An Act reforming the operations and practices of State authorities, amending R.S.58:5-7 and R.S.58:14-2, and supplementing Title 52 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) Sections 1 through 20 and 23 of this act shall be known and may be cited as the "State Authorities Reform Act."

2. (New section) The Legislature finds and declares that:

a. There are over fifty governmental agencies in New Jersey commonly known as "State authorities," which play significant roles in the governance of the State, yet their operations are largely unknown to many of the citizens of New Jersey;

b. These State authorities are independent or quasi-independent and operate outside the standard structure of the Executive Branch of State government;

c. Together, these State authorities have capital and operating budgets amounting to billions of dollars, and they issue bonds and otherwise incur debt without voter approval that also total in the billions of dollars; and

d. It is in the best interests of public and good government: (1) to reform the business practices of State authorities, including how they enter into contracts, incur debt, and hire employees; (2) to take steps to make the operations of the State authorities more accessible to public scrutiny; and (3) to ensure that the State authorities are working to further the State's plans for economic growth.

3. (New section) As used in this act:

"Board of directors" or "board" means the governing body of a State authority.

"Governor's Authorities Unit" or "Authorities Unit" means the Authorities Unit in the Governor's Office or a similar successor entity thereto.

"Nonprofessional services" means services other than professional services or technical services.

"Procurement contract" means a contract for goods or services including, but not limited to, contracts for the purchase of goods such as materials, products, or supplies; services that are non-professional; and professional services.

"Professional services" means services rendered or performed by a person authorized by law to practice a recognized profession whose practice is regulated by law and the performance of which services requires knowledge of an advanced type in a field of learning acquired by a prolonged formal course of specialized instruction and study as distinguished from general academic instruction or apprenticeship and training.

"Relative" means an individual's spouse or the individual's or spouse's parent, child, brother, sister, aunt, uncle, niece, nephew, grandparent, grandchild, son-in-law, daughter-in-law, stepparent, stepchild, stepbrother, stepsister, half brother or half sister, whether the relative is related to the individual or the individual's spouse by blood, marriage or adoption.

"Senior management" means the executive director or chief executive officer, the chief financial officer, assistant directors, and any other directors, or substantially similar positions of a State authority.

"State authority" or "authority" means an independent State authority; any board, commission, or agency that is organized in but not of a principal department of State government; and any State authority that is required to submit its minutes, resolutions, or actions for gubernatorial approval or veto.

4. (New section) a. Each State authority shall annually prepare a comprehensive report concerning the authority's operations. The report shall set forth the significant actions of the authority from the previous year, including a discussion of the degree of success the authority had in promoting the State's economic growth strategies and other policies.

The report shall also include the authority's financial statements and identify internal financial controls at the authority that govern expenditures, financial reporting, procurement, and other financial matters and transactions.

b. The report shall contain a certification by the appropriate member of senior management that during the preceding year the authority has, to the best of the member's knowledge, followed all of the authority's standards, procedures, and internal financial controls. In the event that such certification is not warranted, the report shall set forth the manner in which such controls were not followed and a description of the corrective action to be taken by the authority.

c. The report shall be submitted to the board of directors of the authority for approval. Upon approval by the board of directors, a copy of the report shall be submitted to the Governor's Authorities Unit and the Legislature, and posted on the authority's website.

5. (New section) In order to ensure that a State authority operates in an efficient, transparent, and ethical manner, the board of directors shall, in addition to its other statutory duties:

a. Exercise direct oversight over the executive director, chief executive officer, chief financial officer, and other senior management of the authority;

b. Ensure that appropriate financial controls are in place at the authority and that an audit committee has been impaneled to the extent required by Executive Order No. 122 of 2004 or a substantially similar executive order;

c. Maintain policies concerning competitive procurement procedures that are consistent with this act and other applicable law;

d. Ensure compliance with all laws and regulations that prohibit the awarding of contracts to businesses that have made disqualifying political contributions;

e. Establish written policies and guidelines concerning personnel matters including, but not limited to, job descriptions, job qualifications, hiring practices, and compensation;

f. Establish policies necessary to implement provisions of law and regulation governing ethics;

g. Require senior management to ensure the maintenance of a website for the authority, and to post on the website notice of the meetings and agendas of the authority board of directors and a copy of the minutes of the meetings;

h. Require disclosure to the board, on an annual basis, of any outside business dealings with the authority during the previous year by a board member, a board member's employer, a board member's business, a board member's relative, a member of the authority's senior management, or a relative of a member of senior management. The disclosure shall be made in the form of a certification submitted to the board by the board member or senior staff member.

