Common Clauses in New York State Contracts and What They Mean, Part IV
This is the fourth installment in the series of articles dedicated to the types of standard clauses you likely will find with New York State government Requests for Proposals, and from other public institutions in this state. Government issued contracts often include many of the same standard provisions, although Invitations for Bids, Requests for Proposals and other types of specific procurement inquiries might have slight differences. Clauses ##1-15 were addressed in Parts I through III of this series. This installment will pick-up with Clause #16 and continue until Clause #20.[1]
Disclaimer: The following information does NOT constitute legal advice and is only for general educational purposes. Each situation is different and specific legal issues usually require additional research and investigation, so do not rely on this article to address a particular legal issue; use this as a starting point to gain a general understanding. This article, although educational in purpose and substance, nevertheless, might be deemed attorney advertising, and prior results do not guarantee future success.
16. No Arbitration
Typical Wording: Disputes involving this contract, including the breach or alleged breach thereof, may not be submitted to binding arbitration (except where statutorily authorized), but must, instead, be heard in a court of competent jurisdiction of the State of New York.
What Is It? The State of New York prefers to litigate their cases instead of arbitrate.
Does It Affect Me? Only if you have problems with your New York State contract that are likely to blossom into a beautiful money-making machine for your lawyers. Now, you may ask, why does the State of New York prefer expensive, bloody, court-room style death match combat over hugging it out in arbitration?
I’ll be honest. After 10 plus years as a government lawyer and over 15 years in government / politics, in general, I still don’t know. Many people feel arbitration is a complete waste of time and resources; then again, others feel it is an indispensable means of peacefully resolving difficult issues while avoiding brutal expenditures of cash.[2] Whether or not arbitration is the greatest thing since sliced bread, NYS is not having it in their contracts - sorry, Charlie. Or Jennifer. Or whatever you go by.
17. Service Of Process
Typical Wording: In addition to the methods of service allowed by the State Civil Practice Law & Rules ("CPLR"), Contractor hereby consents to service of process upon it by registered or certified mail, return receipt requested. Service hereunder shall be complete upon Contractor's actual receipt of process or upon the State's receipt of the return thereof by the United States Postal Service as refused or undeliverable.
Contractor must promptly notify the State, in writing, of each and every change of address to which service of process can be made. Service by the State to the last known address shall be sufficient. Contractor will have thirty (30) calendar days after service hereunder is complete in which to respond.
What Is It? This provision is a bit on the technical side. Ever wonder where lawsuits come from? Did your parents ever tell you? Contrary to what they might have explained, the Stork does not deliver them. Rather, after an highly competent lawyer drafts the initial “Summons & Complaint,” that lawyer must properly “serve” the recipient with those papers. These “service” rules aren’t rocket science, but they can get a bit detailed and complex,[3] and give rise to all kinds of seemingly endless issues, which will keep everyone in court for months more.[4]
Generally speaking, ‘service of process’ is designed to protect people from having lawsuits filed against them, of which they know nothing about; proper service ensures a Defendant knows there is a lawsuit against them, and Plaintiff can prove that Defendant was served properly.[5] Where government is involved, “due process” (of which ‘service of process’ is a part) is also guaranteed by the Fifth and Fourteenth Amendments of the United State Constitution.[6]
Does It Affect Me? I personally have worked on motions involving whether or not Plaintiff successfully served Defendant by dropping the relevant papers on the desk of Defendant’s receptionist. Provision #17 seeks to simplify the process a bit, although contractors with able attorneys, always could find a hook in which to challenge service of process. Usually however, unless the State is about to encounter the Statute of Limitations, needless litigation over service generally only delays the inevitable, as the contractor eventually will be served properly, and the contractor’s attorney will get richer fighting the service.
Generally speaking, unless your service objection permanently will dispense with the case (such as when executing a winning “FINISH HIM!” move of dismissing service, followed by an Affirmative Defense of the Statute of Limitations), I personally recommend just sucking it up and accepting service - getting sued is sometimes part and parcel of government contracting.
