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A09692 Text:

                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________

                                         9692

                                 I N  A S S E M B L Y

                                     May 15, 2014
                                      ___________

       Introduced  by  M.  of  A. ENGLEBRIGHT -- (at request of the State Comp-
         troller) -- read once and referred to the  Committee  on  Governmental
         Operations

       AN  ACT  to amend the state finance law, in relation to establishing the
         ethical standards for state agency contractors act

         THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section 1. Legislative findings and intent. The legislature finds that
    2  to  a  great  extent,  state  agencies  and  public  authorities rely on
    3  contractors to help accomplish a  broad  array  of  complex,  inherently
    4  governmental  and mission-critical functions.  State agencies and public
    5  authorities contract for services that involve the contractors' exercise
    6  of judgment, providing operational and policy advice to  state  officers
    7  and  employees,  overseeing  other  contractors  and,  at times, working
    8  alongside state officers and employees on the same projects. This inter-
    9  mingling of public and private workforce reveals a need to address  what
   10  processes  are in place to ensure the integrity of government operations
   11  and maintain public confidence.
   12    While a majority of contractors deliver services with integrity,  some
   13  contractors  could,  nonetheless, engage in misconduct during the course
   14  of the contract term - for example, engaging in acts for personal finan-
   15  cial gain, accepting inappropriate gifts, or inappropriately negotiating
   16  for certain jobs.
   17    Furthermore, in carrying out the day-to-day tasks for  state  agencies
   18  and  public  authorities,  contractors often require extensive access to
   19  and use of nonpublic government  information.  Protection  of  nonpublic
   20  information  is  critical, because unauthorized disclosure can erode the
   21  integrity of government operations and lead to situations in which  such
   22  information  is  misused for private gain, potentially harming important
   23  interests such  as  the  privacy  of  individuals,  commercial  business
   24  proprietary rights, security, and law enforcement.
   25    The  legislature  further  finds that opportunities for organizational
   26  and personal conflicts of interest by contractors,  and  the  misuse  of
   27  nonpublic  information  by contractors through negligence or misconduct,

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD13704-04-4
       A. 9692                             2

