Lead agency procurement; boards; conflicts of interest.

(1) Community-based care lead agencies shall be procured by the department through a competitive process as required under chapter 287.

(2) The department shall produce a schedule for the procurement of community-based care lead agencies and provide the schedule to the community alliances established pursuant to s. 20.19(5) and post the schedule on the department’s website.

(3) Notwithstanding s. 287.057, the department shall use 5-year contracts with lead agencies. The department may only extend a contract for a period of 1 to 5 years, in accordance with s. 287.057, if the lead agency has met performance expectations within the monitoring evaluation.

(4) In order to serve as a lead agency, an entity must:

(a) Be organized as a Florida corporation or a governmental entity.

(b) Be governed by a board of directors or a board committee composed of board members. Board members shall provide oversight and ensure accountability and transparency for the system of care. The board of directors shall provide fiduciary oversight to prevent conflicts of interest, promote accountability and transparency, and protect state and federal funding from misuse. The board of directors shall act in accordance with s. 617.0830. The membership of the board of directors or board committee must be described in the bylaws or articles of incorporation of each lead agency, which must provide that at least 75 percent of the membership of the board of directors or board committee must be composed of persons residing in this state, and at least 51 percent of the state residents on the board of directors must reside within the service area of the lead agency. The lead agency shall ensure that board members participate in annual training related to their responsibilities. The department shall set forth minimum training criteria in the contracts with the lead agencies. However, for procurements of lead agency contracts initiated on or after July 1, 2014:

1. At least 75 percent of the membership of the board of directors must be composed of persons residing in this state, and at least 51 percent of the membership of the board of directors must be composed of persons residing within the service area of the lead agency. If a board committee governs the lead agency, 100 percent of its membership must be composed of persons residing within the service area of the lead agency.

2. The powers of the board of directors or board committee include, but are not limited to, approving the lead agency’s budget and setting the lead agency’s operational policy and procedures. A board of directors must additionally have the power to hire the lead agency’s executive director, unless a board committee governs the lead agency, in which case the board committee must have the power to confirm the selection of the lead agency’s executive director.

(c) Demonstrate financial responsibility through an organized plan for regular fiscal audits and the posting of a performance bond.

(5) The department’s procurement team procuring any lead agencies’ contracts must include individuals from the community alliance in the area to be served under the contract. All meetings at which vendors make presentations to or negotiate with the procurement team shall be held in the area to be served by the contract.

(6) In communities in which conditions make it not feasible to competitively contract with a lead agency, the department may collaborate with the local community alliance to establish an alternative approach to providing community-based child welfare services in the service area that would otherwise be served by a lead agency.

(a) The department and local community alliance shall develop a plan that must detail how the community will continue to implement community-based care through competitively procuring either the specific components of foster care and related services or comprehensive services for defined eligible populations of children and families from qualified entities as part of the community’s efforts to develop the local capacity for a community-based system of coordinated care. The plan must ensure local control over the management and administration of service provision. At a minimum, the plan must describe the reasons for the department’s inability to competitively contract for lead agency services, the proposed alternative approach to providing lead agency services, the entities that will be involved in service provision, how local control will be maintained, how services will be managed to ensure that federal and state requirements are met and outcome goals under s. 409.986 are achieved, and recommendations for increasing the ability of the department to contract with a lead agency in that area.

(b) The department shall submit the plan to the Governor, the President of the Senate, and the Speaker of the House of Representatives before implementation. The department shall submit quarterly updates about the plan’s implementation to the Governor, the President of the Senate, and the Speaker of the House of Representatives until 2 years after full implementation of the plan.

(7)(a) As used in this subsection, the term:

1. “Activity” includes, but is not limited to, a contract for goods and services, a contract for the purchase of any real or tangible property, or an agreement to engage with a lead agency for the benefit of a third party in exchange for an interest in real or tangible property, a monetary benefit, or an in-kind contribution.

2. “Conflict of interest” means when a board member, a director, or an officer, or a relative of a board member, a director, or an officer, of a lead agency does any of the following:

a. Enters into a contract or other transaction for goods or services with the lead agency.

b. Holds a direct or indirect interest in a corporation, limited liability corporation, partnership, limited liability partnership, or other business entity that conducts business with the lead agency or proposes to enter into a contract or other transaction with the lead agency. For purposes of this paragraph, the term “indirect interest” has the same meaning as in s. 112.312.

c. Knowingly obtains a direct or indirect personal, financial, professional, or other benefit as a result of the relationship of such board member, director, or officer, or relative of the board member, director, or officer, with the lead agency. For purposes of this paragraph, the term “benefit” does not include per diem and travel expenses paid or reimbursed to board members or officers of the lead agency in connection with their service on the board.

3. “Related party” means any entity of which a director or an officer of the entity is also directly or indirectly related to, or has a direct or indirect financial or other material interest in, the lead agency. The term also includes any subsidiary firm, parent entity, associate firm, or joint venture. Lead agencies that hold more than one lead agency contract with the department may request an exemption from the department for specific related party requirements.

