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HomeMy WebLinkAbout86-522 FountaineThomas J. Fountaine, II Borough Manager 401 Blair Street Borough of Hollidaysburg Hollidaysburg, PA 16648 Dear Mr. Fountaine: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 March 7, 1986 ADVICE OF COUNSEL Re: Public Official, Borough Councilmember, Contracting 86 - 522 This responds to your letter of February 10, 1986, in which you requested advice from the State Ethics Commission. Issue: Whether a business which employs a member of the borough council may enter into a contract to provide engineering services to the borough. Facts: As the Rorough Manager for the Borough of Hollidaysburg, Pennsylvania, you have requested the advice of the State Ethics Commission regarding the activities of a member of the borough council. You have requested this advice on behalf of the horough councilmember, You indicate that the horough of Hollidaysburg is in the process of selecting a consulting engineer to he employed on a general retainer contract for a one year period. The horough has prepared detailed request for proposals setting forth the specific services requested. This request for proposal was forwarded to eight firms throughout the Commonwealth of Pennsylvania. One of the firms responding to the borough's request for proposals employs Fred W. Schmidhammer, a memher of the borough council. You indicate that Mr. Schmidhammer is employed hy the FADS Group, a consulting engineering and architectural firm. In this respect, Mr. Schmidhammer is involved in the design of electrical systems, preparation of technical specifications that need administration and construction contracts relating to electrical systems. He has heen employed hy EADS since Novemher 15, 1965. Mr. Thomas 3. Fountaine, II March 7, 1986 Page 2 You advised that throughout the selection process, Mr. Schmidhammer has refrained from participating in any discussion or any votes concerning this matter. He has also puhlicly stated his reason for not participating in discussions on this issue. You indicate that Mr. Schmidhammer is neither an owner nor officer of this company. You further advise that Mr. Schmidhammer, in his private employment capacity, will he performing no functions or services in relation to the horough project. In addition to the foregoing, Mr. Schmidhammer is a memher of the horough council's Public Works Committee. This committee is responsihle for the review and recommendation of projects involving engineering services. You have advised that this committee would he responsihle for reviewing the work performed by EADS prior to the full horough council's approval of the work. You have requested the advice of the State Ethics Commission as to whether there would he any prohihition upon the borough's proposed contract with the FADS Group. You have further requested the advice of the State Ethics Commission as to any prohibition that may he placed upon Mr. Schmidhammer in relation to this situation. • Discussion: Initially, the Ethics Commission notes that as a borough councilmemher you are a puhlic official within the definition of that term under the Ethics Act. See 65 P.S. 402. As such, you are suhject to provisions of the Ethics Act and must conform your conduct to the requirements of the Act. See 65 P.S. 401 et seq. While the Ethics Act contains some restrictions against contracts between the husiness with which a "puhlic , official" or "puhlic employee" is associated and the governmental hody with which the official or employee is associated, the Ethics Act does not totally prohihit a puhlic official or employee or his family or husiness from engaging in husiness activities or contracting, in general with the hody the official or employee serves. Section 3(a) of the Ethics Act does provide that no puhlic official or puhlic employee shall use his puhlic office or any confidential information ohtained through holding of a puhlic office or position to acquire financial gain for himself, his immediate family, or a husiness with which he is associated. See 65 P.S. 403(a). A "husiness with which he is associated" is defined in the Ethics Act as follows: "Rusiness with which he is associated." Any husiness in which the person or a memher of the person's immediate family is a director, officer, owner, employee or holder of stock. 