    1  can have a significant effect on the government's ability to perform its
    2  primary functions, potentially resulting in inappropriate use of taxpay-
    3  er dollars, damaged reputation, and loss of public trust.
    4    The legislature further finds that while few cases of improper conduct
    5  by  contractors have been publicly identified, safeguards are lacking to
    6  identify whether organizational or personal conflicts of interest  exist
    7  among contractors. The cost to the state of contractors or their employ-
    8  ees  engaging  in  actions  reaping organizational or personal gain - an
    9  outcome increasingly likely based on sheer numbers - would likely  never
   10  be known, let alone calculable, as long as there is no transparency.
   11    S  2.  Short  title.  This  act shall be known and may be cited as the
   12  "ethical standards for state agency contractors act".
   13    S 3. The state finance law is amended by adding a new section  148  to
   14  read as follows:
   15    S 148. ETHICAL STANDARDS FOR CONTRACTORS PERFORMING INHERENTLY GOVERN-
   16  MENTAL  AND MISSION-CRITICAL FUNCTIONS OR RENDERING SERVICES PURSUANT TO
   17  AN INFORMATION-RISK CONTRACT. 1. FOR THE PURPOSES OF THIS  SECTION,  THE
   18  FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
   19    (A)  "STATE  AGENCY CONTRACTOR" OR "CONTRACTOR" SHALL MEAN AN INDIVID-
   20  UAL, SUBCONTRACTOR, OR OTHER AGENT OF THE CONTRACTOR WHO, OR  AN  ENTITY
   21  WHICH, PURSUANT TO CONTRACT OR OTHER ARRANGEMENT WITH A STATE AGENCY AND
   22  UNDER  THE  SUPERVISION OR OVERSIGHT OF A STATE OFFICER OR EMPLOYEE, (I)
   23  PERFORMS OR ASSISTS A STATE AGENCY  IN  THE  PERFORMANCE  OF  INHERENTLY
   24  GOVERNMENTAL  ACTIVITIES AND MISSION-CRITICAL FUNCTIONS, OR (II) RENDERS
   25  SERVICES PURSUANT TO AN INFORMATION-RISK CONTRACT.
   26    (B) "STATE AGENCY" SHALL  MEAN  ANY  STATE  DEPARTMENT,  OR  DIVISION,
   27  BOARD,  COMMISSION, OR BUREAU OF ANY STATE DEPARTMENT; THE STATE UNIVER-
   28  SITY OF NEW YORK OR THE CITY UNIVERSITY OF NEW YORK AND THE  INDEPENDENT
   29  INSTITUTIONS  OPERATING  STATUTORY OR CONTRACT COLLEGES ON BEHALF OF THE
   30  STATE; ANY PUBLIC BENEFIT CORPORATION, PUBLIC AUTHORITY OR COMMISSION AT
   31  LEAST ONE OF WHOSE MEMBERS ARE APPOINTED BY THE GOVERNOR  OTHER  THAN  A
   32  LOCAL AUTHORITY AS DEFINED IN SECTION TWO OF THE PUBLIC AUTHORITIES LAW;
   33  AND  ANY  GOVERNMENTAL  ENTITY  PERFORMING A GOVERNMENTAL OR PROPRIETARY
   34  FUNCTION FOR THE STATE, OTHER THAN THE LEGISLATURE OR THE JUDICIARY.
   35    (B-1) "EMPLOYEE" SHALL MEAN ANY OFFICER, EMPLOYEE, AGENT OR  REPRESEN-
   36  TATIVE OF A STATE AGENCY CONTRACTOR.
   37    (C) "INHERENTLY GOVERNMENTAL AND MISSION-CRITICAL FUNCTION" SHALL MEAN
   38  A  FUNCTION THAT INVOLVES THE DISCRETIONARY EXERCISE OF STATE GOVERNMENT
   39  AUTHORITY, OR INVOLVES MONETARY TRANSACTIONS AND ENTITLEMENTS INCLUDING,
   40  BUT NOT LIMITED TO, PROGRAM  MANAGEMENT  SUPPORT,  SYSTEMS  ENGINEERING,
   41  TECHNICAL  ASSISTANCE,  OR  CONTRACT AND ACQUISITION SUPPORT. INHERENTLY
   42  GOVERNMENTAL AND MISSION-CRITICAL FUNCTIONS SHALL INCLUDE, BUT  ARE  NOT
   43  LIMITED TO:
   44    (I)  THE DETERMINATION OF STATE BUDGET PRIORITIES, POLICY, GUIDANCE OR
   45  STRATEGY;
   46    (II) THE DETERMINATION OF STATE AGENCY POLICY, SUCH AS DETERMINING THE
   47  CONTENT AND APPLICATION OF REGULATIONS;
   48    (III) THE DIRECTION AND CONTROL OF STATE EMPLOYEES;
   49    (IV) THE SELECTION OR NON-SELECTION OF INDIVIDUALS FOR  STATE  GOVERN-
   50  MENT  EMPLOYMENT,  INCLUDING THE INTERVIEWING OF INDIVIDUALS FOR EMPLOY-
   51  MENT;
   52    (V) THE APPROVAL OF POSITION DESCRIPTIONS  AND  PERFORMANCE  STANDARDS
   53  FOR STATE EMPLOYEES;
   54    (VI)  THE  APPROVAL  OF  STATE  GOVERNMENT  PROPERTY TO BE ACQUIRED OR
   55  DISPOSED OF AND ON WHAT TERMS; PROVIDED, HOWEVER,  A  STATE  AGENCY  MAY
   56  GIVE CONTRACTORS AUTHORITY TO DISPOSE OF PROPERTY AT PRICES WITHIN SPEC-
       A. 9692                             3

