•  Summary 
  •  Actions 
  •  Committee Votes 
  •  Floor Votes 
  •  Memo 
  •  Text 
  •  LFIN 
  •  Chamber Video/Transcript 

A07020 Text:

                STATE OF NEW YORK
                               2021-2022 Regular Sessions
                   IN ASSEMBLY
                                     April 20, 2021
        Introduced  by  M.  of  A.  ZEBROWSKI  -- (at request of the State Comp-
          troller) -- read once and referred to the  Committee  on  Governmental
        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.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 7020                             2
     1    The  legislature  further  finds that opportunities for organizational
     2  and personal conflicts of interest by contractors,  and  the  misuse  of
     3  nonpublic  information  by contractors through negligence or misconduct,
     4  can have a significant effect on the government's ability to perform its
     5  primary functions, potentially resulting in inappropriate use of taxpay-
     6  er dollars, damaged reputation, and loss of public trust.
     7    The legislature further finds that while few cases of improper conduct
     8  by  contractors have been publicly identified, safeguards are lacking to
     9  identify whether organizational or personal conflicts of interest  exist
    10  among contractors. The cost to the state of contractors or their employ-
    11  ees  engaging  in  actions  reaping organizational or personal gain - an
    12  outcome increasingly likely based on sheer numbers - would likely  never
    13  be known, let alone calculable, as long as there is no transparency.
    14    §  2.  Short  title.  This  act shall be known and may be cited as the
    15  "ethical standards for state agency contractors act".
    16    § 3. The state finance law is amended by adding a new section  148  to
    17  read as follows:
    18    § 148. Ethical standards for contractors performing inherently govern-
    19  mental  and mission-critical functions or rendering services pursuant to
    20  an information-risk contract. 1. For the purposes of this  section,  the
    21  following terms shall have the following meanings:
    22    (a)  "State  agency contractor" or "contractor" shall mean an individ-
    23  ual, subcontractor, or other agent of the contractor who, or  an  entity
    24  which, pursuant to contract or other arrangement with a state agency and
    25  under  the  supervision or oversight of a state officer or employee, (i)
    26  performs or assists a state agency  in  the  performance  of  inherently
    27  governmental  activities and mission-critical functions, or (ii) renders
    28  services pursuant to an information-risk contract.
    29    (b) "State agency" shall  mean  any  state  department,  or  division,
    30  board,  commission, or bureau of any state department; the state univer-
    31  sity of New York or the city university of New York and the  independent
    32  institutions  operating  statutory or contract colleges on behalf of the
    33  state; any public benefit corporation, public authority or commission at
    34  least one of whose members are appointed by the governor  other  than  a
    35  local authority as defined in section two of the public authorities law;
    36  and  any  governmental  entity  performing a governmental or proprietary
    37  function for the state, other than the legislature or the judiciary.
    38    (b-1) "Employee" shall mean any officer, employee, agent or  represen-
    39  tative of a state agency contractor.
    40    (c) "Inherently governmental and mission-critical function" shall mean
    41  a  function that involves the discretionary exercise of state government
    42  authority, or involves monetary transactions and entitlements including,
    43  but not limited to, program  management  support,  systems  engineering,
    44  technical  assistance,  or  contract and acquisition support. Inherently
    45  governmental and mission-critical functions shall include, but  are  not
    46  limited to:
    47    (i)  The determination of state budget priorities, policy, guidance or
    48  strategy;
    49    (ii) The determination of state agency policy, such as determining the
    50  content and application of regulations;
    51    (iii) The direction and control of state employees;
    52    (iv) The selection or non-selection of individuals for  state  govern-
    53  ment  employment,  including the interviewing of individuals for employ-
    54  ment;
    55    (v) The approval of position descriptions  and  performance  standards
    56  for state employees;

