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Affidavit of Notice of Fee Disposition

ACT No. 868 Regular Session, 2010 (SENATE BILL NO. 71) now requires that when any person or entity enters into any contract exceeding ten thousand dollars ($10,000) with any local entity (whether or not by public bid), or any contract with any state entity done without 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 by the contractor in writing by an affidavit as developed by the Board of Ethics.

The effective date of this new statute is July 1, 2010. However, this legislation could not be enforced until the Board of Ethics issued its form “Affidavit.”  This is similar to the situation raised by the 2008 Act No. 727 (HB 563) and Act No. 726 (HB 558) which required the use of a new “Uniform Public Bid Form” which could not be enforced until Facility Planning and Control promulgated the form on August 20, 2009.

The Board of Ethics wasted no time when it issued such a form “Affidavit” by document dated July 2010 (attached).

Thus, the Act 868 is now fully in effect.

WHO IS AFFECTED

  1. “State entity" means the state, or any agency, department, office, or other instrumentality of the state.

  2. "Local entity" means any political subdivision of the state, including those entities with home rule charters which were existing or adopted when the Constitution of Louisiana of 1974 was adopted, or any agency, department, office, or other instrumentality of such political subdivision.

  3. Any person or entity that contracts with any state or local entity awarded without bidding.

  4. Any person or entity that contracts with a local entity awarded through a bidding process where the amount of the contract exceeds ten thousand dollars ($10,000).

THUS, the following are subject to the new legislation:

  • all service contracts of any kind let without “bidding” (architects, accounting, engineers, insurance, attorneys, building maintenance, trash pickup, street cleaning, weed control, etc.), and every such service contract with any political subdivision where the contract value exceeds $10,000;

  • all contracts with the state let through an RFP process instead of “bidding”:

  • all construction contracts with any political subdivision in excess of $10,000;

  • all procurement contracts under the Louisiana Procurement Code, Data Processing Procurement, lease-purchase contracts, or any other type of procurement of any nature or kind (apples to zebras) awarded without bidding with a state entity or local entity; and

  • all procurement contracts, of any nature or kind, awarded with bidding with a local entity in excess of $10,000.

WHAT MUST BE DONE TO COMPLY

  1. The affidavit of notice of fee disposition shall be on the form prescribed by the Board of Ethics.

  2. The affidavit shall be notarized as to its authenticity.

  3. The affidavit of notice of fee disposition shall 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 to receive the commission, fee, or other consideration to the contract, who shall attest to the truth of the facts set forth in the affidavit.

  4. The affidavit of notice of fee disposition shall 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.

  5. 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.

THUS, the new legislation requires:

  • the execution of the affidavit on the prescribed form (do not use substitute or altered forms)

  • the affidavit must ne notarized and signed by the person or an authorized representative of the entity receiving the money under the contract (suggest signature of registered officer of corporation or attach resolution from entity authorizing the person signing);

  • if joint venture or un-registered partnership, then all joint venturers/members should execute a separate affidavit;

  • the notice of fee disposition affidavit shall be attached to and made a part of the contract;

  • the affidavit must be recorded (presumably with the contract in the Mortgage Records of the Parish  where the public entity is located),

Comment: The Legislature did not address when the affidavit must be submitted. Best practice suggests that, in the absence of any specific instruction from the public entity, either set forth in the bidding documents or otherwise, the affidavit should be ready at the time the contract is signed so that the affidavit can be recorded before the contractor commences performance.

CONSEQUENCES OF NONCOMPLIANCE

  1. Any 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 which states that such act constitutes a “crime of filing false public records” for which the punishment is imprisonment “for not more than five years with or without hard labor or” a fine of “not more than five thousand dollars, or both.”

  2. Newly enacted La. R.S. 38:2196.1 uses the term “shall” to denote mandatory compliance and, therefore, presumably the failure to comply would render the contract null and void.  However, the Legislature chose to place this affidavit requirement in Part I rather than in Part II of Title 38 - Public Contracts, Works and Improvements.  Part I does not contain the “null and void” language found in La. R.S. 38:2220 which specifically states: “Any purchase of materials or supplies, or any contract entered into for the construction of public works, contrary to the provisions of this Part shall be null and void.”

