S T A T E O F N E W Y O R K
________________________________________________________________________
1919
2009-2010 Regular Sessions
I N A S S E M B L Y
January 14, 2009
___________
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:
Section 1. Short title. This act shall be known and may be cited as
the "New York state contract disqualification act".
S 2. Legislative findings and declarations. The legislature finds and
declares that between the years 1999-2002 public confidence in publicly
traded companies suffered greatly as a result of criminally fraudulent
accounting practices and similarly unlawful governance procedures which
has led to several high profile bankruptcies of companies in the United
States.
The legislature further finds and declares that the economic conse-
quences of these pernicious acts have been widespread and devastating.
During this time period, the value of assets and funds in the New York
state and local employees' retirement system alone precipitously
declined from one hundred twenty-eight billion dollars to ninety-seven
billion dollars. Thousands of investors nationwide have withdrawn the
full amount of the remainder from their individual retirement accounts
and have failed to reinvest these proceeds in securities. In addition,
these practices have led to a steep decline in the value of public
companies, limited their liquidity and jeopardized their financing.
The legislature further finds and declares that the state has a keen
pecuniary and proprietary interest in ensuring that the companies with
which it does business are and remain sound financial entities capable
of performing the contracts and delivering the services they have been
contracted to provide. That in order to protect the public fiscally and
ensure the provision of vital public services, the state must ensure
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.
LBD04390-01-9
A. 1919 2
dulent accounting practices and similarly unlawful corporate governance
procedures.
The legislature further finds that the enactment of this act is essen-
tial to protect the welfare of the state, its local governments and the
residents thereof.
S 3. The state finance law is amended by adding a new section 139-bb
to read as follows:
S 139-BB. PROHIBITED BIDDERS AND CONTRACTORS. 1. UNLESS OTHERWISE
PROVIDED, NO FIRM, PARTNERSHIP OR CORPORATION SHALL ENTER INTO A
CONTRACT WITH THE STATE, ANY POLITICAL SUBDIVISION THEREOF, PUBLIC
CORPORATION, AUTHORITY, DEPARTMENT OR AGENCY, IF THE FIRM, PARTNERSHIP,
OR CORPORATION OR ANY OFFICER, DIRECTOR, PARTNER, OR OTHER MANAGERIAL
AGENT OR FIRM, PARTNERSHIP OR CORPORATION HAS BEEN SUBJECTED TO A
CONTRACT DISQUALIFICATION, AS DEFINED IN SUBDIVISION TWO OF THIS
SECTION.
2. FOR PURPOSES OF THIS SECTION, A "CONTRACT DISQUALIFICATION" SHALL
MEAN ANY OF THE DISPOSITIONS LISTED BELOW:
(A) FELONY CONVICTION OF THE FIRM, PARTNERSHIP OR CORPORATION OR ITS
MANAGERIAL OFFICER OR OFFICERS FOR THE CRIMINAL VIOLATION OF THE RELE-
VANT SECURITIES LAWS, AS DEFINED IN SUBDIVISION THREE OF THIS SECTION;
OR
(B) IMPOSITION OF A CIVIL PENALTY, WHETHER SINGULARLY OR IN THE AGGRE-
GATE, OF NOT LESS THAN FIVE HUNDRED THOUSAND DOLLARS AGAINST THE FIRM,
PARTNERSHIP OR CORPORATION OR ITS MANAGERIAL OFFICER OR OFFICERS FOR
CIVIL VIOLATION OF THE RELEVANT SECURITIES LAWS, AS DEFINED IN SUBDIVI-
SION THREE OF THIS SECTION; OR
(C) ANY FINAL AWARD, BY EITHER JUDGMENT OR SETTLEMENT OF MONETARY
DAMAGES EQUAL TO OR EXCEEDING FIVE MILLION DOLLARS, STEMMING FROM
ALLEGED VIOLATIONS OF THE RELEVANT SECURITIES LAWS, AS DEFINED IN SUBDI-
VISION THREE OF THIS SECTION; OR
(D) A FILING FOR BANKRUPTCY UNDER THE FEDERAL BANKRUPTCY STATUTES
WHENEVER THE UNDERLYING CAUSE FOR THE CONDITION OF BANKRUPTCY HAS
RESULTED IN WHOLE OR IN PART FROM THE COMMISSION OF FRAUD IN ACCOUNTING
PRACTICES OR CORPORATE GOVERNANCE.
