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HomeMy WebLinkAbout10-604 Kurtyka ADVICE OF COUNSEL July 22, 2010 Ronald Kurtyka Kurtyka Enterprises, Inc. P.O. Box 115 100 Price Street Rices Landing, PA 15357 10-601 Dear Mr. Kurtyka: This responds to your letters dated May 21, 2010, June 8, 2010, and June 22, 2010, by which you requested an advisory from the Pennsylvania State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. §1101 et seq., would impose any prohibitions or restrictions upon a member and vice chairman of a municipal authority board, who in a private capacity is the owner and president of a construction, excavation, and land development company that has a contract to provide construction inspection services on an as-needed basis to the engineering firm which serves as the appointed engineering consultant to the municipal authority, with regard to: (1) participating in his public capacity in matters pertaining to the engineering firm; (2) inspecting projects of the municipal authority for the engineering firm in his private capacity; or (3) contracting through his company to provide services to the municipal authority. Facts: As a Member and Vice Chairman of the Board (“Board”) of the Dry Tavern Sewer Authority (“Authority”), you request an advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. In 2007, the Authority Board appointed a firm named “Widmer Engineering” (“Widmer”) as the Authority’s engineering consultant. The Authority subsequently began to enter into various contracts with Widmer related to planning, grant writing, design, contract administration, construction inspection, and general professional services as needed. On January 7, 2008, the Jefferson Township Board of Supervisors appointed you to serve a five-year term on the Authority Board. In a private capacity, you are the owner and president and an employee of a construction, excavation, and land development company named “Kurtyka Enterprises, Inc.” (“Company”). You state that the number of Company employees varies depending upon the workload and that you are currently the sole employee of the Company. Kurtyka, 10-601 July 22, 2010 Page 2 You state that on April 15, 2010, you became aware through a telephone call from Widmer that the Company was being considered for a construction inspector position with Widmer even though you had not applied for such a position with Widmer. On April 21, 2010, you interviewed with Widmer. On May 3, 2010, the Company accepted a position as a sub-consultant to Widmer to provide construction inspection services on an as-needed basis. You state that on May 4, 2010, the Company contracted with Widmer to provide the aforesaid services, and you began providing such services as a Company employee. You state that in providing on-site inspection services for various construction projects, your duties include daily interaction with contractors, verifying compliance of construction activities with construction documents, verifying types of materials used, measuring and verifying quantities for payment estimates, resolving all types of construction issues as they arise, and documenting the construction progress. You state that you have not played any role in any matter(s) before the Board involving or pertaining to Widmer since you became aware on April 15, 2010, that the Company was being considered for the construction inspector position with Widmer. Based upon the above submitted facts, you seek guidance as to whether the Ethics Act would impose any prohibitions or restrictions upon you with regard to engaging in the following activities as a Member and Vice Chairman of the Authority Board: (1) Voting to approve or reject any contracts or contract modifications between the Authority and Widmer; (2) Voting to approve or reject any payments or reimbursements from the Authority to Widmer; (3) Voting to approve or reject any payment requisitions to various funding sources that include payments or reimbursements to Widmer; (4) Voicing your opinion regarding any contract, contract scope, contract modification, payment, reimbursement, or other issue between the Authority and Widmer; (5) Voting to approve or reject any payment or payment requisitions to contractors where the design and/or contract documents were prepared by Widmer; or (6) Performing any other duty(ies). You further seek guidance as to whether the Ethics Act would impose any prohibitions or restrictions upon you/the Company with regard to bidding on or entering into a contract with the Authority or inspecting any Authority project(s) for Widmer. 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. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion/advice may be given only as to prospective (future) conduct. To the extent that your inquiry relates to conduct that has already occurred, such past Kurtyka, 10-601 July 22, 2010 Page 3 conduct may not be addressed in the context of an advisory opinion. However, to the extent your inquiry relates to future conduct, your inquiry may and shall be addressed. As a Member and Vice Chairman of the Authority Board, you are a public official as that term is defined in the Ethics Act, and therefore you are subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted Activities (a)Conflict of interest.-- No public official or public employee shall engage in conduct that constitutes a conflict of interest. (j)Voting conflict.-- Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three-member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. §§ 1103(a), (j). The following terms related to Section 1103(a) are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public Kurtyka, 10-601 July 22, 2010 Page 4 employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "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. 65 Pa.C.S. § 1102. Pursuant to Section 1103(a) of the Ethics Act, a public official/public employee is prohibited from using the authority of public office/employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official/public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. In each instance of a conflict of interest, the public official/public employee would be required to abstain fully from participation. The abstention requirement would not be limited merely to voting, but would extend to any use of authority of office, including, but not limited to, discussing, conferring with others, and advocating for a particular result. Juliante, Order 809. Subject to certain statutory exceptions, in each instance of a voting conflict, Section 1103(j) of the Ethics Act requires the public official/public employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes. 