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HomeMy WebLinkAbout83-504 SpencerMr. James C: Spencer P.O. Box 10036 Erie, PA 16514 Dear Mr. Spencer: mgli,Addr. STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 January 11, 1983 ADVICE OF COUNSEL 83 - 504 This responds to your letter of September 14, 1982, in which you requested advice for the State Ethics Commission. Issue: You ask whether any ethical problems would arise if you, a township auditor, joined a company which donates the equipment and fuel necessary for a 60 -day test of equipment to the township free of charge. Facts: You are an elected auditor in Harborcreek Township, Erie County hereinafter, the Township. The Township supervisors are exploring the possibility of purchasing equipment to convert either some or all of the Township vehicles to compressed natural gas (CNG). You are considering joining with other partners in a new company located in Erie to sell and equip vehicles with CNG equipment. The company is known as Alternate Fuel Systems, Inc. (AFS). AFS has offered to equip two Township vehicles with the conversion equipment for a two -month (60 -day) test period, free of charge. AFS will also supply the compressed gas to run the trucks at no charge to the Township for the test period. Discussion: As an elected auditor in Harborcreek Township there is no doubt that you are a public official within the meaning of the Ethics Act, 65 P.S. §401 et seq. Accordingly, your conduct as an elected auditor is governed by the Ethics Act. However, while the Act contains some restrictions against contracting with the governmental body with which you are associated Section 3(c), the Act does not prohibit a person from engaging in outside employment or other ventures on their own time. Essentially, the Ethics Act precludes engaging in ventures which would constitute a conflict of interest with your public employment. The Ethics Commission had defined "conflict of interest" as existing where an individual represents two or more persons whose interests are adverse to each other. See Alfano, 80 -007. While the situation you present does not present a per se conflict of interests, you should be aware of some of the restrictions that apply to you under the Ethics Act. State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania James C. Spencer January 7, 1982 Page 2 Section 3(a) of the Ethics Act provides that no public official should use his public office or any confidential information obtained through holding public office to acquire financial gain for himself, his immediate family, or a business with which he is associated. 65 P.S. Section 403(a). You may not use your office as elected auditor to secure financial gain for your business, AFS, nor may you pass any confidential information acquired through being an auditor to AFS. In Section 3(b) of the Act, the legislature has stated that no person shall give to a public official, nor shall any public official accept, any thing of value based on any understanding that the official's vote, official action or judgment would be influenced thereby. 65 P.S. 403(b). Future employment is a thing of value and thus you may not allow your official actions or judgment with regard to relations with AFS to be affected by your association with AFS. Similarly, the Ethics Act would apply to AFS as a "person" as that term is defined in the Act, and would preclude your company, under Section 3(b) of the Ethics Act, from offering any thing of value to a public official or entity based on the understanding that the official's conduct would be influenced thereby. In this light, the donation of the equipment and fuel to the Township for the free test period is an obvious "thing of value" and could not be offered with the understanding that the resultant conduct of the Township, i.e., to award any possible conversion contract and your company, would be influenced thereby. Thus, the free equipment and fuel for the test period cannot be used by AFS in order to influence the conduct of a public official or entity to award AFS a contract pursuant to Section 3(b). In order to insure that the free test equipment is not being used to influence the official judgment as to the Township's prospective purchase of such conversion equipment, we would require that any use of the free test equipment be made only in conjunction with the open and public process described in Section 3(c) of the Ethics Act. Section 3(c) provides that no public official, member of his immediate family or any business in which the person or a member of his immediate family is an officer, director or owner of greater than 5% of the equity at fair market value may contract with a governmental body unless the contract valued at more than $500 has been awarded through an open and public process. See Howard 79 -044. Previous opinions of the Commission have held that the term governmental body" in Section 3(c) refers to the governmental body with which the public official is "associated." Bryan, 80 -014; Lench, 79 -047. Therefore, the "open and public process" limitation of Section 3(c) applies if and when you and your firm attempt to contract with the Township. You are attempting to secure Township James C. Spencer January 7, 1982 Page 3 business through this free trial offer. To comply with the intent and spirit of the Ethics Act this offer and opportunity to provide free services and fuel should be made available to competitors of AFS, if any. Then, the Township would be able to objectively compare services and select a contractor after the requisite open and public process. It must be emphasized that there is no absolute prohibition on AFS as to contracting with the Township provided that any contract valued in excess of $500 is awarded only after an open and public process. In its opinion in Howard, 79 -044, the Commission stated that an open and public process must meet the following criteria: (1) Prior public notice; and (2) public disclosure of all proposals considered; and (3) public disclosure of the award of the contract. If these standards are complied with and competitors have a reasonable time within which to submit their proposals, including the equivalent opportunity to provide free trial - period, conversion, and fuel, your firm (AFS) could contract with the Township for a contract in excess of $500, should the opportunity arise. This process will, insure that Township officials are not influenced in their award of any contract by the free use of equipment and fuel supplied only by AFS. Finally, if AFS contracts with the Township, as auditor, you should play no role in auditing and approving the payments to AFS under same. Conclusion: As a public official, you must avoid conflicts and the appearance of conflicts of interest by complying with the requirements of Sections 403(a) and (b) in not using confidential information gained through your public office to obtain financial gain and in not accepting or offering any thing of value in return for favorable official actions. You should also, as an associate of AFS and a Township Auditor, enter into a contract with the Township valued in excess of $500, only if that contract is awarded through an open and public process, which provides for: (1) Prior public notice; and (2) public disclosure of all proposals considered; and (3) public disclosure of the award of the contract. James C. Spencer January 7, 1982 Page 4 Competitors of AFS should likewise be provided with the same free -trial offer that AFS is proposing to avoid any appearance that AFS is being permitted opportunities unavailable to other firms. If AFS contracts with the Township, you should not audit or approve contract /payments to AFS. 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 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 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. CW /rdp Sincerely, Sandra S. Chr tianson General Coun el