HomeMy WebLinkAbout13-546 Confidential
ADVICE OF COUNSEL
June 25, 2013
13-546
This responds to your letters postmarked April 26, 2013, and May 2, 2013, by
which you requested a confidential 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 of
a municipal water authority, who in a private capacity owns an A company, with regard
to entering into: (1) a contract with the municipal water authority for A services for a B
project; or (2) annual contracts with the municipal water authority that require A
services.
Facts:
As Solicitor for the [name of municipal water authority] (“Authority”), you
have been authorized by an Authority Board Member (“the Board Member”) to request a
confidential advisory from the Pennsylvania State Ethics Commission on his behalf.
You have submitted facts that may be fairly summarized as follows.
In his private capacity, the Board Member owns and operates an A company
(“Company”).
The Authority will soon be advertising for bids for a B project (“Project”) that will
require A services. You state that all discussions pertaining to the Project have been
conducted during the Authority’s advertised, monthly public meetings.
At the Authority Board meeting where the scope of the Project and budgetary
numbers for the Project were initially discussed, the Board Member asked one question
pertaining to the timeframe for bidding the Project. You state that with the exception of
the aforesaid meeting, the Board Member has not participated in any Authority Board
discussions regarding the Project. You state that the Board Member has recused
himself from all votes pertaining to the Project. You further state that the Board Member
recused himself from the vote to authorize bids for the Project and that he has not voted
on any matters pertaining to the contract for the Project.
Additionally, the Authority has annual contracts that require A services.
Based upon the above submitted facts, you pose the following questions:
Confidential Advice, 13-546
June 25, 2013
Page 2
(1) Whether the Board Member/the Company could bid on and be awarded
the contract for the Project without violating the Ethics Act if the Board
Member would abstain from all votes and discussions pertaining to such
contract; and
(2) Whether the Board Member/the Company could bid on and be awarded
the annual contracts that require A services without violating the Ethics
Act if the Board Member would abstain from all votes and discussions
pertaining to such contracts.
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 Member of the Authority Board, the Board Member on whose behalf you
have inquired is a public official 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
Confidential Advice, 13-546
June 25, 2013
Page 3
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.
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.
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.
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.
Confidential Advice, 13-546
June 25, 2013
Page 4
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. 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.
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 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.
Confidential Advice, 13-546
June 25, 2013
Page 5
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.
In applying the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
The Company is a business with which the Board Member is associated in his
capacity as the owner. Pursuant to Section 1103(a) of the Ethics Act, the Board
Member generally would have a conflict of interest in matters before the Authority Board
that would financially impact him or the Company.
You are advised that the Ethics Act itself would not prohibit the Board
Member/the Company from seeking to contract to provide A services to the Authority.
However, the Board Member would have a conflict of interest under Section 1103(a) of
the Ethics Act in matters before the Authority Board pertaining to actual or anticipated
contract(s) between the Authority and the Board Member/the Company, including but
not limited to the contract for the Project or annual contract(s) that require A services.
At such times as there would be a reasonable and legitimate anticipation that the
Authority would award a contract to the Board Member/the Company, the Board
Member would have a conflict of interest in related matters, such as preparing or
approving the specifications for such contract. Where the Board Member/the Company
would bid for an Authority contract, the Board Member 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. The Board Member would also be prohibited from using the
authority of his public position, or confidential information accessed or received as a
result of being a Member of the Authority Board, to effectuate a private pecuniary
benefit to himself/the Company through a detriment to a business competitor. See,
Pepper, Opinion 87-008.
In addition, the Board Member 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 the Board Member/the Company to the Authority. In each instance of a
conflict of interest, the Board Member 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.
The restrictions and requirements of Section 1103(f) of the Ethics Act would have
to be observed whenever applicable and in particular as to any contract between the
Board Member/the Company and the Authority that would be valued at $500 or more.
It is noted that a problem could exist under the Municipality Authorities Act as to
contracting between the Board Member/the Company and the Authority. The
Municipality Authorities Act provides in part:
§ 5614. Competition in award of contracts
. . . .
Confidential Advice, 13-546
June 25, 2013
Page 6
(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 the Board Member 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:
The [name of municipal water authority] (“Authority”) Board Member
on whose behalf you have inquired (“the Board Member”) 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 his private capacity, the Board
Member owns and operates an A company (“Company”); (2) the Authority will soon be
advertising for bids for a B project (“Project”) that will require A services; (3) all
discussions pertaining to the Project have been conducted during the Authority’s
advertised, monthly public meetings; (4) at the Authority Board meeting where the
scope of the Project and budgetary numbers for the Project were initially discussed, the
Board Member asked one question pertaining to the timeframe for bidding the Project;
(5) with the exception of the aforesaid meeting, the Board Member has not participated
in any Authority Board discussions regarding the Project; (6) the Board Member has
recused himself from all votes pertaining to the Project; (7) the Board Member recused
himself from the vote to authorize bids for the Project, and he has not voted on any
matters pertaining to the contract for the Project; and (8) the Authority has annual
contracts that require A services, you are advised as follows.
The Company is a business with which the Board Member is associated in his
capacity as the owner. Pursuant to Section 1103(a) of the Ethics Act, the Board
Member generally would have a conflict of interest in matters before the Authority Board
that would financially impact him or the Company. The Ethics Act itself would not
prohibit the Board Member/the Company from seeking to contract to provide A services
to the Authority. However, the Board Member would have a conflict of interest under
Section 1103(a) of the Ethics Act in matters before the Authority Board pertaining to
actual or anticipated contract(s) between the Authority and the Board Member/the
Company, including but not limited to the contract for the Project or annual contract(s)
that require A services. At such times as there would be a reasonable and legitimate
anticipation that the Authority would award a contract to the Board Member/the
Company, the Board Member would have a conflict of interest in related matters, such
as preparing or approving the specifications for such contract. Where the Board
Member/the Company would bid for an Authority contract, the Board Member 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. The Board Member would also be
prohibited from using the authority of his public position, or confidential information
accessed or received as a result of being a Member of the Authority Board, to effectuate
a private pecuniary benefit to himself/the Company through a detriment to a business
competitor. In addition, the Board Member 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 the Board Member/the Company to the Authority. In each instance of a
conflict of interest, the Board Member would be required to abstain from participation,
Confidential Advice, 13-546
June 25, 2013
Page 7
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. The
restrictions and requirements of Section 1103(f) of the Ethics Act would have to be
observed whenever applicable and in particular as to any contract between the Board
Member/the Company and the Authority that would be valued at $500 or more. It is
noted that a problem could exist under the Municipality Authorities Act as to contracting
between the Board Member/the Company and the Authority, and therefore, it is
suggested that the Board Member 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.
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