State Finance Law

Changes to Public Officers Law Gifts Conflicts of Interest Agenda Outside Employment Financial Disclosure Post Employment Restrictions Agenda Procurement Lobbying

Public Officers Law Public Officers Law §73(5) Framework for determining whether a gift to a State officer or employee is permissible Public Officers Law

Legislative Law Legislative Law §1-c(j) – What constitutes a gift? $75 rule is no longer in effect. The new standard is nominal value-gift may be: Money Service Loan Travel Lodging Meals Entertainment Discount Forbearance Promise Legislative Law

Legislative Law §1-m provides that lobbyist are prohibited from offering or giving a gift to any public official Legislative Law

Legislative Law §1-c(l) defines who is a public official for purposes of the prohibition on gifts Legislative Law

Public Officers Law Public Officers Law §74 sets forth a Code of Ethics for State officers and employees Public Officers Law Law

Gifts Commission on Public Integrity – Advisory Opinion updates prior opinions relative to gifts Gifts

What is a gift? What is nominal value? The Aggregation Rule Disqualified Source Impermissible Gifts to Third Parties Gifts

Exceptions: Complimentary attendance at Charitable or Political Events Complimentary attendance at widely attended event Promotional items Gifts

Conflicts of Interest Public Officers Law §74 establishes the State Code of Ethics which prohibits conflicts of interest Potential conflicts of interest can arise in a number of different situations You have responsibilities as a public sector employee that differ from those of private sector employees Conflicts of Interest

General rule is that officers and employees of State government may not engage in activities that would create or appear to create a conflict with their public duties, nor raise suspicion among the public that they are likely to be engaged in acts that are in violation of their public trust Conflicts of Interest

Public Officers Law §74 sets out a series of standards to determine if there is a conflict of interest, including the concept of “appearance of impropriety”. Conflicts of Interest

t Personal outside employment or investments Employment of, contracts to, or benefits for family members Release of confidential information Gifts Potential Areas for Conflict of Interest

Prohibits accepting other employment that will impair independence of judgment or require disclosure of confidential information Prohibits engaging in transactions with any business entity where employee has financial interest that can conflict with duties Must abstain from investments that may be directly related to the employee’s decisions or which otherwise create a substantial conflict with duties Outside Employment or Investments Public Officers Law §§73 & 74 Outside Employment or Investments

Concept of “employment” is broadly defined There is no general prohibition against employees engaging in outside employment or compensated activity However, prior approval for such employment must be obtained from your state agency and in some instances from the State Ethics Commission Violation of the laws and policy, as well as of the following guidelines may be grounds for disciplinary action Outside Employment or Investments

POL standards prohibiting use of official position to secure unwarranted privileges for self or others Cannot give reasonable basis for appearance that employee is affected by kinship, rank, position or influence of any party or person Cannot raise suspicion among public that you are likely to be engaged in actions in violation of trust Cannot give reasonable basis for impression that any person can improperly influence you or unduly enjoy your favor in the performance of your official duties (Public Officers Law §74) Employment of, Contracts to, or Benefits for Family Members or Others

Public Officers Law §73(4)(i) prohibits sales of goods or services greater than $25 to a State agency by a State employee or a firm where the employee has more than 10% stock unless there is a competitive bid. Important to make inquiry and document in the procurement record. Employment of Current State Employees

Code of Conduct has several prohibitions about release of confidential information Information confidential to the agency (information about the agency or decisions by the agency not otherwise known) Information confidential to the process Information obtained from a vendor either as part of the procurement process or as the result of the procurement Release of Confidential Information (Public Officers Law §74)

(Public Officers Law §§73(5) and 74) While some would argue that public employees “can’t be bought for a lunch”, it is an issue of perception, the appearance of impropriety or fairness. Look at it from the perspective of the other vendors and the general public and the message that it sends other agency employees. There are circumstances under which a state employee can accept a gift. Gifts

Public Officers Law §73-a Policy Makers or Salary Threshold: Over SG-24 Subject to certain exemptions File Annually by May 17 or within 30 Days of Joining State Service Financial Disclosure Statements currently available on- line at: Financial Disclosure

(Public Officers Law §73 (8)) Two-Year Bar on activities before employee’s former agency. Lifetime Bar on transactions that the employee worked on while in state service-agency is irrelevant. Government-to-Government Exceptions Solicitations or discussions of employment opportunities with an individual or entity that has a pending matter before the state employee is prohibited. Post Employment Restrictions

