NJASCU's Most Pressing Priority: Reform the NJ State College Contracts Law
The most important issue for the state colleges and universities is reforming the procurement and construction provisions of the 31-year-old State College Contracts Law. The law pertains only to the seven state colleges and universities, while the public research universities follow more flexible requirements. It makes no sense to have different procurement and construction standards when all 11 senior public institutions are buying the same types of goods and services, and constructing the same types of buildings. The differences in the laws include:
- Standards for awarding construction contracrts
- The state colleges and universities must select "the lowest responsible bidder whose bid, conforming to the invitations for bids, will be the most advantageous to the state college"
- Public research universities can award contracts based on bids that "will be most advantageous to the university, price and other factors considered."
- Ability to enter cost-effective, innovative contracts and partnerships
The different standards for awarding construction contracts means that the public research universities can, but the state colleges cannot, enter:
- Public-private partnerships
- Design-build contracts, and
- Construction-manager-at-risk contracts.
- Bid thresholds
- The bid threshold for Rowan, Montclair State, and the state colleges and universities is currently $33,000
- The bid threshold for NJIT is $27,3000
- Exceptions to public bidding
- Rowan, NJIT, and Montclair State follow the same rules at the state government, which include five subject-matter exceptiosn (e.g., professional services) and seven circumstances under which advertising is unnecessary (e.g., only one source of supply is available).
- The state colleges and universities have a list of 27 subject-matter exclusions (e.g., professional services), and a complex multi-part analysis when the institution has not successfully advertised for bids.
- Time restrictions on contracts
- The public research universities have no limits on the length of contracts
- The state colleges and universities have a general limit of 36 months on contracts, with longer terms allowed for items such as utilities, information technology, insurance, and motor vehicle leases (five-year maximums), and management and operation of bookstores, performing arts centers, residence halls, parking facilities and building operations (up to 30 years).
the state colleges and universities with the same standards for procurement and
construction as NJIT, Rowan, and Montclair State (Rutgers has its own status
under the Rutgers Compact of 1956) will allow the institutions to become even
more nimble and cost-efficient, purchase goods and construct facilities in a
timely way, meet student demand, and remain a major force in the regional economy.
A detailed comparison of the State College Contracts Law with the procurement
and construction laws for NJIT, Rowan, and Montclair State is available here.
1. Amend the State Colleges Contract Law (N.J.S.A. 18A:64-52 et seq.) to:
- Allow institutions to contract for faster and less costly design-build construction, preferably as a public bid exemption category.
- Allow guaranteed maximum price and construction management at risk contracts for complex, schedule driven projects.
- Eliminate the current requirement for multiple bids to five prime contract types. Institutions should be allowed to accept and to award an unlimited number of multiple bids for construction projects when it is determined to be in the institution's best financial interest.
2. Amend the "lowest responsible bid" requirement for construction contracts to permit an award based on "price and other factors." Under the current law, state colleges and universities can do little when faced with a "responsible" low bid from a contractor with a bad record of performance or one not truly capable of performing at a high degree of quality. Under the current system, a contractor of marginal quality can low-bid a contract and then issue many requests for change orders, thereby delaying the job and getting additional payments to increase the ultimate job price.
3. Transfer title of real property on which the state colleges and universities are located from the State to the institutions:
- Depending largely on the date of each institution's founding, a portion of the state colleges' and universities' real property that is designated for the established purpose of the institution of higher education is held in the name of the State of New Jersey. The State takes no responsibility and provides no support for investments in or maintenance of these lands. The institutions themselves make all such investments and bear all such costs.
- When an institution undertakes a project involving such property, it faces intrusion from state regulations and decision-making. All such property, which is properly and without equivocation intended for the purposes of the institution, should be transferred to the respective institutions' boards of trustees so that institutions can enter lease and other agreements to advance the capital and facilities needs of the institutions without undue delays, complications, and intrusions from the State.
4. Require the New Jersey Educational Facilities Authority (EFA) to turn over to the institutions the deed to bond-financed properties once the debt has been retired.
- When the colleges and universities finance capital debt through EFA, the deed for the property concerned is transferred to EFA as part of the bond transaction. When the institution retires all outstanding debt on that property, the EFA should be required to turn over the deed to the board of trustees of the institution.
5. Eliminate public works reporting requirements.
- Treasury's Division of Contract Compliance and Equal Employment Opportunity in Public Contracts require contractors to complete Form AA 20 to track the number of miority workers employed in public contracts. The State should eliminate this requirement.
1. Revise the following procurement provisions of the State College Contracts Law (N.J.S.A. 18A:64-52 et seq.):
- Increase the public bid threshold from $32,100 to at least $50,000.
- Expand public bid waiver categories to include banking, financial, and travel services.
