HomeMy WebLinkAbout83-567 BalderstonMrs. Bettylou Balderston
Borough Manager
New Hope Borough Council
Box 141, 41 North Main Street
New Hope, Pennsylvania 18938
RE: Borough Manager; Contracting; Family Business
Dear Mrs. Balderston:
Marling Address
STATE ETHICS COMMISSION
P.O. BOX 1179
HARRISBURG, PA 17108
TELEPHONE: (717) 783 -1610
June 20, 1983
ADVICE OF COUNSEL
83 -567
This responds to your letter of March 11, 1983, in which you, as Borough
Manager for New Hope, Bucks County, Pennsylvania, requested advice from the
State Ethics Commission.
Issue: You are the Borough Manager of New Hope. Your husband is a salaried
employee and major stockholder of a general contracting business which is
family -owned and operated. The only other licensed general contractor within
the municipality is a Councilman.
Occasionally, the Borough must hire your husband to perform certain
duties which the New Hope Street Department cannot perform. These duties
usually arise in conjunction with snow periods and snow storms because the
municipality is not equipped to handle certain volume situations. The extent
of the Borough's use of your husband's company is determined by the amount of
snow in any given year. You indicate that in a season of heavy snow, the
Borough might incur bills from your husband In a range from $1,000 to $2,000.
You state that the Borough does not contract by open bid with any area
company for such work because it is difficult to anticipate what the Borough's
requirements will be in any given year. You further state that you simply
have three companies "on call" to the Borough whenever the need should arise.
You add that almost none of the services for which you require the outside
equipment are substantial enough to be placed per bid, and that all situations
in which this problem arises are emergency situations.
In this regard, you are concerned about the legality of the Borough's
continuing to call upon Mr. Balderston for his services when the need arises,
and you have requested advice from the State Ethics Commission.
State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania
Mrs. Bettylou Balderston
June 20, 1983
Page 2
Discussion: As the Borough Manager of New Hope, you are a "public employee"
within the meaning of the Ethics Act, 65 P.S. 401 et. seq. Accordingly, your
conduct as Borough Manager is governed by the Ethics Act. However, while the
Act contains some restrictions against contracts between the business with
which a public employee is associated and the governmental body with which
that employee is associated, the Act does not toally prohibit a person or his
or her family from engaging in business ventures or outside employment 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 has 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 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 his
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 your husband's
general contracting business. Thus, you may not use your position as Borough
Manager to secure financial gain for your husband's business, the general
contracting business, nor may you pass any confidential information .acquired
through being Borough Manager to your husband's business. In this respect
you, as Manager, should not participate in any decisions, discussions, or
recommendations that would lead the Borough to engage the services of your
husband's firm.
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 general contracting service to be
influenced by your association with that service.
Mrs. Bettylou Balderston
June 20, 1983
Page 3
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 a 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 Lynch 79 -047.
Therefore, the "open and public process" limitation of Section 3(c) applies
if, and when, your husband's general contracting service attempts to work for
the Borough under a contract worth $500 or more.
It must be emphasized that Section 3(c) presents no absolute prohibition
on your husband's contracting 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 disclosure of the award of the contract.
If these standards are complied with and competitors of your husband's
business have a reasonable time within which to submit their proposals, your
husband's business, the general contracting service, could contract with the
Borough of New Hope for a contract in excess of $500, should the opportunity
arise. This process will insure that even the appearance of a conflict of
interest by virtue of your being Borough Manager will not occur. In addition,
as generally stated above, if your husband's contracting service 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 also abstain from any
action, recommendation, or other process of consideration of the award of the
contract to your husband's general contracting business.
You have indicated that you do not contract by open bid for the necessary
work because you cannot be certain of future requirements and because, as you
state, none of the work is substantial enought to be placed for bid. However,
under the Ethics Act, the open and public process may not be by- passed even in
an emergency situation. Although it is difficult to estimate your yearly
cost, those cost if estimated to be above $500 each year. Should follow the
open and public process, whether the exact contract amount can be ascertained
in advance or not. Previously, in a similar situation we recommend that an
annual bid - proposal format be adopted, with an estimation of services needed
and an hourly rate be set. See Steff, 80 -535.
Mrs. Bettylou Balderston
June 20, 1983 _ Page 4
Conclusion: As a public employee, you must avoid conflicts and the appearance
of conflicts of interest 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 action. Also, because of your
association with your husband's general contracting service and your
employment as Borough Manager, your husband's service may 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(c) of
the Ethics Act, 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.
When the Borough considers or decides whether or not to award the
contract to your husband's general contracting service, you as Borough Manager
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 and to whom the contract is to be awarded.
Although the Commission recognizes the difficulty of ascertaining your
future needs and thus subjecting such proposals to an open and public process,
the process enumerated above must be followed in order to comply with the
letter and spirit of 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 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.h'r' 0
General Counel