Tips for navigating New York City’s integrity disclosure forms
New York City’s Vendor Information Exchange System (VENDEX) is an annoyance for organizations dependent on city funding. While it’s tempting to treat VENDEX compliance as clerical, it warrants attention from top executives.
Perfect VENDEX compliance can be difficult, and complacency can lead to the filing of false data. The city’s files contain many false VENDEXes, most of which never impact vendors or contract awards. But when an organization comes under scrutiny through media attention, government inquiries or disputes with competitors or disgruntled employees, VENDEXes are picked over. VENDEX mistakes that are unearthed can take organizations and leaders down, and false VENDEX statements can lead to criminal convictions. It should never be delegated and forgotten. So pull out your VENDEX Questionnaire and let’s try to make some sense of it.
First, let’s debunk a myth: No one is “VENDEX approved.” If the Mayor’s Office of Contracts Services (MOCS) deems a VENDEX submission facially complete, its data will be entered in a computer. That doesn’t mean the answers have been “judged” or “cleared” by MOCS, a contracting agency, or the city’s Department of Investigations. Even if a contract is registered, that does not mean someone approved the VENDEX responses.
However, it does mean that someone reviewed the contractor’s VENDEX “cautions” – summaries in the city’s database of certain adverse information. Many “cautions” simply paraphrase the vendor’s VENDEX submission narratives. Executives should thus ensure that VENDEX narratives include truthful, positive details so cautions will not inappropriately complicate or impede access to city funding.
“Cautions” can be triggered by responses to VENDEX’s most frustrating questions. Perhaps most challenging, particularly for larger organizations, is Vendor Question (VQ) No. 15, which asks whether the vendor, its affiliates, or past or present officers or managerial employees have been “investigated.” This can’t be answered without reviewing the Vendor’s Guide to VENDEX, which defines an investigation as “any inquiry by any prosecutorial, investigative or regulatory agency” about a person or entity’s “activities” or “business practices.” While there is an exclusion for contacts with the contracting agency “relating to performance or routine aspects of an existing contract,” “agency communications relating to constituent complaints,” and “routine non-forensic program or financial audits,” VQ No. 15 can still be burdensome.
When it is coupled with VQ No. 16, which asks whether this same broad group has been “found in violation of any administrative, statutory, or regulatory provisions” and whether administrative charges are pending, it is plain that most regulated entities will find it difficult to gather the information sought.
There are other VENDEX questions that are somewhat easier to address when correctly understood. Organizations working with affiliates or within networks should carefully consider VQ No. 5a, which concerns the sharing of “office space, staff, equipment, or expenses.” Organizations employing or engaging former or present government employees or appointees should carefully review VQ No. 7. Those that have engaged lobbyists for “procurement lobbying” should take heed of VQ No. 18. And organizations should be wary of VQ No. 12’s reference to judgments, injunctions and liens, since its confusing mention of the “City Council” might make it seem narrower than perhaps intended.
It can be prudent to disclose information that is not called for by the VENDEX forms. For example, VQ No. 11’s reference to debarments, non-responsibility findings, disqualifications and suspensions is expressly limited to “contracts,” which are defined as agreements with New York City government agencies. As this distinction might be lost on contracting officers, investigators and reporters, organizations correctly answering “no” might avoid a disastrous misunderstanding by supplementing a negative response with unsolicited information about negative government contract actions in other jurisdictions.
The consequences of a filing a false disclosure form are too great to ignore. With care, an organization can minimize the risks posed by integrity disclosure requirements.
Claude M. Millman, a partner at Kostelanetz & Fink LLP, was formerly director of the Mayor’s Office of Contracts Services and currently represents city contractors and subcontractors, including nonprofit organizations.
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