State Finance Law §§ 139-j and 139-k State Agency X has determined that it needs to procure widgets that should result in energy efficiency savings. It issues a press release announcing that it plans to release a Request For Proposals (RFP) in the next month. During that month, a potential bidder, the CEO of Company Y, calls the head of the purchasing office at Agency X to inquire whether the RFP will include product specifications for a newer version of widgets that has been on the marketplace for the past year and which is manufactured by Company Y (as well as Companies Z and A). Hypothetical

State Finance Law §§ 139-j and 139-k The purchasing officer informs the CEO of Company Y that the draft RFP does not contain those specifications. The CEO then forwards information to assist Agency X in reconsidering its design. A month later, Agency X issues the RFP for widgets. The specifications were revised so that widgets, such as those manufactured by Companies Y, Z and A, can now successfully bid on the RFP. Potential bidders are advised in the RFP that there will be a conference call scheduled to address any questions they may have. Hypothetical

State Finance Law §§ 139-j and 139-k In addition, according to the RFP, a representative of any potential bidder may schedule an interview with the head of purchasing to obtain answers to questions that are not satisfactorily answered on the conference call. Jeremy B., who works in Agency X’s Finance office, but is unfamiliar with this particular procurement, is named as the designated contact for the widget bid. State Agency X’s purchasing officer is contacted twice, after the RFP is issued, by the CEO of Company X, who is seeking further information as to how his company can best present its response to meet Agency X’s specifications. The purchasing officer speaks generally with the CEO about the RFP but declines to provide any specific information. Hypothetical

State Finance Law §§ 139-j and 139-k Company X is selected by State Agency X as the lowest responsible and responsive bidder on the widget RFP. Company Y protests that decision to OSC in writing and by phoning the Contract Review Section at OSC. In reviewing the procurement record from State Agency X, OSC finds no record of any contact by the CEO of Company Y. Hypothetical

State Finance Law §§ 139-j and 139-k Questions: In what ways, if any, does this procurement violate the Procurement Lobbying Law? What is the remedy for the violation(s)? Hypothetical

Procurement Lobbying Law State Finance Law §§ 139-j and 139-k (the Law) restricts communications between the business community (offerers) and the government about procurement contracts. It recognizes there are different kinds of communications. Communications that are an “attempt to influence” have specific rules (referred to as Contacts). The Law requires each Governmental Entity to develop a policy on permissible Contacts and to inform Offerers of the policy. State Finance Law §§ 139-j and 139-k

The Law also tells the business community where to direct advocacy efforts. If an Offerer does not follow the Law, the Contacts are considered “impermissible Contacts”. Violation of such rules has severe consequences – including public notice of non-responsibility, non-award of contract and debarment. The Law requires each state agency to conduct a review and investigation about impermissible Contacts. OGS is responsible for maintaining on the Internet lists of businesses that have violated the Law’s requirements. State Finance Law §§ 139-j and 139-k

General Rule Offerer can always contact the Designated Contact. Offerer cannot Contact other employees or governmental entities once the procurement has begun and until it is concluded (“restricted period”) unless the communication falls within one of the permissible subject matter exemptions (SFL §139-j(3)(a)(1-9)). State Finance Law §§ 139-j and 139-k

Do’s Find out what a vendor wants to discuss before agreeing to talk. Determine if there is a Restricted Period. If there is a Restricted Period, determine who is the Designated Contact for that procurement; and Direct communications correctly (namely to the Designated Contact). Follow the processes in the solicitation. Generally, request all questions be submitted in writing to the Designated Contact listed in the solicitation. State Finance Law §§ 139-j and 139-k

Do’s Develop agendas for any meetings that are conducted and stick with the agenda. Create a record of Contact for every Contact – even if you are the Designated Contact. Send the record of Contact to the Designated Contact for inclusion in procurement record. If not a Designated Contact, do refer for investigation all impermissible Contacts. You don’t make decision: you are obligated to make a referral! Do cooperate with your counsel or Ethics Officer in his/her investigation. State Finance Law §§ 139-j and 139-k

Don’ts Don’t discuss procurements in a Restricted Period – it lasts until OSC approves the contract! Don’t miss opportunities for process improvements. Clearly identify when Restricted Period commences. Formalize information exchanges with business. Formalize procurement processes. Don’t hesitate to call or your Counsel or Ethics Officer with any questions about the Law or if additional training is needed. State Finance Law §§ 139-j and 139-k

2010 Amendments to the Procurement Lobbying Law The Law’s restrictions can now apply before the issuance of the bid, request for proposal or other method used for commencing a procurement, where the governmental agency (1) has made a determination of need for a procurement, and (2) communicates such determination in a public manner, such as a public announcement or public communication, to any potential vendor. A new restricted period will apply each time a procurement is amended, extended or renewed, or there is a change order unless the amendment, extension, renewal or change order is authorized and payable under the terms of the underlying contract as it was finally awarded or approved.

