HOUSE BILL 278

50th legislature - STATE OF NEW MEXICO - second session, 2012

INTRODUCED BY

Larry A. Larrañaga

AN ACT

RELATING TO PROCUREMENT; PROVIDING FOR IMMEDIATE SUSPENSION OF A BUSINESS FOR REASONABLE SUSPICION OF CONDUCT; ADDING CAUSES FOR DEBARMENT OR SUSPENSION OF A CONTRACTOR; ALLOWING THE CONTINUATION OF CONTRACTS WITH A DEBARRED OR SUSPENDED CONTRACTOR UNDER CERTAIN CONDITIONS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. Section 13-1-177 NMSA 1978 (being Laws 1984, Chapter 65, Section 150) is amended to read:

     "13-1-177. AUTHORITY TO DEBAR OR SUSPEND.--

          A. The state purchasing agent or a central purchasing office, after reasonable notice to the business involved, shall have authority to recommend to the governing authority of a state agency or a local public body the suspension or debarment of a business for cause from consideration for award of contracts, other than contracts for professional services. The debarment shall not be for a period of more than three years, and a suspension shall not exceed [three months] one year. The authority to debar or suspend shall be exercised by the governing authority of a state agency or a local public body in accordance with regulations [which] that shall provide for reasonable notice and a fair hearing prior to suspension or debarment.

          B. The state purchasing agent or a central purchasing office may immediately suspend a business for up to ninety days if the state purchasing agent or central purchasing office determines that there is reasonable suspicion of conduct by the business that would warrant suspension for cause. If the state purchasing agent or a central purchasing office immediately suspends a business, the state purchasing agent or a central purchasing office shall:

                (1) immediately issue a written notice of the immediate suspension to the business by certified mail, return receipt requested, that shall include:

                     (a) the date and time of a review hearing before the issuing authority pursuant to Paragraph (3) of this subsection;

                     (b) the reasons for the suspension;

                     (c) a statement that the state may issue a cease and desist order for all services or activities provided by the business under any agreement with the state agency or local public body; and

                     (d) a statement that the business has the right to appeal the final decision of the review hearing pursuant to Section 13-1-183 NMSA 1978;

                (2) inform the governing authority of the state agency or local public body that has an agreement in place with the business of the immediate suspension; and

                (3) hold a review hearing of the immediate suspension before the issuing authority within thirty days of issuing the written notice.

          C. The state purchasing agent or a central purchasing office may immediately suspend a business if a criminal information, indictment or complaint is filed against the business in a district court and is the result of the same or similar conduct that would warrant an immediate suspension pursuant to Subsection B of this section. The immediate suspension pursuant to this subsection shall remain in effect during the pendency of the criminal proceedings against the business.

          D. The secretary shall promulgate rules necessary to implement the provisions of Subsections B and C of this section."

     SECTION 2. Section 13-1-178 NMSA 1978 (being Laws 1984, Chapter 65, Section 151) is amended to read:

     "13-1-178. CAUSES FOR DEBARMENT OR SUSPENSION--TIME LIMIT.--

          A. The causes for debarment or suspension occurring within three years of a procurement include but are not limited to the following:

                [A.] (1) conviction of or civil judgment against a bidder, offeror or contractor for commission of a criminal offense related to obtaining or attempting to obtain a public or private contract or subcontract, or in the performance of such contract or subcontract;

                [B.] (2) conviction of a bidder, offeror or contractor under state or federal statutes of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating federal or state criminal tax laws or receiving stolen property;

                [C.] (3) conviction of a bidder, offeror or contractor under state or federal antitrust statutes [arising out of the submission of bids or proposals] relating to submission of offers;

                (4) conviction of or civil judgment against a bidder, offeror or contractor for any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a contractor or subcontractor;

                (5) civil judgment against a bidder, offeror or contractor of an unfair trade practice pursuant to the Unfair Practices Act;

                [D.] (6) violation by a bidder, offeror or contractor of contract provisions, as set forth in this [subsection] paragraph, of a character [which] that is reasonably regarded by the state purchasing agent or a central purchasing office to be so serious as to justify suspension or debarment action:

                     [(1)] (a) willful failure to perform in accordance with one or more contracts, provided that this failure has occurred within a reasonable time preceding the decision to impose debarment; or

                     [(2)] (b) a history of failure to perform or of unsatisfactory performance of one or more contracts, provided that this failure or unsatisfactory performance has occurred within a reasonable time preceding the decision to impose debarment and provided further that failure to perform or unsatisfactory performance caused by acts beyond the control of the contractor shall not be considered to be a basis for debarment;

                [E.] (7) any other cause occurring within three years of a procurement [which] that the state purchasing agent or a central purchasing office determines to be so serious and compelling as to affect responsibility as a contractor; or

                [F. for] (8) a willful violation by a bidder, offeror or contractor of the provisions of the Procurement Code within three years of a procurement.

          B. As used in this section, the terms "bidder", "offeror" and "contractor" include "principal". "Principal" means an officer, director, owner or partner of, or a person having primary management or supervisory responsibilities within, a business or a business's related entities."

     SECTION 3. A new section of the Procurement Code is enacted to read:

     "[NEW MATERIAL] CONTINUATION OF CURRENT CONTRACTS--RESTRICTIONS ON SUBCONTRACTING.--

          A. Notwithstanding the debarment, suspension or proposed debarment of a contractor, a state agency or local public body may continue contracts or subcontracts in existence at the time the contractor was debarred, suspended or proposed for debarment unless the governing authority of the state agency or local public body directs otherwise.

          B. Unless the governing authority of a state agency or local public body makes a written determination of the compelling reasons otherwise, ordering activities from a contractor that has been debarred, suspended or proposed for debarment shall not:

                (1) incur any further financial obligations for materials, services, facilities or other obligations unless specifically authorized to do so under the terms and conditions of the current agreement or proposed agreement; or

                (2) add new work, exercise options or otherwise extend the duration of the current contract or order.

          C. When a contractor that has been debarred, suspended or proposed for debarment is proposed as a subcontractor for any subcontract subject to the Procurement Code, the state purchasing agent or a central purchasing office shall not consent to the subcontract unless the governing authority of a state agency or local public body states in writing the compelling reasons for consenting to the subcontract.

          D. A contractor shall not enter into a subcontract with a contractor that has been debarred, suspended or proposed for debarment unless the contractor receives written authorization from the state purchasing agent or a central purchasing office. If a contractor intends to subcontract with a contractor that has been debarred, suspended or proposed for debarment, the contractor shall notify the state agency or local public body in writing before entering into the subcontract and the notification shall include:

                (1) the name of the subcontractor;

                (2) the contractor's knowledge of the reasons the subcontractor has been debarred, suspended or proposed for debarment;

                (3) the compelling reasons for doing business with the subcontractor, notwithstanding the debarment, suspension or proposed debarment; and 

                (4) the systems and procedures that the contractor has established to ensure that the contractor is fully protecting the interests of the state agency or local public body when dealing with the subcontractor in view of the specific basis for the subcontractor's debarment, suspension or proposed debarment."

     SECTION 4. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2012.

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