Purchases Exempt from the NCB Process - 1506

Purchases Exempt by Statute

Purchases may be awarded without advertising or competitive bidding because of being exempt by statute.

Purchases exceeding a department’s purchasing authority, or for departments without any type of purchasing authority, must be submitted to DGS/PD/OTA for review, approval, and execution.

The following purchases may be awarded without advertising or competitive bidding, and without seeking NCB approval, subject to the restrictions noted:

• Emergency contracts, which are necessary for the immediate preservation of life or state property, are exempt from the NCB justification process.  Contracts issued because of an emergency may be entered into immediately. However, such contracts are subject to otherwise applicable statutory approval requirements and the reporting requirements.
• Goods and services for which the state has entered into an LPA and which have been competitively bid or which have been determined to be required for essential services and which have been established by a methodology that assures the state of a reasonable price for the goods/services offered.

Purchases Exempt by DGS Policy

There are purchases that may be awarded without advertising or competitive bidding and without an NCB, because of being exempt by policy. Although exempt by statute or policy, the purchasing authority dollar thresholds still apply. For purchases that exceed a department’s purchasing authority or for departments without any type of purchasing authority, purchase requests must be submitted to DGS/PD for review, approval, and execution of the purchase.

Purchases that exceed departments purchasing authority or departments without any type of purchasing authority must submit these purchases to DGS for review, approval, and execution. The following purchases may be awarded without advertising or competitive bidding subject to the restrictions noted:

• Proprietary subscriptions, proprietary publications, and/or technical manuals (manuals, law books, technical manuals, technical services related to publications, etc.) regardless of media format, up to $250,000.00.
• Maintenance agreements for equipment that is under documented warranty, or where there is only one authorized or qualified representative, or where there is only one distributor in the area for parts and services. This exception applies only in circumstances where services to be provided are less than $250,000, per year; if over $250,000, per year – an NCB is required.
• Contracts with business entities operating Community-Based Rehabilitation Programs (CRP), which meet the criteria established by Welfare and Institutions Code Section 19404. Note: Exception does not apply to contracts justified pursuant to GC section 19130(a).

Amendments Exempt from Advertising and Competitive Bidding by DGS Policy

Amendments where a protest or other legal action delays the award of a new contract are exempt from advertising and competitive bidding, when the same terms at equal or lower rates apply.

Note: These amendments should only apply during the protest period or while legal action is pending. A new purchase document can be executed, but in no case shall this exemption extend beyond six (6) months for a particular amendment.

Amendments to existing IT contracts which were originally competitively bid (including contract executed against a Leveraged Procurement Agreement) which included options for changes (e.g. quantity or time), may be amended consistent with the terms of the original contract providing for such extension(s) if such options were evaluated during the solicitation process.

Purchasing Authority Thresholds

Although exempt from advertising and competitive bidding by policy, purchasing authority dollar thresholds still apply.

Supporting Statement

Procurement files must include a statement indicating the basis for exemption from advertising or competitive bidding, either by policy or by statute. Documentation must be provided in sufficient detail to support how the exemption is authorized.

Example #1

“This purchase is exempt from advertising and/or competitive bidding based on the DGS policy.

Example #2

“This purchase is exempt from advertising and/or competitive bidding based upon the use LPA #             .

Example #3

“This purchase is exempt from advertising and/or competitive bidding based upon the use of existing law.” Departments shall specify the law being utilized for this exemption within the justification.

Cost Reasonableness

Purchases although exempt by statute or policy, must be reasonable in cost and justification. Departments must provide the basis of the comparison to include items such as market rates, contract pricing, historical pricing, cost breakdown, etc. Procurement files must include documentation to support fair and reasonable pricing.