To be fair, though, most other attorneys usually recommend the opposite, spending time and effort fighting service, and under the correct circumstances that could be appropriate. When is it correct to do that? If you can wrangle concessions of some kind from your opponent; that said, I find that with reasonable opponents, you can accomplish that with negotiation rather than litigation (but again, on the other hand, many opponents are not reasonable).
18. Prohibition On Purchase Of Tropical Hardwoods
Typical Wording: The Contractor certifies and warrants that all wood products to be used under this contract award will be in accordance with, but not limited to, the specifications and provisions of Section 165 of the State Finance Law,[7] (Use of Tropical Hardwoods) which prohibits purchase and use of tropical hardwoods, unless specifically exempted, by the State or any governmental agency or political subdivision or public benefit corporation.
Qualification for an exemption under this law will be the responsibility of the contractor to establish to meet with the approval of the State. In addition, when any portion of this contract involving the use of woods, whether supply or installation, is to be performed by any subcontractor, the prime Contractor will indicate and certify in the submitted bid proposal that the subcontractor has been informed and is in compliance with specifications and provisions regarding use of tropical hardwoods as detailed in §165 State Finance Law.
Any such use must meet with the approval of the State; otherwise, the bid may not be considered responsive. Under bidder certifications, proof of qualification for exemption will be the responsibility of the Contractor to meet with the approval of the State.
What Is It? Depending on your level of preferred opulence and tree-hugging qualities, this is either an ultra-important measure to prevent deforestation,[8] or supreme government over-regulation.[9]
Does It Affect Me? Sadly, this can be a real pain and potentially drive up costs, although it’s been around for awhile so everyone is probably used to it by now and accounts for it in their bid pricing; there are also more alternatives now available. You better ensure your certification of all wood products are in order or you could run afoul of this requirement and receive a poor grade in Vendex (etc.) or face other action. There are exceptions, including for instance, such as if the hardwood is purchased from a sustainably managed forest, if no suitable alternatives are available, inclusion or application of such provisions results in a substantial cost increase, etc.
19. MacBride Fair Employment Principles
Typical Wording: In accordance with the MacBride Fair Employment Principles (Chapter 807 of the Laws of 1992), the Contractor hereby stipulates that the Contractor either (a) has no business operations in Northern Ireland, or (b) shall take lawful steps in good faith to conduct any business operations in Northern Ireland in accordance with the MacBride Fair Employment Principles (as described in Section 165 of the New York State Finance Law), and shall permit independent monitoring of compliance with such principles.
What Is It? This is one of my very favorite provisions in all of government contracting; the one I really like to bring out and show folks that have no idea about how … inclusive (?) is public procurement. There is no provision so unusual, so intrusive, so entangled, that won’t find its way into bureaucratic regulations. Because your local widgets have such high change being connected to Northern Ireland, and we need to put this provision literally into every single New York State contract. Sigh.
Ah, where to begin? First, how about with a brief history lesson? Before I do, please note, this is a gross over-simplification, and British and Irish citizens are likely to hold very contradictory and strong perspectives, so please, no disrespect is meant to either group, if I glossed over this incorrectly!
