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HomeMy WebLinkAbout94-585 CoulterSTATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. 80X 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL July 19, 1994 James P. Coulter, Esquire Dillon McCandless & King 128 West Cunningham Street Butler, PA 16001 94 -585 Re: Conflict of Interest, Public Official, Contracting with Governmental Body, Private Employment, Use of Authority of Office, Confidential Information, Business with which Associated, Heavy Equipment Operator. Dear Mr. Coulter: This responds to your letter of June 18, 1994, in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition upon a borough mayor or a "business with which he is associated" from contracting with the borough. Facts: As Solicitor for Prospect Borough in Butler County, Pennsylvania, you request an advisory from the State Ethics Commission on behalf of James Skrak, Mayor of the Borough of Prospect. Mr. Skrak's occupation is as a heavy equipment operator. The Borough would like to hire Mr. Skrak to perform services as a heavy equipment operator. The proposed services relate to maintenance work to be performed on the sewer system, streets, and the like. Mr. Skrak proposes to charge the Borough at an hourly rate which is equal to or less than that which the Borough would incur with other operators. The Borough is in receipt of written quotes for work of this type. Mr. Skrak's quote is the most economical quote offexed to the Borough. Depending upon the volume of the work to be performed, the compensation proposed to be paid to Mr. Skrak could exceed one thousand dollars. You ask whether the Borough can retain Mr. Skrak to perform these proposed services assuming that the Borough of Prospect makes full disclosure of all relevant information regarding this payment, that the work is actually performed by Mr. Skrak and that he James P. Coulter, Esquire, 94 -585 July 19, 1994 Page 2 charges a rate commensurate or less than would be charged by other companies. Based upon all of the above, you request an advisory from the State Ethics Commission. Discussion: As Mayor for the Borough of Prospect in Butler County, Pennsylvania, Mr. James Skrak is a "public official" as that term is defined in the Ethics Law. 65 P.S. 5402; 51 Pa. Code §11.1. As such, he is subject to the provisions of the Ethics Law and the restrictions therein are applicable to him. Section 3(a) of the Ethics Law provides: Restricted Activities No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined under the Ethics Law: "Conflict or conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Conflict" or "conflict of interest" does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member or his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business with which he is associated." Any business in which the person or a member James P. Coulter, Esquire, 94 -585 July 19, 1994 Page 3 of the person's immediate family is a director, officer, owner, employee or has a financial interest. Under Section 3(a) of the Ethics Law quoted above, a public official may not use the authority of office or confidential information to obtain a private pecuniary benefit for himself, a member of his immediate family or a business with which he is or a member of his immediate family is associated. Generally, the Ethics Law places no per se prohibition upon a public official or business with which he is associated from contracting with his governmental body. Pancoe,, Opinion 89 -011. Under Section 3(a), Mr. Skrak could not participate in his public capacity on matters involving the contract between the governmental body and himself or any business with which he is associated. In addition, the requirements of Section 3(j) of the Ethics Law must be followed, such that the reasons for any such abstention must be publicly noted and a written memorandum to that effect must be filed with the secretary recording the minutes. Therefore, under Section 3(a), Mr. Skrak or a business with which he is associated is not precluded from contracting with the Borough of Prospect, but Mr. Skrak could not participate or vote as to the matter of the contract and he must comply with the disclosure requirements of Section 3(j) of the Ethics Law. Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept any thing of monetary value based upon the understanding that the vote, official action, or judgement of the public official /employee would be influenced thereby. Section 3(f) of the Ethics Law provides as follows: Section 3. Restricted activities. (f) No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is James P. Coulter, Esquire, 94 -585 July 19, 1994 Page 4 associated, 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. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. In relation to the above provision of law, the State Ethics Commission has generally determined that this provision is a procedure to be used when a public official or employee contracts with his own governmental body in an amount of $500 or more. The process must be open and public with prior public notice and subsequent public disclosure. In addition, the public official/ employee may not have any supervisory or overall responsibility for the implementation or administration of the contract. Thus, the open and public process must be used in all situations where a public official is otherwise appropriately contracting with his own governmental body in an amount of $500 or more. This open and public process would require: (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; public