    1  IFIED RANGES AND SUBJECT TO OTHER REASONABLE CONDITIONS DEEMED APPROPRI-
    2  ATE BY SUCH STATE AGENCY;
    3    (VII)  APPROVING  ANY STATE CONTRACTUAL DOCUMENTS, INCLUDING DOCUMENTS
    4  DEFINING REQUIREMENTS, INCENTIVE PLANS AND EVALUATION CRITERIA;
    5    (VIII) AWARDING, ADMINISTERING OR TERMINATING CONTRACTS;
    6    (IX) DETERMINING WHETHER CONTRACT COSTS ARE REASONABLE, ALLOCABLE  AND
    7  ALLOWABLE;
    8    (X) THE APPROVAL OF STATE LICENSING ACTIONS AND INSPECTIONS;
    9    (XI) THE CONDUCT OF CRIMINAL INVESTIGATIONS; OR
   10    (XII)  THE  CONTROL  OF  PROSECUTIONS  AND PERFORMANCE OF ADJUDICATORY
   11  FUNCTIONS.
   12    (D) "NONPUBLIC INFORMATION" SHALL MEAN INFORMATION UNDER A STATE AGEN-
   13  CY'S AUTHORITY OR CONTROL, THE UNAUTHORIZED ACCESS TO, OR LOSS,  MISUSE,
   14  OR  MODIFICATION  OF,  WHICH MAY COMPROMISE IMPORTANT INTERESTS, SUCH AS
   15  PERSONAL OR  MEDICAL  PRIVACY,  GOVERNMENT  SECURITY,  LAW  ENFORCEMENT,
   16  PROPRIETARY  RIGHTS, OR THE CONDUCT OF STATE AGENCY PROGRAMS.  NONPUBLIC
   17  INFORMATION INCLUDES, BUT IS NOT LIMITED TO, INFORMATION THAT:
   18    (I) IS EXEMPT FROM DISCLOSURE UNDER ARTICLE SIX OF THE PUBLIC OFFICERS
   19  LAW OR OTHERWISE PROTECTED FROM DISCLOSURE BY LAW, RULE  OR  REGULATION;
   20  IS PRIVATE INFORMATION, THE RELEASE OF WHICH WOULD CONSTITUTE A SECURITY
   21  BREACH  UNDER SECTION TWO HUNDRED EIGHT OF THE STATE TECHNOLOGY LAW; HAS
   22  BEEN DESIGNATED AS CONFIDENTIAL BY A STATE AGENCY; HAS NOT BEEN  DISSEM-
   23  INATED  TO  THE PUBLIC AND IS NOT AUTHORIZED TO BE MADE AVAILABLE TO THE
   24  PUBLIC ON REQUEST; IS PERSONAL IDENTIFYING  INFORMATION  INCLUDING,  BUT
   25  NOT  LIMITED  TO,  A  PERSON'S NAME, SOCIAL SECURITY NUMBER, BIRTH DATE,
   26  HEALTH/MEDICAL INFORMATION, FINANCIAL INFORMATION, OR TAXPAYER DATA;  OR
   27  IS  SOURCE  SELECTION  INFORMATION INCLUDING, BUT NOT LIMITED TO, SOURCE
   28  SELECTION PLANS, TECHNICAL EVALUATION PLANS, COST EVALUATIONS  OR  RANK-
   29  INGS;
   30    (II)  IS  BUSINESS  PROPRIETARY INFORMATION RELATING TO TRADE SECRETS,
   31  OPERATIONS, APPARATUS, OR PROCESSES; OR
   32    (III) IS STATE AGENCY INFORMATION RELATED TO CONTINUITY OF  OPERATIONS
   33  INFORMATION;  SECURITY  MANAGEMENT  INFORMATION,  PLANNING  INFORMATION,
   34  BUDGETING INFORMATION, PROTECTION SERVICES/ BUILDING  SECURITY  INFORMA-
   35  TION, OR PERSONNEL RECORDS.
   36    (E)  "PROPRIETARY  INFORMATION"  SHALL MEAN INFORMATION INCLUDING, BUT
   37  NOT LIMITED TO, SOURCE SELECTION, BUSINESS  PROPRIETARY  INFORMATION  OR
   38  PERSONAL  INFORMATION  AS  SUCH TERM IS DEFINED IN SECTION NINETY-TWO OF
   39  THE PUBLIC OFFICERS LAW.
   40    (F) "INFORMATION-RISK CONTRACT" SHALL MEAN ANY  CONTRACT  PURSUANT  TO
   41  WHICH CERTAIN STATE AGENCY CONTRACTORS MAY:
   42    (I)  RECEIVE  ACCESS TO INFORMATION RELATING TO A STATE AGENCY'S DELI-
   43  BERATIVE PROCESSES, MANAGEMENT OPERATIONS, OR STAFF, WHICH IS NOT GENER-
   44  ALLY RELEASED OR AVAILABLE TO THE PUBLIC;
   45    (II) HAVE ACCESS TO PROPRIETARY INFORMATION THAT  COULD  BE  EXPLOITED
   46  FOR FINANCIAL GAIN; OR
   47    (III) HAVE ACCESS TO NONPUBLIC INFORMATION.
   48    (G) AN "ORGANIZATIONAL CONFLICT OF INTEREST" SHALL MEAN A STATE AGENCY
   49  CONTRACTOR'S  PRESENT OR CURRENTLY PLANNED INTERESTS, INCLUDING BUSINESS
   50  OR RELATIONSHIPS  WITH  OTHER  PRIVATE  SECTOR  ENTITIES,  WHICH  EITHER
   51  DIRECTLY  OR INDIRECTLY RELATE TO THE WORK TO BE PERFORMED UNDER A STATE
   52  AGENCY CONTRACT AND (I) WHICH MAY DIMINISH ITS CAPACITY TO  GIVE  IMPAR-
   53  TIAL,  TECHNICALLY  SOUND,  OBJECTIVE  ASSISTANCE OR ADVICE, OR (II) MAY
   54  RESULT IN IT HAVING AN UNFAIR COMPETITIVE ADVANTAGE.
   55    (H) A "PERSONAL CONFLICT  OF  INTEREST"  SHALL  MEAN  A  STATE  AGENCY
   56  CONTRACTOR'S   EMPLOYEE'S   PERFORMANCE   OF  SERVICES  OR  EXERCISE  OF
       A. 9692                             4

