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Regular Session, 2011
SENATE BILL NO. 242
BY SENATOR APPEL
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
PUBLIC CONTRACTS. Requires recording of certain public work and material and
supplies contracts and certain amendments, revisions, and change orders; increases fines and
criminal penalties for splitting profits, fees, and commissions. (8/15/11)
AN ACT1
To amend and reenact R.S. 14:141 and R.S. 39:126 and 1767, and R.S. 48:251.8, to enact2
R.S. 38:2192 and 2222 and R.S. 39:1557.1, and to repeal R.S. 38:2196.1, R.S.3
39:200(N) and 1493.1, and Part X of Chapter 17 of Subtitle III of Title 39 of the4
Louisiana Revised Statutes of 1950, consisting of R.S. 39:1758, relative to public5
contracts; to provide for prohibited splitting of profits, fees, and commissions; to6
provide with respect to recordation of certain change orders , amendments, or other7
revisions to public contracts; and to provide for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 14:141 is hereby amended and reenacted to read as follows: 10
§141. Prohibited splitting of profits, fees or commissions; exceptions 11
A. For the purposes of this section Section, "splitting of profits, fees or12
commissions" means the giving, offering to give, receiving or offering to receive,13
directly or indirectly, anything of apparent present or prospective value by or to a14
public officer or public employee or to any fund or fiduciary existing for the benefit15
of or use by such public officer or employee, when such value is derived from any16
agreement or contract to which the state or any political subdivision thereof is a17 SB NO. 242
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party.1
B. There shall be no splitting of profits, fees or commissions, past or present,2
derived from the sale of any commodity, goods, services, insurance, or anything of3
value to the state or any political subdivision thereof from which a public officer4
official or public employee, representing the state or a political subdivision, as the5
case may be, in his official capacity in the contract negotiations, receives or offers6
to receive a portion of the profits, fees and/or commissions, unless the amount7
thereof and the conditions therefor are included in detail in the contract of sale or the8
insurance contract and said contract is filed by the public official or employee9
hereinabove described with the secretary of state at least ten days prior to execution10
of said contract. The ten-day filing period shall be waived in the event of an11
emergency in which such filing is not reasonable. Upon filing thereof, the secretary12
of state shall immediately release to the news media the details of such contract and,13
upon written request, furnish a copy of such contract to the news media. The14
contract shall be a public record.15
C. Whoever commits the crime of failure to report the splitting of receiving16
or offering to receive a portion of the profits, fees or commissions, and to contain17
such fee arrangement in the contract of sale or in the insurance contract as provided18
by this act Section shall upon conviction be fined not more than one ten thousand19
dollars or shall be imprisoned, with or without hard labor, for not more than two ten20
years, or both.21
Section 2. R.S. 38:2192 and 2222 are hereby enacted to read as follows:22
§2192. Certain contract amendments and revisions; recordation23
Each amendment or other revision to any service or insurance contract24
which adds an amount of ten percent or more of the original contract amount25
and which additional amount is at least ten thousand dollars or all amendments26
and other revisions to any service or insurance contract aggregating to an27
amount of twenty percent or more of the original contract amount and which28
additional amount is at least ten thousand dollars shall be recorded by the29 SB NO. 242
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public entity which entered into the contract in the office of the recorder of1
mortgages in the parish where the public entity is domiciled not later than2
thirty days after the date of the amendment or other revision which requires3
that the recordation take place. In addition, the original contract shall be4
recorded together with the amendments or other revisions if not previously5
recorded.6
* * *7
§2222. Change orders; recordation8
Each change order to a public works contract or to a contract for9
materials and supplies which adds an amount of ten percent or more of the10
original contract amount and which additional amount is at least ten thousand11
dollars or all change orders to a contract aggregating to an amount of twenty12
percent or more of the original contract amount and which additional amount13
is at least ten thousand dollars shall be recorded by the public entity which14
entered into the contract in the office of the recorder of mortgages in the parish15
where the work is to be done or, if not a public work, where the entity is16
domiciled not later than thirty days after the date of the change order which17
requires that the recordation take place. In addition, the original contract shall18
be recorded together with the change orders if not previously recorded. The19
provisions of this Section shall not apply to the office of facility planning and20
control, and the office of state purchasing.21
Section 3. R.S. 39:126 and 1767 are hereby amended and reenacted and R.S.22
39:1557.1 is hereby enacted to read as follows:23
§126. Change orders24
A. Any change order in excess of one hundred thousand dollars for a project25
undertaken pursuant to an appropriation in the Capital Outlay Act shall require the26
approval of the Joint Legislative Committee on the Budget. In addition, a change27
order for a project undertaken pursuant to this Part shall also be subject to the28
