HomeMy WebLinkAbout83-526 SheetzMr. Donald L. Sheetz
105 Railroad Street
Kutztown, PA 19530
Dear Mr. Sheetz:
Mailin Address
STATE ETHICS COMMISSION
P.O. BOX 1 179
HARRISBURG, PA 17108
TELEPHONE: (717) 783 -1610
April 6, 1983
ADVICE OF COUNSEL
RE: Borough Superintendent, Contracting, Family Business
State Ethics Commission • 308 Finance Budding • Harrisburg, Pennsylvania
83-526
This responds to your letter of February 9, 1983, in which you requested
advice from the State Ethics Commission.
Issue: You request advice as to whether the Borough of Kutztown may do
business with your family -owned rental center where you are both the Borough
Superintendent and the President of this center knownas Don Sheetz,
Incorported.
Facts: You are the Borough Superintendent for the Borough of Kutztown,
Pennsylvania. You oversee the operations and maintenance of the Borough's
utilities, prepare specifications for bidding for equipment and materials, and
review bids received and advise counsel as to the identity of the successful
bidders. You have worked for the Borough for 17 years, and apparently have a
good working relationship with the Borough.
Last year your family decided to go into the equipment rental and storage
area of business in order to make equipment available to home owners,
contractors, and /or municipalities in the area. Upon forming your business
you also formed a corporation known as Don Sheetz, Incoporated. You have a
full -time employee /manager, your wife is the secretary- treasurer, and your
brother and sister -in -law and your son are all on the Board. You are listed
as the President. Although the Corporation is named after you, your
brother -in -law has controlling interest in the Corporation. Your full -time
occupation is with the Borough of Kutztown.
Over the years the Borough has rented equipment either in Allentown or
Reading and has had the additional cost of labor and transporting such items
to and from Kutztown. Since your prices at the rental center parallel the
prices of other rental centers, you believe that renting from your business
and the transportation savings associated with rental from same would be of
benefit to the Borough of Kutztown. You would, therefore, like to know
whether and under what conditions the Borough of Kutztown may do business with
your rental center.
Mr. Donald L. Sheetz
April 6, 1983
Page 2
Discussion: As the Borough Superintendent of the Borough of Kutztown, there
is no doubt that you are a public employee within the meaning of the Ethics
Act, 65 P.S. 401 et seq. Accordingly, your conduct as a Borough
Superintendent is governed by the Ethics Act. However, while the Act contains
some restrictions against contracts between a public employee and the
governmental body with which you are associated (the Borough), the Act does
not totally 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 who's interests
are adverse to each other. See Alfano, 80 -007. While the situation you
present does not present a per se conflict of interest, you should be aware of
some of the restrictions that apply to you under the Ethics Act.
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. 403(a). "Business" with which
you are "associated" is defined as:
"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
Under this definition, you are clearly "associated" with the Rental Center.
Thus, you may not use your position as Borough Superintendent to secure
financial gain for your business, the Rental Center, nor may you pass any
confidential information acquired through being a Borough Superintendent to
the Rental Center.
Section 3(b) of the Act states that no person shall give to a public
official /employee, nor shall any public official /employee accept, any thing of
value based on any understanding that the official's vote, action or judgment
would be influenced thereby. 65 P.S. 403(b). Future employment- income, etc.
is a thing of value and thus, you may not allow your official actions or
judgments with regard to relations with the Rental Center to be effected by
your association with the Rental Center.
Mr. Donald L. Sheetz
April 6, 1983
Page 3
Similarly, the Ethics Act would apply to the Rental Center as a "person"
as that term is defined in the Act to include a corporation, and would
preclude your Company, under Section 3(b) of the Ethics Act, from offering any
thing of value to a public official or employee based on the understanding
that the official's conduct would be influenced thereby. In this light, any
possible discounts could not be offered with the understanding that the result
of conduct of the Borough, i.e., to award any possible rental contracts to
your Company, would be influenced thereby. Thus, the Rental Center could not
offer anything of value in order to influence the conduct of a public official
or employee to award the Rental Center any contract with the Borough or
otherwise.
Further, Section 3(c) of the Act states that no public official, member
of his immediate family or any 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
the governmental body with which the official is associated unless the
contract 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 and Lench, 79 -047.
Therefore, the "open and public process" limitation of Section 3(c) applies
if, and when, you and your corporation attempt to contract with the Borough.
It must be emphasized Section 3(c) presents no absolute prohibition on a
Rental Center contract with the Borough. Section 3(c) requires, however, that
any contract valued in excess of $500 be 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 dislcosure of the award of the contract.
If these standards are complied with and competitors have a reasonable time
within which to submit their proposals, your corporation, the Rental Center,
could contract with the Borough for a contract in excess of $500, should the
opportunity arise. This process will insure that Borough officials are not
influenced in an award of any contract by any use of equipment supplied by the
Rental Center.
Finally, if the Rental Center contracts with the Borough in accordance
with Section 1 of the Ethics Act, in order to avoid any appearance of a
conflict of interest, you must abstain from any action, recommendation or
other process of consideration of the award of the contract to the Rental
Center.
Mr. Donald L. Sheetz
April 6, 1983
Page 4
Conclusion: As a public employee, you must avoid conflicts and the appearance
of conflicts of interests by complying with the requirements of Sections 3(a)
and (b) of the Ethics Act and not using confidential information gained
through public office to obtain financial gain and not accepting or offering
any thing of value for favorable official actions. You should also, because
of your association with the Rental Center and as the Borough Superintendent,
enter into a contract with the Borough valued in excess of $500, only if that
contract is awarded after an open and public process in compliance with
Section 3(o) of the Ethics Act, which provides for:
CW /rdp
(1) Prior public notice; and
(2) public disclosure of all proposals considered; and
(3) public disclosure of the award of the contact.
When the Borough considers whether or not to award the contract to the
Rental Center, you must, in order to avoid any conflict of interest or the
appearance of a conflict of interest under Section 1 of the Ethics Act,
abstain from any participation in the decision - making process of whether or
not to award the contract or by which the contract is awarded.
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.
Sincerely,
andra S. Ch
General Coun =l
tianson