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HomeMy WebLinkAbout87-587 ClarkMr. William H. Clark Trinity Area School District Park Avenue Washington, PA 15301 Dear Mr. Clark: STATE ETHICS COMMISSION! 308 FINANCE BUILDING HARRISBURG, PA 17120 TELEPHONE: (717) 783 -1610 June 11, 1987 ADVICE OF COUNSEL 87 -587 Re: Public Transportation Officer, Contracting, School District, Transportation Company This responds to your letter of April 28, 1987, in which you requested advice from the State Ethics Commission. Issue: You ask whether as a transportation officer of a school district may be a major stockholder in a transportation company that has a contract for the transportation of students in that same school district. Facts: You as transportation officer of the Trinity Area School District have requested advice from the State Ethics Commission. In your letter of June 5, 1987 you advise that you were formerly a Safety Education Instructor with the Trinity Area School District, hereinafter District, prior to your current appointment. As transportation officer, you are responsible for preparing a transportation routing system for school students-, parochial school students and A.V.T.S. The routing system must be synchronized by you to meet school schedules. As part of your duties, you also prepare and implement rules and regulations for conduct on the school buses. You also have the responsibility for school crossing guards. Lastly, you perform other miscellaneous duties together with those that may be assigned by the Superintendent. It is also noted that your prepare, for submission to the Superintendent, the contracts for the bus contractors which will be presented for state reimbursement. This involves a determination of the total mileage of the buses which is broken down on a mileage with students and mileage without students basis. This information is submitted to the Department of Education for a formulated reimbursement to the school district. Mr. William H. Clark June 11, 1987 Page 2 You are also affiliated with the G. G. and C. Bus Company Inc., herinafter Company, being one of the three major stockholders. The company is run by a general manager and a staff of Zen people which services the district comprised of 85 square miles. The company also provides service to several other districts, but has been on contract with the District for approximately 20 years. The contract is subject to renewal on a yearly basis following a re- evaluation by the Board of Education and acceptance by the Company. Discussion: Initially, it is noted that as a transportation officer you are a public employee within the definition of that term under the Ethics Act. See 65 P.S. §402. As such, you are subject 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 business with which a "public official" or "public employee" is affiliated 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 in business activities or 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, factually you as a major stockholder of the Company are a director, officer, owner, or employee or holder of stock of the business which would seek to contract with the District. As such, you as a transportation officer and public employee 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 transportation officer of the District to secure financial gain for Company business and could not use any confidential information acquired through the holding of public office or employment to the benefit of that business. Thus, you, as Transportation Officer, should not participate in any decisions, discussions, or recommendations that would lead the District to award the contract in question to the Company. Mr. William H. Clark June 11, 1987 Page 3 Section 3(b) of the Ethics Act also states that 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 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 circumstances. 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 unles the contract has been awarded through an open and public process. See Howard, 79 -044. In this Advice facts have been provided to establish that you or a member of your immediate family is either an officer, di rector, or owner of greater than 5% of the equity at fair market value of the business in question. Given this, previous opinions of the Commission will be reviewed which have construed the term "governmental body" in Section 3(c) of the Ethics Act to mean the governmental body with which the individual public employee /official is "associated." Bryan, 80 -014 and Lynch, 79 -047. The "governmental body" with which you are associated is the District. Therefore, the open and public process requirements of Section 3(c) of the Ethics Act would apply if and when the Company would seek to contract with the District in an amount in excess of $500 or more. Therefore, the "open and public process" limitations of Section 3(c) of the Ethics Act apply only if you and/or this business contracts with the District in an amount of $500 or more. You and /or the Company could, however, contract with any governmental body other than District with which you are not considered to be "associated" without undertaking the open and public process set forth in Section 3(c) of the Ethics Act. It should be emphasized, that even though Section 3(c) of the Ethics Act presents no absolute prohibition to the contract between the District and the Company, certain requirements as to the open an public process must be met. In its Opinions in Howard, 79 -044 and Fields, 82 -006, the Commission stated that an open and public 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; Mr. William H. Clark June 11, 1987 Page 4 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 in the transportation 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. In addition to the foregoing, the Ethics Act provides that this Commission may address other areas of conflict. 65 P.S. §403(d). The parameters of the types of activities encompassed, by the above provision, are generally determined through a review of the scope and intent of the State Ethics Act. Generally, the Act was promulgated in order to ensure the public that the interest of their officials and employees are not in conflict with the public trust. 65 P.S. §401. As such, this Commission has determined that public officials would be in a prohibited conflict in any situation wherein they attempted to serve one or more interests that are adverse. See, Alfano, 80 -007; Fritzinger, 80 -008. Within this general conflict provision, it is clear, that a public official should abstain from participating in any matter wherein they have a direct interest. As above noted, part of your duties as transportation officer require you to prepare, for submission to the superintendent, contracts for each bus contractor, including the Company with which you are associated, for state reimbursement. Since you are one of the three major stockholders in the Company, you should not, in your capacity as transportation officer, review and prepare the contracts with the Company as it relates to the state reimbursement for mileaged logged. Further, you should not participate in any matters wherein a conflict would occur between your position as transportation officer and stockholder of the Company. 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, as transportation officer, stand in the relationship to the Company involved as set forth in either Section 3(a) or Section 3(c) of the Ethics Act and that Company seeks to contract with the gove rnmeptal body with which you are associated, the District, the requirements of Section 3(a), 3(b), and Section 3(c) mandate that: Mr. William H. Clark June 11, 1987 Page 5 1. You should not have anything to do with the District's 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 District to this business; 3. no confidential information acquired or received through the holding of your public position be used to obtain advantages or financial gain for this 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. Lastly, you as transportation officer of the District should not review or prepare the contract for state reimbursement for the Company with which you are associated. 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. r Sincerely, ter Vincent J. Dopko General Counsel