Top Democrat looks to sharply raise no-bid contract limits

A top Senate Democrat has introduced a bill that would sharply raise no-bid thresholds for public contracts issued by school boards and local and county governments.

The bill, sponsored by Sen. Paul Sarlo (D-Bergen), would more than double limits on the size of contracts that local and county governments can issue without soliciting bids, raising it from $17,500 to $50,000 for municipalities without a qualified purchasing agent.

The proposal would “give a little more flexibility to the larger cities and towns,” said Sarlo, who is chair of the Senate’s budget committee

The new $50,000 limit would also apply to school districts without a qualified purchasing agent, whose no-bid limit is now $32,000. The plan would also allow localities and school districts with qualified purchasing agents to issue contracts worth up to $100,000 without soliciting bids, up from the current $44,000 maximum. For entities with more than 100,000 residents, the cap would be $200,000.

The cash cap “hasn’t moved in years,” Sarlo said. “$44,000 is the bid threshold, and that’s for a town of 5,000 people or a town of 700,000 people.”

Seven New Jersey municipalities — Newark, Jersey City, Paterson, Elizabeth, Lakewood, Edison, and Woodbridge — have more than 100,000 residents, but the provision would also apply to 19 of New Jersey’s 21 counties. Only Cape May and Salem counties have fewer than 100,000 residents.

That means most New Jersey counties would be subject to the same $200,000 no-bid limit imposed on sprawling state agencies like NJ Transit, the South Jersey Transportation Authority, and the Treasury’s purchase and property division, New Jersey’s central procurement agency.

The proposal would also allow qualified purchasing agents to award contracts below their respective threshold directly instead of first requiring a vote from the governing body.

The jump from $50,000 is roughly in line with historical increases, though there are concerns, said Marc Pfeiffer, assistant director of Rutgers University’s Bloustein Local Government Research Center.

“That’s keeping track with the history that has made sense and worked,” said Pfeiffer, who has worked in public procurement. “Doubling that and then doubling on that, potentially, because of the size of the entity, to a threshold that is equal to state government at the high end is troubling. It seems excessive and could create some unintended consequences that we can’t think of right now.”

It’s unclear whether contracts issued by a purchasing agent without formal approval from the governing body would be reported to the public. Under the current structure, such contracts are disclosed only because elected officials must approve a resolution or ordinance to issue the award.

The bill would also raise the maximum term of no-bid contracts from two years to three years and would require the state to adjust bid thresholds every three years instead of every five years. The one-year maximum on professional service contracts would remain intact.

Mayor Christian Bollwage of Elizabeth, New Jersey’s fourth largest municipality, declined to say whether the city would benefit from a more agile contracting framework. But he said the bill’s impact would be limited without separate regulatory changes.

“Unless the pay-to-play threshold is raised commensurate with these numbers, the benefit is minimal to non-existent,” he said in a statement.

New Jersey’s pay-to-play law bars firms from receiving public contracts worth more than $17,500 if business owners with at least a 10% stake in a given company — or immediate family members — have donated more than $300 to local officeholders, with additional restrictions on giving to certain political committees.

Sarlo’s bill, which has no Assembly companion and hasn’t had a committee hearing, would leave the pay-to-play threshold untouched. But lawmakers are exploring other changes to the law as part of a broader push for campaign finance reform.

On Thursday, the Senate’s judiciary committee advanced a measure that would remove various political committees, including political party and legislative leadership committees, from the list of entities that would invoke the pay-to-play restriction.

That bill would also sunset a patchwork of pay-to-play ordinances enacted at the local level. Such ordinances are often more stringent than state pay-to-play laws. The full chamber is due to vote on that bill Monday.