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FBI Corruption Probe Leads to Allentown Pay-to-Play Ordinance

It is a pattern we have seen and reported on repeatedly: public revelations of alleged corruption – already criminalized under state law – lead to passage of new pay-to-play laws designed to assure the public that previously lawful campaign activity creating the appearance or potential for corruption will not be tolerated.  Most recently, it is the Allentown City Council which has now passed a pay-to-play ordinance in the wake of a criminal probe.

Allentown, PA

The Allentown inquiry giving rise to the legislation included all of the “usual suspects” in a garden variety public corruption and bribery scandal.  According to published reports and court documents, a local developer pled guilty to participation in a conspiracy – purportedly involving Mayor (and US Senate candidate) Ed Pawlowski – to exchange campaign donations for unnamed government favors, “destroying records, conducting sweeps of government offices for electronic surveillance, and procuring disposable ‘burner phones’ that he believed would be difficult for law enforcement to monitor”.  (For the record, Mayor Pawlowski’s counsel vociferously denies his client’s involvement in the activities or conspiracy for which the developer pled guilty).

Despite the alleged criminal conduct providing the impetus for the legislation, Allentown’s new ordinance – as passed by the city council – provides for significant consequences to the unwary.  As passed, if any individual or business makes a single or multiple contributions in excess of $250.00 or provides services in that amount in a calendar year to a candidate or incumbent, the individual or business “shall not be eligible to apply for or enter into any non-competitive bid contract or be eligible to be a sub-contractor for a non-competitive bid contract or to receive financial assistance (grants, tax incentive, etc.) from the city.” 

It is unclear whether this prohibition applies for the remainder of the year or forever but the ordinance clearly provides that violation of the law by any individual or business (or “family members with a financial interest in the business, business associates, subcontractors,”

PACs, or consultants) during a period when a contract is in place “shall be cause to void the contract” and “shall make the contractor liable for liquidated damages of 10% of the maximum payment to the contractor.”  OUCH!  This is not an ordinance you want your family members, business associates, subcontractors, or consultants violating.

Ironically, the ordinance does not take effect until it has been signed into law by . . . . . . Mayor Ed Pawlowski.  I’m guessing he doesn’t choose to take a stand against this legislation.

Well we’re living here in Allentown
And they’re closing all the contractors down
Out in Bethlehem they’re doin’ time
Ripping up forms
Burning their phones
Well we’re waiting here in Allentown
For the contracts that we never found
For the promises our government gave
If we gave dough
If we behaved

So the contracts they hang on the wall
But they never really helped us at all
No they never taught us what was void
the public’s upset
And they’re annoyed
And we’re waiting here in Allentown

  Every contractor had a pretty good shot
To get at least as far as their old man got
But something happened on the way to that place
They threw pay-to-play in our face

 Well I’m living here in Allentown
And it’s hard to keep a good man down
But I won’t be getting up today

And it’s getting very hard to stay
And we’re living here in Allentown

(Sincere apologies to Billy Joel and the people of Allentown)

 

FBI Corruption Probe Leads to Allentown Pay-to-Play Ordinance

Just Call It The “Pay-to-Play” Corridor

 

 When one hears about state pay-to-play reform efforts underway along the “Northeastern Corridor”, it’s only natural to look first to the news wires in New Jersey, Connecticut and New York. After all, those jurisdictions have proven themselves to be the leaders of the pack when it comes to pay-to-play advancements, or at least reformist, pay-to-play rhetoric. In recent weeks, however, we have begun to see momentum building behind new pay-to-play legislation in the neighboring jurisdictions of Pennsylvania and Rhode Island. Depending on the outcome of these new efforts, perhaps it’s time that we drop the directional nomenclature and simply start calling the entire region the “Pay-to-Play Corridor”.