Forms:

Affidavit of Notice of Fee Disposition

Schedule A: Parties to Receive Dispositions, Splits, or Shares of the Commission, Fee, or Other Consideration

Affidavit of Notice of Fee Disposition

ACT No. 868 Regular Session, 2010 (SENATE BILL NO. 71) now requires that when any person or entity enters into any contract exceeding ten thousand dollars ($10,000) with any local entity (whether or not by public bid), or any contract with any state entity done without 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 by the contractor in writing by an affidavit as developed by the Board of Ethics.

The effective date of this new statute is July 1, 2010. However, this legislation could not be enforced until the Board of Ethics issued its form “Affidavit.”  This is similar to the situation raised by the 2008 Act No. 727 (HB 563) and Act No. 726 (HB 558) which required the use of a new “Uniform Public Bid Form” which could not be enforced until Facility Planning and Control promulgated the form on August 20, 2009.

The Board of Ethics wasted no time when it issued such a form “Affidavit” by document dated July 2010 (attached).

Thus, the Act 868 is now fully in effect.

WHO IS AFFECTED

  1. “State entity" means the state, or any agency, department, office, or other instrumentality of the state.

  2. "Local entity" means any political subdivision of the state, including those entities with home rule charters which were existing or adopted when the Constitution of Louisiana of 1974 was adopted, or any agency, department, office, or other instrumentality of such political subdivision.

  3. Any person or entity that contracts with any state or local entity awarded without bidding.

  4. Any person or entity that contracts with a local entity awarded through a bidding process where the amount of the contract exceeds ten thousand dollars ($10,000).

THUS, the following are subject to the new legislation:

  • all service contracts of any kind let without “bidding” (architects, accounting, engineers, insurance, attorneys, building maintenance, trash pickup, street cleaning, weed control, etc.), and every such service contract with any political subdivision where the contract value exceeds $10,000;

  • all contracts with the state let through an RFP process instead of “bidding”:

  • all construction contracts with any political subdivision in excess of $10,000;

  • all procurement contracts under the Louisiana Procurement Code, Data Processing Procurement, lease-purchase contracts, or any other type of procurement of any nature or kind (apples to zebras) awarded without bidding with a state entity or local entity; and

  • all procurement contracts, of any nature or kind, awarded with bidding with a local entity in excess of $10,000.

WHAT MUST BE DONE TO COMPLY

  1. The affidavit of notice of fee disposition shall be on the form prescribed by the Board of Ethics.

  2. The affidavit shall be notarized as to its authenticity.

  3. The affidavit of notice of fee disposition shall 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 to receive the commission, fee, or other consideration to the contract, who shall attest to the truth of the facts set forth in the affidavit.

  4. The affidavit of notice of fee disposition shall 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.

  5. 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.

THUS, the new legislation requires:

  • the execution of the affidavit on the prescribed form (do not use substitute or altered forms)

  • the affidavit must ne notarized and signed by the person or an authorized representative of the entity receiving the money under the contract (suggest signature of registered officer of corporation or attach resolution from entity authorizing the person signing);

  • if joint venture or un-registered partnership, then all joint venturers/members should execute a separate affidavit;

  • the notice of fee disposition affidavit shall be attached to and made a part of the contract;

  • the affidavit must be recorded (presumably with the contract in the Mortgage Records of the Parish  where the public entity is located),

Comment: The Legislature did not address when the affidavit must be submitted. Best practice suggests that, in the absence of any specific instruction from the public entity, either set forth in the bidding documents or otherwise, the affidavit should be ready at the time the contract is signed so that the affidavit can be recorded before the contractor commences performance.

CONSEQUENCES OF NONCOMPLIANCE

  1. Any 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 which states that such act constitutes a “crime of filing false public records” for which the punishment is imprisonment “for not more than five years with or without hard labor or” a fine of “not more than five thousand dollars, or both.”

  2. Newly enacted La. R.S. 38:2196.1 uses the term “shall” to denote mandatory compliance and, therefore, presumably the failure to comply would render the contract null and void.  However, the Legislature chose to place this affidavit requirement in Part I rather than in Part II of Title 38 - Public Contracts, Works and Improvements.  Part I does not contain the “null and void” language found in La. R.S. 38:2220 which specifically states: “Any purchase of materials or supplies, or any contract entered into for the construction of public works, contrary to the provisions of this Part shall be null and void.”

