Section 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 department  of  correctional  services'
  correctional  industries  program  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 correctional
  services, social services, 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  correctional  services,  the
  commissioner of social services, 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   department   of   correctional   services'
  correctional industries program;
    (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 correctional services. The
  prices to be charged for  commodities  produced  by  the  department  of
  correctional   services'   correctional   industries  program  shall  be
  established by the commissioner of correctional services  in  accordance
  with section one hundred eighty-six of the correction law.
    a. The prices established by the commissioner of correctional services
  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 correctional services  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 correctional services 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  department  of  correctional  services'
  correctional   industries   program,   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 from the department of correctional services'  correctional
  industries  program,  directly  from the correctional industries program
  administered by the commissioner of correctional  services,  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 correctional
  services.
    e. The state commissioner of social services  shall  appoint  the  New
  York  state  commission for the blind and visually handicapped, 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.