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HomeMy WebLinkAbout00-511 ConfidentialSTATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 (717) 783 -1610 1- 800 - 932 -0936 ADVICE OF COUNSEL February 9, 2000 Re: Conflict; Public Official /Employee; Councilman; Borough; Business With Which Associated; Bid; Contract. This responds to your letter of January 5, 2000 by which you requested advice from the State Ethics Commission. ISS Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 DI seq., presents any prohibition or restrictions upon a borough councilman as to submitting a bid to the borough on behalf of a business with which he is associated for a borough project. Facts: You are Councilman for the A Borough. This spring, the Borough will accept bids for a contract to build a new B. You currently do business as C Business. You believe that if you would be permitted to submit a bid for the B contract, you could save the Borough a substantial amount of money. You ask whether you may submit a bid for the B project if one or more of the following conditions are met: 1. You play no particular part in drawing up specifications or participating in work sessions prior to the contract award, and you submit a bid along with others in the public sector; 2. If legally required, you shift your business into your wife's name since your wife participates in writing all checks and other office duties. If a percentage of ownership would be an issue, you ask for an advisory as to what percentage would be acceptable; and 3. You are not physically present on the job site. You only entertain subcontractors or other employees to execute the work. Finally, you ask whether you may use the services of the Borough Solicitor for legal advice on these matters if you pay him for his services separately. FAX: (717) 787 - 0806 • Web Site: www.ethics.state.pa.us • e - mail: ethics @state.pa.us 00-511 Confidential Advice, 00 -511 February 9, 2000 Page 2 Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§1107(10), (1 1), advisories are issued to the requestor based upon the facts which the requestor has submitted. In issuing the advisory based upon the 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 Pa.C.S. §§1107(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As a Councilman for the A Borough, you are a public official as that term is defined in the Ethics Act, and hence you are subject to the provisions of that Act. Section 1 103(a) of the Ethics Act provides: Section 1103. Restricted activities. (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. §1103(a). The following terms are defined in the Ethics Act as follows: Section 1102. 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. The term 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 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. "Immediate family." A parent, spouse, child, brother or sister. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. Confidential Advice, 00 -511 February 9, 2000 Page 3 "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. The term 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. 65 Pa.C.S. §1102. In addition, Sections 1103(b) and 1103(c) of the Ethics Act 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 judgment 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 1 103(f) of the Ethics Act provides as follows: Section 1103. Restricted activities. (f) Contract. - -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 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. Confidential Advice, 00-511 February 9, 2000 Page 4 65 Pa.C.S. §1103(f). Section 1 103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the 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, Section 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Pursuant to Section 1103(f), an "open and public process" includes: (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 1103(f) of the Ethics Act 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 1103(j) of the Ethics Act provides as follows: Section 1 103. Restricted activities. (j) Voting conflict. - -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. 65 Pa.C.S. §1103(j). Confidential Advice, 00 -511 February 9, 2000 Page 5 In each instance of a conflict, Section 1103(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 the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. In applying the above provisions of the Ethics Act to the instant matter, pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. You refer to C Business as "my business "; therefore, C Business, a business which you own, is a "business with which you are associated" as that term is defined in the Ethics Act. Accordingly, pursuant to Section 1103(a) of the Ethics Act, you would be prohibited from using the authority of your office as a Borough Councilman or any confidential information for the private pecuniary benefit of C Business. If you would have a reasonable expectation that C Business would obtain the Borough contract, you would have a conflict and could not participate as to matters such as drawing up the contract specifications, participating in work sessions prior to the contract award, or reviewing or selecting bids or proposals. See, Amato, Opinion No. 89 -002. In addition, when the Borough would vote to award the contract, you would have a conflict of interest concerning the contract and would have to abstain and observe the disclosure requirements of Section 1 103(j) of the Ethics Act. As to the questions you have posed, you are advised as follows. With regard to your first question, Section 1103(f) would not preclude you from bidding on the Borough contract provided the requirements of Section 1103(f) detailed above are satisfied. With regard to your second question, Section 1103(f) prohibits a public official/ public employee or his spouse or child or any business in which the person or his spouse or child is associated from entering into any contract valued at $500 or more with the public official /public employee's governmental body without an open and public process. Therefore, it would make no difference whether C Business would be in your name or your wife's name. As long as the conditions of Section 1103(f) would be met, you or your wife could bid on the B project. With regard to your third question, Section 1103(f) would prohibit you, in your official capacity, from having any supervisory or overall responsibility for the implementation or administration of the contract. As for your final question, assuming that you would be seeking the legal services of the Borough Solicitor in connection with a private matter relating to C Business, and also assuming that the Solicitor's fees would be paid privately out of your personal funds and that there would be no utilization of Borough facilities, equipment or personnel relative to the Solicitor's private representation, Section Confidential Advice, 00-511 February 9, 2000 Page 6 1103(a) of the Ethics Act would not prohibit you from using the Borough Solicitor's services in that regard. However, in retaining the Solicitor to represent you in a private matter, you would be forming a business relationship with the Solicitor. Therefore, as a Borough Councilman, you would have a conflict of interest in matters coming before Council pertaining to the Borough Solicitor such as his retention or fees. In such instances, you would be required to abstain and observe the disclosure requirements of Section 1 103(j) of the Ethics Act. See, Miller, Opinion No. 89 -024. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the respective municipal code. Conclusion: As Councilman forA Borough, you are a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act"), 65 Pa.C.S. §1101 et sea. C Business is a business with which you are associated. Under Section 1 103(a) of the Ethics Act, you would be prohibited from using the authority of your office as a Borough Councilman or any confidential information for the private pecuniary benefit of C Business. In such instances where you would have a conflict, you would have to abstain and observe the disclosure requirements of Section 1 103(j) of the Ethics Act. Section 1103(f) of the Ethics Act would not prohibit you from submitting a bid to the Borough on behalf of C Business for the construction of a B so long as you would observe the restrictions outlined above. Finally, the Ethics Act would not prohibit you from utilizing the legal services of the Borough Solicitor in connection with C Business assuming that that the Solicitor's fees would be paid privately out of your personal funds and that there would be no utilization of Borough facilities, equipment or personnel relative to your private matter. Since you would have a business relationship with the Borough Solictor, you would have a conflict of interest in matters coming before Council pertaining to the Borough Solicitor such as his retention or fees. In such instances, you would be required to abstain and observe the disclosure requirements of Section 1 103(j) of the Ethics Act. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), an 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, provided 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 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 thirty (30) days of the date of this Advice Confidential Advice, 00 -511 February 9, 2000 Page 7 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 thirty (30) days may result in the dismissal of the appeal. erely, Vincent J. Dopko Chief Counsel