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November 30, 2011                               Urgent Action Needed!

Re: Cost Estimates in Bid Advertisements Bill is scheduled for a floor vote

Dear Mayor:

A-3285, which would require that certain public contract bid advertisements include certified cost estimates or estimate ranges of projected contract cost and amends the grounds for rejection of bids, is scheduled for a floor vote before the Assembly on Monday, December 5, 2011.

Advocates for this legislation argue that the best interests of taxpayers are served by this legislation, because it promotes, they claim, openness and broad dissemination of information.  We agree that taxpayers are best served by openness and broad dissemination of information.  A-3285, however, would, in fact, limit a competitive process that is the foundation of the Local Public Contracts Law and would not best serve the public interest.

In addition, to requiring that a contracting unit include in the public advertisement their cost estimates or cost estimate ranges for construction projects in excess of $500,000, the bill amends the six reasons to reject all bids.  A-3285 amends the provision to reject all bids in which the lowest bid substantially exceeds the municipality’s cost estimates for the goods or service to require that the cost estimates or estimate ranges be published and attested.  As a result, all contracts, including goods and services, over the contracting unit’s bid threshold will now require the public advertisement for bid to include cost estimates or cost estimates ranges. 

Municipal engineers and other design professionals will typically prepare the projects cost estimates based on the current industry cost and bids received for similar projects in different municipalities.  Their estimates tend to be in the middle of the current industry cost.  Requiring the advertisement of the cost will lead to unfair pricing and increased cost for taxpayers. 

A-3285 also has the potential to expose municipalities to protracted disputes and litigation.  What happens if a municipality receives a bid below the engineer’s estimates?  Can they award the bid or must they reject the bid?  What impact do the provisions of A-3285 have on change orders?  Can a municipality issue a change order, even if the cost of the change order would exceed the engineer’s published estimates?

A-3285 removes the incentives for competitiveness and will lead to increased cost for public contracts.   We urge you to contact your Assembly representatives and voice our opposition to A-3285. 

Very truly yours,

 

William G. Dressel, Jr.
Executive Director

 

 

 

 

 

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