4. “Relative” means a relative within the third degree of consanguinity by blood or marriage.

(b)1. For any activity that is presented to the board of a lead agency for its initial consideration and approval, or any activity that involves a contract that is being considered for renewal, a board member, a director, or an officer of a lead agency shall disclose to the board any activity that may reasonably be construed to be a conflict of interest before such activity is initially considered and approved or a contract is renewed by the board. A rebuttable presumption of a conflict of interest exists if the activity was acted on by the board without prior notice as required under paragraph (c). The board shall disclose any known actual or potential conflicts to the department.

2. A lead agency may not enter into a contract or be a party to any transaction with related parties if a conflict of interest is not properly disclosed. A lead agency may not enter into a contract with a related party for officer-level or director-level staffing to perform management functions. The contract with the department and lead agency must specify the administrative functions that the lead agency may subcontract.

3. Subject to the requirements of subparagraph 2., a lead agency may enter into a contract or be a party to any transaction with related parties as long as the fee, rate, or price paid by the lead agency for the commodities or services being procured does not exceed the fair market value for such commodities or services. The lead agency shall disclose any known actual or potential conflicts to the department.

(c)1. If a board member or an officer of a lead agency, or a relative of a board member or an officer, proposes to engage in an activity as described in subparagraph (b)1., the proposed activity must be listed on the meeting agenda for the next general or special meeting of the board members, and copies of all contracts and transactional documents related to the proposed activity must be included in the agenda. The meeting agenda must clearly identify the existence of a potential conflict of interest for the proposed activity. Before a board member or an officer of the lead agency, or a relative of a board member or an officer, engages in the proposed activity, the activity and contract or other transactional documents must be approved by an affirmative vote of two-thirds of all other board members present.

2. If a board member or an officer of the lead agency notifies the board of a potential conflict of interest with the board member or officer, or a relative of the board member or officer, under an existing contract as described in subparagraph (b)2., the board must notice the activity on a meeting agenda for the next general or special meeting of the board members, and copies of all contracts and transactional documents related to the activity must be attached. The meeting agenda must clearly identify the existence of a potential conflict of interest. The board must be given the opportunity to approve or disapprove the conflict of interest by a vote of two-thirds of all other board members present.

(d)1. If the board votes against the proposed activity under subparagraph (c)1., the board member or officer of the lead agency, or the relative of the board member or officer, must notify the board in writing of his or her intention, or his or her relative’s intention, not to pursue the proposed activity, or the board member or officer shall withdraw from office before the next scheduled board meeting. If the board finds that a board member or officer has violated this paragraph, the board member or officer shall be removed from office before the next scheduled board meeting.

2. In the event that the board does not approve a conflict of interest as required under subparagraph (c)2., the parties to the activity may opt to cancel the activity or, in the alternative, the board member or officer of the lead agency must resign from the board before the next scheduled board meeting. If the activity canceled is a contract, the lead agency is only liable for the reasonable value of the goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages, or other form of penalty for such cancellation.

(e) A board member or an officer of a lead agency, or a relative of a board member or an officer, who is a party to, or has an interest in, an activity that is a possible conflict of interest may attend the meeting at which the activity is considered by the board and may make a presentation to the board regarding the activity. After the presentation, the board member or officer, or the relative of the board member or officer, must leave the meeting during the discussion of, and the vote on, the activity. A board member or an officer who is a party to, or has an interest in, the activity shall recuse himself or herself from the vote.

(f) A contract entered into between a board member or an officer of a lead agency, or a relative of a board member or an officer, and the lead agency which has not been properly disclosed as a conflict of interest or potential conflict of interest under this section is voidable and terminates upon the filing of a written notice terminating the contract with the board of directors which contains the consent of at least 20 percent of the voting interests of the lead agency.

(g)1. All department contracts with lead agencies must contain the following contractual penalty provisions:

a. Penalties in the amount of $5,000 per occurrence must be imposed for each known and potential conflict of interest, as described in paragraph (b), which is not disclosed to the department.

b. If a contract is executed for which a conflict of interest was not disclosed to the department before execution of the contract, the following penalties apply:

(I) A penalty in the amount of $20,000 for a first offense.

(II) A penalty in the amount of $30,000 for a second or subsequent offense.

(III) Removal of the board member who did not disclose a known conflict of interest.

2. The penalties for failure to disclose a conflict of interest under sub-subparagraphs 1.a. and b. apply to any contract entered into, regardless of the method of procurement, including, but not limited to, formal procurement, single-source contracts, and contracts that do not meet the minimum threshold for formal procurement.

3. A contract procured for which a conflict of interest was not disclosed to the department before execution of the contract must be reprocured. The department shall recoup from the lead agency expenses related to a contract that was executed without disclosure of a conflict of interest.