        A. 7020                             3
     1    (vi)  The  approval  of  state  government  property to be acquired or
     2  disposed of and on what terms; provided, however,  a  state  agency  may
     3  give contractors authority to dispose of property at prices within spec-
     4  ified ranges and subject to other reasonable conditions deemed appropri-
     5  ate by such state agency;
     6    (vii)  Approving  any state contractual documents, including documents
     7  defining requirements, incentive plans and evaluation criteria;
     8    (viii) Awarding, administering or terminating contracts;
     9    (ix) Determining whether contract costs are reasonable, allocable  and
    10  allowable;
    11    (x) The approval of state licensing actions and inspections;
    12    (xi) The conduct of criminal investigations; or
    13    (xii)  The  control  of  prosecutions  and performance of adjudicatory
    14  functions.
    15    (d) "Nonpublic information" shall mean information under a state agen-
    16  cy's authority or control, the unauthorized access to, or loss,  misuse,
    17  or  modification  of,  which may compromise important interests, such as
    18  personal or  medical  privacy,  government  security,  law  enforcement,
    19  proprietary  rights, or the conduct of state agency programs.  Nonpublic
    20  information includes, but is not limited to, information that:
    21    (i) is exempt from disclosure under article six of the public officers
    22  law or otherwise protected from disclosure by law, rule  or  regulation;
    23  is private information, the release of which would constitute a security
    24  breach  under section two hundred eight of the state technology law; has
    25  been designated as confidential by a state agency; has not been  dissem-
    26  inated  to  the public and is not authorized to be made available to the
    27  public on request; is personal identifying  information  including,  but
    28  not  limited  to,  a  person's name, social security number, birth date,
    29  health/medical information, financial information, or taxpayer data;  or
    30  is  source  selection  information including, but not limited to, source
    31  selection plans, technical evaluation plans, cost evaluations  or  rank-
    32  ings;
    33    (ii)  is  business  proprietary information relating to trade secrets,
    34  operations, apparatus, or processes; or
    35    (iii) is state agency information related to continuity of  operations
    36  information;  security  management  information,  planning  information,
    37  budgeting information, protection services/ building  security  informa-
    38  tion, or personnel records.
    39    (e)  "Proprietary  information"  shall mean information including, but
    40  not limited to, source selection, business  proprietary  information  or
    41  personal  information  as  such term is defined in section ninety-two of
    42  the public officers law.
    43    (f) "Information-risk contract" shall mean any  contract  pursuant  to
    44  which certain state agency contractors may:
    45    (i)  receive  access to information relating to a state agency's deli-
    46  berative processes, management operations, or staff, which is not gener-
    47  ally released or available to the public;
    48    (ii) have access to proprietary information that  could  be  exploited
    49  for financial gain; or
    50    (iii) have access to nonpublic information.
    51    (g) An "organizational conflict of interest" shall mean a state agency
    52  contractor's  present or currently planned interests, including business
    53  or relationships  with  other  private  sector  entities,  which  either
    54  directly  or indirectly relate to the work to be performed under a state
    55  agency contract and (i) which may diminish its capacity to  give  impar-

        A. 7020                             4
     1  tial,  technically  sound,  objective  assistance or advice, or (ii) may
     2  result in it having an unfair competitive advantage.
     3    (h)  A  "personal  conflict  of  interest"  shall  mean a state agency
     4  contractor's  employee's  performance  of  services   or   exercise   of
     5  discretion  under  a  state  agency  contract,  in a way to benefit such
     6  contractor's employee or his or her relative including, but not  limited
     7  to,  financial  conflicts of interest where the contractor's employee or
     8  relative stands to gain or lose financially from the contractor's  work;
     9  lack  of  impartiality;  acceptance  of gifts valued at fifty dollars or
    10  more alone or in the aggregate within a given twelve-month  period  from
    11  an  individual  or  entity  reviewed, audited, or investigated under the
    12  state agency contract, or from anyone  who  could  be  affected  by  the
    13  performance of the contractor's duties.
    14    (i)  "Relative"  shall mean any person living in the same household as
    15  the individual and any person who is a direct descendant of  that  indi-
    16  vidual's grandparents or the spouse of such descendant.
    17    (j)  "State agency contract" shall mean a contract with a state agency
    18  to perform an inherently governmental and mission-critical function,  or
    19  an information-risk contract.
    20    2.  Any contract executed by a state agency with a contractor perform-
    21  ing or assisting or providing advice to a state agency in  the  perform-
    22  ance  of  an  inherently governmental and mission-critical function, and
    23  any information-risk contract shall:
    24    (a) prohibit a contractor from organizational  conflicts  of  interest
    25  with  respect  to  such  state agency contract except to the extent that
    26  such contractor has disclosed such conflict  to  the  state  agency  and
    27  proposed  a  method  of  mitigation  or elimination satisfactory to such
    28  agency;
    29    (b) prohibit contractors' employees from taking any action that  would
    30  constitute  a  personal conflict of interest as defined in paragraph (h)
    31  of subdivision one of this section and provide  that  such  agency  may,
    32  when  a  contractor  discloses  that a personal conflict of interest has
    33  occurred, take appropriate action;
    34    (c) include a nondisclosure agreement or clause requiring the contrac-
    35  tor to certify that they have an executed  nondisclosure  agreement  for
    36  each  individual  employed by such contractor pursuant to a state agency
    37  contract as a condition of access to nonpublic information and requiring
    38  that agreements between such contractors and third parties must  protect
    39  the state agency's nonpublic information;
    40    (d) require contractors to obtain written consent from the state agen-
    41  cy  prior  to  disclosing  nonpublic  information  to  subcontractors or
    42  others;
    43    (e) require contractors to train at least biannually its employees and
    44  subcontractors, if any, rendering services  on  state  agency  contracts
    45  regarding  organizational  conflicts  of interest, personal conflicts of
    46  interest and protection of nonpublic information  and  the  consequences
    47  for unauthorized disclosure or misuse of such information;
    48    (f) require contractors to immediately notify the state agency regard-
    49  ing  any  such  organizational or personal conflicts of interest, or the
    50  misuse or unauthorized disclosure of nonpublic information; and
    51    (g) impose consequences for violations.
    52    3. Contractors shall be responsible for the  security  of  any  system
    53  relating  to  nonpublic  information  whether  such system is maintained
    54  electronically or otherwise.