Forms:

Affidavit of Notice of Fee Disposition

Schedule A: Parties to Receive Dispositions, Splits, or Shares of the Commission, Fee, or Other Consideration

Affidavit of Notice of Fee Disposition

ACT No. 868 Regular Session, 2010 (SENATE BILL NO. 71) now requires that when any person or entity enters into any contract exceeding ten thousand dollars ($10,000) with any local entity (whether or not by public bid), or any contract with any state entity done without 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 by the contractor in writing by an affidavit as developed by the Board of Ethics.

The effective date of this new statute is July 1, 2010. However, this legislation could not be enforced until the Board of Ethics issued its form “Affidavit.”  This is similar to the situation raised by the 2008 Act No. 727 (HB 563) and Act No. 726 (HB 558) which required the use of a new “Uniform Public Bid Form” which could not be enforced until Facility Planning and Control promulgated the form on August 20, 2009.

The Board of Ethics wasted no time when it issued such a form “Affidavit” by document dated July 2010 (attached).

Thus, the Act 868 is now fully in effect.

WHO IS AFFECTED

  1. “State entity" means the state, or any agency, department, office, or other instrumentality of the state.

  2. "Local entity" means any political subdivision of the state, including those entities with home rule charters which were existing or adopted when the Constitution of Louisiana of 1974 was adopted, or any agency, department, office, or other instrumentality of such political subdivision.

  3. Any person or entity that contracts with any state or local entity awarded without bidding.

  4. Any person or entity that contracts with a local entity awarded through a bidding process where the amount of the contract exceeds ten thousand dollars ($10,000).

THUS, the following are subject to the new legislation:

  • all service contracts of any kind let without “bidding” (architects, accounting, engineers, insurance, attorneys, building maintenance, trash pickup, street cleaning, weed control, etc.), and every such service contract with any political subdivision where the contract value exceeds $10,000;

  • all contracts with the state let through an RFP process instead of “bidding”:

  • all construction contracts with any political subdivision in excess of $10,000;

  • all procurement contracts under the Louisiana Procurement Code, Data Processing Procurement, lease-purchase contracts, or any other type of procurement of any nature or kind (apples to zebras) awarded without bidding with a state entity or local entity; and

  • all procurement contracts, of any nature or kind, awarded with bidding with a local entity in excess of $10,000.

WHAT MUST BE DONE TO COMPLY

  1. The affidavit of notice of fee disposition shall be on the form prescribed by the Board of Ethics.

  2. The affidavit shall be notarized as to its authenticity.

  3. The affidavit of notice of fee disposition shall 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 to receive the commission, fee, or other consideration to the contract, who shall attest to the truth of the facts set forth in the affidavit.

  4. The affidavit of notice of fee disposition shall 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.

  5. 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.

THUS, the new legislation requires:

  • the execution of the affidavit on the prescribed form (do not use substitute or altered forms)

  • the affidavit must ne notarized and signed by the person or an authorized representative of the entity receiving the money under the contract (suggest signature of registered officer of corporation or attach resolution from entity authorizing the person signing);

  • if joint venture or un-registered partnership, then all joint venturers/members should execute a separate affidavit;

  • the notice of fee disposition affidavit shall be attached to and made a part of the contract;

  • the affidavit must be recorded (presumably with the contract in the Mortgage Records of the Parish  where the public entity is located),

Comment: The Legislature did not address when the affidavit must be submitted. Best practice suggests that, in the absence of any specific instruction from the public entity, either set forth in the bidding documents or otherwise, the affidavit should be ready at the time the contract is signed so that the affidavit can be recorded before the contractor commences performance.

CONSEQUENCES OF NONCOMPLIANCE

  1. Any 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 which states that such act constitutes a “crime of filing false public records” for which the punishment is imprisonment “for not more than five years with or without hard labor or” a fine of “not more than five thousand dollars, or both.”

  2. Newly enacted La. R.S. 38:2196.1 uses the term “shall” to denote mandatory compliance and, therefore, presumably the failure to comply would render the contract null and void.  However, the Legislature chose to place this affidavit requirement in Part I rather than in Part II of Title 38 - Public Contracts, Works and Improvements.  Part I does not contain the “null and void” language found in La. R.S. 38:2220 which specifically states: “Any purchase of materials or supplies, or any contract entered into for the construction of public works, contrary to the provisions of this Part shall be null and void.”