    1  DISCRETION UNDER A STATE AGENCY CONTRACT,  IN  A  WAY  TO  BENEFIT  SUCH
    2  CONTRACTOR'S  EMPLOYEE OR HIS OR HER RELATIVE INCLUDING, BUT NOT LIMITED
    3  TO, FINANCIAL CONFLICTS OF INTEREST WHERE THE CONTRACTOR'S  EMPLOYEE  OR
    4  RELATIVE  STANDS TO GAIN OR LOSE FINANCIALLY FROM THE CONTRACTOR'S WORK;
    5  LACK OF IMPARTIALITY; ACCEPTANCE OF GIFTS VALUED  AT  FIFTY  DOLLARS  OR
    6  MORE  ALONE  OR IN THE AGGREGATE WITHIN A GIVEN TWELVE-MONTH PERIOD FROM
    7  AN INDIVIDUAL OR ENTITY REVIEWED, AUDITED,  OR  INVESTIGATED  UNDER  THE
    8  STATE  AGENCY  CONTRACT,  OR  FROM  ANYONE  WHO COULD BE AFFECTED BY THE
    9  PERFORMANCE OF THE CONTRACTOR'S DUTIES.
   10    (I) "RELATIVE" SHALL MEAN ANY PERSON LIVING IN THE SAME  HOUSEHOLD  AS
   11  THE  INDIVIDUAL  AND ANY PERSON WHO IS A DIRECT DESCENDANT OF THAT INDI-
   12  VIDUAL'S GRANDPARENTS OR THE SPOUSE OF SUCH DESCENDANT.
   13    (J) "STATE AGENCY CONTRACT" SHALL MEAN A CONTRACT WITH A STATE  AGENCY
   14  TO  PERFORM AN INHERENTLY GOVERNMENTAL AND MISSION-CRITICAL FUNCTION, OR
   15  AN INFORMATION-RISK CONTRACT.
   16    2. ANY CONTRACT EXECUTED BY A STATE AGENCY WITH A CONTRACTOR  PERFORM-
   17  ING  OR  ASSISTING OR PROVIDING ADVICE TO A STATE AGENCY IN THE PERFORM-
   18  ANCE OF AN INHERENTLY GOVERNMENTAL AND  MISSION-CRITICAL  FUNCTION,  AND
   19  ANY INFORMATION-RISK CONTRACT SHALL:
   20    (A)  PROHIBIT  A  CONTRACTOR FROM ORGANIZATIONAL CONFLICTS OF INTEREST
   21  WITH RESPECT TO SUCH STATE AGENCY CONTRACT EXCEPT  TO  THE  EXTENT  THAT
   22  SUCH  CONTRACTOR  HAS  DISCLOSED  SUCH  CONFLICT TO THE STATE AGENCY AND
   23  PROPOSED A METHOD OF MITIGATION  OR  ELIMINATION  SATISFACTORY  TO  SUCH
   24  AGENCY;
   25    (B)  PROHIBIT CONTRACTORS' EMPLOYEES FROM TAKING ANY ACTION THAT WOULD
   26  CONSTITUTE A PERSONAL CONFLICT OF INTEREST AS DEFINED IN  PARAGRAPH  (H)
   27  OF  SUBDIVISION  ONE  OF  THIS SECTION AND PROVIDE THAT SUCH AGENCY MAY,
   28  WHEN A CONTRACTOR DISCLOSES THAT A PERSONAL  CONFLICT  OF  INTEREST  HAS
