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SECTION 162
Preferred sources
State Finance (STF) CHAPTER 56, ARTICLE 11
§ 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 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;

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

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.

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;

(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;

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
severely disabled, by qualified special employment programs for mentally
ill persons and by qualified veterans' workshops. In the case of
services:

(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 severely disabled
and veterans' workshops.

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.

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 among
responsive offerors for the same or equivalent commodities or services.

c. Such qualified charitable non-profit-making agencies for the blind
and other severely 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 severely disabled shall
accept sole responsibility for any payment due the vendor.

d. Such qualified charitable non-profit-making agencies for the blind
and other severely 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 severely
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
severely 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 severely disabled and the veterans' workshops.
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 severely disabled, any special
employment program for mentally ill persons or any veterans' workshops
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' workshop 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. The commissioner of the
appropriate appointing agency as identified in paragraph e of
subdivision six of this section, shall conduct one or more pilot studies
whereby a private vendor may be accorded preferred source status for
purposes of this section. The pilot studies shall seek to ascertain the
benefits of partnerships between private industry and those entities
accorded preferred source status as specified in this section. Preferred
source status under a partnering arrangement may only be accorded 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 could otherwise be new clients of an
entity previously 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 a preferred source.

8. a. The commissioner of the appropriate appointing agency shall
report by December thirty-first, two thousand four, to the governor, the
chairperson of the senate finance committee, the chairperson of the
assembly ways and means committee and the director of the budget, the
results and findings of each pilot study conducted, pursuant to
subdivision seven of this section, and include recommendations for
improving partnering with preferred sources.

b. 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.