- Allow institutions to issue addenda to RFPs/RFQs only to vendors who picked up bid documents, eliminating the currently required 10-day newspaper advertisement period for each addenda issued.
- Change the current bond requirement for bidders from 10% of bid amount to "10% of bid amount up to a maximum of $20,000," in order to increase the number of small businesses able to bid on RFPs/RFQs.
- Allow institutions to advertise RFPs/RFQs on a State-maintained website and other commercial websites rather than only in newspapers, which are the costliest medium and the least efficient in reaching potential bidders.
- Extend contract terms from up to 5 years to up to 30 years for:
- the purchase, lease, and maintenance of information technology. Current law restricting the term to 5 years prohibits negotiating pricing for maintenance and support for software systems (ERP systems) that take many years to implement and are expected to remain in place for two or three decades. Extension of the term for this type of contract will enable institutions to negotiate much better pricing (for example, 10% of licensing costs vs. 20-22% of licensing costs).
- Banking and financial services
- Facilities maintenance
- Amend the requirement that institutions award goods and services contracts to "the responsible bidder whose bid, conforming to the inviation for bids, will be most advantageous to the State college, price and other factors considered" (N.J.S.A. 18A:64-70). The law does not define "responsible" or "advantageous," and the state colleges and universities have limited maneuvering room when faced with a purportedly "responsible" low bidder that cannot perform at a high degree of quality.
- Allow institutions to pre-qualify vendors and contractors and to maintain on-call contracts for professional and consulting services, maintenance, renovation and repairs of facilities, information technology and telecommunications infrastructure. This change would permit institutions to respond to emergency situations and to complete routine repairs in a timely way.
- Clarify the law so institutionally disbursed funds held on behalf of other organizations or entities, i.e., funds not owned by the State or the disbursing institution, are not subject to provisions of the State College Contracts Law. One example of such funds -- generally called "agency funds" -- is held for student organizations.
2. Moderate the authority of the State Comptroller to audit public colleges and universities (N.J.S.A. 52:15C-7) and review their contracts (N.J.S.A. 52:15C-10). Public institutions of higher education must provide notice to the State Comptroller no later than 20 business days after awarding a contract worth more than $2 million but less than $10 million, and must inform the State Comptroller in writing within 30 days of commencing a procurement process worth $10 million or more. These reviews have cost many additional hours of staff time, have threatened to delay and increase the cost of time-sensitive projects, and in some instances undermine or contradict other long-established state legal authority.
- The State Comptroller's auditing and monitoring authority should be limited to the expenditure of state funds. When state funds are involved, the State Comptroller's review process should be greatly simplified.
3. Revise the State Business Registration Certificate (BRC) requirements, which are costly, time-consuming, confusing, and unmanageable (N.J.S.A. 52:32-44).
- Require the State to maintain a BRC database to which the colleges can have access to determine the eligibility of vendors. Since the BRC process governs whether a vendor can bid or do business with a state agency or a senior public college, the State should maintain a centralized database. Failure to have access to sucha database adds significant delays and costs to the colleges' business processes.
- Increase the dollar threshold for requiring a State Business Registration Certificate from the current level of $4,515 to at least the public bid threshold (currently, $30,100 for the state colleges and universities).
- Eliminate the BRC requirement for sole source and personal services contracts, e.g. performing artists, guest lecturers, and distinguished academicians, who are typical in a college environment, but not typical in State agencies. Such individuals, often from out-of-state or even from foreign countries, are understandably reluctant to comply with reporting requirements regarding political contributions and business registry in New Jersey with which they have no association. The BRC is intended to facilitate tax collection in New Jersey, and sole source/personal service contracts are not subject to use taxes. The BRC should also exempt sole-source suppliers of academic services to programs and libraries, many of which are based out-of-state or out of the country, as well as the many shared programs and services that the colleges have with foreign universities.
4. Maintain, and provide public colleges and universities with online access to, a vendor database identifying those vendors that have completed all mandated State forms.
5. Exempt the senior public colleges and universities from the pay-to-play laws (N.J.S.A. 19:44A-20.13 to 19:44A-20.25). These laws are aimed at contractors who receive business awarded by elected officials to whom they contribute. The trustees and administrators of the senior public colleges are not elected and are not participants in the state's electoral processes. Nevertheless, currently, any vendor who has made a political contribution of $300 or more must submit documentation to the institution's procurement department. The institution must send these documents to the Department of the Treasury. If the Treasury denies the contract, the institution must find an alternate vendor, often delaying the award of a contract by up to a month, adding costs and delays to projects.
- If the senior public colleges and universities must comply with the law, then the dollar threshold for requesting Political Contribution Disclosure forms from bidders should be increased from the current $17,500 threshold to the public bid threshold (currently $32,100 for the state colleges and universities). The State should post and reglarly update the status of each vendor on a public website so individual institutions need not review each vendor's status and submit forms back and forth to Treasury each time the vendor bids on a project.