Forms:

Affidavit of Notice of Fee Disposition

Schedule A: Parties to Receive Dispositions, Splits, or Shares of the Commission, Fee, or Other Consideration

Affidavit of Notice of Fee Disposition

ACT No. 868 Regular Session, 2010 (SENATE BILL NO. 71) now requires that when any person or entity enters into any contract exceeding ten thousand dollars ($10,000) with any local entity (whether or not by public bid), or any contract with any state entity done without 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 by the contractor in writing by an affidavit as developed by the Board of Ethics.

The effective date of this new statute is July 1, 2010. However, this legislation could not be enforced until the Board of Ethics issued its form “Affidavit.”  This is similar to the situation raised by the 2008 Act No. 727 (HB 563) and Act No. 726 (HB 558) which required the use of a new “Uniform Public Bid Form” which could not be enforced until Facility Planning and Control promulgated the form on August 20, 2009.

The Board of Ethics wasted no time when it issued such a form “Affidavit” by document dated July 2010 (attached).

Thus, the Act 868 is now fully in effect.

WHO IS AFFECTED

  1. “State entity" means the state, or any agency, department, office, or other instrumentality of the state.

  2. "Local entity" means any political subdivision of the state, including those entities with home rule charters which were existing or adopted when the Constitution of Louisiana of 1974 was adopted, or any agency, department, office, or other instrumentality of such political subdivision.

  3. Any person or entity that contracts with any state or local entity awarded without bidding.

  4. Any person or entity that contracts with a local entity awarded through a bidding process where the amount of the contract exceeds ten thousand dollars ($10,000).

THUS, the following are subject to the new legislation:

  • all service contracts of any kind let without “bidding” (architects, accounting, engineers, insurance, attorneys, building maintenance, trash pickup, street cleaning, weed control, etc.), and every such service contract with any political subdivision where the contract value exceeds $10,000;

  • all contracts with the state let through an RFP process instead of “bidding”:

  • all construction contracts with any political subdivision in excess of $10,000;

  • all procurement contracts under the Louisiana Procurement Code, Data Processing Procurement, lease-purchase contracts, or any other type of procurement of any nature or kind (apples to zebras) awarded without bidding with a state entity or local entity; and

  • all procurement contracts, of any nature or kind, awarded with bidding with a local entity in excess of $10,000.

WHAT MUST BE DONE TO COMPLY

  1. The affidavit of notice of fee disposition shall be on the form prescribed by the Board of Ethics.

  2. The affidavit shall be notarized as to its authenticity.

  3. The affidavit of notice of fee disposition shall 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 to receive the commission, fee, or other consideration to the contract, who shall attest to the truth of the facts set forth in the affidavit.

  4. The affidavit of notice of fee disposition shall 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.

  5. 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.

THUS, the new legislation requires:

  • the execution of the affidavit on the prescribed form (do not use substitute or altered forms)

  • the affidavit must ne notarized and signed by the person or an authorized representative of the entity receiving the money under the contract (suggest signature of registered officer of corporation or attach resolution from entity authorizing the person signing);

  • if joint venture or un-registered partnership, then all joint venturers/members should execute a separate affidavit;

  • the notice of fee disposition affidavit shall be attached to and made a part of the contract;

  • the affidavit must be recorded (presumably with the contract in the Mortgage Records of the Parish  where the public entity is located),

Comment: The Legislature did not address when the affidavit must be submitted. Best practice suggests that, in the absence of any specific instruction from the public entity, either set forth in the bidding documents or otherwise, the affidavit should be ready at the time the contract is signed so that the affidavit can be recorded before the contractor commences performance.

CONSEQUENCES OF NONCOMPLIANCE

  1. Any 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 which states that such act constitutes a “crime of filing false public records” for which the punishment is imprisonment “for not more than five years with or without hard labor or” a fine of “not more than five thousand dollars, or both.”

  2. Newly enacted La. R.S. 38:2196.1 uses the term “shall” to denote mandatory compliance and, therefore, presumably the failure to comply would render the contract null and void.  However, the Legislature chose to place this affidavit requirement in Part I rather than in Part II of Title 38 - Public Contracts, Works and Improvements.  Part I does not contain the “null and void” language found in La. R.S. 38:2220 which specifically states: “Any purchase of materials or supplies, or any contract entered into for the construction of public works, contrary to the provisions of this Part shall be null and void.”

