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HomeMy WebLinkAbout86-564 SechristMs. Barbara J. Sechrist Eaton Township Supervisors P.O. Box 476 Tunkhannock, PA 18657 Re: Public Official, Contracting Dear Mr. Sechrist: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 May 21, 1986 ADVICE OF COUNSEL 86 - 564 This responds to your letter of May 2, 1986, in which you requested advice from the State Ethics Commission. Issue: You ask whether as a Township Secretary /Treasurer a husiness by which you are employed may engage in contracting under certain circumstances with the township. Facts: You are a Secretary /Treasurer, serving with the Eaton Township Board of Supervisors, hereinafter the Township and, as such, you have requested advice from the State Ethics Commission. Facts: You advise that in addition to serving as the Secretary /Treasurer of the Township, you also work full -time at an oil and gas distributorship. This company, Bowman Petroleum, routinely bids on gas and oil contracts advertised by Eaton Township. You advise that this company is currently holding a Township contract. You were appointed Township Secretary /Treasurer in January of 1986. You advise that your position at Bowman Petroleum is one of an office manager. You advise that you have no impact on the pricing of the hid and that you do not participate in that companies structuring of the bid. Additionally, you advise that as Secretary /Treasurer you do not have any input into the decision as to whom the hid is awarded. You have requested the advice of the State Ethics Commission as to whether your position, as Secretary /Treasurer in the Township, would prohihit Bowman Petroleum from future contract bidding under the State Ethics Act. Discussion: Initially, the Ethics Commission notes that as a Township Secretary /Treasurer you are an official within the definition of that term under the Ethics Act. See 65 P.S. 5402. As such, you are subject to Ms. Barbara J. Sechrist May 21, 1986 Page 2 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 business with which a "public official" or "public employee" is associated and the governmental body with which the official or employee is associated, the Ethics Act does not totally prohibit a public official or employee or his family or business from engaging contracting, in general with the body the official or employee serves. Section 3(a) of the Ethics Act does provide that no public official or public employee shall use his public office or any confidential information obtained through holding of a public office or position to acquire financial gain for himself, his immediate family, or a business with which he is associated. See 65 P.S. 403(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 have been provided with facts to establish that you are an employee of a business that contemplates contracting with the Township. As such, you 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 you could not use your position as a Secretary /Treasurer to secure financial gain for Bowman Petroleum and could not use any confidential information acquired through the holding of public office or employment to the benefit of that business. Thus, primarily, you should not participate in any decisions, discussions, or recommendations that would lead the Township to award the contract in question to Bowman Petroleum. You should also not participate in any invoicing or billing as Secretary /Treasurer that would result in the Township's payment of monies to that company. Thus, in the event that Bowman Petroleum were to obtain future contracts or in the event that you are called upon to participate as a Secretary /Treasurer in any matter that relates to this company, you must abstain from such participation. Section 3(b) of the Ethics Act also states that no person shall give to a public official or employee nor shal 1 any public official or employee accept anything of value based on the understanding that the official's vote, action, or judgment would be influenced thereby. See 65 P.S. 403(b). You 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 these ci rcumstances. Ms. Barbara J. Sechrist May 21, 1986 Page 3 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 a governmental body unless the contract has been awarded through an open and public process. See Howard, 79 -044. In this advice, we have been provided with facts to establish that neither you nor a member of your immediate family is an officer, director, or owner of greater than 5% of the equity at fair market value of the business in question. As such, we do not believe that Section 3(c) of the State Ethics Act would pertain to the instant situation. In the event that you were in a position with Bowman Petroleum as outlined above, or you individually were attempting to contract with the Township, then the provisions of Section 3(c) of the State Ethics Act would require that the open and public process be employed. See, Bryan, 80 -014, Lynch, 79 -047. In the event that Section 3(c) of the State Ethics Act is applicable, there would be no absolute prohibition upon a contract being awarded to Bowman Petroleum Company. As noted, however, the open and public process must be employed and that process is met by applying the following Standards: 1. prior public notice of the employment or contracting 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; and 4. public disclosure of the contract awarded or offered and accepted. See also Cantor, 82 -004. 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 Bowman Petroleum 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 or employment. Since you indicate that the Township will advertise for and /or has requested and received proposals or bids in relation to this contract, it is clear that the open and public process requirements of the Ethics Act have been or will be satisfied as long as conditions 3 and 4 cited above are also met. In addition to the provisions of the State Ethics Act, we believe that it is appropriate to note that the Second Class Township Code also places certain restrictions on a township official's participation or interest in a contract. The Code specifically provides as follows: Ms. Barbara J. Sechrist May 21, 1986 Page 4 Except as herein provided, no township official, either elected or appointed, who knows, or who by the exercise of reasonable diligence, could know, shall be interested to any appreci able degree, either directly or indirectly, i n any contract for the sale or furnishing of any supplies or materials for the use of the township, or for any work to be done for such township involving the expenditure by the township of more than three hundred dollars ($300) in any year, but this limitation shall not apply to cases where such officer, or appointee of the township, is an employe of the person, firm or corporation to which the money is to be paid in a capacity with no possible influence on the transaction, and in which he cannot be possibly benefited thereby, either financially or otherwise: Provided, however, That in the case of a supervisor, if he knows that he is within the exception just mentioned, he shall so inform the supervisors and shall refrain from voting on the expenditures, or any ordinance relating thereto, and shall in no manner participate therein: 53 P.SD. §65802(F) A review of the foregoing provision of the Second Class Township Code would appear to indicate that in certain situations, a township official, such as the Secretary /Treasurer or a business in which that official has substantial influence or may be directly benefitted, may be restricted in having an interest in a contract between the Township and such business. While we are not interpreting this provision of law in relation to your specific factual situation, we reference to this particular provision of law, in that you may be aware of its existance and that you may seek appropriate advice in relation thereto from your township solicitor. Conclusion: Under the facts as have been set forth above, you are a "public official" or "public employee" as those terms are defined in the Ethics Act and must conform to the requirements of the Ethics Act. Assuming that you stand in the relationship to the business involved set forth in either Section 3(a) or Section 3(c) of the Ethics Act and that business seeks to contract with the governmental body with which you are associated, the Township, the requirements of Section 3(a), 3(b), and Section 3(c) mandate that: 1. You should not have anything to do with the Township decisions, or votes, discussions regarding the awarding of this contract or work; 2. an open and public process, as described above, must be undertaken prior to any such award of a contract by the Township to this busi ness; Ms. Barbara J. Sechrist May 21, 1986 Page 5 3. no confidential information acquired or received through the holding of your public position be used to obtain advantages or financial gain for thi s business; and 4. the requirements of Section 3(b) of the Ethics Act must be observed, 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 proceedi ng 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.