approval of the commissioner of administration. Any change order in excess of fifty29 SB NO. 242
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thousand dollars but less than one hundred thousand dollars shall be submitted to the1
Joint Legislative Committee on the Budget for review but shall not require2
committee approval.3
B. Each change order to a contract which adds an amount of ten percent4
or more of the original contract amount and which additional amount is at least5
ten thousand dollars or all change orders to a contract aggregating to an6
amount of twenty percent or more of the original contract amount and which7
additional amount is at least ten thousand dollars shall be recorded by the8
agency which entered into the contract in the office of the recorder of mortgages9
in the parish where the work is to be done not later than thirty days after the10
date of the change order which requires that the recordation take place. In11
addition, the original contract shall be recorded together with the amendments12
or other revisions if not previously recorded.13
* * *14
§1557.1. Change orders; recordation15
Each change order to a contract which adds an amount of ten percent or16
more of the original contract amount and which additional amount is at least17
ten thousand dollars or all change orders to a contract aggregating to an18
amount of twenty percent or more of the original contract amount and which19
additional amount is at least ten thousand dollars shall be recorded by the20
governmental body which entered into the contract in the office of the recorder21
of mortgages in the parish where the work is to be done or where the entity is22
domiciled not later than thirty days after the date of the change order which 23
requires that the recordation take place. In addition, the original contract shall24
be recorded together with the amendments or other revisions if not previously25
recorded. The provisions of this Section shall not apply to the office of facility26
planning and control, and the office of state purchasing. 27
* * *28
§1767. Appropriation dependency; requirement for affidavit of notice of fee29 SB NO. 242
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disposition1
A. All lease-purchase contracts entered into pursuant to this Chapter shall2
contain an annual appropriation dependency requirement to the effect that renewal3
and continuation of such contract is contingent upon the appropriation of funds to4
fulfill the requirements of the contract and if the legislature, after a diligent and good5
faith effort, fails to appropriate sufficient monies to provide for the continuation of6
a contract, or if such appropriation can not be effected, the contract shall terminate7
in accordance with the terms of the lease on the last day of the last fiscal year for8
which funds were appropriated, provided the equipment is returned to the nonprofit9
lessor or his agent, as provided in the equipment-lease-purchase contract and such10
contract shall not be a long-term debt of the state or the applicable purchasing11
agency. In addition, in such equipment-lease-purchase contracts, the nonprofit lessor12
shall covenant and agree to indemnify and hold the lessee harmless against any loss,13
damage, liability, cost, penalty, or expense, including attorney fees, which is not14
otherwise agreed to by the lessee in the equipment-lease-purchase contract and15
which is incurred and arises upon a failure of the legislature to appropriate funds in16
the manner described above for a continuation of the contract or the exercise of the17
option to purchase the selected equipment.18
B. Notwithstanding any limitation of the applicability of this Part or Chapter19
in any other provision of law, contracts shall be subject to the provisions of R.S.20
38:2196.1 regarding the requirement for an affidavit of notice of fee disposition, if21
applicable.22
Section 4. R.S. 48:251.8 is hereby amended and reenacted to read as follows:23
§251.8. Public contracts; certain provisions invalid; requirement for affidavit of24
notice of fee disposition25
A. The legislature hereby declares null and void and unenforceable as against26
public policy any provision in a department contract which requires either of the27
following:28
(1) That a suit or arbitration proceeding must be brought in a forum or29 SB NO. 242
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jurisdiction outside of this state, instead of being pursued in accordance with the laws1
of this state governing such actions.2
(2) That the agreement must be interpreted according to the laws of another3
jurisdiction.4
B. Notwithstanding any limitation of the applicability of this Part or Chapter5
in any other provision of law, contracts shall be subject to the provisions of R.S.6
38:2196.1 regarding the requirement for an affidavit of notice of fee disposition, if7
applicable.8
Section 5. R.S. 38:2196.1, R.S. 39:200(N) and 1493.1, and Part X of Chapter 17 of9
Subtitle III of Title 39 of the Louisiana Revised Statutes of 1950, consisting of R.S. 39:1758,10
are hereby repealed in their entirety.11
The original instrument was prepared by Jerry J. Guillot. The following
digest, which does not constitute a part of the legislative instrument, was
prepared by Sharon F. Lyles.
DIGEST
Appel (SB 242)
Present law (R.S. 14:141) prohibits the splitting of profits, fees or commissions in certain
instances. Defines "splitting of profits, fees or commissions" as the giving, offering to give,
receiving or offering to receive, directly or indirectly, anything of apparent present or
prospective value by or to a public officer or public employee or to any fund or fiduciary
existing for the benefit of or use by such public officer or employee, when such value is
derived from any agreement or contract to which the state or any subdivision thereof is a
party.
