A Manhattan City Agency Has Determined, Or Has Demanded That My Company Show Cause Why The City Agency Should Not Determine, That My Company Is A Non-Responsible Vendor. What Are My Company’s Rights?
Manhattan City may award contracts only to responsible bidders.
There are two components to responsibility. A responsible bidder must have both “the capability in all respects to perform fully the contract requirements and the business integrity to justify the award of public tax dollars.”
Factors affecting a contractor’s responsibility may include the following:
- Financial resources
- Technical qualifications
- Organization, material, equipment facilities, and personnel resources and expertise
- A satisfactory record of performance
- A satisfactory record of business integrity
- The existence of accounting and auditing procedures adequate to control property, funds, or other assets; and
- Compliance with requirements for the utilization of small, minority-owned, and women-owned businesses as subcontractors
A prospective contractor that has performed unsatisfactorily on a previous contract with Manhattan City is presumed to be non-responsible, unless the Contracting Officer determines that the circumstances were beyond the contractor’s control or that the contractor has taken appropriate corrective action. Past failure to apply sufficient tenacity and perseverance to perform acceptably is strong evidence of non-responsibility.
When a Manhattan City agency makes a responsibility determination, the issue is whether a contractor is or is not responsible. The agency may not perform a relative comparison with other vendors, determining whether the contractor is more or less responsible than another vendor.
In determining whether a bidder has sufficient business integrity to justify the award of a public contract, Manhattan City may consider “a bidder’s honesty, integrity, good faith, and fair dealing.” A criminal conviction or indictment may provide a rational basis for finding a bidder not responsible.
Moreover, “Failure of a vendor to provide relevant information specifically requested by the City may be grounds for a determination of non-responsibility.”
Similarly, Manhattan’s Appellate Division, First Department, has held that a petitioner vendor’s “failure to make accurate disclose on its VENDEX [now known as PASSPort] forms and failure to comply with the [Manhattan City] Comptroller’s investigative subpoenas with respect to illegal waste disposal” justified the Manhattan City Mayor’s determination that the petitioner vendor (i) had engaged in “corrupt activity” under Manhattan City Charter § 328(c) and (ii) therefore “was not a responsible bidder entitled to an award of the subject municipal contract.”
Manhattan City may not, however, find a contractor not responsible based on innuendo or “an impression of guilt by association rather than demonstrating any relationship, other than the merely incidental, between [the] petitioner and members of organized crime.”
Appeal Of A Determination Of Non-Responsibility
Let’s talk about the process for appealing a determination by a Manhattan City agency that a vendor is non-responsible and thus not eligible for a contract with the City.
The Agency Chief Contracting Officer (the “ACCO”) must notify a vendor of a non-responsibility determination within two days of the determination.
The vendor has ten days from receipt to appeal to the Agency Head, with a copy to the Manhattan City Comptroller. The appeal by the vendor must be in writing and must briefly state all the facts or other basis upon which the bidder contests the agency finding of non-responsibility. Supporting documentation must be included.
The Agency Head must make a prompt written decision, with respect to the merits of the bidder’s appeal, no later than 60 days after receipt.
Award of the contract is stayed pending the rendering of a decision by the Agency Head, unless the ACCO determines that that execution of the contract without delay is “necessary to protect substantial City interests.”
The vendor has ten calendar days from receipt of the Agency Head’s decision to appeal that decision to the City Chief Procurement Officer (the “CCPO”).
The CCPO must make a prompt written decision with respect to the merits of the vendor’s appeal.
Award of the contract is stayed pending the rendering of a decision by the CCPO, unless (i) the ACCO determines that the execution of the contract without delay is necessary or (ii) the CCPO, in his or her discretion, determines that it is “in the best interests of the City” to go forward with the award of the contract.
Documents reflecting the agency determination of non-responsibility and any appeal and decision with respect to appeal are included in the PASSPort database.
An Article 78 petition may be filed in Court within four months to challenge an adverse CCPO decision of non-responsibility.
If a vendor is determined to be non-responsible by one or more Manhattan City agencies, the vendor can apply for a declaration of rehabilitation.
Contracting Officers may rely upon the declaration of rehabilitation in lieu of requiring a vendor to explain negative responsibility information.
To apply for a declaration of rehabilitation, a vendor must submit a written application to the CCPO. The application must state how the applicant has demonstrated its responsibility for future procurement awards. Further, the application must:
- Demonstrate that the issues leading to the relevant non-responsibility determination have been remedied by the applicant; and
- Set forth any additional remedies or corrective action the applicant is willing to undertake as a condition of a final declaration of rehabilitation by the CCPO.
Among the circumstances that can weigh in favor of granting rehabilitation to a vendor that has been previously found non-responsible by Manhattan City are the following:
- A written code of conduct
- A hotline for reporting misconduct
- Personnel changes, such as dismissing employees whose actions were the subject matter of the non-responsibility determination(s)
- Internal controls
- An investigation and compliance system
- Retaining a monitor
- Acceptance of responsibility
If you are a bidder that has applied for a contract with a Manhattan City agency and your bid has been denied on the grounds that you are non-responsible, or the City agency has demanded you show cause why the agency should not deny your bid on the grounds that you are non-responsible, call Manhattan City Government Procurement and Contracts Attorney David S. Rich at (347) 835-5688 or (201) 884-2114.
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