By: Daniella Gordon and Jennifer M. Horn
The New Jersey legislature is considering a bill which would permanently bar contractors who are convicted of fraud in connection with work on government contracts from bidding on future public contracts in the State. Under S. 2167, contractors convicted of making false payment claims to the government will be permanently barred from:
- Contracting with a contracting agency;
- Subcontracting with a third party in furtherance of a contract with a contracting agency;
- Serving as a key employee of any entity that is contracting with a contracting agency of any affiliate of such an entity; and
- Serving as a key employee of any entity that is subcontracting with a third party in furtherance of a contract with a contracting agency or of any affiliate of such an entity.
Contractors submitting bids for public works contracts will be required to certify their compliance with the law.
The bill was proposed in the wake of sentencing of two construction company owners who were implicated in a bid rigging scheme under which the Township Engineer received kickbacks from the contractors in exchange for recommending approval of their contracts. The Township Engineer was sentenced to a prison term of three years for his role in the scheme; however, the contractors involved received probationary sentences and were only barred from bidding on public contracts in the State for five years following their convictions.
The period of temporary debarment was viewed as an inadequate consequence of the fraud conviction, which has been characterized as a grave violation of the public trust. The proposed measure is consistent with other penalties imposed by the State for similar offenses. For instance, under N.J.S.A. 2C:51-2, any person holding public office who is convicted of a crime of dishonesty “shall be forever disqualified from holding any office or position of honor, trust or profit” in the State of New Jersey.
It seems likely that the bill will be enacted given the analogous statutory precedent and the public interest concerns inherent in the award of government contracts.
Daniella Gordon is a litigation Associate in the Construction Group. She represents clients in a wide range of construction related matters, including public bidding contests, construction defect claims, and appeals.
Jennifer M. Horn is Senior Counsel at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.