6. Review and revise N.J.S.A. 52:40-4 et seq., which reqires the senior public colleges and universities to designate a liaison, track the share of contracting dollars paid to minority and women-owned businesses, develop plans and goals, and provide burdensome quarterly reports to the Division of Minority and Women Business Development. The new law also includes the colleges among the "Reporting Agencies" that are monitored by the Division of Public Contracts Equal Employment Opportunity Compliance in the Department of the Treasury.
- The senior public colleges and universities are committed to using minority and women-owned businesses. The requirements under N.J.S.A. 52:40-4 et seq., however, do not contribute to that effort; they simply increase red tape and administrative reporting burdens.
DEPARTMENT OF COMMUNITY AFFAIRS REGULATIONS
Review and improvde Division of Codes and Standard's plan review and field inspections.
- The waiting time for approval under these processes can take up to six months, and delivery of service is erratic and unpredictable. As a result, projects are significantly delayed, creating excessive additional costs for the campuses and the inability to plan when a project will be completed for use by students and faculty.
- In order to provide an urgently needed fix to this critical situation, DCA should be: (a) required by statute, regulation or executive order, as appropriate to accomplish plan reviews and process documents, including outbound transmittals to the originating applicant, within 20 business days of receipt, and to provide field inspections within 72 hours of a request for such inspection; (b) authorized and required to outsource these responsibilities to non-governmental private firms that possess the requisite DCA licenses to perform such wrk within those specified timeframes if DCA cannot, with any costs caused by DCA's failure to meet the timeframes recoverable by the institution from DCA; and (c) required to improve the Division of Codes and Standards' plan review and field inspections procedures.
- When DCA approves a plan and then a DCA field inspector reviewing a site built in accordance with that plan concludes that a non-code compliant issue exists, DCA should be responsible for resolving the difference so that the institution need not delay construction or incur additional costs.
1. Eliminate sales tax on parking fees paid by commuter students to park on campus (N.J.S.A. 54:32B-3(i)). University employees and resident students are exempt from sales tax on parking services. This tax should be eliminated so that commuting students are treated the same as resident students.
2. Eliminate the requirement that colleges and universities pay sales tax on natural gas purchases (N.J.S.A. 54:32B-9(c)(3)).
PUBLIC-PRIVATE PARTNERSHIPS FOR FACILITIES
The public-private partnership program, created under the New Jersey Economic Development Act of 2009 and extended under the New Jersey Economic Opportunity Act of 2013, should be made permanent, without a sunset provision.
- The New Jersey Economic Development Act of 2009 provided an 18-month period that allowed the state colleges and universities to partner with private developers on construction projects that did not need to follow the provisions of the State College Contracts Law. The partnership period was extended to August 1, 203, and again to August 2015.
- Partnerships with private enterprises help state colleges and universities build facilities faster and more cost effectively. For example:
- Ramapo College of New Jersey entered a partnership with a private entity that will fund the capital cost of replacing aging roofs on several campus buildings, an estimated $9.325 million expense. The private firm will receive, in addition to tax credits, a return on its investment through the sale of renewable energy to the college.
- The first project under the Economic Development Act was "The Heights" at Montclair State University. The project, located at the north end of the campus, consists of two complexes, each of which has four residential buildings and features common areas including a state of the art dining facility. The project will provide residence for 2,000 more students, bringing the total number of residents to 5,000.
The passage of the "Veterans Educational Assistance Act" of 2008 -- commonly called the Post-9/11 GI Bill -- paved the way for unprecedented access to higher education for military-affiliated students. Since its enactment in 2009, nearly one million vetearns have taken advantage of this entitlement, the most generous education benefit since "The Servicemembers Readjustment Act of 1944." The result of this legislation is a historic opportunity for first-generation leaders to seek and attain higher education in the State of New Jersey.
The state colleges and universities took the lead in preparing for the influx of military-affiliated students with the founding of Operation College Promise (OCP) -- a national education, research and policy initiative that supports the transition and postsecondary education of veterans who benefit from the Post-9/11 GI Bill. In the five years since the enactment of the Post-9/11 GI Bill, enrollment of veteran students on the eight campus-based state colleges has more than tripled, and when Thomas Edison State University is included, this population composes about 16 percent (over 16,000 total) of the total student body.
New Jersey is poised to continue to be a leader in serving the veteran-student population with the recently established "Veterans Higher Education Commission," which will serve as a vehicle to explore additional initiatives to streamline the transition of military credit and service toward appropriate degree and career paths. A variety of measures now pending in the Legislature would acknowledge the kills and experience of military service to count toward the training and licensure needed for certain jobs. These proposals should be carefully reviewed with appropriate regulating agencies to find efficiencies that will bolster employment opportunities. Additionally, consideration should be given to proposals establishing condensed degree plans similar to the recently establiehd "VETeach" pilot. Other initiatives that maximize transfer of military credit are being considered at other senior public institutions which have flexible credit-transfer policies.
