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On July 27, 2010, Governor Deval Patrick signed into law Chapter 188 of the Acts of 2010, An Act Relative to Municipal Relief (Act). The Act includes changes to the laws governing municipal procurements of supplies, services and real property, as well as public construction. The following changes took effect immediately, pursuant to the Governor's cover letter.
M.G.L. c.30B
M.G.L. c.30B, §1(b)(1), which exempts contracts subject to the public construction laws, was amended to clarify that contracts subject to M.G.L. c.25A, §11C are also exempt. Section 11C provides for an alternative procurement process for contracts for energy management services.
M.G.L. c.30B, §1(b)(4), which exempts contracts with the commonwealth, was amended to clarify that dispositions of real property to the commonwealth are subject to M.G.L. c.30B, §16(a) (b) and (g). That is, 1) the property must be declared available for disposition, 2) valued in accordance with procedures accepted by the appraising profession as valid, and, 3) if the property is disposed of for less than the fair market value, the reason and the difference between the fair market value and the price to be received must be published in the Central Register.
The Act added a new section, M.G.L. c.30B, §1(f), that will now permit local governmental bodies to purchase goods and services specified under General Services Administration (GSA) federal supply schedules that are available for use by local governmental bodies from authorized GSA vendors without a M.G.L. c.30B process. All local rules, including rules requiring written contracts will continue to apply to these procurements. It is important to note that this section only permits local governmental bodies to purchase supplies and services and does not apply to construction and construction materials estimated to cost $10,000 or more. Contracts for construction and construction materials estimated to cost less than $10,000 require the use of sound business practices.
Chapter 30B was amended to incorporate a definition for the term "sound business practices". "Sound business practices" is defined as "ensuring the receipt of a favorable price by periodically soliciting price lists or quotes." While the definition does not require a formal competitive process for small procurements of less than $5,000, it requires governmental bodies to ensure that they have received the needed quality of supplies and services at a reasonable price.
In addition, the following definitions were inserted related to two new M.G.L. c.30B sections -- M.G.L. c.30B, §6A (reverse auctions) and M.G.L. c.30B, §22 (intergovernmental cooperative purchasing.)
M.G.L. c.30B, §4(d), was amended to provide that local governmental bodies may award contracts for local agricultural products costing less than $25,000 using sound business practices. The local governmental body must ensure that the local agricultural product received is of the needed quality and that the price is reasonable as determined through the use of sound business practices. The sound business practices language replaces the former generally accepted business practices language. Additionally, Chapter 197 of the Acts of 2010 clarified that the $25,000 limit applies on a per contract basis and not to all procurements of local agricultural products over the course of one year. This is consistent with the Office of the Inspector General's opinion that, when there is a sound business reason to do so, small frequent purchases of produce do not constitute bid splitting.
The Act inserts a new section, M.G.L. c.30B, §6A, which permits a chief procurement officer to utilize a reverse auction process for the acquisition of supplies and services valued at $25,000 or more. A reverse auction is an internet-based process that allows sellers to anonymously bid against each other until the auction time expires. While in a traditional auction a bidder would submit a higher bid than the last bid received, bidders in a reverse auction would submit a lower bid than the last bid received, thereby driving prices down. Procurements utilizing reverse auctions will still be subject to the traditional bidding requirements including, but not limited to, advertising. More information on reverse auctions, including best practices for their use, will be forthcoming shortly at www.mass.gov/ig.
The Act added a new section in M.G.L. c.30B, M.G.L. c.30B, §22, which permits intergovernmental cooperative purchasing. The Act permits local governmental bodies subject to M.G.L. c.30B to purchase from contracts that have already been procured by the federal government, another state, a political subdivision (city, town, county, etc.) and units thereof, of the commonwealth or any other state, so long as the contract is open to Massachusetts governmental bodies and was procured in a manner that constitutes fair and open competition. Additionally, local governmental bodies subject to M.G.L. c.30B may conduct or sponsor such cooperative procurements. All local rules, including rules requiring written contracts will continue to apply to these procurements. It is important to note that this section permits local governmental bodies to purchase only supplies through intergovernmental cooperative purchasing and does not apply to the purchase of services, construction, and construction materials estimated to cost $10,000 or more. Contracts for construction and construction materials estimated to cost less than $10,000 require the use of sound business practices. (See below.) Please visit www.mass.gov/ig for more information on cooperative purchasing, including best practices for its use.
M.G.L. c.40, §3
M.G.L. c.40, §3 was amended to increase the number of years a town, through its selectmen, may let or lease town-owned buildings from ten years to 30 years. However, the Act did not alter the limit of 25 years for schoolhouses in actual use.
M.G.L. c.149, §29
The Act increased the dollar threshold for when a payment bond in the amount of at least 50% of the contract price must be furnished for state and local public construction contracts to $25,000 for all governmental entities. It was formerly $2,000 for local governmental bodies, and $5,000 for the state.
M.G.L. c.149, §44A(2)(A)
The Act amended the public building construction law to require the use of sound business practices for projects estimated to cost less than $10,000. Formerly, contracts estimated to cost less than $5,000 required the use of sound business practices and contracts estimated to cost $5,000 or greater, but less than $10,000 required the solicitation of 3 written quotes. All contracts estimated to cost less than $10,000 will require a record that includes, at a minimum, the name and address of the person from whom the services were procured.
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