2023 New York Laws › STF - State Finance › Article 11 - State Purchasing › 162 - Preferred Sources.

§  162.  Preferred sources.  1. Purpose. To advance special social and
economic goals, selected providers shall have  preferred  source  status
for  the  purposes  of  procurement in accordance with the provisions of
this section.  Procurement from these providers shall be  exempted  from
the   competitive   procurement   provisions   of  section  one  hundred
sixty-three of this article and other competitive procurement  statutes.
Such  exemption  shall  apply  to  commodities produced, manufactured or
assembled, including those repackaged to meet  the  form,  function  and
utility  required  by  state  agencies,  in New York state and, where so
designated, services provided by those sources in accordance  with  this
section.
2.  Preferred  status.  Preferred status as prescribed in this section
shall be accorded to:
a. Commodities produced by the correctional industries program of  the
department  of corrections and community supervision and provided to the
state pursuant to subdivision two of section one hundred eighty-four  of
the correction law;
b.  Commodities  and  services  produced  by  any qualified charitable
non-profit-making agency for the blind approved for such purposes by the
commissioner of the office of children and family services;
c. Commodities and services produced by any special employment program
serving mentally  ill  persons,  which  shall  not  be  required  to  be
incorporated  and  which  is operated by facilities within the office of
mental health and is approved for such purposes by the  commissioner  of
mental health;
* d.  Commodities  and  services  produced by any qualified charitable
non-profit-making agency for other disabled persons  approved  for  such
purposes  by  the  commissioner  of education, or incorporated under the
laws of this state and approved for such purposes by the commissioner of
education;
* NB Effective until October 4, 2025
* d. Commodities and services produced  by  any  qualified  charitable
non-profit-making  agency  for  other severely disabled persons approved
for such purposes by the  commissioner  of  education,  or  incorporated
under  the  laws  of  this  state  and approved for such purposes by the
commissioner of education;
* NB Effective October 4, 2025
* e. Commodities and services produced by a qualified veterans' entity
providing job and employment-skills training to veterans  where  such  a
entity  is  operated by the United States department of veterans affairs
and is manufacturing products or performing services within  this  state
and  where such entity is approved for such purposes by the commissioner
of education; or
* NB Effective until October 4, 2025
* e. Commodities  and  services  produced  by  a  qualified  veterans'
workshop  providing job and employment-skills training to veterans where
such a workshop is operated by the United States department of  veterans
affairs and is manufacturing products or performing services within this
state  and  where  such  workshop  is  approved for such purposes by the
commissioner of education; or
* NB Effective October 4, 2025
* f. Commodities and services produced  by  any  qualified  charitable
non-profit-making  entity for veterans approved for such purposes by the
commissioner of education, or incorporated under the laws of this  state
and approved for such purposes by the commissioner of education.
* NB Effective until October 4, 2025
* f.  Commodities  and  services  produced by any qualified charitable
non-profit-making workshop for veterans approved for  such  purposes  by

the  commissioner  of  education, or incorporated under the laws of this
state and approved for such purposes by the commissioner of education.
* NB Effective October 4, 2025
3.  Public  list  of  services  and  commodities provided by preferred
sources.
a.  By  December  thirty-first,  nineteen  hundred  ninety-five,   the
commissioner,  in consultation with the commissioners of corrections and
community supervision, the office of children and family  services,  the
office  of  temporary  and  disability  assistance,  mental  health  and
education, shall prepare a list of all commodities and services that are
available and are being provided as of said date, for purchase by  state
agencies,  public  benefit  corporations  or political subdivisions from
those  entities  accorded  preference  or  priority  status  under  this
section.  Such  list  may  include  references  to  catalogs  and  other
descriptive literature which are available directly  from  any  provider
accorded  preferred  status  under  this section. The commissioner shall
make this list available to prospective vendors, state agencies,  public
benefit   corporations,  political  subdivisions  and  other  interested
parties. Thereafter,  new  or  substantially  different  commodities  or
services may only be made available by preferred sources for purchase by
more  than  one  state  agency,  public benefit corporation or political
subdivision after addition to said list.
