States with a Code of Ethics for Contractors

You asked if any state has a contractor’s code of ethics that governs contractors or vendors who contract with the state.

After completing a Westlaw computer search of all state statutes, contacting the National Conference of State Legislatures, and sending out a listserv to state law librarians, we found no state code of ethics for contractors or vendors. Several states, however, have agencies with a code of ethics applicable to people and businesses that contract with them. Most of these codes are modeled after that state’s code of ethics for public officials and state employees.

New Jersey’s Department of Transportation and Lottery Commission both have a code of conduct for their contractors and vendors. These codes prohibit contractors and vendors from engaging in conduct that might compromise the integrity of the state agency, such as situations where proprietary or financial interests or the opportunity for financial gain could lead to favored treatment.

Recognizing the need for state purchasing personnel to remain free and independent from the perception of impropriety, the Texas’ Building and Procurement Commission (TBPC) adopted a code of conduct for its employees, vendors, potential vendors, and other state employees acting under authority delegated by the TBPC.

In addition to these state agency codes, we found that the New York Metropolitan Transportation Authority (MTA) adopted a vendor code of ethics that imposes procurement process standards above those required by law.

Lastly, it is important to note that most professionals have to comply with their profession’s code of ethics as a condition of licensing. We have attached copies of ethics codes from the Rhode Island Boards of Design Professionals and the National Society of Professional Engineers.

The DOT adopted its Code of Ethics for Vendors on December 16, 1987. The code is based on the principles established in Executive Order 189 governing the Executive Commission on Ethical Standards (N. J. S. A. § 52: 13D-12 et seq. )

DOT requires its code of ethics to be a part of each request for proposal (RPF) it promulgates and attached to every contract and agreement it enters. Additionally, it distributes the code to every person or entity that does business with the department and, where feasible, those seeking to do business with it.

The code prohibits general contractors, subcontractors, consultants, people, firms, corporations, or organizations doing or seeking to do business with the DOT from:

1. employing any DOT officer or employee to work on their behalf in any matter involving the DOT;

2. offering or providing any interest, financial or otherwise, direct or indirect, to a DOT officer or employee;

3. causing or influencing, or attempting to cause or influence, any DOT officer or employee to act in any manner that might tend to impair his objectivity or independence of judgment;

4. causing or influencing, or attempting to cause or influence, any DOT officer or employee to use or attempt to use his official position to secure any unwarranted privileges or advantages for the contractor or any other person; or

5. offering a DOT officer or employee any gift, favor, service, or other thing of value under circumstances that might cause someone to infer that the item was given or offered to influence the recipient in the discharge of his official duties.

The code also prohibits DOT officers and employees from accepting breakfasts, lunches, dinners, alcoholic beverages, tickets to entertainment or sporting events, or any other item with more than nominal value from a vendor. The code creates an exception for food or refreshments of relatively low monetary value provided during the course of a meeting, conference, or other occasion where the officer or employee is properly in attendance (e. g. , coffee, Danish, tea, or soda during a conference break).

Like the DOT code, the Lottery Commission’s code is (1) a part of each RPF it promulgates; (2) attached to every contract and agreement it enters; and (3) distributed to every person or business doing and, where possible, seeking to do business with the commission. The code does not apply to people who purchase lottery tickets.

The code prohibits people, firms, or businesses doing or seeking to do business with the Division of the State Lottery from:

1. employing or maintaining a business relationship with any commission officer or employee, including any interest, financial or otherwise, direct or indirect; or any business transaction or professional activity;

2. causing or influencing, or attempting to cause or influence, any commission officer or employee to act in a manner that might tend to impair his objectivity or independence of judgment;

3. causing or influencing, or attempting to cause or influence, any commission officer or employee to use or attempt to use his official position to secure any unwarranted privileges or advantages for the contractor or any other person;

4. offering a commission officer or employee any gift, favor, service, or other thing of value under circumstances that might cause someone to reasonably infer that the item was given or offered to influence the recipient in the discharge of his official duties; or

5. without the commission director’s written approval, disclosing any information about the division’s affairs that is not generally or legally available to the public (NJ Admin. Code § 17: 20-8. 1).

Recognizing the unique role of purchasing personnel charged with the disposition of state funds, the TBPC adopted an ethical code of conduct for its employees, vendors, potential vendors, and other state employees acting under authority delegated by the TBPC.

1. offering, giving, or otherwise agreeing to give an employee or an employee’s relatives anything of value in exchange for a promise or other consideration in awarding a state contract; or

2. being employed in a “bona fide executive, administrative, or professional capacity” in a state agency if they are an officer, employee, or paid consultant of a Texas trade association that contracts with the state.

