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Home My WebLink About82-556 SheehanRichard C. Sheehan, Esquire 1020 South Park Avenue Audubon, PA 19401 Dear Mr. Sheehan: Mailing Address: STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 June 17, 1982 ADVICE OF COUNSEL 82 -556 RE: Insurance Payments, Supervisor Owns Auto - Repair Shop This responds to your letter of May 19, 1982 in which you, as Solicitor for Lower Providence Township, requested advice from the State Ethics Commission. Issue: You asked whether there is a violation of the Ethics Act where payments are made by Township check for repairs to Township owned vehicles to an auto - repair company owned by one of the Township Supervisors. Facts: Maloney's Auto -body, Incorporated (hereinafter "Maloney's ") is owned by a Township Supervisor in Lower Providence Township. Maloney's makes repairs to automobiles owned by the Township. Payment to Maloney's for services performed is made by Township check. The Township is reimbursed for the damage to its automobiles from either its own insurance company or the insurance company of the third party. When the Township's insurance company makes, the payment, the Township's general fund is charged for the amount of the applicable deductible or the particular policy. The amounts involved may exceed $500, but vary with each repair job, depending on the extent of the damage. The "jobs" are not awarded by any public process nor is there any public notice given that such "jobs" will be undertaken. State Ethics Commision" • 308 Finance Building • Harrisburg, Pennsylvania Richard C. Sheehan, Esquire June 17, 1982 Page 2 Discussion: It is clear that a Township Supervisor is a "public official" within the meaning of the Ethics Act as an elected official. As such the Supervisor's conduct must conform to the requirements of the Ethics Act. The main question, therefore, is whether the payment by the Township to Maloney's is a "contract" within the terms contemplated by Section 3(c) of the Ethics Act which states that: No public offical or public employee or a member of his immediate family or business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body 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. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. 403(c). Although the Act itself does not define "contract" it is generally understood that a contract is a bargained -for- exchange for the performance of a promise. If the "jobs" in question here establish a contractual relationship between the Township and Maloney's (a bargained- for - exchange by the Township with Maloney's for the repair of the automobiles) then the situation gives rise to a "contract" between the Township and the businsess of one of its Supervisors and is within the purview of Section 3(c) of the Ethics Act. Of course, if the contract is between Maloney's and the insurance company Section 3(c) is not implicated. However, in the facts as you have presented them it is apparent that the Township is the entity which is contracting with Maloney's or at least has secured the services of Maloney's in these repair "jobs." In such a circumstance the requirements of Section 3(c) must be met and we will further review those below. Richard C. Sheenan, Esquire June 17, 1982 Page 3 Assuming that the contract for repair here is between the Township and Maloney's, Section 3(c) requires that the contract be awarded only after an open and public process providing for prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In interpreting these requirements the Commission has adopted a "reasonableness test" to determine whether a particular procedure satisfies the requirements of Section 3(c). Howard, 79 -044. Essentially, each case must be judged on its own merits but the prime requirement is that there should be a sufficient time for a reasonable and prudent competitor to be able to prepare and submit a proposal prior to the award of the contract. Kemberling, 82 -519. While the amount payable for auto repairs may vary during any particular year or period of time, we suggest you consider the process described in Steff, 80 -535 (copy attached) to avoid any problems under Section 3(c) of the Ethics Act. In Steff, we suggested that an annual estimate be prepared and a contract sought for the anticipated repair work. Thus, where the contract is between the Township and Maloney's, the fact that the Township may be reimbursed through insurance monies or third party funds does not preclude the application of Section 3(c) to the basic "jobs" which amount to a contract and which must be "awarded" as discussed above. It is also important to remember that Section 1 of the Ethics Act, 65 P.S. 401, amonishes a public official that he must avoid the "appearance of a conflict with public trust." This provision was intended to cover arrangements, contractual or otherwise, between officials and the governmental bodies which they serve which, although wholly above board in intent and performance, present a potentially misleading or damaging appearance to the general public. In addition, Section 3(a) of the Ethics Act states: No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). Richard C. Sheenan, Esquire June 17, 1982 Page 4 Section 3(a) taken in light of Section 1 of the Ethics Act makes it clear that the Supervisor in question must abstain from discussions, votes, etc., leading up to and the award of the auto - repair contract. While the Supervisor may vote on the undisputed and routine payment of bills associated with the repair contract after the contract is awarded, even assuming that the contract is awarded to Maloney's, he must abstain from discussions and official actions otherwise relating to this contract. Stewart, 79- 070 and Reid, 82 -052. Obviously, to the extent that any routine bill or payment to Maloney's might become subject to question, dispute, or adjustment, the Supervisor must similarly abstain. Conclusion: The public notice and disclosure provisions of Section 3(c) of the Ethics Act cover contracts between the Township Supervisor's business (Maloney's) and the Township for the repair of the Township vehicles. Section 3(c) does not restrain the Supervisor in contracting through his business with an insurance company. The Supervisor in discussing, voting, etc,. on the issues of repair work for contracts or payment thereof must be guided by the above discussion. 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 may be scheduled and a formal Opinion from the Commission will be issued. You should make such a request or indicate your disapproval of this Advice within the next 30 days. SSC /rdp Attachment Sincerely, Sandra S. ristianson General Co nsel