b.  After  January  first,  nineteen  hundred  ninety-six,  upon   the
application   of   the   commissioner   of   corrections  and  community
supervision, the commissioner of  the  office  of  children  and  family
services,  the  office  of  temporary  and  disability  assistance,  the
commissioner of mental health or the commissioner  of  education,  or  a
non-profit-making  facilitating  agency  designated  by  one of the said
commissioners pursuant  to  paragraph  e  of  subdivision  six  of  this
section,   the   state   procurement  council  may  recommend  that  the
commissioner: (i) add commodities or services to, or (ii)  in  order  to
insure that such list reflects current production and/or availability of
commodities  and  services, delete at the request of a preferred source,
commodities or services from, the list established  by  paragraph  a  of
this  subdivision.  The council may make a non-binding recommendation to
the relevant preferred source to delete a commodity or service from such
list. Additions may be made only for new services or commodities, or for
services or commodities that  are  substantially  different  from  those
reflected  on said list for that provider. The decision to recommend the
addition of services or commodities shall be  based  upon  a  review  of
relevant  factors  as  determined  by  the  council  including costs and
benefits to be derived from such addition and shall include an  analysis
by  the office of general services conducted pursuant to subdivision six
of this section. Unless the  state  procurement  council  shall  make  a
recommendation  to  the  commissioner on any such application within one
hundred twenty days of receipt thereof, such application shall be deemed
recommended. In the event that the state procurement council shall  deny
any such application, the commissioner or non-profit-making agency which
submitted  such  application  may,  within  thirty  days of such denial,
appeal such denial to the commissioner of  general  services  who  shall
review  all  materials  submitted  to the state procurement council with
respect to such application and who may request such further information
or material as is deemed necessary. Within sixty days of receipt of  all
information or materials deemed necessary, the commissioner shall render
a  written final decision on the application which shall be binding upon
the applicant and upon the state procurement council.
c. The list maintained by the office of general services  pursuant  to
paragraph a of this subdivision shall be revised as necessary to reflect

the  additions and deletions of commodities and services approved by the
state procurement council.
4.  Priority accorded preferred sources. Except as provided in the New
York state printing and public documents law, priority  among  preferred
sources shall be accorded as follows:
a.  (i)  When  commodities  are  available,  in the form, function and
utility required by a state agency, public authority, commission, public
benefit corporation or political subdivision, said commodities  must  be
purchased   first  from  the  correctional  industries  program  of  the
department of corrections and community supervision;
* (ii) When commodities are  available,  in  the  form,  function  and
utility  required  by, a state agency or political subdivision or public
benefit  corporation  having  their  own  purchasing  agency,  and  such
commodities  are  not  available  pursuant  to  subparagraph (i) of this
paragraph, said  commodities  shall  then  be  purchased  from  approved
charitable  non-profit-making agencies for the blind, provided, however,
the preferred source shall perform fifty percent or more of the work;
* NB Effective until October 4, 2025
* (ii) When commodities are  available,  in  the  form,  function  and
utility  required  by, a state agency or political subdivision or public
benefit  corporation  having  their  own  purchasing  agency,  and  such
commodities  are  not  available  pursuant  to  subparagraph (i) of this
paragraph, said  commodities  shall  then  be  purchased  from  approved
charitable non-profit-making agencies for the blind;
* NB Effective October 4, 2025
* (iii)  When  commodities  are  available,  in the form, function and
utility required by, a state agency or political subdivision  or  public
benefit  corporation  having  their  own  purchasing  agency,  and  such
commodities are not available pursuant to subparagraphs (i) and (ii)  of
this  paragraph,  said  commodities  shall  then  be  purchased  from  a
qualified  non-profit-making  agency  for  other  disabled  persons,   a
qualified  special  employment  program  for  mentally ill persons, or a
qualified veterans' entity;  provided,  however,  the  preferred  source
shall perform fifty percent or more of the work;
* NB Effective until October 4, 2025
* (iii)  When  commodities  are  available,  in the form, function and
utility required by, a state agency or political subdivision  or  public
benefit  corporation  having  their  own  purchasing  agency,  and  such
commodities are not available pursuant to subparagraphs (i) and (ii)  of
this  paragraph,  said  commodities  shall  then  be  purchased  from  a
qualified non-profit-making agency for other severely disabled  persons,
a  qualified  special  employment program for mentally ill persons, or a
qualified veterans' workshop;
* NB Effective October 4, 2025