Forms:

Affidavit of Notice of Fee Disposition

Schedule A: Parties to Receive Dispositions, Splits, or Shares of the Commission, Fee, or Other Consideration

Affidavit of Notice of Fee Disposition

ACT No. 868 Regular Session, 2010 (SENATE BILL NO. 71) now requires that when any person or entity enters into any contract exceeding ten thousand dollars ($10,000) with any local entity (whether or not by public bid), or any contract with any state entity done without 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 by the contractor in writing by an affidavit as developed by the Board of Ethics.

The effective date of this new statute is July 1, 2010. However, this legislation could not be enforced until the Board of Ethics issued its form “Affidavit.”  This is similar to the situation raised by the 2008 Act No. 727 (HB 563) and Act No. 726 (HB 558) which required the use of a new “Uniform Public Bid Form” which could not be enforced until Facility Planning and Control promulgated the form on August 20, 2009.

The Board of Ethics wasted no time when it issued such a form “Affidavit” by document dated July 2010 (attached).

Thus, the Act 868 is now fully in effect.

WHO IS AFFECTED

  1. “State entity" means the state, or any agency, department, office, or other instrumentality of the state.

  2. "Local entity" means any political subdivision of the state, including those entities with home rule charters which were existing or adopted when the Constitution of Louisiana of 1974 was adopted, or any agency, department, office, or other instrumentality of such political subdivision.

  3. Any person or entity that contracts with any state or local entity awarded without bidding.

  4. Any person or entity that contracts with a local entity awarded through a bidding process where the amount of the contract exceeds ten thousand dollars ($10,000).

THUS, the following are subject to the new legislation:

  • all service contracts of any kind let without “bidding” (architects, accounting, engineers, insurance, attorneys, building maintenance, trash pickup, street cleaning, weed control, etc.), and every such service contract with any political subdivision where the contract value exceeds $10,000;

  • all contracts with the state let through an RFP process instead of “bidding”:

  • all construction contracts with any political subdivision in excess of $10,000;

  • all procurement contracts under the Louisiana Procurement Code, Data Processing Procurement, lease-purchase contracts, or any other type of procurement of any nature or kind (apples to zebras) awarded without bidding with a state entity or local entity; and

  • all procurement contracts, of any nature or kind, awarded with bidding with a local entity in excess of $10,000.

WHAT MUST BE DONE TO COMPLY

  1. The affidavit of notice of fee disposition shall be on the form prescribed by the Board of Ethics.

  2. The affidavit shall be notarized as to its authenticity.

  3. The affidavit of notice of fee disposition shall 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 to receive the commission, fee, or other consideration to the contract, who shall attest to the truth of the facts set forth in the affidavit.

  4. The affidavit of notice of fee disposition shall 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.

  5. 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.

THUS, the new legislation requires:

  • the execution of the affidavit on the prescribed form (do not use substitute or altered forms)

  • the affidavit must ne notarized and signed by the person or an authorized representative of the entity receiving the money under the contract (suggest signature of registered officer of corporation or attach resolution from entity authorizing the person signing);

  • if joint venture or un-registered partnership, then all joint venturers/members should execute a separate affidavit;

  • the notice of fee disposition affidavit shall be attached to and made a part of the contract;

  • the affidavit must be recorded (presumably with the contract in the Mortgage Records of the Parish  where the public entity is located),

Comment: The Legislature did not address when the affidavit must be submitted. Best practice suggests that, in the absence of any specific instruction from the public entity, either set forth in the bidding documents or otherwise, the affidavit should be ready at the time the contract is signed so that the affidavit can be recorded before the contractor commences performance.

CONSEQUENCES OF NONCOMPLIANCE

  1. Any 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 which states that such act constitutes a “crime of filing false public records” for which the punishment is imprisonment “for not more than five years with or without hard labor or” a fine of “not more than five thousand dollars, or both.”

  2. Newly enacted La. R.S. 38:2196.1 uses the term “shall” to denote mandatory compliance and, therefore, presumably the failure to comply would render the contract null and void.  However, the Legislature chose to place this affidavit requirement in Part I rather than in Part II of Title 38 - Public Contracts, Works and Improvements.  Part I does not contain the “null and void” language found in La. R.S. 38:2220 which specifically states: “Any purchase of materials or supplies, or any contract entered into for the construction of public works, contrary to the provisions of this Part shall be null and void.”

