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HomeMy WebLinkAbout83-603 NickleachMr. Joseph A. Nickleach, Esquire Nickleach & Owen 310 Maket Street Kittanning, PA 16201 RE: Municipal Authority, Contracting Dear Mr. Nickleach: Mailing Address. STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 October 17, 1983 ADVICE OF COUNSEL 83 -603 This responds to your letter of September 28, 1983, in which-you requested advice from the State Ethics Commission. Issue: You ask whether a member of an Authority, which you serve as Solicitor, may engage in contracting under certain circumstances with the Authority. Facts: You are Solicitor for a Municipal Water Authority, hereinafter the Authority, and as such requested advice from the State Ethics Commission. You ask us to assume that the Authority members receive a small payment for attending meetings and to assume that this payment is not reimbursement for actual expenses. The Authority is in the pcocess of building a new water - treatment plant. Specifications have been drawn by the Authority engineer and the particular Authority member about whose conduct you raise this question had nothing to do with the drafting of specifications. Bidding will be undertaken in accordance with the Municipal Authorities Act and the project will be duly advertised and bids opened at a public meeting and awarded in accordance with the requirements of the Municipal Authority Act. The particular Authority member in question may wish to submit a bid for this project. You indicate that you have drawn the conclusion from your own research and from previous conversations with this office that so long as: (1) the bidding process is an open and public one; (2) this particular Authority member had nothing to do with the drafting of the specifications; (3) the particular Authority member who may wish to contract to the Authority does not participate in any way in the discussions or voting on the awarding State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania Mr. Joseph A. Nickleach, Esquire October 17, 1983 Page 2 of the contracts, then he may remain a member of the Authority and bid on the Authority's project. Likewise, it is also your understanding that if this particular Authority member resigns from the Authority, he would be prohibited from dealing directly with the Authority for a period of one -year after he would leave the Authority. Discussion: Based on your assumption that these individuals are appointed and receive compensation which is not reimbursement for actual expenses, we will assume that the Authority members are "public officials" as that term is set forth in the Ethics Act, 65 P.S. 402. Accordingly, the conduct of this particular Authority member as a "public official" would be governed by the Ethics Act. While the Ethics Act contains some restrictions against contracts between the business with which a "public official" is associated and the governmental body with which the official is associated, the Ethics Act does not totally prohibit a public official or his family or business from engaging in business activities or contracting, in general with the body he serves. Section 3(a) of the Ethics Act provides that no public official shall 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. 4503(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. 402. For purposes of this Advice, we will assume that the individual Authority member in question is a director, officer, owner, or employee or holder of stock of the business which would seek to contract with the Authority. As such, then the Authority member 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 the Muncipal Authority member could not use his position as a member of the Authority to secure financial gain for his business and could not use any confidential information acquired through the holding of public office on the Authority to the benefit of that business. Thus, you are correct that the Municipal Authority member should not participate in any decisions, discussions, or recommendations that would lead the Authority to award the contract in question to his business. Since you have indicated that this individual was not involved with the drafting of specifications for the bid proposals, it would also seem that the requirement that he not acquire or use confidential information to the benefit of his business is also being met. Mr. Joseph A. Nickleach, Esquire October 17, 1983 Page 3 Section 3(b) of the Ethics Act also states, 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 officials vote, action, or judgment would be influenced thereby. See 65 P.S. 403(b). The Authority member who would seek to contract with the Authority 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 the individual members of the Authority. 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 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. In this Advice we will also assume that the individual Authority member who wishes to contract with the Authority is either an officer, director, or owner of greater than 5% of the equity at fair market value of the business in question. Assuming this, you should be advised of previous Opinions of the Commission held that the term "governmental body" in Section 3(c) refers to the governmental body with which the individual is "associated." Bryan, 80 -014 and Lynch, 79 -047. The "governmental body" with which the Authority member is associated is clearly the Authority. Therefore, the open and public process requirements of Section 3(c) would apply if and when the Authority member's business would seek to contract with the Authority in an amount in excess of $500. It should be emphasized, however, that Section 3(c) presents no absolute prohibition to the contract between the Authority and this business. Section 3(c) has been interpreted by the Commission to require the following: 1. prior public notice of the contract possibility; 2. public disclosure of all proposals considered; and 3. public disclosure of the award of the contract. 