HomeMy WebLinkAbout86-529 ClippingerJames R. Clippinger, Chief Counsel
State Public School Building Authority
101 South 25th Street
P.O. Box 3161
Harrisburg, Pennsylvania 17105 -3161
Dear Mr. Clippinger:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
TELEPHONE (717) 783 -1610
April 1, 1Q86
ADVICE OF COUNSEL
86 - 529
Re: Director, Independent State Agency, Contracting with Commonwealth Agency
This refers to your letter of February 18, 1q86, wherein you requested
the advice of the State Ethics Commission.
Issue: Whether the State Ethics Act places any restriction upon the potential
lease contract between a limited partnership, in which a puhlic official is
involved, and an agency of the Commonwealth.
Facts: You indicate that you serve as the Chief Counsel for the State Puhlic
School Building Authority, and the Pennsylania Higher Educational Facilities
Authority, hereinafter collectively referred to as the Authorities. Mr.
Robert K. Bloom currently serves as the Executive Director of the Authorities.
In this position, Mr. Bloom is the Chief Executive Officer of the Authorities
and is responsible for the general supervision, direction and business affairs
of the Authorities. Mr. Bloom has advised you that he is a limited partner in
a Pennsylvania limited partnership which currently owns certain real estate
improvements in the City of Harrisburg. This limited partnership is now
engaging in negotiations to lease certain office space to the Department of
General Services. You have not indicated in your letter of request whether
the facilities to he leased will actually he used by the Department of General
Services or whether that Department is obtaining this lease on behalf of
another Commonwealth agency.
You have advised that Mr. Bloom is not involved, either directly or
indirectly in the negotiations between the limited partnership and the
Department of General Services. You further advised that Mr. Bloom has not
been privy to any confidential information in relation to this transaction.
James R. Cl i ppi nge r, Chief Counsel
April 1, 1986
Page 2
You have requested the advice of the State Ethics Commission as to whether the
State Ethics Act presents any prohibition on this contemplated leasing
arrangement.
Discussion: As the Executive Director of the Authorities, Mr. Bloom is
clearly a public official as that term is defined in the State Ethics Act. 65
P. S. §402. As such, his conduct must conform to the requirements of the Act.
See Rodman, 83 -503; Shuff, 83 -511; Nelson, 85 -008.
Generally, the Commission has reviewed this question on various
occasions. See Trace, 79 -067; Promislo, 84 -580. These cases have been
reviewed under the provisions of Section 3(c) of the State Ethics Act which
provides as follows:
Section 3. Restricted activities.
(c) No public official or public employee or a member of
his immediate family or any business in which the person
or a member of the person's immediate family is a
director, officer, owner or holder of stock exceeding 5%
of the equity at fair market value of the business shall
enter into any contract valued at $500 or more with a
governmental body unless the contract has been awarded
through an open and public process, including prior public
notice and subsequent public disclosure of all proposals
considered and contracts awarded. Any contract made in
violation of this subsection shall be voidable by a court
of competent jurisdiction if the suit is commenced within
90 days of making of the contract. 65 P.S. 403(c).
Within the above provision of law, the Commission has determined that if a
public official stands in the relationship to a business as set forth above,
that before a contract, including a lease may be awarded to said business or
public official, such must be done through an open and public process. See
Howard, 79 -044; Fields, 82 -006. Additionally, this open and public process is
only required when the governmental official , or the business as identified in
Section 3(c) of the State Ethics Act, is contemplating contracting with the
governmental body with which the official is associated. See Bryan, 80 -014;
Lynch, 79 -047. The Commission has determined, that in situations where the
open and public process is required, said process must include the following
standards:
1. Prior public notice of the employment, contracting, or leasing
possibility;
2. Sufficient time for a reasonable and prudent competitor /applicant to
be able to prepare and present an application or proposal;
3. Public disclosure of all applications or proposals considered;
James R. Clippinger, Chief Counsel
April 1, 1986
Page 3
4. Public disclosure of the contract awarded or offered and accepted.
See Cantor, 82 -004.
