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AB # j 3; ,%3& TITLE: CALIFORNIA FALSE CLAIMS ACT DEPT.
MTG. 6 -JgA*5 PROVISIONS CITY 1
DEPT. 7 I I I
RECOMMENDED ACTION:
Introduce Ordinance No. /v.?.3/2 amending Carlsbad Municipal Cc Sections 3.32.025 through 3.32.028 to include provisions E penalties for the filing of false claims, and to Adopt Resolutj
No.q5-1?3 establishing the fee for filing an appeal thereundc
ITEM EXPLANATION
In 1987, the Legislature enacted the California False Claims Ac California Government Code section 12650, et seq. This 1 provides for various penalties when a person knowingly submit: false claim to a public entity for payment or approval. The I permits a public entity to pursue false claim actions on its c behalf or to file an action in Court under the Act when a laws1 is brought by a contractor against the City for payment.
Under Government Code section 12651, a . person knowin!
submitting a false claim can be liable to the City far triple 4 amount of actual damages, civil penalties of up to $10,000 i each false claim submitted, and the cost of the civil action recover the penalties and damages. No speci ic intent to defr: is required, but merely that the contractor submitted the fa:
information in deliberate ignorance or in r ckless disregard the truth or falsity of the information. 1 I Case law following Federal statutory autho ity, has providec precedent for disqualification of an "irres onsible contractc
from bidding on any public work contract f r a period of up five years. 1
This agenda bill seeks to incorporate the prdvisions of the Fa: Claims Act and debarment authority into the Revenue and Final section of the Carlsbad Municipal Code to put contractors
notice of potential remedies of the City in the event that tl make fraudulent claims regarding a public c ntract. I 1 FISCAL IMPACT
The fiscal impact will vary on a case-by case basis but I reduce submission of future false claims in an unknown amouni i
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EXHIBITS
I. Ordinance. c
2. Resolution No. q5-174 .
3 s Exhibit l8Al1, proposed revision to the City of Carlsbac Standard Public Works Contract, gi ing notice to 1 contractor of the provisions of th State Claims j
potential for disqualification from bi ding.
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RESOLUTION NO, 95-173
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, ESTABLISHING A FEE
FOR AN APPEAL OF CONTRACTOR DISQUALIFICATION,
WHEREAS, the City Council has determined it to bt
public interest to establish a fee for the purpose of fi
appeal of a decision of the City Manager, or his desig
disqualify a contractor, subcontractor or consultant from
on City contracts,
NOW, THEREFORE, BE IT RESOLVED by the City Counci
City of Carlsbad, California, as follows!
1. That the above recitation is true and correc
2. That the City Council of the City of Carlsbac
sets an appeal fee of $120 to apply to any appeal filed pur:
Carlsbad Municipal Code Section 3.32.028 of a deci:
disqualification from bidding on City contracts.
3. The fees imposed by this resolution shall
effective immediately upon its adoption.
PASSED, APPROVED AND ADOPTED at a Regular Meetin
City Council of the City of Carlsbad on the 20th day of -
1995 by the following vote, to wit:
AYES: Council Members Lewis, Nygaard, Kulchin, Finnila
NOES: None
ABSENT : None
ATTEST:
ALETHA L. RAUTENKRANZ, City Cterk
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ORDINANCE NO. NS-313
.AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, AMENDING TITLE 3,
CHAPTER 3.32 OF THE CARLSBAD MUNICIPAL CODE
BY THE ADDITION OF VARIOUS SECTIONS TO INCLUDE
THE CALIFORNIA FALSE CLAIMS ACT PROVISIONS.
