HomeMy WebLinkAbout89-538 SchubertMr. Michael A. Schubert
2220 Highland Court
Harrisburg, PA 17110
STATE ETHICS COMMISSION
308 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 1 71 08 -1 470
TELEPHONE (717) 783 -1610
ADVICE OF COUNSEL
May 3, 1989
89 -538
Re: Public Employee, Pennsylvania Turnpike Commission,
Contracting with General Assembly or local government
Dear Mr. Schubert:
This responds to your letter of April 3, 1989, in which you
requested advice from the State Ethics Commission.
Issue: You ask whether as a employee of the Turnpike
Commission you or a business you represent may engage in
contracting under certain circumstances with the General Assembly
or local government.
Facts: You are a public employee, serving with the
Pennsylvania Turnpike Commission, hereinafter the PTC. As an
employee of the PTC you state that you represent a company which
produces computer software design to aid legislators and local
government officials relative to delivering constituent
services. You request advice as to what conflicts might occur
if you were to offer this software to members of the General
Assembly or local government officials in your spare time.
Discussion: Initially, the Ethics Commission notes that as a
PTC employee 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 serve;.
Mr. Michael A. Schubert
May 3, 1989
Page 2
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.
S402.
For purposes of this Advice, we have been provided with
facts to establish or can assume that you are a director,
officer, owner, or employee or holder of stock of the business
which would seek to contract with the members of the General
Assembly or local government official. As such, then 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 public position as a
means to secure financial gain for computer software business and
could not use any confidential information acquired through the
holding of public office or employment to the benefit of that
business. Thus, you could not use your office or the equipment
or supplies or personnel of PTC to conduct your private business
activities since such activity would be in contravention to the
Ethics Act. See Dorrance, Order 456; Cohen, 610 -R
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
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, Opinion 79 -044. In this
Advice we have been provided with facts to establish or can
assume that you are either an officer, director, or owner of
Mr. Michael A. Schubert
May 3, 1989
Page 3
greater than 5% of the equity at fair market value of the
business in question. Given this, we must review the previous
Opinions of the Commission which 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, Opinion 80 -014 and
Lunch, Opinion 79 -047. The "governmental body" with which you
are associated is PTC. Therefore, the open and public process
requirements of Section 3(c) of the Ethics Act would apply if and
when your business would seek to contract with the PTC in an
amount in excess of $500 or more. However, Section 3(c) would
not have application to the General Assembly or to local
government since they are not the "governmental body" with which
you are associated.
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 PTC in an amount of $500 or more. You
and /or this business /company could, however, contract with any
governmental body other than PTC 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.
It should be emphasized, that even though Section 3(c) of
the Ethics Act presents no absolute prohibition to the contract
between you and PTC, certain requirements as to the open and
public process must be met. In its Opinions in Howard, Opinion
79 -044 and Fields, Opinion 82 -006, the Commission stated that an
open and public process is met by applying the following
standards:
1. prior public notice of the
possibility;
2. sufficient time for a
competition /applicant to be
an application or proposal.
3. public disclosure of all
considered; and
employment or contracting
reasonable and prudent
able to prepare and present
applications or proposals
4. public disclosure of the contract awarded or offered
and accepted. See also Cantor, Opinion 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
Mr. Michael A. Schubert
May 3, 1989
Page 4
have had prior notice of the opportunity to secure such a
contract or employment.
Conclusion: Under the facts as have been set forth above, you
area "public official /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 PTC, the
requirements of Section 3(a), 3(b), and Section 3(c) mandate
that:
such.
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
the PTC to 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
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.
Section 3(c) of the Ethics Act would not restrict your
contracting with the General Assembly on local government since
they are not the "governmental body" with which you are
associated. Lastly, the property of the proposed conduct has
only been addressed under the Ethics Act.
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
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may request that the full
Mr. Michael A. Schubert
May 3, 1989
Page 5
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 in writing
and must be received at the Commission within 15 days of the date
of this Advice pursuant to 51 Pa. Code S2.12.
Sincerely,
Vincent J. Dopko,
General Counsel