Any vendor or potential vendor that is determined to have acted unethically may be barred from receiving future contracts and have any existing contracts canceled (TBPC Procurement Manual § 1. 2).

MTA’s vendor code of ethics is applicable to any person or entity doing or seeking to do business with the MTA or any of its subsidiary agencies, including contractors, subcontractors, consultants, and suppliers. A summary of the code follows. For a copy of the code visit www. mta. nyc. ny. us/mta/procurement/vendor-code. htm).

Each procurement solicitation the MTA issues must identify a contact person. Once that person is named, neither a vendor nor any person or entity acting on the vendor’s behalf, including those providing compensated or uncompensated lobbying, advocacy, consulting or other services, may contact the person, except as specifically authorized to

further the procurement process. Any written communication, including, letters, faxes and e-mails, directed to anyone other than the contact person must be forwarded to the contact to determine the appropriate response.

Each vendor must direct every individual or entity retained, employed, designated by or acting for or on its behalf to attempt to influence the procurement process with the MTA, to limit his contacts concerning specific procurement actions to the MTA’s designated contact person.

Non-Collusion

1. must calculate the bid or proposal price independently, without collusion, consultation, communication, or agreement with any other competing vendor in an attempt to restrict competition;

2. unless otherwise required by law, cannot disclose his bid or proposal price, directly or indirectly, to any other competing vendor prior to the closing date for bids or proposals; and

3. cannot make any attempt to induce any other individual or entity to submit or not to submit a bid or proposal.

No Gifts or Contingency Fees

No vendor may offer or give any gift, directly or indirectly, to (a) an employee or (b) any member of an employee’s immediate family because of the vendor’s relationship with the employee. However, if a vendor has a family or personal relationship with the employee, a gift that is unconnected with the employee’s duties at the MTA is not necessarily prohibited. In determining whether a gift was motivated by personal rather than business concerns, the MTA considers (a) the history of the relationship between the donor and the recipient and (b) whether the donor purchased the item. A gift is not motivated by a family or personal relationship if the donor seeks to charge or deduct its value as a business expense or seeks reimbursement from a client. Regardless of the family or personal relationship, a gift is strictly forbidden if it is being given under circumstances where it can reasonably be inferred that it was intended to influence an employee in the performance of his official duties.

A vendor cannot employ or retain any individual or entity to solicit or secure an MTA contract on any agreement or understanding for a commission, percentage, brokerage, or fee that is contingent or dependent upon the outcome of the procurement.

Neither a vendor nor any director, officer, principal, or partner thereof, may have or acquire a 10% or greater interest, either directly or indirectly, in any company or firm that would conflict in any manner or degree with the performance of the MTA contract.

A vendor cannot permit an employee to have a 10% or greater interest, either directly or indirectly, in any company or firm that would conflict with the performance of the MTA contract.

Upon request, a vendor must disclose to the MTA organizational, financial, contractual, or other affiliations with any organization that has interests that may be substantially affected by the procurement solicitation. The vendor must cooperate in any inquiry or investigation undertaken by the MTA to determine whether any such affiliations present a conflict of interest.

Every bid or proposal made to, and every contract with, the MTA above the MTA’s small purchase threshold must contain a certification that no individual or entity has been or will be offered or given any gift in connection with such bid or contract and that no conflicts of interest exist.

Additionally, as a condition of being considered for the award of any contract above the MTA’s small purchase threshold, the primary contracting party must submit with its bid or proposal and include in its contract a further certification executed by an officer of that party. This certification must attest that the party and all officers and personnel who may interact or have interacted with the MTA during the course of the procurement or contract have been provided with a copy of the Vendor Code of Ethics.

The primary contracting party must obtain similar certifications from all of its lower tier subcontractors, subconsultants, and suppliers, as well as from any other subcontractors, subconsultants, and suppliers from whom that party is soliciting or has received proposals for work on an MTA contract. The MTA may audit the lower tier certifications.

If there is a code violation, the MTA may avail itself of every remedy in law or equity, or as otherwise agreed to by parties in any contract, including declaring the vendor non-responsible, debarred, or in material breach of the contract. Additionally, violations may subject the vendor to criminal or civil penalties under state or federal law.

Vendors must immediately report to the MTA’s senior procurement official and Office of the Inspector General any request for a gift made to the vendor by any MTA officer, board member, or employee. Vendors are also under a continuing obligation to report any change in circumstances that materially affect any prior report to the MTA, including conflicts of interest disclosures.


August 20, 2004		2004-R-0680
STATES WITH A CODE OF ETHICS FOR CONTRACTORS

By: Sandra Norman-Eady, Chief Attorney