School District Procurement Procedures and the Appropriate Use of Piggyback Purchasing

The State Comptroller’s Office recently issued findings related to school districts and their procurement procedures. Specifically, the Comptroller addressed the inadequate management of “piggyback” purchases made by schools. With this recent Comptroller scrutiny, and with many school districts having capital projects in full swing, it is important to be mindful of the N.Y. General Municipal Law’s specific requirements for making piggyback purchases.

Piggyback purchasing is an exception to the N.Y. General Municipal Law’s requirement that certain public contracts be competitively bid. It allows school districts to procure certain goods and services through the use of other governmental contracts, thus avoiding the competitive bidding process. In essence, the school district is relying on the other governmental agency to have complied with the competitive bidding process to obtain the best price. While piggybacking on the efforts of other governmental agencies provides a useful and often expedient option for schools in the procurement process, minimum requirements must be met before a piggyback purchase may lawfully proceed.

To comply with the piggyback purchase requirements, the law requires that the district satisfy the following criteria:

1. The school district’s board of education must have adopted a policy to authorize use of the piggyback purchasing method;

2. The initial contract being piggybacked upon must have been let by the United States or a federal agency, by any state, or by any other political subdivision of a state;

3. The initial contract to be piggybacked upon must have been advertised in a manner consistent with the New York competitive bidding law;

4. The initial contract must specifically be made available for use by other governmental entities;

5. The initial contract must have been awarded to the lowest responsible bidder or on the basis of best value “in a manner consistent with” the New York competitive bidding law; and

6. The procurement agreement must only be for equipment/services within the scope of the initial contract piggybacked upon, and only services related to the “installation, maintenance or repair” of “apparatus, materials, equipment or supplies.”

In one recent matter, the Comptroller found that a school district had failed to verify that over $150,000 in three different purchases had satisfied the requirements for appropriate piggyback purchasing. The Comptroller reiterated the requirement that school district officials verify that the initial contract on which the district seeks to piggyback meets the explicit requirements to establish proper piggyback purchasing. The Comptroller also encouraged the district to “perform a cost-benefit analysis before using the exception,” as this process would “ensure that the District is furthering the underlying purposes of the exception, and that the procurement is consistent with the purposes of competitive bidding”.

School districts must remember, therefore, that while piggyback purchasing often is an effective and efficient means to obtain the best value for its public funds, it does not relieve the school district of its own due diligence and oversight. By conducting a thorough analysis of the initial contract’s compliance with the above criteria, school districts can continue to use the piggybacking process while also ensuring that the district remains in compliance with competitive bidding requirements of the law.