6. (New section) A State authority shall promulgate regulations setting forth procedures to be followed for public advertising for bids for all procurement contracts to be awarded by the authority. The procedures shall ensure that potential interested and qualified bidders receive appropriate notice of the proposed contract and a fair opportunity to seek award of the contract. The procedures shall include advertisements in appropriate publications, and posting on the authority's website and on the Statewide website established in accordance with section 19 of this act.

7. (New section) Prior to the due date for bids on procurement contracts, a State authority may hold conferences with interested parties to explain contract specifications and the factors to be used in awarding the contract, and to answer any questions. The date, time, location, and other information concerning the conferences shall be advertised along with the advertisement of the proposed contracts or in any other manner that will adequately give notice of the conferences to interested parties.

8. (New section) A State authority shall establish written procedures for the awarding of contracts for goods or non-professional services that are consistent with the purposes of this act. The procedures shall include measures to ensure equal opportunity for minority-owned, female-owned, and small business enterprises. The procedures shall prescribe the establishment of specifications and related information and the means by which such specifications and information shall be transmitted in written or electronic form to interested parties.

The procedures shall provide that all bids or other responses to an advertised contract shall be submitted to the authority in written or electronic form. In cases where the contract is to be awarded to the lowest responsible bidder, the bid shall be in writing and sealed until opened with all other bids.

9. (New section) a. Except as provided in subsection b. of this section, a State authority shall award a contract for goods or non-professional services to the lowest responsible bidder.

b. If a State authority is not required by another section of law or by regulation to award a contract for goods or nonprofessional services to the lowest responsible bidder, it may award the contract to a bidder other than the lowest responsible bidder if: (1) the circumstances come within the exceptions provided in section 14 of this act, and (2) documentation of the decision not to award the contract to the lowest responsible bidder is given in accordance with the requirements of sections 14 and 15 of this act.

10. (New section) a. A State authority shall establish written procedures that are consistent with the purposes of this act for the awarding of contracts for professional services or technical services. The procedures shall include efforts to ensure equal opportunity for minority-owned, female-owned, and small business enterprises. The procedures shall include steps to ensure that contract specifications are not drafted in such a way as to establish a preference for a particular firm.

The procedures shall include a numerical, quantitative scoring process to evaluate proposals. The procedures shall require that the scoring process and the scoring factors shall be in writing.

b. The factors which may be used by an authority as part of its scoring process include, but are not limited to, the following:

(1) the background, qualifications, skills, and experience of the firm and its staff;

(2) the firm's degree of expertise in the area of the proposal;

(3) the rate or price to be charged by the firm;

(4) the authority's prior experience with the firm;

(5) the firm's familiarity with the work, requirements, and systems of the State authority;

(6) the firm's capacity to meet the requirements of the contract;

(7) the firm's references;

(8) interviews with prospective firms; and

(9) the geographic location of the firm's offices.

c. A State authority shall review its ongoing and open-ended professional services contracts and establish a timetable for periodic advertisement and re-evaluation of the contracts in accordance with this section.

11. (New section) Prior to the receipt of any proposals or qualifications concerning a professional services or technical services contract, a State authority shall establish a qualified evaluation committee to review and score submitted bids and proposals. The authority shall screen each member of the committee for a conflict of interest or the appearance of a conflict of interest. A member of the board or a member of senior management shall not participate, either directly or indirectly, in the evaluation process if the member has a conflict of interest or there is an appearance of conflict of interest.

12. (New section) An analysis of relevant factors that lead to the decision to award a contract for professional services or technical services shall be memorialized, in summary form, in the State authority's resolution awarding the contract.

13. (New section) When professional services rendered in connection with bond sales, related financial instruments, and litigation matters are expected to be required on numerous occasions over a period of time, the procedures and criteria set forth in this act may be used to create a pool of prequalified potential providers of professional services for a term not to exceed two years. The purpose of establishing such a pool shall be to aid rather than circumvent a genuine competitive process that ensures quality service at the best possible value.

Advertisements for applications for inclusion in the pool of prequalified providers of professional services shall set forth the basis on which members of the pool will be selected to perform particular services. The selection for a particular service may be based upon the price to be charged by the professional for that service, the relative strengths of the prequalified professionals for that particular service, a process of alternating professionals, or other fair and appropriate approaches.