b. * When services are available, in the form,  function  and  utility
required  by,  a state agency or political subdivision or public benefit
corporation having their own purchasing agency, equal priority shall  be
accorded  the  services  rendered  and  offered  for  sale  by qualified
non-profit-making agencies  for  the  blind  and  those  for  the  other
disabled,  by  qualified  special  employment  programs for mentally ill
persons and by qualified  veterans'  entities;  provided,  however,  the
preferred source shall perform fifty percent or more of the work. In the
case of services:
* NB Effective until October 4, 2025
* When  services  are  available,  in  the  form, function and utility
required by, a state agency or political subdivision or  public  benefit
corporation  having their own purchasing agency, equal priority shall be
accorded the  services  rendered  and  offered  for  sale  by  qualified

non-profit-making  agencies  for  the  blind  and  those  for  the other
severely disabled, by qualified special employment programs for mentally
ill persons and  by  qualified  veterans'  workshops.  In  the  case  of
services:
* NB Effective October 4, 2025
(i)  state  agencies  or  political  subdivisions  or  public  benefit
corporations having their own purchasing agency  shall  make  reasonable
efforts to provide a notification describing their requirements to those
preferred sources, or to the facilitating entity identified in paragraph
e  of  subdivision  six  of  this  section,  which  provide the required
services as indicated on the official  public  list  maintained  by  the
office  of  general  services  pursuant  to  subdivision  three  of this
section;
(ii) if, within ten days of the notification required by  subparagraph
(i)  of  this  paragraph,  one or more preferred sources or facilitating
entities identified in paragraph e of subdivision six  of  this  section
submit  a  notice of intent to provide the service in the form, function
and utility required, said service shall be purchased in accordance with
this section. If more than one preferred source or  facilitating  entity
identified  in  paragraph  e  of subdivision six of this section submits
notification of intent and meets the requirements, costs  shall  be  the
determining factor for purchase among the preferred sources;
(iii) if, within ten days of the notification required by subparagraph
(i)  of  this  paragraph,  no  preferred  source  or facilitating entity
identified in paragraph e of subdivision six of this  section  indicates
intent  to  provide  the  service, then the service shall be procured in
accordance with section one hundred sixty-three  of  this  article.  If,
after  such  period,  a  preferred  source elects to bid on the service,
award shall be made in accordance with section one  hundred  sixty-three
of this article or as otherwise provided by law.
c.  For  the  purposes of commodities and services produced by special
employment programs operated by facilities approved or operated  by  the
office  of  mental health, facilities within the office of mental health
shall be exempt from the requirements of subparagraph (i) of paragraph a
of this subdivision. When such requirements  of  the  office  of  mental
health cannot be met pursuant to subparagraph (ii) or (iii) of paragraph
a of this subdivision, or paragraph b of this subdivision, the office of
mental   health   may   purchase  commodities  and  services  which  are
competitive in price and comparable in  quality  to  those  which  could
otherwise  be  obtained  in  accordance  with this article, from special
employment programs operated by facilities within the office  of  mental
health or other programs approved by the office of mental health.
5.  Prices  charged  by  the  department  of corrections and community
supervision. The prices to be charged for commodities  produced  by  the
correctional  industries  program  of  the department of corrections and
community supervision  shall  be  established  by  the  commissioner  of
corrections  and  community  supervision  in accordance with section one
hundred eighty-six of the correction law.
a. The prices established  by  the  commissioner  of  corrections  and
community  supervision  shall be based upon costs as determined pursuant
to this subdivision, but shall not exceed a reasonable fair market price
determined at or within ninety days before the time of sale. Fair market
price as used herein means the price at which a vendor of  the  same  or
similar  product  or service who is regularly engaged in the business of
selling such product or service offers to sell such product  or  service
under  similar  terms  in  the same market. Costs shall be determined in
accordance with an agreement between the commissioner of corrections and
community supervision and the director of the budget.
b. A purchaser of any such product or service may, at any  time  prior
to  or within thirty days of the time of sale, appeal the purchase price
in accordance with section one hundred eighty-six of the correction law,
on the basis that it unreasonably exceeds fair  market  price.  Such  an
appeal  shall  be  decided  by  a  majority vote of a three-member price
review board consisting of the director of the budget, the  commissioner
of  corrections  and community supervision and the commissioner or their
representatives. The decision of the review board shall be final.
