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Vendor Responsibility Information for State Agencies

Conducting a Vendor Responsibility Review and Making a Responsibility Determination

What is a "responsible" vendor?

To be considered a responsible vendor, a company or individual should have appropriate legal authority to do business in New York, a satisfactory record of integrity, appropriate financial, organizational and operational capacity and controls, and acceptable performance on previous contracts, if any.

Reasonable process for determination

The process must be conducted such that it provides reasonable assurances that the proposed contractor is responsible.

A contracting agency must undertake an affirmative review and, in all cases, consider any information that comes to its attention that raises issues concerning the vendor’s responsibility. This information should be reviewed on a case-by-case basis, with consideration given to its relevance to the scope of work of the transaction as well as the integrity of the contractor. The contracting agency must:

  • Work with the vendor to address potentially negative information; and
  • Make a finding of responsibility or non-responsibility.

Additionally, for contracts valued at $100,000 or more, an agency must:

  • Require disclosure by the proposed contractor of all information the agency deems relevant to vendor responsibility, and
  • Verify and understand any potentially negative information, by contacting the vendor and using other sources.
Information an agency must consider

The specific scope of the agency responsibility review is determined by the contracting agency. Responsibility reviews should address the following four major categories:

  • Financial and Organizational Capacity: Factors to be considered include, but are not limited to, assets, liabilities, recent bankruptcies, equipment, facilities, personnel resources and expertise, availability in consideration of other business commitments, or existence of appropriate accounting and auditing procedures for control of property and funds.
  • Legal Authority: Factors to be considered include authority to do business in New York State (e.g., foreign corporation’s registration with the New York State Department of State under the Business Corporation Law or Not-for-profit Corporation Law), licensing (e.g., with the Education Department or Department of State), registration of Not-for-profits with the New York State Attorney General’s Charities Bureau, debarment by the New York State Labor Department due to a prevailing wage violation, etc. Note that both foreign and domestic businesses and not-for-profit corporations, limited partnerships, limited liability partnerships, and limited liability companies should have filed documentation with the Department of State.
  • Integrity: Factors to be considered include, but are not limited to, criminal indictments or convictions, civil fines and injunctions imposed by governmental agencies, anti-trust investigations, ethical violations, tax delinquencies, debarment by federal, state or local governments, or prior determinations of integrity-related non-responsibility.
  • Previous Contract Performance: Factors to be considered may include reports of less than satisfactory performance, early contract termination for cause, contract abandonment, court determinations of breach of contract, etc.

In making a responsibility determination, a State contracting entity must:

  • Consider any information that comes to its attention.
  • Validate and assess the information disclosed and other information obtained to arrive at a reasonable conclusion regarding the proposed contractor's responsibility.
  • Include in the procurement record submitted to the Office of the State Comptroller (OSC) a Vendor Responsibility Profile and documentation describing and supporting the State contracting entity's responsibility determination, when required.
  • For contracts over $100,000, obtain disclosure from the proposed contractor of information the contracting entity deems relevant, addressing each factor listed above.

Please review vendor responsibility requirements found in the GFO XI.16 for more details about required State contracting entity actions.

Evaluating a contractor’s past performance

A State contracting entity can require that proposers/bidders submit, as part of their proposal/bid, applicable references and identify other government contracts it has received. Additionally, the contracting entity, as part of its evaluation process, should contact those references and evaluate the information obtained. In conducting reference checks, it is suggested that the State contracting entity require references for work of similar scope, complexity, etc. Any negative references should be carefully reviewed by the contracting entity, and include verification that the proposed contractor was provided due process by the entity providing the reference. OSC encourages the use of quality control and consumer satisfaction measures, especially for human services contracts.

These suggested procedures are not intended to be all-inclusive. Agencies should undertake all steps that they deem appropriate when evaluating a proposed contractor’s past performance.

Information that is cause to find a vendor non-responsible

A multitude of factors must be considered, as well as their relevance to the specific procurement. A finding of non-responsibility may be warranted, for example, when the State contracting entity has reliable evidence that causes them to believe that the contractor has committed fraud, anti-trust violations, embezzlement, theft, forgery, bribery or tax evasion; made false statements, or similar offenses; has had contracts terminated for breach; does not possess financial capacity to perform; etc. This list is not exhaustive: reliable evidence of any other offense indicating a lack of business integrity or honesty that seriously and directly affects the responsibility of the vendor may be sufficient to justify a finding of non-responsibility. In assessing any potentially negative information, the State contracting entity must attempt to verify its accuracy and provide an opportunity for the vendor to respond in defense on any material findings.

Potentially non-responsible finding process

If a State contracting entity makes a preliminary determination that a vendor is non-responsible, the contracting entity must notify the vendor of its preliminary determination and the basis for it. The State contracting entity must give the vendor an opportunity to be heard prior to rendering a final determination of non-responsibility. The State contracting entity should consult with its legal counsel and follow its own specific procedures for rendering such determinations.

List of non-responsible vendors

OSC will, upon request, provide a State contracting entity with information OSC has relevant to a proposed contractor's responsibility. In addition, in reviewing a contract transaction, OSC will notify the contracting entity if OSC is aware of a non-responsibility finding and the contracting entity has not addressed it in its responsibility review. In making any such information available, OSC would strongly caution agencies that a finding of non-responsibility is not equivalent to a debarment, and that a responsibility determination is made individually for each contract.

Standards for responsibility determinations

As the standards for responsibility determinations are defined in case law, it is suggested that State contracting entity procurement staff consult with their counsel for interpretation of case law as it pertains to vendor responsibility. In assessing a proposed contractor's responsibility, a State contracting entity must review each of the four factors related to vendor responsibility: integrity, legal authority to do business in New York State, capacity, and previous performance. A contracting entity must consider the factual information available to it and make a reasonable determination based on its assessment of that information and the relevance of the information to the contract under consideration. Furthermore, as stated in GFO XI.16, in a finding of non-responsibility, vendors must receive due process. Additionally, in all contract transactions that are subject to OSC approval, OSC reserves the right to conduct a de novo responsibility review.

Non-responsibility information after an award

The range of actions available to the State contracting entity is essentially the same whenever the contracting entity becomes aware of information that calls into question a contractor's responsibility. The State contracting entity may review the responsibility issue(s) and determine no action is warranted, or the contracting entity may require the contractor correct the problem or implement a corrective action plan. All contracts should give the contracting entity the ability to terminate for cause. Inclusion of a clause establishing lack of responsibility, including failure to disclose information, as a potential cause of termination enhances the State contracting entity's ability to address issues discovered after a contract has begun. The certification contained in the OSC Vendor Responsibility questionnaires also provides for potential contract termination if a vendor provides false or misleading information.

Vendor responsibility information sent to OSC

Information regarding vendor responsibility is considered in the OSC contract review process. OSC reviews the procurement record prepared by the State contracting entity to verify that the contracting entity has certified its findings of responsibility and addressed responsibility issues. In the event that the procurement record is incomplete or leaves questions that need to be addressed, OSC audit staff will ask State contracting entity staff to provide additional information. In instances where follow-up with the State contracting entity does not resolve the issue, OSC may return the contract unapproved. OSC may also undertake its own independent, de novo review of the proposed contractor's responsibility.

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