   29  OCCURRED, TAKE APPROPRIATE ACTION;
   30    (C) INCLUDE A NONDISCLOSURE AGREEMENT OR CLAUSE REQUIRING THE CONTRAC-
   31  TOR  TO  CERTIFY  THAT THEY HAVE AN EXECUTED NONDISCLOSURE AGREEMENT FOR
   32  EACH INDIVIDUAL EMPLOYED BY SUCH CONTRACTOR PURSUANT TO A  STATE  AGENCY
   33  CONTRACT AS A CONDITION OF ACCESS TO NONPUBLIC INFORMATION AND REQUIRING
   34  THAT  AGREEMENTS BETWEEN SUCH CONTRACTORS AND THIRD PARTIES MUST PROTECT
   35  THE STATE AGENCY'S NONPUBLIC INFORMATION;
   36    (D) REQUIRE CONTRACTORS TO OBTAIN WRITTEN CONSENT FROM THE STATE AGEN-
   37  CY PRIOR  TO  DISCLOSING  NONPUBLIC  INFORMATION  TO  SUBCONTRACTORS  OR
   38  OTHERS;
   39    (E) REQUIRE CONTRACTORS TO TRAIN AT LEAST BIANNUALLY ITS EMPLOYEES AND
   40  SUBCONTRACTORS,  IF  ANY,  RENDERING  SERVICES ON STATE AGENCY CONTRACTS
   41  REGARDING ORGANIZATIONAL CONFLICTS OF INTEREST,  PERSONAL  CONFLICTS  OF
   42  INTEREST  AND  PROTECTION  OF NONPUBLIC INFORMATION AND THE CONSEQUENCES
   43  FOR UNAUTHORIZED DISCLOSURE OR MISUSE OF SUCH INFORMATION;
   44    (F) REQUIRE CONTRACTORS TO IMMEDIATELY NOTIFY THE STATE AGENCY REGARD-
   45  ING ANY SUCH ORGANIZATIONAL OR PERSONAL CONFLICTS OF  INTEREST,  OR  THE
   46  MISUSE OR UNAUTHORIZED DISCLOSURE OF NONPUBLIC INFORMATION; AND
   47    (G) IMPOSE CONSEQUENCES FOR VIOLATIONS.
   48    3.  CONTRACTORS  SHALL  BE  RESPONSIBLE FOR THE SECURITY OF ANY SYSTEM
   49  RELATING TO NONPUBLIC INFORMATION  WHETHER  SUCH  SYSTEM  IS  MAINTAINED
   50  ELECTRONICALLY OR OTHERWISE.
   51    4.  CONTRACTORS  INVOLVED  IN  SOURCE SELECTION AND RELATED ACTIVITIES
   52  SUPPORTING AWARD OF STATE AGENCY CONTRACTS SHALL BE SUBJECT TO LAWS  AND
   53  REGULATIONS TO PREVENT RELEASE OF NONPUBLIC INFORMATION.
   54    5. IN ADDITION TO THE REQUIREMENTS OF SUBDIVISIONS TWO, THREE AND FOUR
   55  OF  THIS  SECTION,  CONTRACTORS  PERFORMING  INHERENTLY GOVERNMENTAL AND
   56  MISSION-CRITICAL SERVICES  OR  INFORMATION-RISK  CONTRACT  SERVICES  FOR
       A. 9692                             5

