Wednesday, September 28, 2011

New Jersey and Pennsylvania Highlight Different Approaches to Pay-to-Play Enforcement

The only consistent element one can discern from state and local pay-to-play enforcement is that municipal approaches to enforcement vary widely. Local legislation and enforcement is driven far more by politics and past scandal than a desire to afford the regulated community with consistent national application. Recently, this blog engaged in something of a back and forth with the public interest group over realistic approaches to pay-to-play enforcement. Trenton, New Jersey’s City Hall and Pennsylvania’s House of Representatives now offer the most recent embodiment of these tensions.

Pennsylvania’s scandals of choice in recent years have involved allegations that the State contracting employees -- from the Governor on down -- have been all too cozy with political allies and former employees in the awarding of no-bid contracts; political allegations that date back several years. It should not be surprising, therefore, that the Pennsylvania House State Government Committee recently passed proposed legislation by a unanimous vote that focuses on the conduct and relationships of state procurement evaluators rather than on the conduct of those seeking state contracts.

House Bill 107, if passed and signed into law, would prohibit any state employee from evaluating a state contract proposal if that employee “has been employed by an offeror within the last two years”. Pennsylvania’s House Republican Caucus left no doubt that this legislation is being proposed as a political response to past scandal:

“This legislation is a direct answer to eight years of allegations concerning back-door, pay-to-play politics from Pennsylvania taxpayers and job creators who have legitimately questioned the integrity regarding the slew of multi-million dollar, no-bid state contracts entered into by the Rendell administration,” said (Rep. George) Dunbar (R-Westmoreland). House Bill 107 will prevent anyone from coming to work for state government and rewarding their former boss with a multi-million dollar contract paid for by you, the taxpayer—strictly on the basis of political favoritism,” said Dunbar. “Put simply, this legislation will bring a long overdue end to this blatant, unethical conflict of interest where back-room, pay-to-play politics generates countless overpriced and uncompetitive state contracts.”

Placing additional compliance responsibility on those awarding state contracts, as opposed to those seeking such contracts and all of their various and sundry potential “agents” is a refreshing and atypical approach to enforcement.

Meanwhile, across the Delaware River, Trenton New Jersey’s Law Director found himself in the uncomfortable, and procedurally murky, position of having his enforcement of the city’s strict pay-to-play ordinance reversed by the city’s mayor after significant “input” from the affected party. Last week, Trenton’s Law Director Marc McKithen concluded that a well-connected state law firm should lose its contract with the City because it had made a political contribution within a year of bidding on a city contract. Under the city’s strict ordinance, that single violation, if not undone, theoretically served as grounds to rescind the contract. Within a single day, however, several heated phone calls by the law firm to the Mayor’s office appears to have demonstrated the difficulties of no-tolerance pay-to-play restrictions as th e Mayor’s office effectively countermanded the finding.

Whether the Mayor had the authority to undo such a determination by the city’s Law Director, and whether application of such unforgiving laws is good public policy, remains to be seen. What is clear is that the tension between reporting and debarment has given rise to another interesting anecdote in the world of pay-to-play.

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