provide essential guidelines for procurement processes.
  • A purchasing manual can authorize additional rules for emergency purchases, including a defined chain of command.

Bidding Processes and Requirements

  • Awards must occur within 60 days of the bid opening.
  • FOB destination is the most beneficial shipping term for buyers.
  • Local Public Contracts Law is defined as P.L. 1999, C. 440 NJSA 40A:11-1 ET seq.
  • Professional service contracts are valid for one year (12 months).
  • Contracts need to be awarded within 21 days after receiving a purchase.

Ethical Considerations and Regulations

  • Report suspected collusion to the governing body, county prosecutor, or attorney general.
  • If no bids are received, rebid before negotiating with vendors.
  • Governing bodies have the authority to award contracts above bid thresholds.
  • Contracts cannot be aggregated; total payments are computed individually.

Bonds and Insurance

  • Bid bonds are 10% of the contract value, capped at $20,000.
  • Consent of surety ensures a contractor can obtain a performance bond.
  • Labor and material payment bonds guarantee payment for labor and materials.
  • Maintenance bonds guarantee correction of defects for a specified duration.

Financial Management and Compliance

  • Encumbrance is setting aside funds in anticipation of expenses via Purchase Orders.
  • Certification of funds confirms monetary availability for procurement.
  • Any changes to specifications during bidding must be communicated via addenda.

Local Government and Regulations

  • Enacting local laws requires resolution or ordinance.
  • Advertising must occur 10 days prior to bidding (60 days for solid waste).
  • UCC regulates commercial transactions, providing uniform statutes across the states.
  • Public contracts must comply with state and federal laws and prevent fraud and favoritism.

Contractual Terms and Obligations

  • Contracts must typically be signed within 21 days post-award.
  • Changes to a contract can increase costs by up to 20%.
  • The statute for local public contract law is specifically P.L. 1999, C. 440.

Procedures and Practices

  • The quote threshold is set at 15% of the total bid threshold.
  • Bid rigging includes price fixing and collusion among bidders.
  • RFP participants must sign conflict of interest certifications for evaluation.

Types of Government and Purchasing Systems

  • Various forms of municipal government in NJ include boroughs, townships, cities, and more.
  • Cooperative purchasing systems include joint and national cooperatives.

Key Definitions and Principles

  • A specification is a detailed set of requirements for a product.
  • MSDS stands for Material Safety Data Sheet, mandated under the Workers Right to Know Act.
  • The four essential elements of a contract: capable parties, mutual consent, lawful objective, and consideration.

Summary of Best Practices

  • Follow the 6 R's in purchasing: right time, quality, quantity, price, source, and manner.
  • Employ competitive methods for source selection: sealed bids, competitive contracting, and quotes.

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Description

This quiz explores the regulations and processes governing purchasing laws and contracts in New Jersey municipalities. It covers topics such as bidding processes, contract types, and ethical considerations necessary for sound procurement practices. Test your knowledge on the formal organization established in 1917 and the current laws that guide local purchasing.

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