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 the Authority members business should be provided a sufficient time within which to submit their proposals and, of course, should have had prior notice of the opportunity to secure such a contract. Since you indicate that the Authority will be advertising for and receiving bids in relation to this contract, it is clear that the open and public process requirements of the Ethics Act will be met. .r. Joseph A. Nickleach, Esquire October 17, 1983 Page 4 Finally, you ask whether, if the Authority member were to resign, whether he would be faced with any restrictions on his activity vis -a -vis the Authority within the first year after his resignation from the Authority. Section 3(e) of the Ethics Act regulates the conduct of "former public officials" as follows: (e) No former official or public employee shall represent a person, with or without compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 P.S. 403(e). It is obvious that upon resignation from the Authority, this individual would become a "former public employee" whose conduct would be subject to the restrictions of Section 3(e). Further, you should be advised that the term "representation" has been interpreted by the Ethics Commission to preclude such activities as: 1. personal appearances before the governmental body with which the individual has been associated, in this case the Authority and this personal appearance restriction has been interpreted to include negotiating contracts with that body; 2. attempts to influence the governmental body; 3. participating in any manner before the former governmental body in any case or matter over which the individual former public official had supervision, direct involvement, or responsibility while employed or serving on the governmental body, in this case the Authority; 4. lobbying, that is representing the interests of any person before the Authority to influence that body in relation to legislation, regulations, etc. Opinions of the Commission further indicate that a former public employee may appear in a third forum such as state or federal court, may make general informational inquiries of the governmental body with which he was associated and may generally utilize the knowledge and expertise gained through their service as public officials except as set forth above. Additionally, a former public official would not violate Section 3(e) of the Ethics Act if he were to merely administer a contract that has already been awarded in accordance with the above restrictions. Notably, however, this allowable activity would not extend to negotiating or re- negotiating such contract that might exist between a former governmental body and the former employee or official or a business Mr. Joseph A. Nickleach, Esquire October 17, 1983 Page 5 with which he is associated following his termination of service with the governmental body. Additionally, the Commission has held that within the first year after an individual leaves public service he may not sign and submit under his own signature or permit his name to appear on bids or proposals which would be submitted to the governmental body which he served. The business or other persons within the business with which the former public official may become associated or employed may make, submissions to the governmental body so long as the individual former public official's name does not appear on such a submission as either the signator, the preparer, or the individual listed in the proposal as potential technical or other advisor. See Kilareski, 80 -054 and Dalton, 80 -056. Conclusion: Under the facts as you have set forth above, this individual would be a "public official" as that term is defined in the Ethics Act and must conform his conduct to the requirements of the Ethics Act. Assuming that this individual stands in the relationship to the business as set forth in either Section 3(a) or Section 3(c) of the Ethics Act to the business which would seek to contract with the governmental body with which he is associated, the Authority, the requirements of Section 3(a) and Section 3(c) mandate that: 1. the member should not have anything to do with the Authority's decisions or discussions regarding the awarding of the contract upon which he may bid; 2. an open and public process as described above be undertaken prior to any such award of a contract by the Authority to the business with which this individual board member is associated; 3. that no confidential information received through his holding of public office be used to obtain advantages or financial gain for this business. Additionally, if this individual were to resign from the Authority, the restrictions of Section 3(e) would be applicable and must be met. These restrictions as outlined above, would apply to the individual for a one -year period following his resignation from the Authority. 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. Mr. Joseph A. Nickleach, Esquire October 17, 1983 Page 6 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. SSC /rdp Sincerely, Sandra S. ristianson General Counsel