NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7512
SPONSOR: Peoples-Stokes TITLE OF BILL:
An act to amend the state finance law, in relation to establishing the
ethical standards for state agency contractors act
PURPOSE:
To establish ethical standards for contractors performing inherently
governmental and mission-critical functions or information risk
contracts.
SUMMARY OF PROVISIONS:
Section one of this bill provides for legislative findings and intent.
Section two of this bill states that this act shall be known and may be
cited as the "ethical standards for state agency contractors act".
Section three of this bill amends the State Finance Law by adding a new
Section 148. This Section would requires contracts executed by a state
agency, department or public authority with a contractor performing
inherently governmental or mission-critical functions and any informa-
tion-risk contract to include certain information and prohibitions such
as: prohibiting contractors from organizational conflicts of interest
with respect to such contract; prohibiting contractors' employees from
personal conflicts of interest arising with respect to such contract;
including a nondisclosure agreement or clause requiring the contractor
to certify that they have an executed nondisclosure agreement for each
individual employed by such contractor as a condition of access to
nonpublic information; and requiring contractors to obtain written
consent from the state agency prior to disclosing nonpublic information
to subcontractors or others.
Additionally, this Section would require contractors performing inher-
ently governmental and mission-critical services or information-risk
contract services for which more than $1,000,000 is to be paid and
involving work in excess of 120 days, not including contracts for the
purchase of commodities, shall be required to have a written code of
business ethics and conduct. The State Comptroller is authorized to
promulgate rules and regulations addressing appropriate content for a
model code of business ethics and conduct.
Finally, this Section would establish that A contractor's failure to
implement an adequate system for personnel conflict certification, to
disclose or correct instances of personnel misconduct, or to take appro-
priate disciplinary measures against personnel who commit misconduct may
be grounds for contract termination by the state agency. In addition, a
contractor that repeatedly proves incapable or unwilling to honor such
contractual obligations may be subject to suspension or debarment in
appropriate circumstances.
Section four of this bill is the effective date.
PRIOR LEGISLATIVE HISTORY:
S.7375 and A.9692 of 2013-14
JUSTIFICATION:
Outsourcing, downsizing, and privatizing have increased in recent years,
and private contractors are filling important roles - such as providing
operational and policy advice to government employees, overseeing the
work of other contractors and working closely alongside government
employees on the same projects. Certainly, some contractors perform
duties so related to government functions that safeguards to promote
integrity are essential. Contracting out also has enormous significance
in terms Of the amount of funding that agencies spend every year for
these services.
While a majority of government contractors deliver services with integ-
rity, inevitably, some government contractors will engage in misconduct
during the course of a contract term - e.g., engaging in acts for
personal financial gain, misusing government property, accepting inap-
propriate gifts, inappropriately negotiating for certain jobs post-con-
tract, and/or divulging non-public information.
Contractors do not take an oath of office, are not subject to the
Constitution, the Freedom of Information Law, or other laws that hold
government employees accountable. Most contractor ethics codes are aimed
at preventing employees acting in a way disloyal to the company, not
disloyal to the client/government agency. (Contrast this with the situ-
ation for State employees, who are covered by specific ethics laws, may
be subject to financial disclosure, take ethics training and are subject
to discipline or possible administrative, civil or criminal prosecution
depending on the wrongdoing.)
To the degree that contractor personnel influence government decisions
or have access to government resources, they owe a fiduciary duty; stan-
dards should be in place to ensure that contractor personnel know about
and do not violate their fiduciary duties.
The State Comptroller urges the passage of this proposed legislation.
FISCAL IMPLICATIONS FOR STATE:
This bill has no significant State fiscal impact.
EFFECTIVE DATE:
This act shall take effect immediately and apply to contracts executed
on and after such date.
