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HomeMy WebLinkAbout85-525 DeGarciaMr. 0. Frank DeGarcia Bureau of Medicaid Investigations Office of the Auditor General Harrisburg, PA 17120 Re: Public Employee, Contracting Dear Mr. DeGarcia: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 March 18, 1985 ADVICE OF COUNSEL 85 -525 This responds to your letter of February 21, 1985, wherein you requested the advice of the State Ethics Commission. Issue: You ask whether, as a public employee, you or your business may engage in contracting under certain circumstances with the Pennsylvania Department of Public Welfare. Facts: You have requested the advice of the State Ethics Commission regarding your ability to enter into a contract with the Department of Public Welfare. You currently serve in the Office of the Auditor General as the Director of the Bureau of Medicaid Investigatons, hereinafter, the Bureau. In addition to the foregoing, you along with your wife are the owners of a business, Pana Cuba Translation Services. This business, in part, provides Spanish Translation Services. You indicate that you have been asked by the Department of Public Welfare, (DPW), to bid on a contract to translate brochures, pamphlets, business forms, and regulations for the County Board of Assistance. While you indicate that your bid will be at a rate of .30 (cents) per line, there is no indication of the total contract cost. For the purpose of this advice, therefore, we will assume that the total cost of the contract exceeds $500. Mr. 0. Frank DeGarcia March 18, 1985 Page 2 Discussion: Initially, the Ethics Commission notes that as a Director for the Bureau you are a public employee within the definition of that term under the Ethics Act. See 65 P.S. §402. As such, you are subject to provisions of the Ethics Act and must conform your conduct to the requirements of the Act. See 65 P.S. §401 et seq. While the Ethics Act contains some restrictions against contracts between the business with which a "public official" or "public employee" is associated and the governmental body with which the official or employee is associated, the Ethics Act does not totally prohibit a public official or employee or his family or business from engaging in business activities or contracting, in general with the body the official or employee serves. Section 3(a) of the Ethics Act does provide that no public official or public employee shall use his public office or any confidential information obtained through holding of a public office or position to acquire financial gain for himself, his immediate family, or a business with which he is associated. See 65 P.S. §403(a). A "business with which he is associated" is defined in the Ethics Act as follows: "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 holder of stock. 65 P.S. 402. For the purposes of this Advice, we have been provided with facts to establish that you are the owner of the business that would seek to contract with the DPW. As such, you would be "associated" with this business and would be required to observe the prohibitions set forth in Section 3(a) of the Ethics Act. This means that you could not use your position as a director in the Bureau to secure financial gain for your business and could not use any confidential information acquired through the holding of public office or employment to the benefit of that business. Section 3(b) of the Ethics Act also states that no person shall give to a public official or employee, nor shall any public official or employee accept anything of value based on the understanding that the official's vote, action, or judgment would be influenced thereby. See 65 P.S. 403(b). You must be cognizant of this requirement and observe this provision of the Ethics Act. Reference to this section is made not to indicate that any violation or potential violation exists but merely to provide a complete review of the sections of the Ethics Act which may be generally applicable to these circumstances. Mr. 0. Frank DeGarcia March 18, 1985 Page 3 Further, Section 3(c) of the Act states that no public official, member of his immediate family, or a business in which the person or member of his immediate family is an officer, director, or owner of greater than 5% of the equity at fair market value may contract in an amount in excess of $500 with a governmental body unless the contract has been awarded through an open and public process. See Howard, 79 -044. In this Advice we have been provided with facts to establish that you and a member of your immediate family are owners of greater than 5% of the equity at fair market value of the business in question. Previous opinions of the Commission have held that the term "governmental body" in Section 3(c) of the Ethics Act refers to the governmental body with which the individual public employee /official is "associated." Bryan, 80 -014 and Lynch, 79 -047. The "governmental body" with which you are associated is the Office of Auditor General. Therefore, the "open and public process" limitations of Section 3(c) of the Ethics Act apply only if you and /or this business contracts with the Office of Auditor General in an amount of $500 or more. You and /or this business /company could, however, contract with any governmental body other than the Office of Auditor General with which you are not considered to be "associated" without undertaking the open and public process set forth in Section 3(c) of the Ethics Act. We have made this determination based upon the facts that you have furnished. If, however, you have any duties or responsibilities with relation to the DPW or the County Board of Assistance (the entities with whom you will be contracting) the advice contained herein would be different. Such duties or responsibilities as mentioned herein would, for example, include conducting audits or investigations of these entities. In light of the fact that you are not "associated" with the DPW or the county board, Section 3(c) of the Act would be inapplicable. In an effort to be complete, we will, however, explore what, if any, restrictions are imposed in the event that Section 3(c) would apply. It should be emphasized, that even though Section 3(c) of the Ethics Act would present no absolute prohibition to the contract between DPW and your business, certain requirements as to the open an public process must be met if, as noted, this section were applicable. In its opinions in Howard, 79 -044 and Fields, 82 -006, the Commission stated that an open and public process is met by applying the following standards: Mr. 0. Frank DeGarcia March 18, 1985 Page 4 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 or offered and accepted. See also Cantor, 82 -004. In determining whether the requirements of Section 3(c) of the Ethics Act had been met, the Commission has adopted a "reasonableness test" which means that reasonable and prudent competitors of your business should be provided a sufficient time within which to submit their proposals and, of course, should have had prior notice of the opportunity to secure such a contract or employment. If DPW will or has advertised and requested and received proposals or bids in relation to this contract, it is clear that the open and public process requirements of the Ethics Act have been or will be satisfied as long as conditions 2 and 3 cited above are also met. Finally, it should be noted that this advice only applies to your duties, and obligations under the Ethics Act. The Commission cannot opine as to any restriction imposed by any other statute, code, rule or administratively imposed regulation. Conclusion: Under the facts as have been set forth above, you are a "public official" or "public employee" as those terms are defined in the Ethics Act and must conform to the requirements of the Ethics Act. Assuming that you stand in the relationship to the business involved as set forth in either Section 3(a) or Section 3(c) of the Ethics Act and that business seeks to contract with the governmental body with which you are associated, the requirements of Section 3(a), 3(b), and Section 3(c) mandate that: 1. You should not have anything to do with the decisions, or votes, discussions regarding the awarding of this contract or work; 2. an open and public process, as described above, must be undertaken prior to any such award of a contract by this business; 3. no confidential information acquired or received through the holding of your public position be used to obtain advantages or financial gain for this business; and Mr. 0. Frank DeGarcia March 18, 1985 Page 5 4. the requirements of Section 3(b) of the Ethics Act must be observed, in that nothing of value can be offered, accepted or solicited in exchange for or to influence official judgment. If, however, you are not associated in any way with DPW or the county board, then the aforementioned Section 3(c) of the Act is not applicable. Pursuant to Section 7(9)(ii), this 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, providing the requestor 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 request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. JJC /sfd Sincerely, ohn J. ino Gener." Counsel