The procurement process for New York State contracts has evolved in ways that may better protect the public fiscally but are full of traps for the unwary vendor. Continuing efforts to reform the procurement system increase the emphasis on lobbying restrictions and vendor responsibility while adding to the complexity of the process and making it more challenging for vendors to navigate without legal guidance.

In an effort to restrict lobbying, contact between the vendor or his agent and the state agency are limited during the procurement process, commencing with the advertisement in the New York State Contract Reporter published by the Department of Economic Development and ending with the approval by the Office of the State Comptroller. For all contracts greater than $15,000, vendors are restricted to contacting a designated person or persons at the agency during the procurement process. Contacts between the agency and the vendor are generally limited to technical questions regarding the procurement. Agencies are encouraged to record all communication with the vendor, although strictly speaking, only communications that could be “reasonably inferred” as seeking to influence the award must be recorded. Failure to abide by these rules could result in a determination of non-responsibility for the vendor. It should be noted, however, that contacts between the vendors and members of the Legislature are permitted, and contacts between members of the Legislature and the procuring agency are permitted (but must be recorded).

The larger analysis by an agency of “vendor responsibility” can occur either through information obtained during the bid solicitation process or after a successful bidder has been selected. What constitutes “responsibility” is “elastic” in the opinion of the State Comptroller and various courts which have examined the issue, and is ultimately a question of fact determined on a case-by-case basis. For all contracts, an agency will consider all information that comes to its attention about the vendor or from basic questions are asked on a vendor questionnaire, which varies by agency. (Examples include an inquiry about violation of a DEC consent order, government suspension or debarment, or violation of a labor law or OSHA violation). For all contracts whose estimated dollar value is at or greater than $100,000, a procuring state agency will conduct its review of vendor responsibility (and in some cases, the vendor’s subcontractors) along four criteria based on responses to a more detailed vendor questionnaire. This process is best summarized by the acronym FLIP: Financial Capacity, Legal Authority, Integrity and Past Performance.

Financial capacity includes an examination of the vendor’s assets, liabilities, existence of accounting procedures, etc. This is done through verifying through various sources the information presented on the questionnaire and through use of public and private databases.

Analysis of legal authority includes whether the vendor is properly authorized and licensed to do business in New York State. This includes determinations such as whether the vendor is debarred by the Labor Department for a prevailing wage violation.

A determination of integrity considers criminal indictments, criminal convictions, civil fines, tax delinquencies and any other discernable evidence which might impugn the vendor’s integrity. The inquiry to integrity may not only include the bidding company but its owners, officers and related companies, as well.

Finally, in assessing past performance an agency must look to whether there were any reports of early termination for cause, court determinations for breach of contract or other documentation of the vendor not fulfilling past contracts.

As concerns arise during the analysis, the procuring agency will work with the vendor both through informal correspondence and a formal responsibility meeting. The agency can evaluate whether the issues which arise impact the ability to perform and/or whether corrective action can be taken, including incorporating such actions into the contract. In the event of a non-responsibility finding, a vendor has the right to due process, i.e. the right to be heard, by the agency.

A vendor found to be non-responsible must disclose such determination on each responsibility questionnaire they complete for five years.

All procurement contracts for goods and services for not less than $50,000 (and for contracts with OGS, not less than $85,000), and for other expenditures not less than $15,000, are subject to final approval by the Office of State Comptroller which will verify, and if necessary, undertake its own review of the proposed vendor’s responsibility.

The Office of the State Comptroller is currently putting the finishing touches on VendRep, a process whereby procuring agencies will be able to place all information about bidders in a central database. All state agencies will have access to the database, which will help streamline the process of vendor responsibility review for the procuring agency.

There will still remain pitfalls for the unwary vendor in the state contract procurement process, which is why more and more vendors are turning to qualified legal counsel to guide them through this tricky process. Gilberti Stinziano Heintz & Smith, P.C. with offices in Syracuse, Albany, Rochester, and New York City, has the knowledge and expertise to guide vendors through the complex procurement process. Our team, including former State Senator Tarky Lombardi, Jr. and Peter Cappuccilli, Jr., has extensive experience in dealing with state agencies and authorities. We welcome your inquiries at our Syracuse office at (315) 442-0100 and in Albany at (518) 476-2001.

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