ASSEMBLY STATE GOVERNMENT COMMITTEE

STATEMENT TO

ASSEMBLY, No. 2203

STATE OF NEW JERSEY

DATED: NOVEMBER 7, 1996

      The Assembly State Government Committee reports favorably Assembly Bill No. 2203.

      This bill provides that the Director of the Division of Purchase and Property shall establish a two-year program permitting certain qualified nonprofit organizations which are utilized by State agencies to provide services or administer agency programs to purchase materials, equipment and supplies from private vendors under State contract. The basis for the selection of qualified nonprofit organizations to participate in the program shall include, but not be limited to, a sufficient volume of contracts to generate data for evaluating the effectiveness and value of extending to all nonprofit organizations the opportunity to purchase materials, supplies, or equipment under the State's contracts. The participating qualified nonprofit organization shall have sole responsibility for any payment due the vendor for any such purchase. All purchases shall be subject to audit and inspection by the qualified nonprofit organization.

      The bill authorizes the Director of the Division of Purchase and Property to promulgate rules imposing a fee upon participating qualified nonprofit organizations to compensate the division for its cost in administering the cooperative purchase program.

      A "qualified nonprofit organization" is defined as a corporation, association or other organization established pursuant to the laws of this State and operated exclusively for charitable, literary or educational purposes, for scientific testing for public safety, for the prevention of cruelty to children or animals, or for the fostering of amateur sports competition. In addition, no part of its earnings may inure to the benefit of any private shareholder or individual and the organization must be exempt from federal income tax.

      This bill enables participating qualified nonprofit organizations to save money by buying materials, supplies and equipment at State contract prices. They, in turn, would be able to pass the savings on to the State and its various institutions in the form of lower-cost services and thus, help reduce State expenditures.

      The bill requires the director to file a report with the Legislature and the Governor, no later than the end of the 20th month after the program begins, on the operation of the first 18 months of the program. The report shall include the director's recommendations as to whether the program shall be made available to all nonprofit organizations and made permanent.

      The bill would take effect immediately, and expire at the end of the two-year period during which qualified nonprofit organizations are authorized to make purchases.