Tough New Louisiana Laws on Corrupt Contracting Practices

Louisiana has adopted two new laws designed to keep individuals and companies convicted of certain crimes from participating on public contracts.

DEBARMENT FOR CRIMINAL ACTIVITY:   

House Bill 1292, which became effective on July 7, 2010, applies to public works contracts, and establishes a two-tiered system of crimes with different sanctions.  

The law applies to any individual or company who is convicted, pleads guilty, or pleads nolo contendere (a plea of no contest) to various listed crimes.  It applies to both how state law defines these crimes and to comparable federal crimes.

• Permanent Debarment:  The following four crimes would result in permanent debarment from public contracting:  public bribery, corrupt influencing, extortion, or money laundering. 

• 5 Year Debarment:  The following nine crimes would result in a five year debarment or bidding on public projects, "from the date of conviction or from the date of the entrance of the plea of guilty or nolo contendere":  theft, identity theft, theft of a business record, false accounting, issuing worthless checks, bank fraud, forgery, misapplication of payments, malfeasance in office.  The five year prohibition on public contracting would only apply if the crime was committed during the solicitation or execution of a public contract or bid.

Enforcement:  Bidders will be required to attest with their bid that they have not been convicted of any of the mentioned crimes.  Public agencies are not required to investigate the truthfulness of a bidder's statement.  Other parties may present evidence to the public agency that the bidder has made false statements concerning any crimes.

Cost Penalty for False Statements:  If a complaint by another bidder is found to be true and the public agency must re-advertise or cancel the project, the bidder making the false statements is responsible for increased costs to the agency including the cost of rebidding, additional costs due to increased cost of bids, and any delay costs associated with the rebid or cancellation of the contract.

CONTRACT NULLIFICATION:

Louisiana Senate Bill 720 becomes effective on August 15, 2010 will nullify any public contract "entered into as a result of fraud, bribery, corruption, or other criminal acts, for which a final conviction has been obtained."  The person convicted of such crimes is "responsible for payment of all costs, attorney fees, and damages incurred in the rebidding of the contract."

ADDITIONAL INFORMATION:  Click here to read a news article on Louisiana's new laws from www.nola.com.

WASHINGTON STATE:

In 2007, the State of Washington adopted mandatory bidder responsibility criteria that must be verified by public agencies prior to the award of a public works project.  

RCW 39.04.350 also enables public agencies to adopt relevant supplemental bidder responsibility criteria, either specific to one project, or generic for all projects.  

The Capital Projects Advisory Review Board (CPARB) has adopted Suggested Guidelines for Bidder Responsibility to help guide public agencies and contractors in understanding and implementing the law.  Included in the Suggested Guidelines for Bidder Responsibility are a number of criteria that public agencies may choose to use on some or all public works projects.  Some of the following suggested supplemental bidder responsibility criteria address issues raised by the new Louisiana laws:

1. Delinquent State Taxes
2. Federal Debarment
3. MWBE Participation on Federal Projects
4. Apprenticeship
5. Public Bidding Crimes
6. Subcontractor Responsibility
7. Claims Against Retainage and Bonds
8. Completion of Similar Projects
9. Termination for Cause
10. Lawsuits
11. Prevailing Wages

CPARB has created a Task Force to help public agencies and contractors come to a common understanding of how to develop and implement supplemental bidder responsibility criteria.  The next meeting of the Task Force will be in the next couple of months.