65 P.S. 402. We have been provided with facts to estahlish that Mr. Schmidhammer is an employee of the husiness which would seek to contract with the horough. As such, then Mr. Schmidhammer would he "associated" with this husiness and would he required to ohserve the prohihitions set forth in Section 3(a) of the Ethics Act. This means that he could not use his position as a horough councilmemher to secure financial gain for the FADS Group husiness and could Mr. Thomas J. Fountaine, II March 7, 1986 Page 3 not use any confidential information acquired through the holding of puhlic office or employment to the benefit of that husiness. Thus, primarily, Mr. Schmidhammer should not participate in any decisions, discussions, or recommendations that would lead the horough to award the contract in question to the EATS husiness. In addition to the foregoing, it should he noted that Section 3(a) of the State Ethics Act cited ahove, would prohihit a puhlic official from receiving any financial gain that is not part of the compensation provided hy law. Thus, if hy law, a puhlic official is not entitled to receive certain compensation nr benefits, then his receipt of such items through his puhlic position could he a violation of the State Ethics Act. In this respect, we note that the Borough Code provides that no memher of horough council may he interested in any expenditure of horough funds in excess of $1,000.00 in any year. This provision of the Borough Code further provides, however, that this provision of law would not prohibit the borough from entering into a contract where the borough councilmemher is employed hy a company that contracts with the borough if the borough official or councilmemher serves in a position where he can he of no influence or is otherwise directly henefitting from the borough's award of the contract. In the event that Mr. Schmidhammer is in a position with the EARS Group so as to fall within the prohihition of the Rorough Code, any receipt of a financial gain in violation of that code would also result in his receiving a financial gain other than the compensation that is provided for hy law, thus, resulting in a violation of the State Ethics Act. 53 P.S. .$46404. Allen, 85 -518. You are, thus, advised to consider this provision of law in relation to the instant situation. In the event that there will he no prohihition placed upon Mr. Schmidhammer in relation to the ahove provisions of law, the State Ethics Act will place no out right prohihition upon the borough's award of this contract to the company which employs Mr. Schmidhammer. In relation to this situation, however, the contract should he awarded through an open and puhlic process. In its Opinions in Howard, 79 -044 and Fields, 82 -006, the Commission stated that an open and puhlic process is met hy applying the following standards: 1. prier puhlic notice of the employment or contracting possibility; 2. sufficient time for a reasonahle and prudent competitor /applicant to he ahle to prepare and present an application or proposal; 3. puhlic disclosure of all applications or proposals considered; and 4. puhlic disclosure of the contract awarded or offered and accepted. See also Cantor, 82 -004. Mr. Thomas J. Fountaine, II March 7, 19R6 Page 4 In determining whether the requirements of Section 3(c) of the Ethics Act had heen met, the Commission has adopted a "reasonahleness test" which means that reasonable and prudent competitors of FADS Group business should he 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 or employment. Since you indicate that the borough has advertised will or advertised for _ and /or has requested and received proposals or hids in relation to this contract, it is clear that the open and public process requirements of the Ethics Act have heen or will he satisfied as long as conditions 3 and 4 cited above are also met. Conclusion: Under the facts as have heen set forth above, Mr. Schmidhammer is a "public official" as that term is defined in the Ethics Act and must conform to the requirements of the Ethics Act. Assuming that he stands in the relationship to the business involved as set forth in either Section 3(a) or Section 3(c) of the Ethics Act and that husiness seeks to contract with the governmental body with which he is associated, i.e. the borough council, the requirements of Section 3(a), 3(h), and Section 3(c) mandate that: 1. Mr. Schmidhammer should not have anything to do with the borough's decisions, or votes, discussions regarding the awarding of this contract or work; 2. an open and puhlic process, as descrihed above, must he undertaken prior to any such award of a contract by the horough to this husiness; 3. no confidential information acquired or received through the holding of your public position he used to ohtain advantages or financial gain for this business; and 4. the requirements of Section 3(h) of the Ethics Act must be ohserved, in that nothing of value can be offered, accepted or solicited in exchange for or to influence official judgment. 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. Thomas J. Fountaine, II March 7 1986 Page 5 This letter is a puhlic record and will he made availahle'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 he scheduled and a formal Opinion from the Commission will he issued. Any such appeal must he made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. John J. .nti Genera -T Counsel