Present law defines "public officer," and "public employee" to apply to any executive,
ministerial, administrative, judicial, or legislative officer, office, employee or position of
authority respectively, of the state or any parish, municipality, district, or other political
subdivision thereof, or of any agency, board, commission, department or institution of said
state, parish, municipality, district, or other political subdivision.
Proposed law clarifies that the prohibition is also applicable to political subdivisions.
Present law provides that there shall be no splitting of profits, fees or commissions, past or
present, derived from the sale of any commodity, goods, services, insurance, or anything of
value to the state or any subdivision thereof from which a public official or employee ,
representing the state in his official capacity in the contract negotiations, receives or offers
to receive a portion of the profits, fees and/or commissions, unless the amount thereof and
the conditions therefor are included in detail in the contract of sale or the insurance contract
and said contract is filed by the public official or employee with the secretary of state at least
10 days prior to execution of said contract. Requires that 10-day filing period be waived in
the event of an emergency in which the filing is not reasonable. Upon the filing, the
secretary of state shall immediately release to the news media the details of such contract
and, upon written request, furnish a copy of such contract to the news media. SB NO. 242
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Proposed law clarifies that the provision also applies to political subdivisions, and that the
contract itself is a public record. Also deletes provisions in present law which authorize
including such profits, fees, and/or commissions in a contract of sale or insurance if the
details of such contracts are filed with the secretary of state 10 days prior to execution
(waived in an emergency) and required to be released to news media. Also specifies that the
contract is a public record.
Present law provides that whoever commits the crime of failure to report the splitting of
profits, fees or commissions, and to contain such fee arrangement in the contract of sale or
in the insurance contract shall upon conviction be fined not more than $1,000 or shall be
imprisoned, with or without hard labor, for not more than two years, or both.
Proposed law changes present law and provides that whoever receives or offers to receive
a portion of profits, fees or commissions shall upon conviction be fined not more than
$10,000 or shall be imprisoned, with or without hard labor, for not more than 10 years, or
both.
Present law (R.S. 38:2196.1) provides that when any person or other entity enters into any
contract awarded without bidding with a state entity or local entity, or any contract with a
local entity exceeding $10,000 awarded with bidding, in which a commission, fee, or other
consideration is paid to the contractor for the contractor to sell to or provide to the state
entity or local entity any commodity, goods, brokerage service or other service of any kind,
insurance, or anything of value, then the full disposition, splitting, or sharing of such
commission, fee, or other consideration shall be disclosed to the state entity or local entity
by the contractor in writing by an affidavit of notice of fee disposition prescribed by the
Board of Ethics notarized as to its authenticity. Requires that the affidavit include the full
value of the commission, fee, or other consideration to be paid, the names of all parties to
receive dispositions, splits, or shares of the commission, fee, or other consideration, and the
signature of the party authorized to commit the entity receiving the commission, fee, or other
consideration to the contract, who shall attest to the truth of the facts set forth in the
affidavit. Requires that the affidavit of notice be attached to and made a part of the contract
for which the commission, fee, or other consideration is paid and shall be recorded in the
public record. Provides that if at any time the disposition, splitting, or sharing of the
commission, fee, or other consideration changes, or the amount of the commission, fee, or
other consideration changes, then a new affidavit reflecting the changes from the first
affidavit shall be prepared, executed, notarized, and recorded by the contractor in the public
record. Provides that if for any reason the information on the recorded affidavit shall be
found to be incorrect, then the contract shall become null and void and all payments of the
commission, fee, or other consideration shall be rebated to the state entity or local entity
which entered into the contract. Provides that in addition, intentional misrepresentation of
the facts on an affidavit shall subject the party attesting to the facts to the penalties provided
for filing or maintaining false public records provided for in R.S. 14:133.
Proposed law repeals present law and all other provisions with similar requirements for other
types of contracts.
Proposed law (R.S. 38:2192) provides that each amendment or other revision to any service
or insurance contract which adds an amount of 10% or more of the original contract amount
and which additional amount is at least $10,000 or all amendments and other revisions to any
service or insurance contract aggregating to an amount of 20% or more of the original
contract amount and which additional amount is at least $10,000 shall be recorded by the
public entity which entered into the contract in the office of the recorder of mortgages in the
parish where the public entity is domiciled not later than 30 days after the date of such
amendment or other revision takes place. Also, proposed law provides that the original
contract shall be recorded together with the amendments or other revisions if not previously
recorded.
