Provides a procedure for the disqualification of contracts; such contract disqualification shall last for a period of five years; defines contract disqualification.
STATE OF NEW YORK
________________________________________________________________________
2379
2011-2012 Regular Sessions
IN ASSEMBLY
January 18, 2011
___________
Introduced by M. of A. DESTITO -- read once and referred to the Commit-
tee on Governmental Operations
AN ACT to amend the state finance law, in relation to establishing a
procedure for contract disqualification
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "New York state contract disqualification act".
3 § 2. Legislative findings and declarations. The legislature finds and
4 declares that between the years 1999-2002 public confidence in publicly
5 traded companies suffered greatly as a result of criminally fraudulent
6 accounting practices and similarly unlawful governance procedures which
7 has led to several high profile bankruptcies of companies in the United
8 States.
9 The legislature further finds and declares that the economic conse-
10 quences of these pernicious acts have been widespread and devastating.
11 During this time period, the value of assets and funds in the New York
12 state and local employees' retirement system alone precipitously
13 declined from one hundred twenty-eight billion dollars to ninety-seven
14 billion dollars. Thousands of investors nationwide have withdrawn the
15 full amount of the remainder from their individual retirement accounts
16 and have failed to reinvest these proceeds in securities. In addition,
17 these practices have led to a steep decline in the value of public
18 companies, limited their liquidity and jeopardized their financing.
19 The legislature further finds and declares that the state has a keen
20 pecuniary and proprietary interest in ensuring that the companies with
21 which it does business are and remain sound financial entities capable
22 of performing the contracts and delivering the services they have been
23 contracted to provide. That in order to protect the public fiscally and
24 ensure the provision of vital public services, the state must ensure
25 that potential vendors have not and will not engage in criminally frau-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06174-01-1
A. 2379 2
1 dulent accounting practices and similarly unlawful corporate governance
2 procedures.
3 The legislature further finds that the enactment of this act is essen-
4 tial to protect the welfare of the state, its local governments and the
5 residents thereof.
6 § 3. The state finance law is amended by adding a new section 139-bb
7 to read as follows:
8 § 139-bb. Prohibited bidders and contractors. 1. Unless otherwise
9 provided, no firm, partnership or corporation shall enter into a
10 contract with the state, any political subdivision thereof, public
11 corporation, authority, department or agency, if the firm, partnership,
12 or corporation or any officer, director, partner, or other managerial
13 agent or firm, partnership or corporation has been subjected to a
14 contract disqualification, as defined in subdivision two of this
15 section.
16 2. For purposes of this section, a "contract disqualification" shall
17 mean any of the dispositions listed below:
18 (a) Felony conviction of the firm, partnership or corporation or its
19 managerial officer or officers for the criminal violation of the rele-
20 vant securities laws, as defined in subdivision three of this section;
21 or
22 (b) Imposition of a civil penalty, whether singularly or in the aggre-
23 gate, of not less than five hundred thousand dollars against the firm,
24 partnership or corporation or its managerial officer or officers for
25 civil violation of the relevant securities laws, as defined in subdivi-
26 sion three of this section; or
27 (c) Any final award, by either judgment or settlement of monetary
28 damages equal to or exceeding five million dollars, stemming from
29 alleged violations of the relevant securities laws, as defined in subdi-
30 vision three of this section; or
31 (d) A filing for bankruptcy under the federal bankruptcy statutes
32 whenever the underlying cause for the condition of bankruptcy has
33 resulted in whole or in part from the commission of fraud in accounting
34 practices or corporate governance.
35 3. For purposes of this section, "relevant securities laws" shall mean
36 any of the following:
37 (a) The Sarbanes-Oxley act of 2002 enacted by public law 107-204, 116
38 stat, 745-810, as amended, and all rules and regulations as are promul-
39 gated thereunder; or
40 (b) The securities exchange act of 1934 (15 U.S.C. 78c), the security
41 act of 1933 (15 U.S.C. 77a et seq.), and any rules or regulations
42 promulgated under either of such acts; or
43 (c) Any other federal securities laws (inclusive of the provisions of
44 law referred to in section 3(a)(47) of the securities exchange act of
45 1934 (15 U.S.C. 78c(a)(47)), inclusive of any rules or regulations
46 promulgated thereunder; or
47 (d) Sections three hundred fifty-two and three hundred fifty-two-c of
48 the general business law of the state of New York and any other
49 provision of article twenty-three-A of such law necessary to implement
50 enforcement of such sections.
51 4. For the purposes of this section, a contract disqualification shall
52 last for a period of five years.
53 5. Every bid submitted to and contract executed by the state, poli-
54 tical subdivision thereof, public corporation, authority or department
55 or agency thereof shall contain a certification by the bidder or
56 contractor that the contractor is not barred from being awarded a
A. 2379 3
1 contract pursuant to this section, and further that the contractor
2 acknowledges that the contracting entity may declare the contract void
3 if the certification completed pursuant to this subdivision is false.
4 6. Any state agency, political subdivision thereof, public corpo-
5 ration, authority or department receiving a bid from any entity which
6 has been subject to any disposition for a contract disqualification
7 pursuant to subdivision two of this section, shall forward such informa-
8 tion to the state comptroller within thirty days. Upon receipt of such
9 information, the state comptroller shall hold a hearing, at which the
10 party shall be entitled to appear, present evidence and be heard, to
11 determine if such party shall be subject to a contract disqualification.
12 Notice to the party and conduct of the hearing shall be in accordance
13 with the provisions of the state administrative procedure act, section
14 seventy-three of the civil rights law, and the civil practice law and
15 rules.
16 7. Any determination made by the state comptroller pursuant to this
17 section shall be subject to judicial review in a proceeding pursuant to
18 article seventy-eight of the civil practice law and rules.
19 § 4. This act shall take effect immediately and shall apply to any
20 contracts entered into on or after such effective date.
