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State of New Jersey
Executive Order #18

Acting Governor Richard J. Codey

WHEREAS, Executive Order No. 134 ("E.O. 134") was issued on September 22, 2004 for the purpose of protecting the integrity of the State's public contracting process by ensuring that decisions regarding the award of State contracts are based upon merit and are not influenced, in appearance or actuality, by political contributions to a candidate for or holder of the public Office of Governor, or any State or county political party committee; and

WHEREAS, E.O. 134 prohibits the award of any State contract in excess of $17,500 to any firm making a reportable contribution during certain specified time periods to a candidate committee or an election fund of any candidate for Governor or the current holder of the Office of Governor, or any state or county political party committee; and

WHEREAS, E.O. 134 further requires that, effective October 15, 2004, firms seeking State contracts must report all contributions made during the preceding four years to any political organization organized under section 527 of the Internal Revenue Code that also meets the definition of a continuing political committee, within the meaning of N.J.S.A. 19:44A-3(n) and N.J.A.C. 19:25-1.7, and permits the State Treasurer to disqualify a firm from bidding on or receiving a contract if the Treasurer determines that such contributions constitute a conflict of interest; and

WHEREAS, by banning the practice of pay-to-play as described above, E.O. 134 clearly advances the best interests of the citizens and taxpayers of the State of New Jersey by ensuring that decisions regarding the award of State contracts are based upon merit and are not influenced, in appearance or actuality, by contributions to a candidate for or holder of the public office of Governor, or to any State or county political party committee; and

WHEREAS, E.O. 134, by its terms, applies to all State contracts above the $17,500 threshold established therein and does not expressly distinguish between State-funded contracts and those contracts that may be funded, in whole or in part, with funds received from other sources; and

WHEREAS, the New Jersey Department of Transportation ("DOT") annually receives approximately $750 to $800 million from the Federal Highway Administration ("FHWA") for the design, construction and maintenance of highways in New Jersey and, pursuant to federal law, 23 U.S.C. sec. 112, et seq., and its implementing regulations, the FHWA must approve the plans, specifications and method of procurement for DOT contracts that are federally funded; and

WHEREAS, beginning in October 2004, the DOT communicated on several occasions with the FHWA concerning whether the inclusion of E.O. 134's requirements in federally funded highway contracts would have any effect on federal highway funding; and

WHEREAS, the FHWA recently has taken the position that despite its beneficial public purpose, E.O. 134 as applied to federally funded highway contracts allegedly poses a threat to competition and would violate federal law, asserting in a January 6, 2005 letter from the FHWA Division Administrator to the DOT Commissioner that "Executive Order #134 conflicts with Federal regulations and may not be included in Federal-aid contracts" and "[u]nless this provision is removed from Federal projects, we cannot authorize Federal funds;" and

WHEREAS, the DOT has not received FHWA authorization on any new federally funded highway construction project since December 2004, and at this time 19 projects totaling approximately $250 million are being held up for lack of federal funding because the contracts for those projects contain language implementing the requirements of E.O. 134; and

WHEREAS, the FHWA's position not only denies the DOT the ability to undertake important construction projects that are necessary to protect the safety and well-being of New Jersey's citizens and the citizens of other states who are traveling by motor vehicle in New Jersey, but also has an economic impact due to job loss associated with projects that cannot proceed without federal funds; and

WHEREAS, the State of New Jersey initiated litigation intended to protect the State's interests by challenging the FHWA's determination that E.O. 134 is in conflict with federal law, and requesting declaratory and injunctive relief preventing the FHWA from withholding federal highway funds; and

WHEREAS, as part of the litigation, the State sought a temporary restraining order to compel the FHWA to release federal highway funds during the pendency of the litigation; and

WHEREAS, a federal district court has denied the State's request for a restraining order, with the effect that the FHWA will be able to continue withholding those essential transportation funds from the State while the litigation proceeds; and

WHEREAS, the Constitution of this State requires me, as Acting Governor, to manage the operations of State government effectively and fairly, consistent with the laws as interpreted by the courts; and

WHEREAS, the State of New Jersey intends to pursue its available legal remedies; however, pursuit of those remedies will likely take several months, and the citizens of this State cannot continue to be harmed by the federal withholding of critically needed transportation funds in the interim;

NOW, THEREFORE, I, RICHARD J. CODEY, Acting Governor of the State of New Jersey, by virtue of the authority vested in me by the Constitution and Statutes of this State, do hereby ORDER and DIRECT:

  1. The provisions of E.O. 134 shall not apply to DOT contracts that are funded, in whole or in part, by the FHWA.

  2. Except as herein modified, all of the provisions of E.O. 134 shall remain in full force and effect.

  3. This Order shall take effect immediately and shall be effective until such time as the State obtains the relief sought in the pending litigation captioned, State of New Jersey v. Norman Y. Mineta, et al.

GIVEN, under my hand and seal this 26th day
of January in the Year of Our Lord, Two Thousand
and Five, and of the Independence of the United States,
the Two Hundred and Twenty-Ninth.

/s/ Richard J. Codey

Acting Governor

[seal]

Attest:

/s/ Paul T. Fader

Chief Counsel to the Governor

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