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HomeMy WebLinkAbout07-598 AulisioGeorge J. Aulisio Lease Dry Cleaners 307 Oak Street Old Forge, PA 18518 Dear Mr. Aulisio: ADVICE OF COUNSEL December 5, 2007 07 -598 This responds to your letter received November 1, 2007, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would permit a dry cleaning business to contract with a school district where the spouse of the owner of the dry cleaning business is a school director for the district, and if so, whether the restrictions of Section 1103(f) of the Ethics Act, pertaining to contracting, would apply to such contract(s). Facts: You are President, Chief Executive Officer, and the sole stockholder /board member of Lease Dry Cleaners, Inc. ( "Lease "). It is administratively noted that Lease is a Pennsylvania business corporation. You state that since 1959, Lease has been doing business with the Old Forge School District ( "School District "). The services provided by Lease to the School District have included cleaning and sanitizing football uniforms. You state that your wife, who recently retired as a seamstress for Lease, will begin serving as a School Director for the District commencing December 2007. You ask whether the Ethics Act would permit Lease to continue to do business with the School District while your wife serves as a School Director. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. Aulisio, 07 -598 December 5, 2007 Page 2 Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows: § 1103. Restricted activities (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa. C. S. § 1103(f). The following terms that relate to Section 1103(f) are defined in the Ethics Act as follows: § 1102. Definitions "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. "Governmental body." Any department, authority, commission, committee, council, board, bureau, division, service, office, officer, administration, legislative body or other establishment in the executive, legislative or judicial Aulisio, 07 -598 December 5, 2007 Page 3 branch of a state, a nation or a political subdivision thereof or any agency performing a governmental function. "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. 65 Pa.C.S. § 1102. Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Pursuant to Section 1103(f), an "open and public process" includes: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted. Section 1103(f) of the Ethics Act also requires that the public official /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. It is administratively noted that Section 3 -324 of the Public School Code of 1949, as amended, provides in part as follows: 3 -324. Not to be employed by or do business with district; exceptions (a) No school director shall, during the term for which he was elected or appointed, as a private person engaged in any business transaction with the school district in which he is elected or appointed, be employed in any capacity by the school district in which he is elected or appointed, or receive from such school district any pay for services rendered to the district except as provided in this act... (c) It shall not be a violation of this section for a school district to contract for the purchase of goods or services from a business with which a school director is associated to the extent permitted by and in compliance with 65 Pa.C.S. Ch. 11 (relating to ethics standards and financial disclosure). 24 P.S. §§ 3- 324(a), (c). On its face, Section 3- 324(c) of the Public School Code allows contracting to occur between school districts and businesses with which their school directors are associated as long as the requirements of the Ethics Act are observed. Aulisio, 07 -598 December 5, 2007 Page 4 In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. Upon taking office as a School Director, your wife would become a "public official" as that term is defined by the Ethics Act. You are an "immediate family member" of your wife. Lease is a business with which you are associated as its President, Chief Executive Officer, and sole stockholder /board member. The Ethics Act would not prohibit Lease from continuing to do business with the School District while your wife serves as a School Director. However, the requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. You are advised that an agreement or arrangement for the provision of dry cleaning services to the School District would constitute a "contract" as that term is defined in the Ethics Act. Therefore, the requirements of Section 1103(f) of the Ethics Act would have to be observed as to any contract between Lease and the School District that would be valued at $500 or more. It is noted that Section 1103(f) of the Ethics Act provides that where the restrictions of Section 1103(f) are not observed, a court may declare the contract void if an action is properly filed with the court within 90 days of the making of the contract. See, 65 Pa. C. S. § 1103(f). The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Conclusion: Upon taking office as a School Director for the Old Forge School District ("School District "), your wife would become a "public official" as that term is defined IDy the Ethics Act. You are an "immediate family member" of your wife. Lease Dry Cleaners, Inc. ( "Lease ") is a business with which you are associated as Lease's President, Chief Executive Officer, and sole stockholder /board member. The Ethics Act would not prohibit Lease from continuing to do business with the School District while your wife serves as a School Director. However, the requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. An agreement or arrangement for the provision of dry cleaning services to the School District would constitute a "contract" as that term is defined in the Ethics Act. The requirements of Section 1103(f) of the Ethics Act would have to be observed as to any contract between Lease and the School District that would be valued at $500 or more. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be Aulisio, 07 -598 December 5, 2007 Page 5 received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel