By: Thomas S. Tripodianos Published: July 2019

E0_192 and MTA Debarment Regulations

If being a public works contractor, consultant or supplier wasn’t already difficult enough things just got harder.  Public Authorities Law Section 1279-h, became law without public comment on April 12, 2019, when it was passed as part of the New York State budget bill.  The MTA provided the regulations called for under the law on June 5, 2019, which mandate retroactively that the MTA debar contractors (defined to include consultants, vendors and suppliers) if they: (1) fail to achieve substantial completion of their contractual obligations within 10% of the adjusted contract time; or (2) present claims (which includes change orders) for additional compensation that are denied in an amount that exceeds the total adjusted contract amount by 10% or more.

While the MTA regulations provide that debarment by one is debarment by all of the agencies under the MTA umbrella things get even worse because Executive Order 192, issued on January 15, 2019, mandates debarment by all state agencies and authorities of contractors debarred by any state agency or authority forever [the MTA Regulations suggest the debarment in only for five years but EO 192 would override that] unless a court determines the debarment was in error, or a secure a waiver from the Counsel to the Governor.  Considering the weight given to past debarment in considering bid awards the detrimental effect could extend past New York.

It gets even worse.  The MTA cannot consider mitigating factors or whether claims have been made in good faith. Debarment is required once a final determination is made by the MTA that the regulations have been violated “and its contracting personnel have no discretion to excuse or justify violations of any provision.”

But wait, there’s more.  Not only is the debarment hearing held and decided by the MTA itself the “ panel may, in its discretion, also debar any of (1) the contractor’s parent(s), subsidiaries and affiliates; (2) any joint venture (including its individual members) and any other form of partnership (including its individual members) that includes a contractor or a contractor’s parent(s), subsidiaries, or affiliates of a contractor, (3) a contractor’s directors, officers, principals, managerial employees, and any person or entity with a ten percent or more interest in a contractor; (4) any legal entity controlled, or ten percent or more of which is owned or controlled, by a contractor, or by any director, officer, principal, managerial employee of contractor, or by any person or entity with a 10 percent or greater interest in contractor, including without limitation any new entity created after the date of the notice of intent to debar”.

A coalition of industry associations has been formed to challenge the validity of the law and regulations but, for the time being they are in full force and effect.  Anyone doing business on public work in New York and especially with the MTA is urged to consult with competent counsel as to how to mitigate the risks imposed by these new laws.

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