senate Bill S7375

2013-2014 Legislative Session

Establishes the ethical standards for state agency contractors act

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Senate Actions - UPPERCASE
May 14, 2014 referred to finance

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S7375 - Bill Details

See Assembly Version of this Bill:
A9692
Current Committee:
Law Section:
State Finance Law
Laws Affected:
Add ยง148, St Fin L

S7375 - Bill Texts

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Establishes the ethical standards for state agency contractors act.

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BILL NUMBER:S7375

TITLE OF BILL: An act to amend the state finance law, in relation to
establishing the ethical standards for state agency contractors act

PURPOSE:

The purpose of this legislation is to establish ethical standards for
certain state agency contractors.

SUMMARY OF PROVISIONS:

Section 1 sets forth the Legislature's findings and intent.

Section 2. Provides that the proposal when enacted shall be known and
may be cited as "the ethical standards for state agency contractors
act."

Section 3. This bill amends the State Finance Law by adding a new
Section 148 relating to ethical standards for contractors performing
inherently governmental and mission-critical functions or rendering a
service or services pursuant to an information-risk contract. This
Section also defines "state agency contractor," "state agency," "employ-
ee," "inherently governmental and mission-critical function," "nonpublic
information," "proprietary information," "information-risk contract,"
"organizational conflict of interest," "personal conflict of interest"
and "state agency contract."

Additionally, this Section requires that any contract executed by a
state agency with a contractor performing inherently governmental and
mission-critical functions or rendering services pursuant to an informa-
tion-risk contract, prohibit contractors from organizational conflicts
of interest with respect to such state agency contract and prohibit a
contractor's employees performing inherently governmental and mission-
critical functions or rendering information-risk contract services from
personal conflicts of interest arising with respect to such state agency
contract. The contract must also include a nondisclosure agreement or
clause requiring the contractor to certify that it has an executed
nondisclosure agreement for each individual employed by the contractor
pursuant to a state agency contract as a condition of access to nonpub-
lic information. The contract must require that agreements between
contractors and third parties must protect the state agency's nonpublic
information and require such contractors to obtain written consent from
the state agency prior to disclosing nonpublic information to subcon-
tractors or others. The contract must require contractors to train at
least biannually its employees and subcontractors, if any, rendering
services on state agency contracts regarding organizational conflicts of
interest, personal conflicts of interest and protection of nonpublic
information and the consequences for unauthorized disclosure or misuse
of such information. Finally, the contract must require contractors to
immediately notify the state agency regarding any such organizational or

personal conflicts of interest, or the misuse or unauthorized disclosure
of nonpublic information and impose consequences for violations.

This Section also provides that contractors shall be responsible for the
security of any system relating to nonpublic information whether such
system is maintained electronically or otherwise. Contractors involved
in source selection and related activities supporting award of state
agency contracts shall be subject to laws and regulations preventing the
release of nonpublic information.

Contractors performing inherently governmental and mission-. critical
services or information-risk contract services for which more than five
million dollars is to be paid and involving work in excess of one
hundred and twenty days shall be required to have a written code of
business ethics and conduct. The provisions of the Act shall not apply
to contracts for the purchase of commodities.

Finally, this Section authorizes the Comptroller, in his or her
discretion, to promulgate rules and regulations addressing the appropri-
ate content for a model written code of business ethics to be utilized
by contractors performing inherently governmental and mission- critical
functions, or rendering information risk contract services, for the
purpose of preventing organizational and personal conflicts of interest
and protecting nonpublic information.

Section 4. Provides for an immediate effective date.

PRIOR LEGISLATIVE HISTORY:

New bill.

JUSTIFICATION:

To a great extent, state agencies and public authorities rely on
contractors to help accomplish a broad array of complex, inherently
governmental and mission-critical functions. State agencies and public
authorities contract for services that involve the contractors' exercise
of judgment, providing operational and policy advice to state officers
and employees, overseeing other contractors and, at times, working
alongside state officers and employees on the same projects. This inter-
mingling of public and private workforce reveals a need to assess what
processes are in place to ensure the integrity of government operations
and maintain public confidence.

While a majority of contractors deliver services with integrity, some
contractors could, nonetheless, engage in misconduct during the course
of the contract term -for example, engaging in acts for personal finan-
cial gain, accepting inappropriate gifts, or inappropriately negotiating
for certain jobs.

Furthermore, in carrying out the day-to-day tasks for state agencies and
public authorities, contractors often require extensive access to and

use of nonpublic government information. Protection of nonpublic infor-
mation is critical, because unauthorized disclosure can erode the integ-
rity of government operations and lead to situations in which such
information is misused for private gain, potentially harming important
interests such as the privacy of individuals, commercial business
proprietary rights, security, and law enforcement.

Opportunities for organizational and personal conflicts of interest by
contractors, and the misuse of nonpublic information by contractors
through negligence or misconduct, can have a significant effect on the
government's ability to perform its primary functions, potentially
resulting in inappropriate use of taxpayer dollars, damaged reputation,
and loss of public trust.

While few cases of improper conduct by contractors have been publicly
identified, safeguards are lacking to identify whether organizational or
personal conflicts of interest exist among contractors. The cost to the
state of contractors or their employees engaging in actions reaping
organizational or personal gain - an outcome increasingly likely based
on sheer numbers - would likely never be known, let alone calculable, as
long as there is no transparency.

FISCAL IMPLICATIONS FOR STATE:

This bill has no significant State fiscal impact.

EFFECTIVE DATE:

This act shall take effect immediately.

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

                                  7375

                            I N  S E N A T E

                              May 14, 2014
                               ___________

Introduced  by Sen. DeFRANCISCO -- (at request of the State Comptroller)
  -- read twice and ordered printed, and when printed to be committed to
  the Committee on Finance

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:

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

S. 7375                             2

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

S. 7375                             3

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

S. 7375                             4

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

S. 7375                             5

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

S. 7375                             6

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

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