WEST virginia legislature
2018 regular session
House Bill 4190
By Delegates Howell, Hamrick, Zatezalo, Kelly, Iaquinta, Hollen, Atkinson, Kessinger, Jennings and Sypolt
18, 2018; Referred
to the Committee on Government Organization then the Judiciary.]
A BILL to amend and reenact §5A-3-33d, §5A-3-33e, and §5A-3-33f of the Code of West Virginia, 1931, as amended, all relating to the debarment of vendors providing goods and services to the state and its subdivisions; providing for vendor debarment for fraudulent acts of an employee; specifying a period of debarment; and prohibiting contracts with vendors who employ debarred individuals.
Be it enacted by the Legislature of West Virginia:
ARTICLE 3. PURCHASING DIVISION.
§5A-3-33d. Grounds for debarment.
Grounds for debarment are:
(1) Conviction of an offense involving fraud or a felony offense in connection with obtaining or attempting to obtain a public contract or subcontract;
(2) Conviction of any federal or state antitrust statute relating to the submission of offers;
(3) Conviction of an offense involving embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements or receiving stolen property in connection with the performance of a contract;
(4) Conviction of a felony offense demonstrating a lack of business integrity or business honesty that affects the present responsibility of the vendor or subcontractor;
(5) Default on obligations owed to the state, including, but not limited to, obligations owed to the workers' compensation funds, as defined in article two-c of chapter twenty-three of this code, and obligations under the West Virginia Unemployment Compensation Act and West Virginia state tax and revenue laws. For purposes of this subsection, a vendor is in default when, after due notice, the vendor fails to submit a required payment, interest thereon or penalty, and has not entered into a repayment agreement with the appropriate agency of the state or has entered into a repayment agreement but does not remain in compliance with its obligations under the repayment agreement. In the case of a vendor granted protection by order of a federal bankruptcy court or a vendor granted an exemption under any rule of the Bureau of Employment Programs or the Insurance Commission, the director may waive debarment under section thirty-three-f of this article: Provided, That in no event may debarment be waived with respect to any vendor who has not paid all current state obligations for at least the four most recent calendar quarters, excluding the current calendar quarter, or with respect to any vendor who is in default on a repayment agreement with an agency of the state;
(6) The vendor is not in good standing with a licensing board, in that the vendor is not licensed when licensure is required by the law of this state, or the vendor has been found to be in violation of an applicable licensing law after notice, opportunity to be heard and other due process required by law;
(7) The vendor is an active and knowing participant in
dividing or planning procurements to circumvent the $25,000 threshold requiring
a sealed bid or otherwise avoid the use of a sealed bid;
(8) An employee of the vendor is convicted of an offense involving fraud against a state or federal government agency committed when the employee was acting within the scope of his or her employment with that vendor; or
Violation of the terms of a public contract or subcontract for:
(A) Willful failure to substantially perform in accordance with the terms of one or more public contracts;
(B) Performance in violation of standards established by law or generally accepted standards of the trade or profession amounting to intentionally deficient or grossly negligent performance on one or more public contracts;
(C) Use of substandard materials on one or more public contracts or defects in construction in one or more public construction projects amounting to intentionally deficient or grossly negligent performance, even if discovery of the defect is subsequent to acceptance of a construction project and expiration of any warranty thereunder;
(D) A repeated pattern or practice of failure to perform so serious and compelling as to justify debarment; or
(E) Any other cause of a serious and compelling nature amounting to knowing and willful misconduct of the vendor that demonstrates a wanton indifference to the interests of the public and that caused, or that had a substantial likelihood of causing, serious harm to the public.
§5A-3-33e. Debarment procedure.
(a) The director shall obtain lists of vendors declared ineligible under federal laws and regulation and lists of vendors who are in default on state obligations, and shall initiate debarment proceedings with respect to such vendors, except when good cause is shown which includes evidence that the vendor has become responsible.