    1  WHICH MORE THAN FIVE MILLION DOLLARS IS TO BE PAID AND INVOLVING WORK IN
    2  EXCESS  OF  ONE  HUNDRED TWENTY DAYS SHALL BE REQUIRED TO HAVE A WRITTEN
    3  CODE OF BUSINESS ETHICS AND CONDUCT. THE PROVISIONS OF THIS  SUBDIVISION
    4  SHALL NOT APPLY TO CONTRACTS FOR THE PURCHASE OF COMMODITIES.
    5    6. THE COMPTROLLER, IN HIS OR HER DISCRETION, MAY PROMULGATE RULES AND
    6  REGULATIONS  ADDRESSING THE APPROPRIATE CONTENT FOR A MODEL WRITTEN CODE
    7  OF BUSINESS ETHICS TO BE UTILIZED BY CONTRACTORS AND EMPLOYEES  OF  SUCH
    8  CONTRACTORS  PERFORMING  INHERENTLY  GOVERNMENTAL  AND  MISSION-CRITICAL
    9  FUNCTIONS, OR RENDERING INFORMATION  RISK  CONTRACT  SERVICES,  FOR  THE
   10  PURPOSE  OF PREVENTING ORGANIZATIONAL AND PERSONAL CONFLICTS OF INTEREST
   11  AND PROTECTING NONPUBLIC INFORMATION.
   12    (A) THE COMPTROLLER'S REGULATIONS MAY INCLUDE SAFEGUARDS  TO  IDENTIFY
   13  AND PREVENT ORGANIZATIONAL AND PERSONAL CONFLICTS OF INTEREST INCLUDING,
   14  BUT NOT LIMITED TO:
   15    (I)  PROHIBITING  THE  CONTRACTOR'S  EMPLOYEES FROM PARTICIPATING IN A
   16  STATE AGENCY CONTRACT IN WHICH THEY HAVE A PERSONAL CONFLICT  OF  INTER-
   17  EST,  ABSENT  NOTIFICATION  TO THE CONTRACTING STATE AGENCY AND SPECIFIC
   18  APPROVAL TO PROCEED FOLLOWING MITIGATION;
   19    (II) REQUIRING THE CONTRACTOR'S EMPLOYEES AVOID THE APPEARANCE OF LOSS
   20  OF IMPARTIALITY IN PERFORMING CONTRACTED DUTIES;
   21    (III) REQUIRING THE CONTRACTOR  TO  REVIEW  AND  ADDRESS  ANY  OF  ITS
   22  EMPLOYEES'  PERSONAL  CONFLICTS  OF  INTEREST  BEFORE  ASSIGNING THEM TO
   23  DELIVER SERVICES;
   24    (IV) PROHIBITING  THE  CONTRACTOR'S  EMPLOYEES  FROM  USING  NONPUBLIC
   25  INFORMATION  OBTAINED  WHILE PERFORMING WORK UNDER CONTRACT FOR PERSONAL
   26  GAIN;
   27    (V) PROHIBITING THE CONTRACTOR'S  EMPLOYEES  WHO  PROVIDE  PROCUREMENT
   28  SUPPORT  SERVICES  FROM INITIATING A FUTURE EMPLOYMENT CONTACT OR FUTURE
   29  EMPLOYMENT CONTACTS INVOLVING A BIDDING STATE AGENCY DURING  AN  ONGOING
   30  PROCUREMENT;
   31    (VI)  IMPOSING LIMITS ON THE ABILITY OF THE CONTRACTOR AND ITS EMPLOY-
   32  EES TO ACCEPT GIFTS IN CONNECTION WITH CONTRACTED DUTIES;
   33    (VII) PROHIBITING MISUSE OF CONTRACT DUTIES  TO  PROVIDE  PREFERENTIAL
   34  TREATMENT TO A PRIVATE INTEREST; AND
   35    (VIII)  ESTABLISHING  DISCIPLINARY  PROCESSES  FOR  VIOLATIONS OF SUCH
   36  CODES.
   37    (B) SUCH REGULATIONS SHALL REQUIRE CONTRACTORS TO:
   38    (I)  REPORT  ANY  ORGANIZATIONAL  OR  PERSONAL  CONFLICT  OF  INTEREST
   39  VIOLATIONS  BY  AN  EMPLOYEE  OF SUCH CONTRACTOR TO THE APPLICABLE STATE
   40  AGENCY CONTRACTING OFFICER AS SOON AS IDENTIFIED;
   41    (II) MAINTAIN EFFECTIVE OVERSIGHT  TO  VERIFY  COMPLIANCE  WITH  SAFE-
   42  GUARDS; AND
   43    (III)  ESTABLISH  AND  MAINTAIN  PROCEDURES  TO  SCREEN  FOR POTENTIAL
   44  CONFLICT OF INTEREST FOR ALL EMPLOYEES EITHER ON A TASK BY TASK BASIS OR
   45  ANNUALLY, THROUGH A FINANCIAL DISCLOSURE STATEMENT.
   46    7. WHEN REVIEW OF CONTRACTOR DISCLOSURE PURSUANT TO PARAGRAPH  (A)  OF
   47  SUBDIVISION  SIX OF THIS SECTION REVEALS AN ACTUAL OR POTENTIAL CONFLICT
   48  OF INTEREST, FINANCIAL CONFLICT OF INTEREST,  IMPAIRED  IMPARTIALITY  OR
   49  MISUSE  OF INFORMATION AND AUTHORITY, CONTRACTORS SHALL ESTABLISH PROCE-
   50  DURES TO MITIGATE SUCH CONFLICT, IMPAIRMENT OR MISUSE INCLUDING, BUT NOT
   51  LIMITED TO, DISQUALIFICATION FROM BEING ASSIGNED TO THE GOVERNMENT TASK,
   52  REASSIGNMENT OR DIVESTITURE.
   53    8. IN ADDITION TO THE VENDOR RESPONSIBILITY  PROCESS,  STATE  AGENCIES
   54  MAY  CONDUCT  REGULAR  BACKGROUND CHECKS OF STATE AGENCY CONTRACTORS AND
   55  EMPLOYEES OF SUCH CONTRACTORS  PERFORMING  INHERENTLY  GOVERNMENTAL  AND
   56  MISSION-CRITICAL  FUNCTIONS,  OR  RENDERING  INFORMATION  RISK  CONTRACT
       A. 9692                             6