Since the 12th Century, the Norman-English began invasions of Ireland, taking an aggressive turn with Tudor efforts to create plantations for Protestant settlers, displacing Irish Catholic inhabitants.[10] Many Irish actively resisted occupation for the next few hundred years, including revolts in the 1590s, the Irish Rebellions of 1641 of 1798, and the 1916 Easter Rising.[11] 1919 saw the rise of the Irish Republican Army (“IRA”), and after a bloody guerilla conflict, in 1921 Ireland was divided into Northern Ireland (largely Protestant) and the Republican of Ireland (largely Catholic).[12]
Shortly, thereafter a bloody civil war took place in Ireland, and on-again, off-again efforts for a united or disparate Ireland took place (some opposed, some for).[13] Unfortunately, from the 1960s-1980s, events often were ugly with terrorism and reprisals a common occurrence.[14] In 1998, the Good Friday accords began to bring peace.[15] Also, in 1998, the MacBride Principles were passed in Congress, and eventually in New York and 17 other states, which was meant to protect minority rights in Ireland (by “minority” it’s meant largely Catholic).[16]
Does It Affect Me? Not at all if you don’t do business in Northern Ireland. If you do, you have to comply with the principles that involve protecting minorities from persecution or discrimination in the work place, hiring and firing and similar kinds of issues that crop up in typical American discrimination law; however, other oddities need to be observed, like the banning of “provocative” political and religious symbols.[17]
20. Omnibus Procurement Act of 1992
Typical Wording: It is the policy of New York State to maximize opportunities for the participation of New York State business enterprises, including minority and women-owned business enterprises as bidders, subcontractors and suppliers on its procurement contracts. Information on the availability of New York State subcontractors and suppliers is available from: NYS Department of Economic Development Division for Small Business Albany, New York 12245, Telephone: 518-292-5100, Fax: 518-292-5884, email: opa@esd.ny.gov. A directory of certified minority and women-owned business enterprises is available from: NYS Department of Economic Development Division of Minority and Women's Business Development, 633 Third Avenue, New York, NY 10017, 212-803-2414, email: mwbecertification@esd.ny.gov
https://ny.newnycontracts.com/FrontEnd/VendorSearchPublic.asp.
The Omnibus Procurement Act of 1992 requires that by signing this bid proposal or contract, as applicable, Contractors certify that whenever the total bid amount is greater than $1 million:
(a) The Contractor has made reasonable efforts to encourage the participation of New York State Business Enterprises as suppliers and subcontractors, including certified minority and women-owned business enterprises, on this project, and has retained the documentation of these efforts to be provided upon request to the State;
(b) The Contractor has complied with the Federal Equal Opportunity Act of 1972 (P.L. 92-261), as amended;
(c) The Contractor agrees to make reasonable efforts to provide notification to New York State residents of employment opportunities on this project through listing any such positions with the Job Service Division of the New York State Department of Labor, or providing such notification in such manner as is consistent with existing collective bargaining contracts or agreements. The Contractor agrees to document these efforts and to provide said documentation to the State upon request; and
(d) The Contractor acknowledges notice that the State may seek to obtain offset credits from foreign countries as a result of this contract and agrees to cooperate with the State in these efforts.
What Is It? I sort of covered this a bit when I dealt with Provision #11 (which was similar). Provision #11 really dealt with anti-discrimination measures, whereas Provision #20 basically mandates setting aside opportunities for so-called M/WBEs (Minority Women Business Enterprises), or at least doing substantial outreach to them. In my experience, in practice, it means mandated set-asides or quotas for such businesses.
Does It Affect Me? Oh yes. If the bid is over $1M, be prepared to have to advertise especially to minority or female based businesses, have set-asides for them, negotiating with agency personnel, who may or may not be reasonable about such goals, and be prepared for a mess of paperwork. As I previously commented, opinions run strong on both sides of the fence of this provision, with some saying it is a needless and extremely costly version of social engineering and others saying it is an indispensible means of remedying past discrimination and fostering a vibrant new middle class.
FYI, many times M/WBEs partner with established non-M/WBE companies or form partnerships (sort of 51% woman / minority and 49% other), which again depending on your viewpoint is either just a means of circumventing the law or facilitating the learning and networking (for M/WBEs) intended by the original legislation. Either way, as a contractor, you’re definitely gonna have to deal with it for any pricey job, although various city and state agencies, including the one with which you are doing business, will assist you in complying and with your outreach efforts; just ensure you take such goals seriously and don’t disregard quotas lightly, or you could face sanctions on your Vendor Responsibility.
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[1] Appendix A Standard Clauses For New York State Contracts (Jan 2014). http://www.ogs.ny.gov/about/appendixa.asp
[3] CPLR §302 (NYS Long Arm Statute); CPLR §307 (Personal Service Upon the State); CPLR §308 (Personal Service Upon a Person); CPLR §311 (Personal Service Upon a Corporation) just to name a few.
[9] https://www.linkedin.com/pulse/teakwood-all-hail-king-hardwoods-sisir-kumar-pradhan (a bit off point being international in flavor, but this will give you an idea of the highly desired characteristics of hardwood and the reason there is even a black market for it).
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