Pennsylvania Legislative Activity

Given the steady stream of “perp walks” seen in the Keystone state over the past month, one could have anticipated significant legislative action on the pay-to-play front. For those of our readers who missed the reports because they were busy “Spring Breaking” or watching their March Madness brackets go down in flames, here’s the long and short of it. In mid March, Pennsylvania Attorney General Kathleen Kane brought a collection of criminal charges against eight Pennsylvania lawmakers and government officials in connection with a wide-ranging bid-rigging and bribery scheme associated with the Pennsylvania Turnpike Commission. Included among those charged were former State Senator Robert Mellow, former Turnpike CEO Joseph Brimmeier, and former Turnpike Chairman Mitchell Rubin, who allegedly directed Turnpike contracts to favored vendors and campaign supporters, and misused millions of dollars in public funds.

With the discovery of this textbook pay-to-play scandal, Pennsylvania lawmakers have been scurrying to distance themselves from the parties involved and position themselves on the right side of pay-to-play reform. The result has been a flurry of legislative ideas and proposals from members in both the state House of Representatives and state Senate. Among the more heavily publicized bills under consideration are SB 750 through SB 758, a collection of pay-to-play and ethics bills sponsored by the bi-partisan tandem of State Senator Mike Stack (D-Philadelphia) and State Senator John Eichelberger, Jr. (R-Blair). As one might expect, the range of issues addressed by these nine bills is quite broad.

Although the specific language in the draft bills has not yet been made publicly available, SB 753, SB 754 and SB 755 appear to focus on contracting issues, requiring the public disclosure of vendor scoring on state RFP bids, the reporting of any payments made to state vendors by registered state PACs or candidate committees, and the disclosure of all subcontractors by state vendors. Meanwhile, SB 750, SB 756 and SB 758 purport to tackle gift and contribution issues by calling for a decrease in the state gift reporting threshold from $250 to $50, requiring the public disclosure of certain campaign contributions by executive branch advisory commission and task force members, and installing an outright ban on gifts to executive branch officials and employees by all companies that do business with, or are regulated by, the Commonwealth.

As of this blog’s publication, none of these proposals have been taken up for consideration in the Pennsylvania State Senate. Their introduction, however, does indicate one direction that the Keystone State’s legislature is looking to go in the wake of the Turnpike scandal.

>Another potential pathway to reform in Pennsylvania was launched earlier this week in the state House of Representatives by Representative George Dunbar (R-Westmoreland). His bill, HB 201, attempts to bring increased transparency and accountability to the state procurement process by incorporating a two-year “revolving-door” provision into Pennsylvania laws governing the competitive sealed bidding process. The legislation passed the House unanimously on Tuesday, but failed to include several amendments proposed by Rep. Brandon Neuman (D-Washington) and others, which would have implemented pay-to-play contribution reporting provisions akin to those seen at the state level in New Jersey.

Perhaps Keystone legislators were scared off by the recent words of New Jersey Election Law Enforcement Commissioner Jeff Brindle, which highlight the unwieldy nature of the Garden State’s pay-to-play framework? Or perhaps it was a pure political dodge? Their true motivations may never be known, but we will continue to keep our readers posted as the aforementioned bills make their way through the state legislative process and new proposals are introduced.

Rhode Island Legislative Activity

Further north on the Pay-to-Play Corridor, we are also beginning to see Rhode Island officials join the push for reform. At present, Rhode Island’s pay-to-play laws place limited, disclosure-only reporting obligations on state contractors. Under these obligations, vendors with contracts for goods or services valued at $5,000 or more are required to disclose on an affidavit all contributions to state officers, general assembly candidates and political parties in excess of $250 made within two years of the beginning of a state contract. These provisions do not, however, place any inherent limitations on the political giving of potential or actual state vendors.

Hoping to rectify this shortcoming, State Attorney General Peter Kilmartin and State Representative Michael Marcello have worked together to draft and introduce legislation that would prohibit state vendors, their owners, their executive officers, and the spouses and minor children of those owners and officers from making political contributions to state officials and state candidates who are or could be generally responsible for awarding state contracts. This ban would apply to all vendors with existing state contracts valued at over $5,000 (or aggregating to over $25,000), and would be effective for the duration of the officeholder’s term or for two years following the termination or expiration of the contract, whichever is longer.