        A. 7020                             5
     1    4. Contractors involved in source  selection  and  related  activities
     2  supporting  award of state agency contracts shall be subject to laws and
     3  regulations to prevent release of nonpublic information.
     4    5. In addition to the requirements of subdivisions two, three and four
     5  of  this  section,  contractors  performing  inherently governmental and
     6  mission-critical services  or  information-risk  contract  services  for
     7  which more than five million dollars is to be paid and involving work in
     8  excess  of  one  hundred twenty days shall be required to have a written
     9  code of business ethics and conduct. The provisions of this  subdivision
    10  shall not apply to contracts for the purchase of commodities.
    11    6. The comptroller, in his or her discretion, may promulgate rules and
    12  regulations  addressing the appropriate content for a model written code
    13  of business ethics to be utilized by contractors and employees  of  such
    14  contractors  performing  inherently  governmental  and  mission-critical
    15  functions, or rendering information  risk  contract  services,  for  the
    16  purpose  of preventing organizational and personal conflicts of interest
    17  and protecting nonpublic information.
    18    (a) The comptroller's regulations may include safeguards  to  identify
    19  and prevent organizational and personal conflicts of interest including,
    20  but not limited to:
    21    (i)  prohibiting  the  contractor's  employees from participating in a
    22  state agency contract in which they have a personal conflict  of  inter-
    23  est,  absent  notification  to the contracting state agency and specific
    24  approval to proceed following mitigation;
    25    (ii) requiring the contractor's employees avoid the appearance of loss
    26  of impartiality in performing contracted duties;
    27    (iii) requiring the contractor  to  review  and  address  any  of  its
    28  employees'  personal  conflicts  of  interest  before  assigning them to
    29  deliver services;
    30    (iv) prohibiting  the  contractor's  employees  from  using  nonpublic
    31  information  obtained  while performing work under contract for personal
    32  gain;
    33    (v) prohibiting the contractor's  employees  who  provide  procurement
    34  support  services  from initiating a future employment contact or future
    35  employment contacts involving a bidding state agency during  an  ongoing
    36  procurement;
    37    (vi)  imposing limits on the ability of the contractor and its employ-
    38  ees to accept gifts in connection with contracted duties;
    39    (vii) prohibiting misuse of contract duties  to  provide  preferential
    40  treatment to a private interest; and
    41    (viii)  establishing  disciplinary  processes  for  violations of such
    42  codes.
    43    (b) Such regulations shall require contractors to:
    44    (i)  report  any  organizational  or  personal  conflict  of  interest
    45  violations  by  an  employee  of such contractor to the applicable state
    46  agency contracting officer as soon as identified;
    47    (ii) maintain effective oversight  to  verify  compliance  with  safe-
    48  guards; and
    49    (iii)  establish  and  maintain  procedures  to  screen  for potential
    50  conflict of interest for all employees either on a task by task basis or
    51  annually, through a financial disclosure statement.
    52    7. When review of contractor disclosure pursuant to paragraph  (a)  of
    53  subdivision  six of this section reveals an actual or potential conflict
    54  of interest, financial conflict of interest,  impaired  impartiality  or
    55  misuse  of information and authority, contractors shall establish proce-
    56  dures to mitigate such conflict, impairment or misuse including, but not

        A. 7020                             6
     1  limited to, disqualification from being assigned to the government task,
     2  reassignment or divestiture.
     3    8.  In  addition  to the vendor responsibility process, state agencies
     4  may conduct regular background checks of state  agency  contractors  and
     5  employees  of  such  contractors  performing inherently governmental and
     6  mission-critical  functions,  or  rendering  information  risk  contract
     7  services.    Such  background  checks may include, at the state agency's
     8  discretion, fingerprinting of the state  agency  contractor's  employees
     9  performing  inherently  governmental  and mission-critical functions, or
    10  rendering information risk contract services or its personnel.
    11    9. A contractor's failure to implement an adequate system for employee
    12  conflict certification, to disclose or correct  instances  of  personnel
    13  misconduct,  or  to  take  appropriate  disciplinary measures against an
    14  employee who commits misconduct may be grounds for contract  termination
    15  by the state agency.
    16    §  4.  This  act shall take effect one year after the date on which it
    17  shall have become a law and apply to contracts  executed  on  and  after
    18  such  date. Effective immediately, the addition, amendment and/or repeal
    19  of any rule or regulation necessary for the implementation of  this  act
    20  on its effective date are authorized to be made on or before such date.
Go to top