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 Kurtyka, 10-601 July 22, 2010 Page 5 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 term “contract” is defined in the Ethics Act as follows: § 1102. Definitions "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. 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. Section 1103(f) of the Ethics Act also provides 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 noted that Section 1103(a) of the Ethics Act does not prohibit public officials/public employees from having outside business activities or employment; however, the public official/public employee may not use the authority of his public position--or confidential information obtained by being in that position--for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89-011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official/public employee is associated in his private capacity or private client(s). Miller, Opinion 89-024; Kannebecker, Opinion 92-010. If a business with which the public official/public employee or immediate family member is associated or a private customer/client would have a matter pending before the governmental body, the public official/public employee generally would have a conflict of interest as to such matter. Kannebecker, supra; Miller, supra. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89-002. In each instance of a conflict of interest, the public official/public employee would be required to abstain from Kurtyka, 10-601 July 22, 2010 Page 6 participation, and in the instance of a voting conflict, to abstain and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. In applying the above provisions of the Ethics Act to the instant matter, you are advised that the Company is a business with which you are associated in your capacity as the owner and president and as an employee. Subject to the statutory exclusions to the definition of “conflict” or “conflict of interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, in your capacity as a Member and Vice Chairman of the Authority Board, you would have a conflict of interest in matters that would financially impact you, the Company, or the Company’s client(s), including but not limited to Widmer. Such matters would include: (1) voting on contracts or contract modifications between the Authority and Widmer; (2) voting on payments or reimbursements from the Authority to Widmer; (3) voting on payment requisitions to various funding sources that include payments or reimbursements to Widmer; or (4) any other matter(s) that would financially impact Widmer. You are further advised that unless there would be some basis for a conflict of interest such as a private pecuniary benefit to you, a member of your immediate family, the Company, or the Company’s client(s), Section 1103(a) of the Ethics Act would not prohibit you from voting on payment(s) or payment requisition(s) to contractor(s) where the design and/or contract documents were prepared by Widmer. In each instance of a conflict of interest, you would be required to abstain fully from participation. The abstention requirement would not be limited to voting, but rather would extend to any use of authority of office. You would be prohibited from voicing your opinion in your capacity as a Member and Vice Chairman of the Authority Board with regard to matter(s) in which you would have a conflict of interest, as such activity(ies) would constitute a use of authority of office. You are advised that the Ethics Act itself would not prohibit you, in your private capacity as the owner, president and employee of the Company, from inspecting Authority project(s) for Widmer or contracting to perform work for the Authority. However, in your public capacity as a Member and Vice Chairman of the Authority Board, you would have a conflict of interest under Section 1103(a) of the Ethics Act in matters pertaining to actual or anticipated contract(s) between the Authority and you/the Company. At such times as there would be a reasonable and legitimate anticipation that the Authority would award a contract to you/the Company, you would have a conflict of interest in related matters, such as preparing or approving the specifications for such contract. Where you/the Company would bid for an Authority contract, you would have a conflict of interest as to such contract and could not participate in reviewing or selecting bids or proposals or awarding the contract. You would also be prohibited from using the authority of your public position, or confidential information accessed or received as a result of being a Member/Vice Chairman of the Authority Board, to effectuate a private pecuniary benefit to yourself/the Company through a detriment to a business competitor. See, Pepper, Opinion 87-008. In addition, you generally would have a conflict of interest with respect to voting to approve the payment of any bills or invoices that would be submitted by you/the Company to the Authority. As noted above, in each instance of a conflict of interest, you would be required to abstain fully from participation and in the instance of a voting conflict, to abstain fully and satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. If, while serving as a Member of the Authority Board, you/the Company would enter into a contract with the Authority, or would subcontract with a person awarded a contract with the Authority, and the value of the contract/subcontract Kurtyka, 10-601 July 22, 2010 Page 7 would be $500 or more, the restrictions of Section 1103(f) of the Ethics Act would be applicable. It is noted that a problem could exist under the Municipality Authorities Act as to contracting between you/the Company and the Authority. The Municipality Authorities Act provides in part: § 5614. Competition in award of contracts . . . . (e) CONFLICT OF INTEREST.--No member of the authority or officer or employee of the authority may directly or indirectly be a party to or be interested in any contract or agreement with the authority if the contract or agreement establishes liability against or indebtedness of the authority. Any contract or agreement made in violation of this subsection is void, and no action may be maintained on the agreement against the authority. 