The bill, H 5490, also places a similar restriction on the executives and family members of companies with pending bids for state contracts. This ban on contributions by vendors with pending bids or contracts would likewise apply in all situations where contract value exceeds $5,000 on any one bid or contract, or $25,000 on aggregate bids or contracts.

The language of the Kilmartin/Marcello bill is broadly drafted to cover contributions made to a wide range of state officials, including the Governor, and includes a low value threshold to ensure nearly universal application to all state contracts. Whether those particular elements survive the legislative process moving forward, however, is yet to be seen. So far, the bill remains in its introduced form and has been held over for further study by the Rhode Island House Judiciary Committee. As additional news on its progress becomes available, we here at Pay to Play Law Blog will keep everyone updated.

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Just Call It The “Pay-to-Play” Corridor

New Jersey and Pennsylvania Highlight Different Approaches to Pay-to-Play Enforcement

The only consistent element one can discern from state and local pay-to-play enforcement is that municipal approaches to enforcement vary widely. Local legislation and enforcement is driven far more by politics and past scandal than a desire to afford the regulated community with consistent national application. Recently, this blog engaged in something of a back and forth with the public interest group CityEthics.org over realistic approaches to pay-to-play enforcement. Trenton, New Jersey’s City Hall and Pennsylvania’s House of Representatives now offer the most recent embodiment of these tensions.

Pennsylvania’s scandals of choice in recent years have involved allegations that the State contracting employees — from the Governor on down — have been all too cozy with political allies and former employees in the awarding of no-bid contracts; political allegations that date back several years. It should not be surprising, therefore, that the Pennsylvania House State Government Committee recently passed proposed legislation by a unanimous vote that focuses on the conduct and relationships of state procurement evaluators rather than on the conduct of those seeking state contracts.

House Bill 107, if passed and signed into law, would prohibit any state employee from evaluating a state contract proposal if that employee “has been employed by an offeror within the last two years”. Pennsylvania’s House Republican Caucus left no doubt that this legislation is being proposed as a political response to past scandal:

“This legislation is a direct answer to eight years of allegations concerning back-door, pay-to-play politics from Pennsylvania taxpayers and job creators who have legitimately questioned the integrity regarding the slew of multi-million dollar, no-bid state contracts entered into by the Rendell administration,” said (Rep. George) Dunbar (R-Westmoreland). House Bill 107 will prevent anyone from coming to work for state government and rewarding their former boss with a multi-million dollar contract paid for by you, the taxpayer—strictly on the basis of political favoritism,” said Dunbar. “Put simply, this legislation will bring a long overdue end to this blatant, unethical conflict of interest where back-room, pay-to-play politics generates countless overpriced and uncompetitive state contracts.”

Placing additional compliance responsibility on those awarding state contracts, as opposed to those seeking such contracts and all of their various and sundry potential “agents” is a refreshing and atypical approach to enforcement.

Meanwhile, across the Delaware River, Trenton New Jersey’s Law Director found himself in the uncomfortable, and procedurally murky, position of having his enforcement of the city’s strict pay-to-play ordinance reversed by the city’s mayor after significant “input” from the affected party. Last week, Trenton’s Law Director Marc McKithen concluded that a well-connected state law firm should lose its contract with the City because it had made a political contribution within a year of bidding on a city contract. Under the city’s strict ordinance, that single violation, if not undone, theoretically served as grounds to rescind the contract. Within a single day, however, several heated phone calls by the law firm to the Mayor’s office appears to have demonstrated the difficulties of no-tolerance pay-to-play restrictions as the Mayor’s office effectively countermanded the finding.

Whether the Mayor had the authority to undo such a determination by the city’s Law Director, and whether application of such unforgiving laws is good public policy, remains to be seen. What is clear is that the tension between reporting and debarment has given rise to another interesting anecdote in the world of pay-to-play.

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New Jersey and Pennsylvania Highlight Different Approaches to Pay-to-Play Enforcement