Infotech and the Law: New York to keep close eye on contractor lobbying

On Aug. 14, a law took effect that places substantial new obligations on the marketing and lobbying activities of companies doing business with the state of New York. Known as Executive Order 127, "Providing For Additional State Procurement Disclosure," it requires contractors to establish new training and compliance programs for doing business in New York.The law's purpose is to increase the visibility of organizations that contact state agencies regarding procurement transactions. It requires "covered entities," such as state agencies under the executive order, to seek information from contractors about the people or organizations they retain, employ or designate to "attempt to influence the procurement process." Thus, the procedures cover both lobbyists and employees of a contractor.The guidelines define an "attempt to influence the procurement process" as any effort to persuade an agency's decision with respect to the solicitation, evaluation or award of a procurement contract, or the preparation of specifications or request for submissions of proposals for a procurement contract. As a result, EO 127 encompasses a wide range of traditional marketing and business development activities of a contractor's employees. Covered entities are considered the state agencies or authorities of which the governor appoints the head or at least one member. Certain agencies, while not expressly covered by the law, are encouraged to voluntarily comply with its terms.While EO 127 applies to procurements and amendments started on or after Aug. 14, not all types of contracts are covered. The executive order does not apply to a contract valued at $15,000 or less. Also exempt are contracts required by law to be awarded to the lowest bidder.Compliance with EO 127 is triggered by an agency's initial decision to proceed with a procurement, and it continues through the contract award. There is no bright-line test for determining if a decision to proceed has occurred; however, such a decision can and does occur before a solicitation is issued.Therefore, as a practical matter, determining a decision to proceed has occurred must be done on a case-by-case and agency-by-agency basis. On new opportunities in New York, it would be prudent for contractors to ask the agency whether a decision to proceed has been made.Notably, EO 127 also applies after award to any subsequent amendments or changes to the procurement contract. Thus, if a contractor employee or consultant attempted to persuade an agency to expand an existing contract, that contact would be covered by EO 127.Routine contact with an agency does not activate EO 127. Rather, only contact that "urges action" or "seeks to impact or cause a determination" and "reasonably appears to be an attempt to influence the procurement process" triggers EO 127 requirements.Contractors doing business with the state of New York should analyze the legal obligations and competitive risks EO 127 creates, as well as monitor the law's implementation within specific agencies.Although the law requires agencies to collect contact information, it implicitly obligates contractors to provide such information or run the risk of being terminated, found not responsible or found to have provided false certification. Therefore, contractors need to be proactive in complying with EO 127, and shouldn't rely on agencies to police their compliance.Contractors also should be aware that disclosures will be a matter of public record.In the long term, complying with the law should not be a problem. In the short term, however, most companies will need to establish new training and compliance procedures to ensure that the requirements of EO 127 are met.Richard Rector is a partner in the Government Contracts Group of Piper Marbury Rudnick & Wolfe LLP in Washington, D.C. His e-mail address is richard.rector@piperrudnick.com.