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HomeMy WebLinkAbout94-587 KingSTATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL July 29, 1994 Michael R. Ring, Ph.D. Executive Director Legislative Office for Research Liaison House of Representatives P.O. Box 218 Main Capitol Harrisburg, PA 17120 94 -587 Re: Conflict, Public Official /Employee, General Assembly, House of Representatives, Legislative Office for Research Liaison, Executive Director, Consultant Contract. Dear Mr. Ring, This responds to your letter of June 30, 1994 in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon the Executive Director of the Legislative Office for Research Liaison regarding the award of a contract to a consultant with whom the Executive Director had a former business relationship. Facts: You inquire about the involvement of your office, the Legislative Office for Research Liaison (LORL), entering into a contract for computer programming services with Stanley D. Fitch, a computer programming consultant with whom you where formerly in partnership. While you were in partnership, your firm did have consulting contracts with LORL, the office which you now head. Since the partnership was dissolved in 1991 with no business relationship existing after that time, you do not stand to benefit monetarily from the contract which is for a relatively modest sum. Your and Fitch's partnership, SRM Associates, contracted with LORL to develop a database of economic indicators and analysis software for the House of Representatives known as the "House Business Data Bank Project." Fitch did virtually all the actual Ring, Michael, R., 94 -587 July 29, 1994 Page 2 programming for the project while you designed the user interface, determined user needs and worked to assure the program, as coded, performed as desired. When the House Data Bank Project was put out on competitive bid, SRM Associates was awarded the initial contract and thereafter was the only bidder. Other potential bidders were discouraged because of the substantial investment required to learn the details of the existing code before beginning to add new codes to the software; thus, it was not feasible to compete given the up- front cost and limited funds available for the project. After 1989, contracts were awarded directly to SRM Associates without competitive bidding for the reason noted above. In July 1991, the project was suspended due to budgetary cutbacks with the analysis software approximately 90% complete with 50,000 lines of computer code. SRM Associates dissolved on December 31, 1991 and a final partnership tax return was submitted to the IRS for that year. LORL on March 16, 1994 reactivated the House Business Data Bank Project and authorized the expenditure of funds for the 1994 -95 fiscal year. On April 21, 1994 you were offered and accepted the position of Executive Director of LORL effective June 1, 1994. As per the policy of LORL Committee, you must enter a contract with a programming consultant to update the data in the House Business Data Bank to complete several partially implemented features of the House Business Data Bank Analysis Software for which approximately $7,500 has been authorized. Fitch is the only potential bidder for the contract in that he is familiar with the code and would not have to pay to learn the code before productive work could begin. Although Fitch was your former partner in SRM Associates, no private business relationship exists between the two of you regarding the House Business Data Bank Project. You will receive no personal financial benefit from the contract no matter who receives the contract. You ask whether the award of the contract to Fitch on a non- competitive bid basis would constitute an Ethics Law violation noting that such a result would entail a delay in getting the project underway since the project involves a continuation of policy established by the previous Executive Director who awarded that contract. Second, if the contract is advertised on a competitive basis, you ask whether Fitch could be awarded the contract if he submitted the low bid. Lastly, if Fitch is ineligible and competitive bidding produces a bid substantially greater than would have been required if Fitch had been awarded the contract, you seek the ethical implications of expending more public funds than would otherwise be necessary. Discussion: It is initially noted that pursuant to Sections 7(10) and 7(11) of the Ethics Law, 65 P.S. § 8407(10), (11), advisories are issued to the requestor based upon the facts which the requestor has submitted. In issuing the advisory based upon the Ring, Michael, R., 94 -587 July 29, 1994 Page 3 facts which the requestor has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts which have not been submitted. It is the burden of the requestor to truthfully disclose all of the material facts relevant to the inquiry. 65 P.S. §8407(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As Executive Director for LORL, you are a public employee as that term is defined under the Ethics Law, and hence you are subject to the provisions of that law. Section 3(a) of the Ethics Law provides: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined in the Ethics Law as follows: Section 2. Definitions. "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 employeg, a member of 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. Ring, Michael, R., 94 -587 July 29, 1994 Page 4 "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 has a financial interest. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. "Contract" shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a. political subdivision. In addition, 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 anything of monetary value based upon the understanding that the vote, official action, or judgement of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. 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 Ring, Michael, R., 94 -587 July 29, 1994 Page 5 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 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. Parenthetically, where contracting is otherwise allowed or where there appears to be no expressed prohibitions to such contracting, the above particular provision of the law would require that an open and public process must be used in all situations where a public official /employee is otherwise appropriately contracting with his own governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more. This open and public process would require that the following be observed as to the contract with the governmental body: (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 and offered and accepted. Section 3(f) of the Ethics Law also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Section 3(j) of the Ethics Law provides as follows: King, Michael, R., 94 -587 July 29, 1994 Page 6 Section 3. Restricted activities (j) Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest, as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest, and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. • If a conflict exists, Section 3(j) requires the public official /employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. In applying the provisions of Section 3(a) and 3(f)' of the Ethics Law to the instant matter, you are advised that you would not have a conflict regarding Fitch and further you would not have to, under the Ethics Law, put this contract out for bids based upon the submitted facts. You have affirmatively stated that your partnership with Fitch was terminated and that you have no financial connection and will have no financial benefit as to this contract. Under the submitted facts, Fitch's firm is not a business with which you are associated as that term is defined under the Ethics Law. Accordingly, based upon your factual Ring, Michael, R., 94 -587 July 29, 1994 Page 7 statement that you would not receive a private pecuniary benefit and further that Fitch's firm is not a business with which you are associated, Sections 3 (a) and 3 (f) of the Ethics Law would not have application to the instant matter. It is also assumed for purposes of this advice that there are no improper understandings as set forth in Sections 3 (b) and 3 (c) of the Ethics Law. 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 herein is the applicability of any rule or procedure of the House of Representatives or the State Adverse Interest Act. Conclusion: As Executive Director for Legislative Office for Research Liaison, you are a public employee subject to the provisions of the Ethics Law. Under Sections 3 (a) and 3. (f) of the Ethics Law, you would not have a conflict and competitive bidding through a open and public process would not be required as to computer programming consulting contract with LORL if you do not receive a private pecuniary benefit as to the contract and if the contract is awarded to a business with which you are not associated. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. 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 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, Ring, Michael, R., 94 -587 July 29, 1994 Page 8 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. cerely, ` 1 r' Vincent . Dopko Chief Counsel