Discussion/Direction: Proposed Amendment to the City of Flagstaff's Procurement Code Manual, Article 30, Section (B)(2), "Suspension, Debarment."

On April 4, 2017, Councilmember Putzova presented a Future Agenda Item Requests (F.A.I.R.) to have a discussion related to amending the City's Procurement Code Manual, specifically setting some standards for the type of business partners we prefer conducting business with and those that meet rigorous standards of social and environmental performance and accountability and transparency. Two or more councilmembers agreed to have a conversation related to the FAIR item. 

On September 26, 2017, the FAIR item was discussed at the work session to determine if other Councilmembers were interested in discussing a proposed amendment to the City of Flagstaff Procurement Code Manual, Article 30, Section (B)(2), "Suspension, Debarment."  Councilmember Putzova provided management with a proposed amendment to the Procurement Code Manual.  Four or more councilmembers agreed to place the FAIR item on a future work session to provide staff with direction. 

Current language: 
The causes for suspension or debarment may include, but are not limited to, the following: Conviction of any person records, receiving stolen property or any other offense indicating a lack of business integrity or business honesty which affects responsibility as a City contractor.

Proposed Amendment (In capitalized letters):
The causes for suspension or debarment may include, but are not limited to, the following: Conviction of any person or any subsidiary or affiliate of any person under any statute of the Federal Government, this State or any other state for embezzlement, theft, fraudulent schemes and artifices, fraudulent schemes and practices, bid rigging, perjury, forgery, bribery, falsification or destruction of records, receiving stolen property or any other offense indicating a lack of business integrity or business honesty which affects responsibility as a City contractor, OR VIOLATION OF A RELEVANT CRIMINAL STATUTE, AS EVIDENCED BY A PUBLIC ENFORCEMENT ORDER OR JUDGMENT, SETTLEMENT WITH A RELEVANT FEDERAL OR STATE ENFORCEMENT AGENCY, IMPOSITION OF FINES OR PENALTIES, OR OTHER FORMAL FINDING BY THE RELEVANT ENFORCEMENT AGENCY WITH REGULATORY ENFORCEMENT AUTHORITY UNDER THE APPLICABLE CONSUMER PROTECTION LAW.

Staff Discussion: 

• A suspension or debarment, based on the proposed language involving a settlement (the act or process of settling an argument or disagreement) with a relevant Federal or State enforcement agency does not determine that a person/entity is guilty of an offense, such as those already stated in the Procurement Code Manual.
   
• Our City’s Procurement Code Manual is consistent with current Federal and State language for suspension and debarment and are based on a conviction for crimes of moral turpitude (embezzlement, fraud, theft, bid rigging, bribery, etc.). During the procurement process, City staff search uniform government database known as “System for Awards Management (S.A.M.) to identify whether a person or entity is involved in a solicitation has been suspended or debarred specifically for criminal conduct.  This SAM database provides consistency to the City's procurement process.
   
• There is no such database to check for public enforcement orders, settlements with enforcement agencies, imposition of fines or penalties, or formal findings by relevant enforcement agencies, against those persons or entities seeking to participate in a solicitation. Without a uniform database, there can be inconsistencies and discrepancies when conducting research for suspended or debarred persons/entities.
   
• A suspension or debarment based on the proposed language could stifle competition.
   
• The proposed language may result in a significant amount of research for City Staff, especially when consistency will be important, but yet very difficult due to the lack of an established database.

Staff are recommending that the City remain with the current language in the Procurement Code Manual, which is consistent with both Federal and State standards for suspension and/or debarment.  If the Council give direction to adopt proposed language, staff would ask for direction in implementing the changes.