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Bill would strengthen ethical rules for state contractors

ALBANY - State Comptroller Thomas DiNapoli proposed legislation to help ensure that contractors doing business with state agencies are held to high ethical standards while performing important governmental services. The Comptroller’s proposal would establish clear nondisclosure standards for contractors in order to protect the public interest, and subject many state contractors to ethics provisions similar to those of state employees, DiNapoli said today.

“State agencies and public authorities rely on contractors to help accomplish a broad array of governmental functions,” DiNapoli said. “While the majority of contractors deliver services with integrity, wrong-doers could use their positions for personal financial gain, accept inappropriate gifts, or inappropriately negotiate for certain jobs. State employees are subject to comprehensive ethical standards but such standards don’t apply to state agency contractors. The goal of this new bill is to ensure the integrity of government operations by requiring contractors to adhere to the same high principles we expect of state employees.”

According to data published with the 2014-15 Executive Budget, New York state employs roughly 9,000 contractors and expects to pay them more than $940 million in the current fiscal year. The proposal addresses two categories of those contractor employees working directly on New York state business: those performing "inherently governmental and mission critical" work and those handling contracts containing "information risk."

In carrying out the day-to-day tasks for state agencies and public authorities, contractors often perform government functions and use sensitive or personal information. This information could be misused, potentially harming important interests such as the privacy of individuals, commercial business proprietary rights, security and law enforcement. Any contractor negligence or misconduct, including the misuse or dissemination of personal data, could have a significant effect on the government’s ability to perform its primary functions, potentially resulting in the fraudulent use of taxpayer dollars, damaged reputation and loss of public trust.

Safeguards are needed to identify and prevent conflicts of interest, help ensure contractors protect confidential information, undergo proper ethics training and bring potential conflicts of interest to light.

DiNapoli’s proposal requires that state contracts with outside businesses handling sensitive governmental business or information:

  • Prohibit contractors and their employees from any having conflicts of interest with respect to their state contracts;
  • Require contractors to certify that they have an executed nondisclosure agreement for every individual employee as a condition of access to private and sensitive information;
  • Require that agreements between contractors and third parties protect state agency data;
  • Require contractors and their employees to receive biannual ethics training;
  • Require contractors to immediately notify the state of any organizational or personal conflicts of interest, and face consequences or penalties for violations.

Additionally, vendors whose contract is valued at $5 million or more and lasts at least 120 days must have a written code of business ethics and conduct.

For a copy of the legislation, visit: www.osc.state.ny.us/legislation/2013-14/oscb33.htm