Designate each of the state colleges and universities and Rowan University as the employer of record of its employees for the purpose of collective bargaining. Under current law, (N.J.S.A. 18A:64-21.1 and N.J.S.A. 18A:64M-9c) the governor's Office of Employee Relations conducts these negotiations. This proposed change would make the collective-bargaining laws for public higher education in New Jersey consistent. The other senior public institutions -- Rutgers University and The New Jersey Institute of Technology -- conduct their own negotiations. Each county college conducts its own negotiations as well.
- Amend the powers and duties of the boards of trustees of the state colleges and universities and Rowan University to include language that as a "public employer" under the new Jersey Employer-Employee Relations Act, boards of trustees shall have the power to conduct all negotiations with represented employees at the college/university (N.J.S.A. 18A:64-6 and N.J.S.A. 18A:64M-9).
- Authorize the state colleges and universities and Rowan University to funciton as a "public employer" under the New Jersey Public Employer-Employee Relations Act to conduct all labor negotiations with the institutions' bargaining-unit employees, and authorize the state colleges and universities to act as the "chief spokesperson" with respect to all matters under negotiations (need to delete N.J.S.A. 18A:64-21.1 and N.J.S.A. 18A:64M-9.c).
- Campus-based negotiations will lead to more meaningful dialogue between the administration and the bargaining units of each institution. Over the past 35 years, since the State College Autonomy Act, the state colleges have developed and expanded extinct and different missions. Campus-based bargaining will result in negotiated agreements that address the distinctive needs and requirements of each institution. The legislation equally and equitably enhances the authority of the state college and university president and the institutions' locals.
- A major advantage of the proposal will be to more closely link educational policy aspects of the labor contracts to the economic conditions of each state college and university.
CIVIL SERVICE REFORM
Remove classified employees of the state colleges and universities from Civil Service status and include them within each institution's personnel system (N.J.S.A. 18A:64-6(h) and (i) and N.J.S.A. 18A:64M-19.c).
- The powers and duties of the state college boards of trustees should be amended to delete references to Civil Service so that upon recommendation by the president, the board has the power to appoint, remove, promote and transfer all employees as shall be required to carry out the purposes of the college/university and assign their duties, determine their salaries and prescribe qualifications for all positions in accordance with policies adopted by the board of trustees. Moreover, the statutory authority of the state colleges' and universities' boards of trustees to determine policies for the organization, administration and development of the college/university should be amended to include "personnel" (N.J.S.A. 18A:64-6.c).
- Between 25% and 45% of the employees at each state college and university are in Civil Service status, and each institution's board of trustees is required to assign duties, determine salaries, and prescribe qualifications for positions "in accordance with the provisions of Title 11, Civil Service, of the revised Statutes" (N.J.S.A. 18:64-6.i), even though the State is not the employer of record for these employees and does not pay the salaries of these employees. Moreover, these employees work in an environment that is wholly different than the usual State agency, and one that is little understood by State personnel reglators.
- Restore cuts to operating aid.
- Rationalize state appropriations for higher education.
- Revise requirements for submitting institutional budgets. The 12 senior public colleges and universities must submit to the State Treasurer and to the Secretary of Higher Education annual operating budget requests in a format that is burdensome and time consuming (N.J.S.A. 18A:3B-6(k)). Despite this effort, the Executive and Legislative branches do not consider these budget requests when drafting and deliberating appropriations to the institutions. The governor and legislature should reconsider, streamline, and reconfigure the budget process to provide meaningful interchange between the institutions and policymakers regarding annual appropriations.
- Provide State funding for mandated tuition-waiver programs. New Jersey requires its public colleges and universities to waive tuition to many constituencies, including the unemployed, senior citizens, members of the National Guard, children or surviving spouses of certain public-safety workers, and children under DYFS care. Unlike many states, New Jersey does not reimburse the institutions for the cost of these programs. The growing number of students in these programs translates into real unfunded costs to the campus -- costs that tuition-paying students in effect must subsidize.
- Revise requirement for submitting capital budgets. The State has not provided a separate capital budget for the 12 senior public colleges and universities since Fiscal Year 1999, and yet the institutions are required to submit a burdensome annual capital report and request to the New Jersey Commission on Capital Budgeting and Planning (N.J.S.A. 52:95-2). The Capital Commission should be required to announce in advance the amount of funding it has to provide and its priorities for funding, and it should promulgate guidelines for capital budget requests that are purposeful and not burdensome. Institutions that choose to submit a capital request should be entitled to a hearing on that request.