(1) In the case of federal ineligibility restrictions applicable to state agencies, the director shall also notify the appropriate agencies of any ineligibility determined under federal authority.
(2) The director may also initiate debarment proceedings if he or she finds probable cause for debarment for any ground set forth in §5A-3-33d of this code.
(3) The director shall initiate debarment proceedings when any state agency requests debarment of a vendor and the director finds that probable cause for debarment exists.
(b) The director shall notify the vendor by certified mail, return receipt requested, of the following:
(1) The reasons for the proposed debarment in sufficient detail to put the vendor on notice of the conduct or transactions upon which the proposed debarment is based;
(2) The causes relied upon for the proposed debarment;
(3) That within thirty working days after receipt of the notice, the vendor may submit in writing information and argument in opposition to the proposed debarment;
(4) The procedures governing debarment decision-making; and
(5) The potential effect of the proposed debarment.
(c) In the event a vendor wishes to contest the debarment decision, the director shall decide the matter in accordance with the provisions of §29A-5-1 et seq. of this code.
(d) In any debarment decision, the director shall make a specific finding, based on the substantial record, whether the public interest requires that the debarment decision extend to all commodities and services of the vendor, or whether the public interest allows the debarment decision to be limited to specific commodities or services.
(e) In any debarment decision, the director shall specify the length of the debarment period. The debarment period must be for the period of time that the director finds necessary and proper to protect the public from an irresponsible vendor: Provided, That if the vendor is debarred for unlawful acts of an employee described in §5A-3-33d(8) of this code, the initial period of debarment shall be two years.
(f) Proof of grounds for debarment must be clear and convincing.
§5A-3-33f. Effects of debarment.
(a) Unless the director determines in writing that there is a compelling reason to do otherwise, the state and its subdivisions may not solicit offers from, award contracts to, or consent to subcontract with a debarred vendor during the debarment period. The state and its subdivisions may not solicit offers from, award contracts to, or consent to subcontract with any vendor who employs a debarred individual while that individual is under debarment.
(b) The contracting officer may not exercise an option to renew or otherwise extend a current contract with a debarred vendor, or a contract which is being performed in any part by a debarred subcontractor, unless the director approves the action in writing, based on compelling reasons for exercise of the option or extension.
(c) The debarment decision may extend to all commodities and services of the vendor, or may be limited to specific commodities or services, as the director specifically finds, in the debarment procedure under §5A-3-33e of this code, to be in the public interest based on the substantial record.
(d) The director may extend the debarment to include an affiliate of the vendor upon proof necessary to pierce the corporate veil at common law. The director shall follow the same procedure, and afford the affiliate like notice, hearing, and other rights, for extending the debarment to the affiliate as provided for under §5A-3-33e of this code for the debarment of the vendor.
(e) The director may reduce the period or extent of debarment, upon the vendor's request supported by documentation, for the following reasons:
(1) Newly discovered material evidence;
(2) Reversal of the conviction or judgment upon which debarment was based;
(3) Elimination of the causes for which the debarment was imposed; or
(4) Other good cause shown, including evidence that the vendor has become responsible.
(f) The director may extend the debarment period for an additional period if the director determines that the extension is necessary to protect the interests of the state. Upon the expiration of a debarment period, the director shall extend the debarment period for any vendor who has not paid all current state obligations for at least the four most recent calendar quarters, exempting the current calendar quarter, and for any vendor who is in default on a repayment agreement with an agency of the state, until such time as the cause for the extended debarment is removed. If the director extends the debarment period, the director shall follow the same procedures, and afford the vendor like notice, hearing and other rights for extending the debarment, as provided for debarment under §5A-3-33e of this code.
(g) A debarment under this article may be waived by the director with respect to a particular contract if the director determines the debarment of the vendor would severely disrupt the operation of a governmental entity to the detriment of the general public or would not be in the public interest.
NOTE: The purpose of this bill is to prevent the state from contracting with vendors who employ or have employed debarred individuals and to provide for the debarment of a vendor for the fraudulent acts of an employee.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.