14. (New section) The provisions of this act concerning public advertisement and competitive procurement processes shall not apply in the following limited circumstances:

a. When the contract price is below the bid threshold set by the Governor pursuant to subsection b. of section 2 of P.L.1954, c.48 (C.52:34-7), unless other State law sets forth a lower bid threshold to be used, in which case the lower bid threshold shall apply. A State authority may not divide a contract into multiple proposed contracts in order to take advantage of this exception.

When a contract price is below a bid threshold, a State authority shall employ a modified competitive procurement process, including advertising and obtaining verbal or written price quotations, to the extent that such process is feasible and economically appropriate.

If an authority invokes this exception, it must certify the procurement process that was used and that the contract was not divided into multiple proposed contracts in order to come under this exception. The authority must maintain a record of the certification;

b. In the case of an unforeseen life, safety, or health emergency where the public exigency requires that services or products be purchased immediately as demonstrated by a memorialized concurrence of three officials designated to make such determinations. This exception is limited to purchasing those services or products necessary to mitigate the emergency situation. State authorities shall make efforts to contract in advance for services or products for which a foreseeable need may arise in the event of an emergency;

c. When there is only one vendor capable or available to provide the goods or services. Sole-source procurements may be made only in exceptional and necessary circumstances. If an authority invokes this exception, a designated member of the authority's senior management shall write, sign, and retain a memorandum justifying the awarding of a sole-source procurement contract;

d. When a contract is with the federal government, or any state government, or any agency or political subdivision thereof;

e. When a firm has brought an innovative idea to the authority, a request for proposals cannot be constructed without communicating the new idea, and the procurement would not benefit from a competitive selection process;

f. When State or federal law or regulation requires, for a specific situation, a procurement process different from that prescribed under this act; or

g. When the State authority has received authorization from the Governor's Authorities Unit.

15. (New section) When a State authority invokes one of the exceptions provided for in subsections b. through g. of section 14 of this act, the authority's executive director or chief executive officer shall certify that circumstances warranted the application of the exception and the proposed resolution concerning the contract shall set forth the justification for invoking the exception.

16. (New section) A financial audit of each State authority shall be conducted annually by an independent certified public accounting firm and with oversight by an audit committee as provided for in subsection b. of section 5 of this act. The financial audit shall be submitted to the board of directors for its review.

The audit shall be accompanied by a written certification from the chief executive officer and the chief financial officer or their equivalents that, to the best of their knowledge, the financial information provided to the auditor in connection with the audit is accurate and fairly represents the financial condition and operational results of the authority for the year being audited.

Upon acceptance by the board, the approved financial audit shall be transmitted to the State Treasurer and the Governor's Authorities Unit, and shall be posted on the authority's website.

17. (New section) A State authority's senior management shall annually review the authority's operations with the specific goal of identifying waste and inefficiencies, and shall take appropriate remedial steps which shall be reported to the Governor's Authorities Unit.

18. (New section) This act is not intended to supersede any other provision of law or regulation concerning the practice and procedures of State authorities if the law or regulation is consistent with the purposes of this act and meets or exceeds the requirements of this act.

19. (New section) The Office of Information Technology in the Department of the Treasury shall establish and maintain a website on which proposed procurement contracts for goods or services from all State authorities shall be posted.

20. (New section) The Governor's Authorities Unit shall conduct periodic policy coordination meetings with the executive directors and chairs of the State authorities and the Office of Economic Growth, or substantially similar successor office, concerning the State's economic growth strategies and goals. The State authorities shall incorporate the economic growth strategies and goals into their capital plan development processes. The State authorities shall submit their proposed capital plans, including specific information as to how the capital plan and other expenditures reflect the State's economic growth strategies and goals, to the Office of Economic Growth and the Governor's Authorities Unit for review and discussion.

21. R.S.58:5-7 is amended to read as follows:

58:5-7. a. Each said commission, when duly organized, shall be deemed to be and shall become a body corporate with power to sue and be sued, and with the right to acquire, hold, use, lease and dispose of all such property as may be necessary for the uses and purposes for which the commission was created, and with all other necessary powers incident to corporate bodies.

b. Each commission shall maintain minutes of all meetings and public hearings held by the commissioners. No action may be taken by the commissioners unless it is taken at a meeting or hearing for which minutes have been provided.

c. A true copy of the minutes of every meeting or hearing of the commissioners shall be delivered forthwith by and under the certification of the secretary thereof to the Governor. No action taken at the meeting by the commissioners shall have force or effect until 15 days after the copy of the minutes shall have been so delivered, unless during this 15-day period the Governor shall approve in writing the minutes or any part thereof, in which case the action shall become effective upon approval. If, within that 15-day period, the Governor returns a copy of the minutes with the Governor's veto of any action taken by the commissioners or any member thereof at the meeting, the action shall be null and void and of no effect. Notwithstanding the foregoing, if the last day of the 15-day period shall be a Saturday, Sunday or legal holiday, then the 15-day period shall be deemed extended to the next following business day.