    1  SERVICES.  SUCH BACKGROUND CHECKS MAY INCLUDE,  AT  THE  STATE  AGENCY'S
    2  DISCRETION,  FINGERPRINTING  OF  THE STATE AGENCY CONTRACTOR'S EMPLOYEES
    3  PERFORMING INHERENTLY GOVERNMENTAL AND  MISSION-CRITICAL  FUNCTIONS,  OR
    4  RENDERING INFORMATION RISK CONTRACT SERVICES OR ITS PERSONNEL.
    5    9. A CONTRACTOR'S FAILURE TO IMPLEMENT AN ADEQUATE SYSTEM FOR EMPLOYEE
    6  CONFLICT  CERTIFICATION,  TO  DISCLOSE OR CORRECT INSTANCES OF PERSONNEL
    7  MISCONDUCT, OR TO TAKE  APPROPRIATE  DISCIPLINARY  MEASURES  AGAINST  AN
    8  EMPLOYEE  WHO COMMITS MISCONDUCT MAY BE GROUNDS FOR CONTRACT TERMINATION
    9  BY THE STATE AGENCY.
   10    S 4. This act shall take effect on the one hundred eightieth day after
   11  it shall have become a law and apply to contracts executed on and  after
   12  such  date;  provided,  however, that effective immediately, any rule or
   13  regulation necessary for the timely implementation of this  act  on  its
   14  effective date is authorized and directed to be made and completed on or
   15  before such effective date.
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