Amendments to the Procurement Lobbying Law (continued) The definition of an “offerer” has been clarified so that a person or entity is subject to the Law even if he, she or it does not have a financial interest in the procurement. A governmental agency that contacts a procuring agency as part of its oversight responsibilities is not subject to the Law. Persons selected as designated contacts must be knowledgeable about the procurement.

The types of contacts that are permissible now expressly include: (1) “ participation in a demonstration or other means for exchange of information in a setting open to all potential bidders provided for in a request for proposals ” ; (2) presenting oral protests, appeals or complaints to OSC; (3) providing information to offerers “ regarding the status of the review, oversight, or approval of a governmental procurement that has been submitted to or is under review by that governmental entity ” ; and (4) “ communications between offerers and governmental entities that solely address the determination of responsibility by a governmental entity of an offerer. ” Amendments to the Procurement Lobbying Law (continued)

Any communications that are considered within the Law’s listing of permissible subject matter contacts do not have to be made to a designated contact. Communications between certain preferred sources and governmental entities are permissible unless they constitute an attempt to influence the governmental entity during a restricted period. The written affirmation that an offerer signs or otherwise acknowledges signifying that he or she understands and agrees to comply with the governmental entity’s procurement lobbying procedures, is deemed to apply to any amendments to the procurement. Amendments to the Procurement Lobbying Law (continued)

State Finance Law §§ 139-j and 139-k Resources Guidance developed by the Advisory Council on Procurement Lobbying, model forms and language and other materials, are present on the internet at State Finance Law §§ 139-j and 139-k

Access through OGSNow “Procurement Lobbying” at Access through the public web site under “About OGS” at Business Unit specific policies OGS Policy on Permissible Contacts

State Finance Law §§ 139-j and 139-k State Agency X has determined that it needs to procure widgets that should result in energy efficiency savings. It issues a press release announcing that it plans to release a Request For Proposals (RFP) in the next month. During that month, a potential bidder, the CEO of Company Y, calls the head of the purchasing office at Agency X to inquire whether the RFP will include product specifications for a newer version of widgets that has been on the marketplace for the past year and which is manufactured by Company Y (as well as Companies Z and A). Hypothetical

State Finance Law §§ 139-j and 139-k The purchasing officer informs the CEO of Company Y that the draft RFP does not contain those specifications. The CEO then forwards information to assist Agency X in reconsidering its design. A month later, Agency X issues the RFP for widgets. The specifications were revised so that widgets, such as those manufactured by Companies Y, Z and A, can now successfully bid on the RFP. Potential bidders are advised in the RFP that there will be a conference call scheduled to address any questions they may have. Hypothetical

State Finance Law §§ 139-j and 139-k In addition, according to the RFP, a representative of any potential bidder may schedule an interview with the head of purchasing to obtain answers to questions that are not satisfactorily answered on the conference call. Jeremy B., who works in Agency X’s Finance office, but is unfamiliar with this particular procurement, is named as the designated contact for the widget bid. State Agency X’s purchasing officer is contacted twice, after the RFP is issued, by the CEO of Company X, who is seeking further information as to how his company can best present its response to meet Agency X’s specifications. The purchasing officer speaks generally with the CEO about the RFP but declines to provide any specific information. Hypothetical

State Finance Law §§ 139-j and 139-k Company X is selected by State Agency X as the lowest responsible and responsive bidder on the widget RFP. Company Y protests that decision to OSC in writing and by phoning the Contract Review Section at OSC. In reviewing the procurement record from State Agency X, OSC finds no record of any contact by the CEO of Company Y. Hypothetical

State Finance Law §§ 139-j and 139-k Questions: In what ways, if any, does this procurement violate the Procurement Lobbying Law? What is the remedy for the violation(s)? Hypothetical

Questions and Answers Questions

Presenter’s Contact Information Howard L. Zwickel, Esq. Deputy Commissioner & Counsel Office of General Services (518) Anne G. Phillips, Esq. Associate Counsel Office of General Services (518) OGS Website: Public Integrity Website: Presenters Contact Information