6. Prices charged by  agencies  for  the  blind,  other  disabled  and
veterans' entity.
a.  Except  with respect to the correctional industries program of the
department of corrections and community supervision,  it  shall  be  the
duty of the commissioner to determine, and from time to time review, the
prices  of  all  commodities  and  to  approve the price of all services
provided by preferred sources as specified in this  section  offered  to
state  agencies,  political  subdivisions or public benefit corporations
having their own purchasing office. The commissioner's price review  and
approval  shall  not  be  required  for  any purchases below one hundred
thousand dollars.
b. In determining and revising  the  prices  of  such  commodities  or
services, consideration shall be given to the reasonable costs of labor,
materials  and  overhead  necessarily incurred by such preferred sources
under efficient methods  of  procurement,  production,  performance  and
administration;  however, the prices of such products and services shall
be as close to prevailing market price as practicable, but in  no  event
greater  than fifteen percent above the prevailing market prices for the
same or equivalent commodities or services.
c. Such qualified charitable non-profit-making agencies for the  blind
and  other  disabled  may  make  purchases  of  materials,  equipment or
supplies,  except  printed  material,  from  centralized  contracts  for
commodities  in  accordance  with  the  conditions  set by the office of
general   services;   provided    that    the    qualified    charitable
non-profit-making  agency  for  the blind or other disabled shall accept
sole responsibility for any payment due the vendor.
d. Such qualified charitable non-profit-making agencies for the  blind
and  other  disabled  may  make  purchases  of  materials, equipment and
supplies directly from the correctional industries program  administered
by the commissioner of corrections and community supervision, subject to
such  rules  as  may  be  established  from time to time pursuant to the
correction law; provided that the qualified charitable non-profit-making
agency for the blind or other disabled shall accept sole  responsibility
for  any  payment  due  the  department  of  corrections  and  community
supervision.
e. The commissioner of the office  of  children  and  family  services
shall  appoint  the  New  York  state commission for the blind, or other
non-profit-making agency, other than the agency representing  the  other
disabled,  to  facilitate  the  distribution  of  orders among qualified
non-profit-making  charitable  agencies  for  the   blind.   The   state
commissioner  of  education  shall  appoint  a non-profit-making agency,
other  than  the  agency  representing  the  blind,  to  facilitate  the
distribution  of  orders  among  qualified  non-profit-making charitable
agencies for the other disabled and the veterans'  entities.  The  state
commissioner  of  mental  health  shall  facilitate  the distribution of
orders among qualified special employment programs operated or  approved
by the office of mental health serving mentally ill persons.
f.  The  commissioner  may  request  the  state comptroller to conduct
audits and examinations to be made of all records, books and data of any
agency for the blind or  the  other  disabled,  any  special  employment

program for mentally ill persons or any veterans' entity qualified under
this  section  to determine the costs of manufacture or the rendering of
services and the manner and efficiency of production and  administration
of  such  agency  or special employment program or veterans' entity with
relation to any product or services  purchased  by  a  state  agency  or
political  subdivision  or public benefit corporation and to furnish the
results of such audit and  examination  to  the  commissioner  for  such
action as he or she may deem appropriate under this section.
7.  Partnering with preferred sources. Private vendors may be accorded
preferred source status but only when a proposal to a soliciting  agency
for  commodities  or  services  includes a binding agreement with one or
more of  the  entities  accorded  preferred  source  status  under  this
section. The binding agreement shall provide that:
(i)  The  preferred  source  shall  perform  the  majority of the work
necessary to such offering, and
(ii) The partnering proposal includes bona fide long  term  employment
opportunities  for  persons  who  are  clients  of  an  entity  accorded
preferred source status herein, and
(iii)  The  partnering  proposal  offers  the  solicited  services  or
commodities  at  a  price  less  than  the price that otherwise would be
charged by the preferred source.
8. The council  shall  report  to  the  governor,  legislative  fiscal
committees  and  the  director  of  the budget by December thirty-first,
nineteen hundred ninety-five and thereafter annually,  a  separate  list
concerning the denial of any application made pursuant to paragraph b of
subdivision  three of this section, the reasons for such denial, whether
such denial was appealed to the commissioner, and the final decision  by
the commissioner on such application.
9.  The  provisions  of  this  section  shall  supersede  inconsistent
provisions of any general, special or local law, or  the  provisions  of
any charter.