Monday, May 3, 2010

New Orleans Declares Felons Are Not Responsible Bidders

Who is a responsible bidder?  Is a firm owned by people convicted of a felony within the past five years responsible?

These were questions with which the New Orleans City Council and Mayor Ray Nagin recently wrestled - and they came to very different conclusions.

Council Approves Ordinance:  On March 11, 2010, the New Orleans City Council approved an ordinance that would ban the city from awarding contracts  to companies whose principals, members, or officers were convicted of a state or federal felony within the previous five years involving "embezzlement, theft of public funds, bribery, or falsification or destruction of public records."

Ordinance Vetoed:  Mayor Nagin vetoed the ordinance on March 25, 2010, claiming that it violated the City's charter and the state's public bid laws that requires award to the "lowest responsible bidder."  Nagin asserted that felony convictions are not listed in the charter or state law as being reasons for finding a bidder not responsible.  In fact, Nagin wrote in his veto message that "under Louisiana law, responsibility" refers to "likely contractor performance, not the conviction history of a contractor's principals, members and-or officers."

Council Overrides Veto: The City Council disagreed with the Mayor and on April 8, 2010, by a 6-0 vote overrode the Mayor's veto.  City Councilwoman Stacy Head, who introduced the measure to override the Mayor's veto, noted that the courts have consistently given government agencies "wide discretion to determine bidder responsibility."  Furthermore, the Louisiana Attorney General has statement that "responsibility refers to the character or quality of the bidder - whether it is an entity with which you are safe doing business."

More Information:  
State of Washington Issues:  In Washington State, bidder responsibility is also a topic of discussion with the February 2010 creation of a statewide Task Force by the Capital Projects Advisory Review Board (CPARB) to address concerns by contractors of how public agencies are using responsibility criteria.

Supplemental Bidder Responsibility Criteria:  CPARB has issued Suggested Guidelines for Bidder Responsibility that includes eleven Supplemental Bidder Responsibility Criteria that public agencies may choose to include in some or all of their public works bidding documents.  The closest one to the convicted felon issue is titled "Public Bidding Crime."  It states that "The Bidder shall not have been convicted of a crime involving bidding on a public works contract within five years from the bid submittal deadline."

The other Supplemental Bidder Responsibility Criteria include the following:
  1. Delinquent State Taxes
  2. Federal Debarment
  3. MWBE Participation on Federally Funded Projects
  4. Apprenticeship
  5. Subcontractor Responsibility
  6. Claims Against Retainage and Bonds
  7. Completion of Similar Projects
  8. Termination for Cause
  9. Lawsuits
  10. Prevailing Wages
Under RCW 39.04.350, a public agency in Washington State could establish Supplemental Bidder Responsibility Criteria similar to the New Orleans measure on not contracting with firms whose owners are convicted felons.

The Task Force on Bidder Responsibility will hold its second meeting on May 20, 2010.

    2 comments:

    Unknown said...

    Mike -

    Great to meet you today. Great article as well.

    It is interesting to see Louisiana leading the way on making a criminal criteria relative to owners.

    Of course, I am sure that this will merely force companies to shift management and remove officers/owners with questionable criminal background out of management titles.

    But it certainly will have a short-term effect on bidders.

    Best,

    Doug

    Scott Wolfe said...

    Hey Mike - Good article. Funny how Louisiana and Washington have a link here. Let me tell you, I practice in both states and there are very few links between the two. This was a pretty hot topic in the New Orleans area for a while, and probably one of Mayor Nagin's last media circus before the end of his term. Will be linking to this article over on the Construction Law Monitor this week.