The powers conferred in this subsection upon the Governor shall be exercised with due regard for the rights of the holders of bonds, notes or other obligations of the commissioners at any time outstanding, and nothing in, or done pursuant to, this subsection shall in any way limit, restrict or alter the obligation or powers of the commissioners or any representative or officer of the commissioners to carry out and perform in every detail each and every covenant, agreement or contract at any time made or entered into by or on behalf of the commissioners with respect to its bonds, notes or other obligations or for the benefit, protection or security of the holders thereof.

d. After the review period required pursuant to subsection c. of this section has elapsed, if the Governor has not notified the commissioners of a veto of the minutes, the minutes and any action taken at that meeting or public hearing to which the minutes correspond shall take effect.

(cf: R.S.58:5-7)

22. R.S.58:14-2 is amended to read as follows:

58:14-2. a. The board of commissioners known as the Passaic valley sewerage commissioners, the first members of which were appointed under the act entitled "An act authorizing the appointment and defining the powers and duties of commissioners in sewage and drainage districts created for the purpose of relieving the streams and rivers therein from pollution, and to provide a plan for the prevention thereof and providing for the raising, expenditure and payment of moneys necessary for this purpose," approved March twenty-seventh, one thousand nine hundred and two (L.1902, c. 49, p. 195), is continued as a body politic and corporate, with perpetual succession under said name of Passaic valley sewerage commissioners, hereinafter in this chapter designated as the "commissioners" , with power to sue and be sued and to adopt and use a corporate seal, and with the right, power and authority to acquire, hold, use and dispose of all such property, real and personal, as may be proper or necessary, and with all other power and authority proper or necessary to carry out and effectuate the purposes for which the board is created.

b. The Passaic Valley Sewerage Commissioners shall maintain minutes of all meetings and public hearings held by the commissioners. No action may be taken by the commissioners unless it is taken at a meeting or hearing for which minutes have been provided.

(cf: R.S.58:14-2)

23. This act shall take effect immediately.

STATEMENT

There are over 50 State authorities in New Jersey that are independent or quasi-independent and operate outside the standard structure of the Executive Branch. Their combined capital and operating budgets amount to billions of dollars. Without voter approval, they issue bonds and otherwise incur debt that totals in the billions of dollars.

The purpose of this bill is to ensure that all State authorities meet a minimum standard of practices and procedures that are in the best interests of the public and good government. The bill requires a State authority: 1. to reform its business practices including, how it enters into contracts, issues bonds, and hires employees; 2. to take steps to make the operations of the authority more accessible to public scrutiny; and 3. to ensure that the authority is working to further the State's plans for economic growth. Specifically, the bill requires a State authority to:

- prepare an annual report of its operations;

- maintain policies for competitive bidding of procurement contracts;

- maintain policies for personnel matters including hiring practices;

- maintain a website and post notices, agendas, and minutes of meetings;

- require disclosure of outside business dealings of board members and senior management;

- publicly advertise procurement contracts, including posting on a State website;

- maintain written procedures for the awarding of procurement contracts, including efforts to ensure equal opportunity for minority-owned, female-owned, and small businesses;

- award contracts for goods and non-professional services to the lowest responsible bidder;

- award contracts for professional or technical services on the basis of written procedures which include a quantitative scoring process for evaluation of proposals by a qualified evaluation committee;

- require written certification of the use of the few limited exceptions to its procurement procedures for goods and services;

- conduct an annual financial audit by an independent public accounting firm; and

- annually review operations for waste and inefficiencies and take appropriate remedial steps.

If enacted, this bill will apply to all State authorities, including, but not limited to, all independent State authorities, all boards, commissions and agencies organized in but not of a principal department of State government, and all State authorities that are required to submit their minutes, resolutions, or actions for gubernatorial approval or veto.

The bill also amends existing statutory law to provide that no action taken at a meeting of the North Jersey District Water Supply Commission or the Passaic Valley Sewerage Commission shall have force or effect until 15 days after the minutes of the meeting have been delivered to the Governor, unless the Governor approves the action sooner. These amendments assure that the two commissions are covered by the bill.