State and Political Subdivisions Required to Check For
Terrorist Ties Before Contracting, Hiring, or Licensing

By: E. Rod Davisson

Reprinted from April 2006 ohioconstructionlaw.com

Legislators recently took another step toward fighting terrorism, and this one will affect almost all governmental entities in Ohio. Beginning April 14, 2006, The “Ohio Terrorism Act” (R.C. § 2909.32 to § 2909.34) prohibits the state and any of its political subdivisions from doing business with, or providing funding to, any person, group or company that “provides material assistance to” any organization listed on the “United States Department of State Terrorist Exclusion List.”

How Does It Work?

This new law requires that persons or entities who want to contract with the state or a municipality or other political subdivision (including a school district) must first fill out a “Declaration Regarding Material Assistance/ Non-Assistance to a Terrorist Organization” (called a “DMA”). In order to complete the DMA, the contractor must review the federal “Terrorist Exclusion List” (the “TEL”)—a list of recognized terrorist organizations maintained by the federal government—and must deny membership in or assistance to any of these organizations.

The list is available on the Ohio Department of Public Safety Homeland Security website. Currently, it contains the names of 48 organizations, most distinctly foreign sounding. However, many do not sound threatening; witness the Al-Hamati Sweets Bakeries. Not all the organizations are connected with the Arab world. Irish terrorist groups are also represented by the Continuity Irish Republican Army and the Red Hand Defenders, among others.

The entity seeking a public contract must disclose its involvement with any entity on the TEL, such as membership, financial support, solicitation of funds or members, affording material support, or hiring or supporting members of any TEL organization.

Who Creates the Forms?

The Ohio Department of Public Safety administers the program. The director is responsible for providing each county and other local entity with the DMA and the TEL. Those forms may be found on the Ohio Department of Public Safety Homeland Security website.

What Must the Political Subdivision Do?

The subdivision must present the DMA and TEL to each person or entity with whom it enters into a contract that will amount, in one year, to more than $100,000 or who receives funding from the municipality in an annual aggregate amount greater than $100,000. For construction projects or other projects awarded by competitive bidding, the subdivision need only provide the forms to the entity selected to do the work. The subdivision is required to keep a copy of the completed form. These rules are set out in R.C. § 2909.33.

Contractor Responsibility

The contractor must answer the questions on the form and sign the declaration. All of the answers must be “no.” If the contractor answers “yes” or fails to answer “no” to any question on the form, it will count as a disclosure of material assistance to terrorists and bar that contractor from entering into any contract to which the law applies.

Other Applications and Exclusions

The DMA also applies to certain state licenses (R.C. § 2909.32) and potential public employees (R.C. § 2909.34). A list of transactions not requiring certification is at R.C. § 2909.33(H) and includes things like investments in United States public companies and investments in public agency debt. When calculating the $100,000 threshold for certification, the subdivision may exclude any personal benefit. (This is more likely to apply to employment contracts than to construction or other services contracts.)

“Personal Benefit” is defined in R.C. § 2909.33(I) as (1) Pensions and disability and survivor benefits (2) Money, goods, services, or other things of value provided by the United States, the state, or a political subdivision of the state to which the recipient is entitled by reason of age, medical condition, or a financial need that is established pursuant to an act of Congress or the General Assembly; (3) Salary or compensation a person receives as an employee of the state or political subdivision of the state.

Recommendations

I recommend that contracting subdivisions notify bidders in the bid documents that successful completion of the DMA is a prerequisite to the contract award. A copy of the DMA and TEL should be included in the bid documents so that potential bidders will understand the requirements before they bid the work.