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Advisory Opinions

ADVISORY OPINION 2011-3

FACTS
Investment Advisors, LLC (“Firm”) serves as an investment manager to each of the City’s five pension funds.  The five pension funds are: the New York City Employees’ Retirement System, the New York City Police Pension Fund, the New York Fire Department Pension Fund, the New York City Teachers’ Retirement System, and the New York City Board of Education Retirement System (collectively, “Pension Funds”). 

To select investment managers for the Pension Funds, the Comptroller’s office follows the procedures required by the Procurement Policy Board (“PPB”).  Pursuant to this process, the Comptroller’s office issues a request for proposals (“RFP”) and investment managers respond to such RFP by completing written questionnaires.  Here, the Comptroller’s office issued an RFP, and the Firm responded to the RFP by completing a written questionnaire.  After submitting the questionnaire, the Firm was selected by the Comptroller’s office to make an in-person presentation to each pension fund’s board of trustees.  The Firm’s presenters included the chairman and chief investment officer, the head of marketing and the head of the high yield group.  Each presenter responded to questions posed by the trustees. 

Subsequently, the Firm was awarded the contracts to serve as an investment manager to the Pension Funds and entered into contracts with the Comptroller’s office, as custodian of the Pension Funds.  For the duration of the contracts, the Firm’s staff has ongoing communications with the investment staff of the Comptroller’s office and/or the Pension Funds to discuss the performance of the Pension Funds’ accounts and general market conditions.

ISSUES
(1) Whether the Firm’s employees engaged in “lobbying” or a “lobbying activity” pursuant to the New York City Administrative Code (“Administrative Code”) §3-211(c) et seq. during the procurement process described above, in particular, when the Firm responded to the RFP and made an in-person presentation to each pension fund’s board of trustees and responded to questions posed by the trustees?

(2) Whether the Firm’s employees are engaged in “lobbying” or a “lobbying activity” pursuant to Administrative Code §3-211(c) et seq. when communicating with the staff of the Comptroller’s office and/or of the Pension Funds during the administration of the contract as described above?

OPINION
The Administrative Code provides that any attempt to influence “any determination made by an elected city official or an officer or employee of the city with respect to the procurement of goods, services or construction . . . involving the disbursement of public monies” constitutes lobbying.  Ad. Code §3-211(c)(1)(iii) (emphasis added).  Therefore, investment managers that are attempting to influence the Pension Funds’ decisions with respect to the procurement of its investment services would, in the absence of an exception, be deemed to be engaged in lobbying. 

The Administrative Code, however, provides an explicit exception for “contractors or prospective contractors who communicate with or appear before city contracting officers or employees in the regular course of procurement planning. . . .” See Ad. Code §3-211(c)(3)(vi)(A) (emphasis added).  Because the Comptroller’s office solicits the services of investment managers through the formal procurement process, the Firm is, for this analysis, a prospective contractor.  Thus, this exception applies to the Firm’s communications, in the regular course of procurement planning, with city contracting officers or employees. Id. The communications described in this inquiry, completing a questionnaire and making in-person presentations to the boards of trustees of the funds, are communications in the regular course of procurement planning.

In addition, the persons with whom the Firm is communicating, the staff of the Comptroller’s office and the Pension Funds’ trustees, should be considered city contracting officers or employees.  The definition of “city contracting officers and employees” excludes elected officials, their deputies, or “any person not duly authorized to enter into and administer contracts and make determinations with respect thereto”.  Ad. Code §3-211(c)(3)(vi)(B)(3).  As described above, the Firm submitted a completed questionnaire to the staff of the Comptroller’s office and made presentations to the boards of trustees of each of the pension funds.  Staff of the Comptroller’s office that manage the procurement process are city contracting officers because they are authorized by the trustees of the Pension Funds to enter into and administer contracts on behalf of the Pension Funds.  The trustees should be considered city contracting officers as well because they have the authority to enter into and administer contracts and make determinations with respect to the Pension Funds.  As a result, to the extent the Firm communicates with city contracting officers or employees in the regular course of procurement planning, such communications do not constitute lobbying.

The Administrative Code also provides that contractors who communicate with city contracting officers or employees in the regular course of the administration of a contract are not engaged in lobbying.  See Ad. Code §3-211(c)(3)(vi)(A) (emphasis added).  Thus, because the Firm entered into a contract with the Comptroller’s office, to serve as an investment manager for the Pension Funds, communications with the staff of the Comptroller’s office in the regular course of the administration of the contract are not considered lobbying.  See Ad. Code §3-211(c)(3)(vi).  In addition, communications concerning the performance of the Firm or general market conditions are not considered lobbying to the extent such communications take place “in the regular course of . . . the administration of a contract”.  Ad. Code §3-211(c)(3)(vi)(A).  However, if the communications at issue do not occur during the routine administration of a contract, such communications would be deemed lobbying.

CONCLUSION
(1) It is the determination of the City Clerk that communications between investment managers, who have been solicited through the procurement process, and the staff of the Comptroller’s office and/or the staff and the trustees of the Pension Funds, in the regular course of procurement planning, fall within an exception to the definition of “lobbying” pursuant to Administrative Code §3-211(c)(3)(vi). 

(2) It is the determination of the City Clerk that communications between the staff of an investment manager that has entered into a contract to serve as an investment manager for the Pension Funds and the staff of the Comptroller’s office and/or the Pension Funds, in the regular course of the administration of the contract, fall within an exception to the definition of “lobbying” pursuant to Administrative Code §3-211(c)(3)(vi).

 

MICHAEL MCSWEENEY, City Clerk of the City of New York
PATRICK SYNMOIE, Counsel to the City Clerk
JAIME LYNN ECKL, Deputy Counsel to the City Clerk

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