The City Council of the City of Carlsbad, Califc
does ordain as follows:
SECTION 1: That Title 3, Chapter 3.32 of the Cax
Municipal Code is amended by the addition of section 3 32 a(
read as follows:
"3.32.025. Submittincr False Claims: Monetary Penalties. (a) Any contractor, subcontractor or consultar commits any of the following acts shall be liable to the for three times the amount of damages which the City SUE because of the act of that contractor, subcontract<
consultant. A contractor, subcontractor or consultan commits any of the following acts shall. also be liable t City for the costs, including attorney's fees, of a civil 2 brought to recover any of those penalties or damages, and r
liable to the City for a civil penalty of up to ten thc
(10,000) dollars for each false claim:
(1) Knowingly presents or causes to be pres to an officer or employee of the City a false claim or rc
for payment or approval;
. (2) Knowingly makes, uses, or causes to bt or used a false record or statement to get a false claim pz approved by the City;
(3) Conspires to defraud the City by gett false claim allowed or paid by the City;
(4) Knowingly makes, uses, or causes to bt
or used a false record or statement to conceal, avoi decrease.an obligation to pay or transmit money or proper the City;
(5) Is a beneficiary of an inadvc submission of a.false claim to the City, subsequently disc the falsity of the claim, and fails to disclose the false to the City within a reasonable time after discovery o false claim.
(b) This Section does not apply to any contrc involving an amount of less than five hundred (500) dollz
one or more false -claims .submitted by the same contre subcontractor or consultant in violation of this Section, (c) Every contract performed at the expense c
city of Carlsbad, or the costs of which are paid for c monies deposited in the treasury of.said City, whether di~ awarded or indirectly by or under subcontract, subpartne~ day labor, station work, piece work, or any other arranc whatsoever, shall contain a clause reciting the provisic
value. For purposes of the Subdivision, 'controversy' meal
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Subdivision (a) .
(d) Liability under this Section shall be joint several for. any act committed by two or more persons,
(e) For purposes of this Section, the tt
\contractor' and 'subcontractor' shall have the same definit: as found in Section 4113 of the Public Contract Code, The 1
\consultant' shall be broadly defined to include any persol
entity that provides services to the City. (f) For purposes of this Section, 'claim' incli
any request or demand for money, property, or services madc any employee, officer, or agent of the City, or to contractor, subcontractor, grantee, or other recipient, whei under contract or not, if any portion of the money, property services requested or demanded issued from, or was provided the City. (4) For purposes-of this Section, \knowingly' mc
that a contractor, subcontractor or consultant, with respec' information, does any of the following:
(1) Has actual knowledge of the informatiol
(2) Acts in deliberate ignorance of the trut falsity of the information;
(3) Acts in reckless disregard of the trutl
falsity of the information. Proof of specific intent is required and reliance on the claim by the City is also required. It
SECTION 2: That Title 3, Chapter 3.32 of the Carl:
Municipal Code is amended by the addition of section 3.32.02
read as follows:
"3.32.026. Disqualification of Irresponsible
Contractors: Effect of Disqualification. Any contractor consultant who fails to comply with the terms of its cont: with the City,. or contractor, subcontractor or consultant violates any provision in Section 3.32.025, or who fails
abide by any rules and/or regulations adopted pursuant Chapter 3.32, may be declared an irresponsible bidder by
City Manager for the public work or improvement at issue. 1 such determination, the contractor, subcontractor or consul (or any other entity with substantially the same offict
directors, owners or principals) shall not be permitted to as a contractor, subcontractor or consultant on any public 1
or improvement for the City of Carlsbad for a period of u]
five years as determined by the City Manager. The contrac. any such person or entity may, at the option of the ( Manager, be canceled and in the event of such cancellation recovery shall be had thereon by the contractor, subcontrac. or consultant. I#
" SECTION 3:. That Title 3, Chapter 3.32 of the Carl,
Municipal Code is amended by the addition of section 3.32.02
~ read as follows:
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"3.32.027 Conduct Remired of Remonsible Contractors. The covenant of good faith and fair dealinc contained I in every city contract, and contract
subcontractors and consultants shall at all times deal in 1 faith with the City and shall submit claims, requests equitable adjustments, requests for change orders, requests contract modifications or requests of any kind seeking incre compensation on a City contract only upon,a good faith, ho
evaluation ' of the underlying circumstances and a good fa honest calculation af the amount sought. Violation of Section subjects the contractor, subcontractor or consultan ,the penalties set forth in Chapter 3.32, inclu disqualification. The act of knowingly submitting a fa untrue or misleading claim, request for equitable adjustm request for contract modification, request for change orde request of any kind seeking increased compensation is suffic of itself to subject the contractor, subcontractor or consul to the penalties stated in Chapter 3.32, regardless of
City's reliance on, or response to the submission."
