How Local Purchases Actually Flow Through Your State Contract
This is one of the most common misunderstandings we hear from contract holders. It is half right, and the half that is wrong is the expensive half.
The order really did not touch NJSTART. A township buying from your contract issues a purchase order from its own financial system. It reaches you by email or lands in your ERP, and you fulfill and invoice it like any other sale. That is exactly how cooperative purchasing is designed to work.
Reporting local sales is not an extra obligation layered onto your contract. It is part of the contract you bid.
When the State solicits a statewide contract, cooperative purchasing volume is part of what is on the table. Historical usage across State agencies and local entities informs the solicitation, bidders price with that volume in view, and the award goes to the responsive and responsible bidder whose pricing reflects it. Access to municipalities, school districts, colleges, and authorities is part of what makes the contract worth holding, and part of what your pricing was built around.
So, a purchase order arriving from a township is not incidental business that happens to brush against your contract. It is the contract working as designed, and reporting it is how that volume stays visible to everyone who priced around it.
Where was the order transacted? For a State agency, usually in NJSTART. For a local buyer, almost always in that entity’s own purchasing or ERP system.
Under what authority was it purchased? If the buyer referenced your State contract number at contract pricing and terms, the answer is your State of New Jersey contract, whichever system produced the paperwork.
Reporting and PEP fee obligations follow the second question, not the first.
Local contracting units operate under the Local Public Contracts Law (N.J.S.A. 40A:11-1 et seq.) and boards of education under the Public School Contracts Law (N.J.S.A. 18A:18A-1 et seq.). The purchase order has to live in the system that carries that entity’s budget, approval chain, and audit trail. A municipal purchasing agent is prohibited from encumbering township funds from inside the State’s eProcurement system. Under N.J.S.A. 40A:11-12 and N.J.S.A. 18A:18A-10, they can buy from your contract without advertising for bids, which is the your advantage from the contract award.
Reporting and fee requirements are tied to your State of New Jersey contract, no matter how the sale is transacted.
The PEP fee applies to the value of all transactions on the contract, including those from Cooperative Purchasing Participants. A purchase order that arrived by email and never appeared in NJSTART is still a contract sale and still belongs in your quarterly report. The question is never “did this flow through NJSTART?” The question should be “was this purchased under my State contract?”
Per the Division of Purchase and Property, a local entity may purchase at a discount below the contract amount, but that purchase is not off the State contract, and the entity follows its own local laws on its own. Business never sourced through your State contract is not subject to the PEP fee. The distinction is the contract, not the channel. If you are unsure which side of the line an order falls on, ask before the reporting deadline rather than after.
1. Capture the contract number at order entry. Record it when the PO comes in and your quarterly report builds itself.
2. Flag public sector customers in your system. Municipalities, school districts, authorities, and colleges should be identifiable, so nothing is missed at quarter end.
3. Brief whoever keys orders. The person entering POs is often not the person filing the report.
Your contract is the authority. NJSTART is where State agencies transact against it, and where buyers across New Jersey search and discover it. A local purchase order flowing through a township’s finance system is not an exception to your contract. It is your contract working the way cooperative purchasing was built to work, and it counts.
Questions about whether a specific sale is reportable? Contact the NJSTART Team at vendors@njstart.info, or reconciler@mdfcommerce.com for help with the Reconciler system.