53 Pa.C.S. § 5614(e). Because this Advice may not interpret the above quoted provision of the Municipality Authorities Act, it is suggested that you seek legal advice in that regard. 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: As a Member and Vice Chairman of the Board (“Board”) of the Dry Tavern Sewer Authority (“Authority”), you are a public official subject to the provisions of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. §1101 et seq. Based upon the submitted facts that: (1) in 2007, the Authority Board appointed a firm named “Widmer Engineering” (“Widmer”) as the Authority’s engineering consultant, and the Authority subsequently began to enter into various contracts with Widmer related to planning, grant writing, design, contract administration, construction inspection, and general professional services as needed; (2) on January 7, 2008, the Jefferson Township Board of Supervisors appointed you to serve a five-year term on the Authority Board; (3) in a private capacity, you are the owner and president and an employee of a construction, excavation, and land development company named “Kurtyka Enterprises, Inc.” (“Company”); (4) the number of Company employees varies depending upon the workload, and you are currently the sole employee of the Company; (5) on April 15, 2010, you became aware through a telephone call from Widmer that the Company was being considered for a construction inspector position with Widmer even though you had not applied for such a position with Widmer; (6) on April 21, 2010, you interviewed with Widmer, and on May 3, 2010, the Company accepted a position as a sub- consultant to Widmer to provide construction inspection services on an as-needed basis; (7) on May 4, 2010, the Company contracted with Widmer to provide the aforesaid services, and you began providing such services as a Company employee; (8) in providing on-site inspection services for various construction projects, your duties include daily interaction with contractors, verifying compliance of construction activities with construction documents, verifying types of materials used, measuring and verifying quantities for payment estimates, resolving all types of construction issues as they arise, and documenting the construction progress; and (9) you have not played any role in any matter(s) before the Board involving or pertaining to Widmer since you became aware on April 15, 2010, that the Company was being considered for the construction inspector position with Widmer, you are advised as follows. Kurtyka, 10-601 July 22, 2010 Page 8 The Company is a business with which you are associated in your capacity as the owner and president and as an employee. Subject to the statutory exclusions to the definition of “conflict” or “conflict of interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, in your capacity as a Member and Vice Chairman of the Authority Board, you would have a conflict of interest in matters that would financially impact you, the Company, or the Company’s client(s), including but not limited to Widmer. Such matters would include: (1) voting on contracts or contract modifications between the Authority and Widmer; (2) voting on payments or reimbursements from the Authority to Widmer; (3) voting on payment requisitions to various funding sources that include payments or reimbursements to Widmer; or (4) any other matter(s) that would financially impact Widmer. Unless there would be some basis for a conflict of interest such as a private pecuniary benefit to you, a member of your immediate family, the Company, or the Company’s client(s), Section 1103(a) of the Ethics Act would not prohibit you from voting on payment(s) or payment requisition(s) to contractor(s) where the design and/or contract documents were prepared by Widmer. The Ethics Act itself would not prohibit you, in your private capacity as the owner, president and employee of the Company, from inspecting Authority project(s) for Widmer or contracting to perform work for the Authority. However, in your public capacity as a Member and Vice Chairman of the Authority Board, you would have a conflict of interest under Section 1103(a) of the Ethics Act in matters pertaining to actual or anticipated contract(s) between the Authority and you/the Company. At such times as there would be a reasonable and legitimate anticipation that the Authority would award a contract to you/the Company, you would have a conflict of interest in related matters, such as preparing or approving the specifications for such contract. Where you/the Company would bid for an Authority contract, you would have a conflict of interest as to such contract and could not participate in reviewing or selecting bids or proposals or awarding the contract. You would also be prohibited from using the authority of your public position, or confidential information accessed or received as a result of being a Member/Vice Chairman of the Authority Board, to effectuate a private pecuniary benefit to yourself/the Company through a detriment to a business competitor. You generally would have a conflict of interest with respect to voting to approve the payment of any bills or invoices that would be submitted by you/the Company to the Authority. In each instance of a conflict of interest, you would be required to abstain fully from participation and in the instance of a voting conflict, to abstain fully and satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. You would be prohibited from voicing your opinion in your capacity as a Member and Vice Chairman of the Authority Board with regard to matter(s) in which you would have a conflict of interest, as such activity(ies) would constitute a use of authority of office. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. It is noted that a problem could exist under the Municipality Authorities Act as to contracting between you/the Company and the Authority, and therefore, it is suggested that you seek legal advice in that regard. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, 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. Kurtyka, 10-601 July 22, 2010 Page 9 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 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