SECTION 4: That Title 3, Chapter 3.32 of the Carl
Municipal Code is amended by the addition of section 3-32.02
read as follows:
"3.32.028 Procedures €or Disqualification of Irresponsible Contractors. When charges are brought pursuan Sections 3.32.025, 3.32.026, or 3.32.027 of Chapter 3.32, contractor, subcontractor or consultant shall be given notic the charges and of all evidence supporting such charges. Contractor, subcontractor or consultant or its attorney shal entitled to of fer rebuttal evidence and any other evidencl support of its .position. The City Manager shall condut hearing within 30 days after receipt of the notice by
contractor, subcontractor or consultant, where the charges all evidence shall be presented, In the alternative, the Manager may,appoint a hearing officer to conduct such a hea
Manager who shall render the final decision. The City Atto
may, in its discretion, appoint outside counsel to prosecute charges.
A decision of . the City Manager making a finding irresponsibility is final and effective ten calendar days a the hearing unless within such ten-day period the contrac subcontractor or consultant files a written appeal with the Council. The written appeal shall specifically state reason( s) for the appeal and the manner in which the decisio the City Manager is in error. Fees for filing an appeal u this section shall be established by resolution of the Council. '
The decision of the City Manager shall be affirmed by the Council unless the appellant shows by a preponderance of
evidence that the decision of the City Manager is in err0
and, make written findings of fact to be submitted to the
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inconsistent with State law. The appeal hearing’ shall be within thirty days after the date of filing the appeal. W ten days following the conclusion of the hearing, the Council shall render its decision on. the appeal. The dec
of the City Council is final.
EFFECTIVE DATE: This ordinance shall be effe
thirty days after.its adoption; and the city clerk shall ce
the adoption of this ordinance and cause it to be publish
least once in a newspaper of.genera1 circulation in the Ci
Carlsbad within fifteen days after its adoption.
INTRODUCED AND FIRST READ at a regular meeting c
Carlsbad City Council on the day of
and thereafter
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PASSED AND ADOPTED -at a regular meeting of the
Council of the City of Carlsbad on the day of
1995, by the following vote, to wit:
AYES:
NOES :
ABSENT :
APPROVED AS TO FORM AND LEGALITY
RONALD R. BALL, City Attorney
CLAUDE A. LEWIS, Mayor
ATTEST:
ALETHA L. RAUTENKRANZ, City Clerk
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EXHIBIT "A"
REVISION TO TEE STANDARD CONTRACT - PUBLIC WORKS
On page 22 add the following language to Paragraph 13:
(A) Contractor hereby agrees that any contract claim submitted to the City must be asserted as part of the contract procet as set forth in this agreement and not in anticipation of
litigation or in conjunction with litigation.
(B) Contractor acknowledges that if a false claim is submitted to the City, it may be considered fraud and the contractor may be subject to criminal prosecution.
(C) Contractor acknowledges that California Government Code sections 12650 et seq., the False Claims Act, provides for civil penalties where a person knowlingly submits a false claim to a public entity. These provisions include false claims made with deliberate ignorance of the false information or in reckless disregard of the truth or falsi' of the information.
(D) If the City of Carlsbad seeks to recover penalties pursuan- to the False Claims Act, it is entitled to recover its litigation costs, including attorney's fees.
(E) Contractor hereby acknowledges that the filing of a false claim may subject the contractor to an administrative
debarment proceeding wherein the contractor may be prevent(
from further bidding on public contracts for a period of q
to five years.
(F) The provisions of Carlsbad Municipal Code sections 3.32.02
3.32.026, 3.32.027 and 3.32.028 pertaining to false claims are incorporated herein by reference.