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HomeMy WebLinkAbout10-630 Clark ADVICE OF COUNSEL December 17, 2010 John E. Clark Business Manager/Board Secretary Spring Cove School District 1100 East Main Street Roaring Spring, PA 16673 10-630 Dear Mr. Clark: This responds to your letters dated September 9, 2010, and October 28, 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 school director, who in a private capacity is one of two owners of a Cartridge World franchise, with respect to a proposed contract between the school district and the franchise for the provision of replacement ink cartridges to the school district. Facts: You have been authorized by Mrs. Amy Acker-Knisely (“Mrs. Acker- Knisely”) to request an advisory from the Pennsylvania State Ethics Commission on her behalf. You have submitted facts that may be fairly summarized as follows. Mrs. Acker-Knisely is a School Director for the Spring Cove School District (“School District”). In a private capacity, Mrs. Acker-Knisely is one of two owners of a Cartridge World franchise (“Cartridge World”) that serves the geographic area of the School District. The other owner of Cartridge World is Karen McCready (“Ms. McCready”). You state that in an effort to reduce costs and improve services, the School District chose to seek quotes on replacement ink cartridges for printers used throughout the School District. You state that the annual expected spending for such ink cartridges would be between $6,000.00 and $7,800.00. The School District did not advertise a Request for Proposals as to the ink cartridges, but rather, secured three quotes directly from particular vendors, specifically, Staples, McCartney’s (a local office supply company), and Cartridge World. You state that Cartridge World’s quote had the best price and turnaround time for refilled cartridges. The School District also used the bid list of the PEPPM Technology Bidding and Purchasing Program (“PEPPM”) as a “comparable” with respect to pricing. However, based upon the submitted facts, it does not appear that the School District would be Clark, 10-630 December 17, 2010 Page 2 “piggybacking” as to a PEPPM contract if it would purchase ink cartridges from Cartridge World. If the School District would enter into the proposed contract (“Contract”) to purchase ink cartridges from Cartridge World, Ms. McCready would be the School District’s contact and working advisor as to the Contract. Mrs. Acker-Knisely would not service the School District’s account with Cartridge World or be involved with pricing decisions. Based upon the above submitted facts, you seek guidance as to whether the Ethics Act would impose any prohibitions or restrictions upon Mrs. Acker-Knisely with respect to the Contract. 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 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 School Director for the School District, Mrs. Acker-Knisely is a public official as that term is defined in the Ethics Act, and therefore she is 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 Clark, 10-630 December 17, 2010 Page 3 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 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 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. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. 65 Pa.C.S. § 1102. 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. The use of authority of office is not limited merely to voting, but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Clark, 10-630 December 17, 2010 Page 4 Examples of conduct that would be prohibited under Section 1103(a) would include the pursuit of a private business opportunity in the course of public action (Metrick, Order 1037) and 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). 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, a public official/public employee would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. 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 term “contract” is defined in the Ethics Act to include, inter alia, acquisition, use or disposal by a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. 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-- in his public capacity--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 on its face, Section 3-324(c) of the Public School Code of 1949, as amended, permits contracting between school districts and businesses with which school directors are associated as long as the requirements of the Ethics Act are observed. 24 P.S. § 3-324(c). Clark, 10-630 December 17, 2010 Page 5 In applying the above provisions of the Ethics Act to the instant matter, you are advised that Cartridge World is a business with which Mrs. Acker-Knisely is associated in her capacity as an owner. In her capacity as a School Director, Mrs. Acker-Knisely 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 School District and Cartridge World, including but not limited to the Contract. Mrs. Acker-Knisely would also be prohibited from using the authority of her public position, or confidential information accessed or received as a result of being a School Director, to effectuate a private pecuniary benefit to herself or Cartridge World through a detriment to a competitor for School District work. See, Pepper, Opinion 87-008. Mrs. Acker-Knisely generally would have a conflict of interest with respect to voting to approve the payment of bills or invoices that would be submitted by Cartridge World to the School District. In each instance of a conflict of interest, Mrs. Acker-Knisely would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. As for Section 1103(f) of the Ethics Act, based upon the submitted facts, the Contract would be valued in excess of $500.00. Therefore, Section 1103(f) of the Ethics Act would be transgressed if Cartridge World would enter into the Contract without the Contract being awarded through an “open and public process” including, inter alia, “prior public notice.” You are advised that the School District’s direct solicitation of quotes from the aforesaid particular vendors would not be sufficient to satisfy the requirements of Section 1103(f) for “prior public notice.” You are further advised that Section(s) 1103(a)/1103(f) of the Ethics Act would prohibit Mrs. Acker-Knisely, in her public capacity as a School Director, from having any supervisory or overall responsibility for the implementation or administration of contract(s) between the School District and Cartridge World. The propriety of the proposed conduct has only been addressed under the Ethics Act. Conclusion: As a School Director for the Spring Cove School District (“School District”), Mrs. Amy Acker-Knisely (“Mrs. Acker-Knisely”) is 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 a private capacity, Mrs. Acker- Knisely is one of two owners of a Cartridge World franchise (“Cartridge World”) that serves the geographic area of the School District; (2) the other owner of Cartridge World is Karen McCready (“Ms. McCready”); (3) the School District chose to seek quotes on replacement ink cartridges for printers used throughout the School District; (4) the annual expected spending for such ink cartridges would be between $6,000.00 and $7,800.00; (5) the School District did not advertise a Request for Proposals as to the ink cartridges, but rather, secured three quotes directly from particular vendors, specifically, Staples, McCartney’s (a local office supply company), and Cartridge World; (6) Cartridge World’s quote had the best price and turnaround time for refilled cartridges; (7) the School District also used the bid list of the PEPPM Technology Bidding and Purchasing Program (“PEPPM”) as a “comparable” with respect to pricing; (8) if the School District would enter into the proposed contract (“Contract”) to purchase ink cartridges from Cartridge World, Ms. McCready would be the School District’s contact and working advisor as to the Contract, and Mrs. Acker-Knisely would not service the School District’s account with Cartridge World or be involved with pricing decisions, you are advised as follows. Clark, 10-630 December 17, 2010 Page 6 Cartridge World is a business with which Mrs. Acker-Knisely is associated in her capacity as an owner. In her capacity as a School Director, Mrs. Acker-Knisely 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 School District and Cartridge World, including but not limited to the Contract. Mrs. Acker-Knisely would also be prohibited from using the authority of her public position, or confidential information accessed or received as a result of being a School Director, to effectuate a private pecuniary benefit to herself or Cartridge World through a detriment to a competitor for School District work. Mrs. Acker-Knisely generally would have a conflict of interest with respect to voting to approve the payment of bills or invoices that would be submitted by Cartridge World to the School District. In each instance of a conflict of interest, Mrs. Acker- Knisely would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. Based upon the submitted facts, the Contract would be valued in excess of $500.00. Therefore, Section 1103(f) of the Ethics Act would be transgressed if Cartridge World would enter into the Contract without the Contract being awarded through an “open and public process” including, inter alia, “prior public notice.” The School District’s direct solicitation of quotes from the aforesaid particular vendors would not be sufficient to satisfy the requirements of Section 1103(f) for “prior public notice.” Section(s) 1103(a)/1103(f) of the Ethics Act would prohibit Mrs. Acker-Knisely, in her public capacity as a School Director, from having any supervisory or overall responsibility for the implementation or administration of contract(s) between the School District and Cartridge World. 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. 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