3. FOR PURPOSES OF THIS SECTION, "RELEVANT SECURITIES LAWS" SHALL MEAN
ANY OF THE FOLLOWING:
(A) THE SARBANES-OXLEY ACT OF 2002 ENACTED BY PUBLIC LAW 107-204, 116
STAT, 745-810, AS AMENDED, AND ALL RULES AND REGULATIONS AS ARE PROMUL-
GATED THEREUNDER; OR
(B) THE SECURITIES EXCHANGE ACT OF 1934 (15 U.S.C. 78C), THE SECURITY
ACT OF 1933 (15 U.S.C. 77A ET SEQ.), AND ANY RULES OR REGULATIONS
PROMULGATED UNDER EITHER OF SUCH ACTS; OR
(C) ANY OTHER FEDERAL SECURITIES LAWS (INCLUSIVE OF THE PROVISIONS OF
LAW REFERRED TO IN SECTION 3(A)(47) OF THE SECURITIES EXCHANGE ACT OF
1934 (15 U.S.C. 78C(A)(47)), INCLUSIVE OF ANY RULES OR REGULATIONS
PROMULGATED THEREUNDER; OR
(D) SECTIONS THREE HUNDRED FIFTY-TWO AND THREE HUNDRED FIFTY-TWO-C OF
THE GENERAL BUSINESS LAW OF THE STATE OF NEW YORK AND ANY OTHER
PROVISION OF ARTICLE TWENTY-THREE-A OF SUCH LAW NECESSARY TO IMPLEMENT
ENFORCEMENT OF SUCH SECTIONS.
4. FOR THE PURPOSES OF THIS SECTION, A CONTRACT DISQUALIFICATION SHALL
LAST FOR A PERIOD OF FIVE YEARS.
5. EVERY BID SUBMITTED TO AND CONTRACT EXECUTED BY THE STATE, POLI-
TICAL SUBDIVISION THEREOF, PUBLIC CORPORATION, AUTHORITY OR DEPARTMENT
OR AGENCY THEREOF SHALL CONTAIN A CERTIFICATION BY THE BIDDER OR
CONTRACTOR THAT THE CONTRACTOR IS NOT BARRED FROM BEING AWARDED A
A. 1919 3
CONTRACT PURSUANT TO THIS SECTION, AND FURTHER THAT THE CONTRACTOR
ACKNOWLEDGES THAT THE CONTRACTING ENTITY MAY DECLARE THE CONTRACT VOID
IF THE CERTIFICATION COMPLETED PURSUANT TO THIS SUBDIVISION IS FALSE.
6. ANY STATE AGENCY, POLITICAL SUBDIVISION THEREOF, PUBLIC CORPO-
RATION, AUTHORITY OR DEPARTMENT RECEIVING A BID FROM ANY ENTITY WHICH
HAS BEEN SUBJECT TO ANY DISPOSITION FOR A CONTRACT DISQUALIFICATION
PURSUANT TO SUBDIVISION TWO OF THIS SECTION, SHALL FORWARD SUCH INFORMA-
TION TO THE STATE COMPTROLLER WITHIN THIRTY DAYS. UPON RECEIPT OF SUCH
INFORMATION, THE STATE COMPTROLLER SHALL HOLD A HEARING, AT WHICH THE
PARTY SHALL BE ENTITLED TO APPEAR, PRESENT EVIDENCE AND BE HEARD, TO
DETERMINE IF SUCH PARTY SHALL BE SUBJECT TO A CONTRACT DISQUALIFICATION.
NOTICE TO THE PARTY AND CONDUCT OF THE HEARING SHALL BE IN ACCORDANCE
WITH THE PROVISIONS OF THE STATE ADMINISTRATIVE PROCEDURE ACT, SECTION
SEVENTY-THREE OF THE CIVIL RIGHTS LAW, AND THE CIVIL PRACTICE LAW AND
RULES.
7. ANY DETERMINATION MADE BY THE STATE COMPTROLLER PURSUANT TO THIS
SECTION SHALL BE SUBJECT TO JUDICIAL REVIEW IN A PROCEEDING PURSUANT TO
ARTICLE SEVENTY-EIGHT OF THE CIVIL PRACTICE LAW AND RULES.
S 4. This act shall take effect immediately and shall apply to any
contracts entered into on or after such effective date.