disclosure of all applications or proposals considered and; (4) public disclosure of the contract awarded and offered and accepted. Further, Section 3(f) requires that the public official could not have supervisory or overall responsibility as to the implementation or administration of the contract. Turning to your specific inquiry as to whether the Borough of Prospect can retain Mr. Skrak to perform the proposed services if the Borough of Prospect makes full disclosure of all relevant information regarding the payment to Mr. Skrak, if the work is actually performed by Mr. Skrak, and if Mr. Skrak charges a rate (3) James P. Coulter, Esquire, 94 -585 July 19, 1994 Page 5 commensurate or less than would be charged by other companies, it is initially noted that the prohibitions of Section 3(f) do not apply to restrict a governmental body such as the Borough of Prospect. Rather, Section 3(f) applies to restrict the public official /public employee, his spouse or child, or any business with which the public official /public employee his spouse or child is associated. Your letter of inquiry is sufficiently broad, however, to encompass the question of the propriety of Mr. Skrak's proposed conduct as to Section 3(f). The proposed contract would be permissible under Section 3(f) of the Ethics Law assuming the above conditions, restrictions and qualifications of Section 3(f) are observed. It would appear from your factual recitation that the Borough has not followed the procedures Section 3(f), but is merely reviewing written quotes for work of "this type" which were received in the past. Such a procedure would not fulfill the requirements of Section 3(f) set forth above, which requirements must be strictly observed. Parenthetically, although the contracting in question would not be prohibited under the Ethics Law provided the requirements of Sections 3(a), (f) and (j) are satisfied, a problem may exist as to such contracting under the Borough Code. In the instant situation, the Borough Code provides as follows: 546404. Penalty for personal interest in contracts or purchases Except as otherwise provided in this act, no borough official either elected or appointed, who knows or who by the exercise of reasonable diligence could know, shall be interested to any appreciable degree either directly or indirectly in any purchase made or contract entered into or expenditure of money made by the borough of relating to the business of the borough, involving the expenditure by the borough of more than one thousand dollars ($1000) in any calendar year, but this limitation shall not apply to cases where such officer or appointee of the borough is an employee 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. But in the case of a councilman or mayor, if he knows that he is within the exception just James P. Coulter, Esquire, 94 -585 July 19, 1994 Page 6 mentioned he shall so inform council and shall refrain from voting on the expenditure or any expenditure or any ordinance relating thereto, and shall in no manner participate therein. Any official or appointee who shall knowingly violate the provisions of this section shall be subject to surcharge to the extent of the damage shown to be thereby sustained by the borough and to ouster from office, and shall be guilty of a misdemeanor, and upon conviction thereof shall be sentenced to pay a fine not exceeding one thousand dollars ($1000), or not exceeding one hundred eighty days' imprisonment, or both. 1966, Feb. 1, P.L. (1965) , No. 581, 51404. 53 P.S. S46404. Since such contracting may be prohibited by the above quoted provision of the Code, but not under the Ethics Law, it is suggested that advice in that regard be sought from the municipal solicitor or from private counsel. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Law has not been considered in that they do not involve an interpretation of the Ethics Law. Specifically not addressed in this advice is the applicability of the Borough Code. Conclusion: As Mayor of the Borough of Prospect in Butler County, Pennsylvania, Mr. James Skrak is a public official subject to the provisions of the Ethics Law. Under Section 3(a) of the Ethics Law, a public official /employee or a business with which the public official /employee is associated may contract with the governmental body, but the public official /public employee could not vote or participate in the matter of the contract. The disclosure requirements of Section 3(j) outlined above must be observed. Finally, if the contract is $500 or more, the open and public process as outlined above must be accomplished. The public official /employee could not have any supervisory or overall responsibilities as to the contract. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Due to the possible application of the Borough Code in this matter, it is suggested that advice be obtained from the municipal solicitor or private counsel in that regard. Pursuant to Section 7(11), 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 James P. Coulter, Esquire, 94 -585 July 19, 1994 Page 7 the material facts and committed the acts complained of in reliance on the Advice given. such. This letter is a public record and will be made available as Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within fifteen (15) days of the date of this Advice pursuant to 51 Pa.Code §13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717- 787 - 0806). Failure to file such an appeal at the Commission within fifteen (15) days may result in the dismissal of the appeal. 111 cerely, ncent Dop Chief Counsel