In reviewing the requirements of Section 3(c) of the State Ethics Act, as
noted above, one of the key elements to be determined is whether the public
official is associated with the governmental body with whom his business is
attempting to contract. In the instant situation, Mr. Bloom is the Executive
Director of the Authorities. The power and duties of these Authorities is
clearly set forth in the enabling legislation. See 24 P.S. §5505; 24 P.S. §7
91.4. Generally, both Authorities are involved with the acquiring, financing,
ref nanci ng, constructing, improving, furnishing, equi ppi ng, and general ly
operating buildings for public schools, facilities and colleges in the
Commonwealth. At first review, it would appear as though Mr. Bloom has no
relationship to the governmental body with whom he will be contracting,
therefore, the open and public process requirements need not . be met. The
Authorities, however, are both comprised of other public officials serving in
the state system. Generally. these individuals include the Governor, the
State Treasurer, the Auditor General , the Superintendent of Public
Construction, the Secretary of Property and Supplies, the President Pro
Tempore of the Senate, the Speaker of the House, the Minority Leader of the
Senate, and the Minority Leader of the House of Representatives. Clearly,
from the above, the Authorities consist of public officials who serve various
other agencies in the Commonwealth. Included among those so serving on the
Authority, is the Secretary of Property and Supplies. Reference to the
Secretary of Property and Supplies, however, is deemed to refer to the
Secretary of General Services. See 71 P.S. §631 (Note). Thus, the Secretary
of General Services, the head of the agency with which the limited partnership
will be contracting, is also a member of the Authorities which Mr. Bloom
serves. It is therefore, argueable that Mr. Bloom is associated with the
Secretary of General Services and for this reason the open and public process
should be required. We believe that employing this process would be
appropriate in light of this situation. In accordance with the open and
public process as noted above, Mr. Bloom may not participate to any degree in
the contracting process. You have indicated that to date, Mr. Bloom has not
been involved in any negotiations and such would be in accord with the State
Ethics Act requirements.
In addition to the foregoing, the State Ethics Act also provides as
follows:
Section 3. Restricted activities.
(a) No public official or public employee shall use his
public office or any confidential information received
through his holding public office to obtain financial gain
other than compensation provided by law for himself, a
member of his immediate family or a business with which
he is associated. 65 P.S. 403(a).
James R. Clippinger, Chief Counsel
April 1, 1986
Page 4
Within the above provision of law, a public official may not use his position
or any confidential information obtained in that position in order to obtain a
financial gain for himself or for a business with which he is associated. The
Act defines business with which one is associated as follows:
Section 2. Definitions.
"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.
Clearly, as a limited partner in the real estate partnership, Mr. Bloom
is associated with that business within the purview of the State Ethics Act.
Therefore, he should not use his position in order to obtain any benefit for
that partnership. As previously noted, you have not indicated in the facts
whether the lease of the premises involved will be specifically for the use of
the Department of General Services or whether the Department of General
Services is securing this premises for some other Commonwealth agency. In any
event, a number of public officials of the Commonwealth serve as members of
the respective Authorities served by Mr. Bloom. If the premises to be leased
are in relation to any of the agencies, specifically under the jurisdiction of
any of these individuals or in relation to the Authorities, Mr. Bloom must, of
necessity, abstain from any participation in the negotiation process as well
as in any discussions with these individuals about said premises.
Additionally, Mr. Bloom should disclose to the respective Authority members
that are involved, his participation as a member of the limited partnership,
and such disclosure should be appropriately noted in the Authority records.
Finally, while it is unlikely that the situation would ever arise, Mr.
Bloom should abstain from participating in any matter that appears before the
Authorities that would involve an agency or entity that is leasing the
premises owned by the limited partnership. See Conner, 85 -026.
Conclusion: The State Ethics Act places no per se prohibition upon the
contrcting between a limited partnership in which a public official is a
partner, and in the Commonwealth. The public official so involved in the
partnership must abstain from participating in the negotiation and award of
the contract as both the private and a public official. Additionally, the
requirements of the open and public process should be met in the instant
situation. The public official should not, in the future, participate in any
matter that conies before the Pennsylvania Higher Educational Facilities
Authority and the State Public School Builders Authority that involves an
entity or agency that is leasing the premises owned by the limited partnership
of which he is a member.
James R. Clippinger, Chief Counsel
April 1, 1986
Page 5
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.
Si ncere
o n J. C• in
Gener. ounsel