Forms:

Affidavit of Notice of Fee Disposition

Schedule A: Parties to Receive Dispositions, Splits, or Shares of the Commission, Fee, or Other Consideration

Affidavit of Notice of Fee Disposition

ACT No. 868 Regular Session, 2010 (SENATE BILL NO. 71) now requires that when any person or entity enters into any contract exceeding ten thousand dollars ($10,000) with any local entity (whether or not by public bid), or any contract with any state entity done without 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 by the contractor in writing by an affidavit as developed by the Board of Ethics.

The effective date of this new statute is July 1, 2010. However, this legislation could not be enforced until the Board of Ethics issued its form “Affidavit.”  This is similar to the situation raised by the 2008 Act No. 727 (HB 563) and Act No. 726 (HB 558) which required the use of a new “Uniform Public Bid Form” which could not be enforced until Facility Planning and Control promulgated the form on August 20, 2009.

The Board of Ethics wasted no time when it issued such a form “Affidavit” by document dated July 2010 (attached).

Thus, the Act 868 is now fully in effect.

WHO IS AFFECTED

  1. “State entity" means the state, or any agency, department, office, or other instrumentality of the state.

  2. "Local entity" means any political subdivision of the state, including those entities with home rule charters which were existing or adopted when the Constitution of Louisiana of 1974 was adopted, or any agency, department, office, or other instrumentality of such political subdivision.

  3. Any person or entity that contracts with any state or local entity awarded without bidding.

  4. Any person or entity that contracts with a local entity awarded through a bidding process where the amount of the contract exceeds ten thousand dollars ($10,000).

THUS, the following are subject to the new legislation:

  • all service contracts of any kind let without “bidding” (architects, accounting, engineers, insurance, attorneys, building maintenance, trash pickup, street cleaning, weed control, etc.), and every such service contract with any political subdivision where the contract value exceeds $10,000;

  • all contracts with the state let through an RFP process instead of “bidding”:

  • all construction contracts with any political subdivision in excess of $10,000;

  • all procurement contracts under the Louisiana Procurement Code, Data Processing Procurement, lease-purchase contracts, or any other type of procurement of any nature or kind (apples to zebras) awarded without bidding with a state entity or local entity; and

  • all procurement contracts, of any nature or kind, awarded with bidding with a local entity in excess of $10,000.

WHAT MUST BE DONE TO COMPLY

  1. The affidavit of notice of fee disposition shall be on the form prescribed by the Board of Ethics.

  2. The affidavit shall be notarized as to its authenticity.

  3. The affidavit of notice of fee disposition shall 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 to receive the commission, fee, or other consideration to the contract, who shall attest to the truth of the facts set forth in the affidavit.

  4. The affidavit of notice of fee disposition shall 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.

  5. 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.

THUS, the new legislation requires:

  • the execution of the affidavit on the prescribed form (do not use substitute or altered forms)

  • the affidavit must ne notarized and signed by the person or an authorized representative of the entity receiving the money under the contract (suggest signature of registered officer of corporation or attach resolution from entity authorizing the person signing);

  • if joint venture or un-registered partnership, then all joint venturers/members should execute a separate affidavit;

  • the notice of fee disposition affidavit shall be attached to and made a part of the contract;

  • the affidavit must be recorded (presumably with the contract in the Mortgage Records of the Parish  where the public entity is located),

Comment: The Legislature did not address when the affidavit must be submitted. Best practice suggests that, in the absence of any specific instruction from the public entity, either set forth in the bidding documents or otherwise, the affidavit should be ready at the time the contract is signed so that the affidavit can be recorded before the contractor commences performance.

CONSEQUENCES OF NONCOMPLIANCE

  1. Any 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 which states that such act constitutes a “crime of filing false public records” for which the punishment is imprisonment “for not more than five years with or without hard labor or” a fine of “not more than five thousand dollars, or both.”

  2. Newly enacted La. R.S. 38:2196.1 uses the term “shall” to denote mandatory compliance and, therefore, presumably the failure to comply would render the contract null and void.  However, the Legislature chose to place this affidavit requirement in Part I rather than in Part II of Title 38 - Public Contracts, Works and Improvements.  Part I does not contain the “null and void” language found in La. R.S. 38:2220 which specifically states: “Any purchase of materials or supplies, or any contract entered into for the construction of public works, contrary to the provisions of this Part shall be null and void.”

Forms:

Affidavit of Notice of Fee Disposition

Schedule A: Parties to Receive Dispositions, Splits, or Shares of the Commission, Fee, or Other Consideration

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