Proposed law (R.S. 38:2222) requires that each change order to a public works contract or SB NO. 242
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to a contract for materials and supplies which adds an amount of 10% or more of the original
contract amount and which additional amount is at least $10,000 or all change orders to a
contract aggregating to an amount of 20% or more of the original contract amount and which
additional amount is at least $10,000 shall be recorded by the public entity which entered
into the contract in the office of the recorder of mortgages in the parish where the work is
to be done or if not a public work, where the entity is domiciled, not later than 30 days after
the date of the change order which requires that the recordation take place.
Present law (R.S. 39:126), relative to capital outlay projects, provides that any change order
in excess of $100,000 for a project undertaken pursuant to an appropriation in the Capital
Outlay Act shall require the approval of the Joint Legislative Committee on the Budget.
Provides that, in addition, a change order for a project undertaken pursuant to Capital Outlay
Budget law shall also be subject to the approval of the commissioner of administration.
Requires that any change order in excess of $50,000 but less than $100,000 be submitted to
the Joint Legislative Committee on the Budget for review but shall not require committee
approval.
Proposed law (R.S. 39:126(B)) retains present law and adds requirement that each change
order to a contract for a capital outlay project which adds an amount of 10% or more of the
original contract amount and which additional amount is at least $10,000 or all change
orders to a contract aggregating to an amount of 20% or more of the original contract amount
and which amount is at least $10,000 shall be recorded by the agency which entered into the
contract in the office of the recorder of mortgages in the parish where the work is to be done
not later than 30 days after the date of the change order which requires the recordation to
take place. Also, proposed law provides that the original contract shall be recorded together
with the amendments or other revisions if not previously recorded. Also, proposed law
provides that it shall not apply to the office of facility planning and control and the office of
state purchasing.
Proposed law (R.S. 39:1557.1), relative to the Louisiana Procurement Code, requires each
change order to a contract which adds an amount of 10% or more of the original contract
amount and which additional amount is at least $10,000 or all change orders to a contract
aggregating to an amount of 20% of the original contract amount shall be recorded by the
governmental body which entered into the contract in the office of the recorder of mortgages
in the parish where the work is to be done or where the entity is domiciled not later than 30
days after the date of the change order which requires that such recordation take place. Also,
proposed law provides that the original contract shall be recorded together with the
amendments or other revisions if not previously recorded. Also, proposed law provides that
it shall not apply to the office of facility planning and control and the office of state
purchasing.
Effective August 15, 2011.
(Amends R.S. 14:141, R.S. 39:126 and 1767, and R.S. 48:251.8; adds R.S. 38:2192 and 2222
and R.S. 39:1557.1; repeals R.S. 38:2196, R.S. 39:200(N), 1493.1, and 1758 )
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Transportation,
Highways, and Public Works to the original bill.
1. Deletes provisions in present law regarding inclusion of profits, fees and/or
commissions in detail in contracts of sale or insurance and filing of such
contracts 10 days in advance of execution with the secretary of state and
waiver of such requirement in event of an emergency and requirement for
secretary of state to release details of such contracts to news media
immediately and furnish a copy of such contracts to same upon request,
because the provisions are replaced by proposed law. SB NO. 242
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2. Defines crime as receiving or offering to receive a portion of profits, fees or
commissions.
3. Increases penalty upon conviction to a fine of not more than $10,000 or
imprisonment, with or without hard labor, for not more than 10 years.
4. Specifies that contracts for the sale of commodities, goods, insurance, or
"anything of value" are public records.
5. Adds new law to require that amendments or other revisions to service or
insurance contracts which add an amount equal to 10% or more of the
original contract amount and which additional amount is at least $10,000 or
all amendments and other revisions to such contracts aggregating to an
amount of 20% of the original contract amount and which additional amount
is at least $10,000 shall be recorded by the public entity in the office of the
recorder of mortgages in the parish of the domicile of the public entity not
later than 30 days after date of such amendment or revision and requires
recordation of original contract with said amendments or other revisions if
not previously recorded.
6. Changes value of any change orders that triggers recordation requirement for
public works contracts, contracts for materials and supplies, capital outlay
projects and procurement code contracts to 10% or more of the original
contract amount and which additional amount is at least $10,000 or value of
all change orders to such contracts aggregating to an amount of 20% of the
original contract amount and which additional amount is at least $10,000.
7. Requires recordation of original contracts with change orders, amendments
or other revisions which trigger recordation where such original contract has
not been previously recorded.
8. Provides an exception to the requirement for recordation of change orders,
amendments or other revisions which trigger recordation for the office of
facility planning and control and office of state purchasing.
9. Repeals provisions that required an affidavit of notice of fee disposition
relative to lease-purchase contracts, DOTD contracts, telecommunication
procurement contracts, state professional, personal, consulting, and social
services contracts, and data processing procurement contracts.