State Activism Through Contracting

While I was rooting around in hotel agreements, the following provisions caught my eye.

First Example

This was in a contract between a hotel and some instrumentality of Tennessee state government:

The HOTEL certifies, under penalty of perjury, that to the best of its knowledge and belief the HOTEL is not on the list created pursuant to Tenn. Code Ann. § 12-12-106 (Iran Divestment Act). The HOTEL further certifies that it shall not utilize any subcontractor that is on the list created pursuant to Tenn. Code Ann. § 12-12-106.

The statute in question says that anyone who is on the state’s list of persons engaging in investment activities in Iran is ineligible to contract with the state, and that if the state has entered into a contract with any such person, the state must terminate that contract.

Because the list is publicly available, whichever state entity is signing a contract with a hotel would be able to check for itself whether the hotel is on the list, so I’m not sure the first sentence is necessary. Mind you, the idea of a hotel engaging in investment activities in Iran is preposterous. The statute doesn’t attempt to address investment by affiliates.

The second sentence goes beyond what the statute requires, so someone must have felt particularly strongly about this issue.

Second Example

This was in the same contract:

In compliance with the requirements of Tenn. Code Ann. § 12-3-309, for any contract for goods or services purchased by [government agency], HOTEL hereby attests that it shall not knowingly utilize the services of an illegal immigrant in the performances of this Agreement and shall not knowingly utilize the services of any subcontractor who will utilize the services of an illegal immigrant in the United States in the performance of the Agreement.

That’s because the statute in question says the following:

After January 1, 2007, no person may enter into a contract to supply goods or services to a state governmental entity without first attesting in writing that the person will not knowingly utilize the services of illegal immigrants in the performance of the contract, and will not knowingly utilize the services of any subcontractor who will utilize the services of illegal immigrants in the performance of the contract.

Third Example

This was in another hotel agreement:

Pursuant to Section 231.006, Texas Family Code, Hotel certifies that it is not ineligible to receive the award of or payments under this Agreement and acknowledges that this Agreement may be terminated and payment may be withheld if this certification is inaccurate.

This statute targets child-support deadbeats and any business of which a deadbeat “is a sole proprietor, partner, shareholder, or owner with an ownership interest of at least 25 percent.” Under the statute, a bid for a contract from state funds “must include the name and social security number of the individual or sole proprietor and each partner, shareholder, or owner with an ownership interest of at least 25 percent of the business entity submitting the bid or application.” And the statute includes a statement that must be included in any state contract; it’s a generic version of the provision quoted above.

What I Think

If a state has the urge to promote some goal through its contracting, presumably that’s because a more comprehensive solution can’t be achieved. Activism through contracting is a distant second-best, a sideshow.

Instead of scoring cheap shots with state activism through contracting, we could work to restore functioning democracy. A fringe benefit might be that we have fewer provisions like this encumbering state contracts.

(I’m a politics ignoramus, but since politics has wandered onto my turf, I feel free offer an opinion. I expect that people have written at length about this. If you know of any such articles, please provide links in the comments.)

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.