HomeMy WebLinkAbout1147 SmithIn Re: Harry Smith
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
File Docket:
X -ref:
Date Decided:
Date Mailed:
Before: Daneen E. Reese, Chair
Austin M. Lee, Vice Chair
Julius Uehlein
Louis W. Fryman
John J. Bolger
Frank M. Brown
99- 008 -C2
Order No. 1147
1/31/2000
2/11/2000
This is a final adjudication of the State Ethics Commission.
Procedurally, the Investigative Division of the State Ethics Commission
conducted an investigation regarding a possible violation of the Public Official and
Employee Ethics Law, Act 9 of 1989, P.L. 26, 65 P.S. §401 et seq., by the above -
named Respondent. At the commencement of its investigation, the Investigative
Division served upon Respondent written notice of the specific allegation. Upon
completion of its investigation, the Investigative Division issued and served upon
Respondent a Findings Report identified as an "Investigative Complaint." An Answer
was filed and a hearing was waived. The record is complete. A Consent Agreement
was submitted by the parties to the Commission for consideration which was
subsequently approved.
Effective December 15, 1998, Act 9 of 1989 was replaced by the Public Official
and Employee Ethics Act ( "Ethics Act "), Act 93 of 1998, Chapter 11, 65 Pa.C.S.
§1101 e seq., which essentially repeats Act 9 of 1989 and provides for the
completion of pending matters under that Act.
This adjudication of the State Ethics Commission is issued under Act 93 of
1998 and will be made available as a public document thirty days after the mailing
date noted above. However, reconsideration may be requested. Any reconsideration
request must be received at this Commission within thirty days of the mailing date and
must include a detailed explanation of the reasons as to why reconsideration should
be granted in conformity with 51 Pa. Code §21.29(b). A request for reconsideration
will not affect the finality of this adjudication but will defer its public release pending
action on the request by the Commission.
The files in this case will remain confidential in accordance with the Ethics Act.
Any person who violates confidentiality of the Ethics Act is guilty of a misdemeanor
subject to a fine of not more than $ 1,000 or imprisonment for not more than one year.
Confidentiality does not preclude discussing this case with an attorney at law.
Smith, 99- 008 -C2
Page 2
I. ALLEGATION:
That Harry Smith, a public official in his capacity as a Coolbaugh Township
Supervisor, violated provisions of the Public Official and Employee Ethics Act ( "Ethics
Act"), Act 9 of 1989, Pamphlet Law 26, 65 P.S. §401 et sea., as codified by Act 93
of 1998, Chapter 11, 65 Pa.C.S. §1101 et sea., when he used the authority of his
office for the private pecuniary benefit of himself and /or a business with which he is
associated when he participated in actions, discussions and decisions of the Coolbaugh
Township Supervisors regarding the purchases of fire trucks from the Guardian Fire
Equipment Company, a company where he is employed as a sales representative.
II. FINDINGS:
1. Harry Smith has served on the Coolbaugh Township Board of Supervisors since
1993.
a. Harry Smith has served as the Treasurer of the Board of Supervisors
since July 1998.
1. Smith's duties as Treasurer include signing checks for payments
of bills.
2. Harry Smith is a Life Member of the Coolbaugh Township Volunteer Fire
Company, ( "Fire Company ") or ( "Fire Department) having served since 1957.
3. Harry Smith has been employed as a sales associate for Guardian Fire
Equipment, Inc. since 1992.
a. Guardian specializes in selling fire trucks and related apparatus.
b. Harry Smith's sales territory includes Monroe, Wayne and Pike Counties,
Pennsylvania.
c. Smith is the sole sales representative for this area.
d. Smith's compensation is based on commissions for products sold.
4. Guardian Fire Equipment, Inc., headquartered in Lansdale, PA, is the exclusive
dealer for Emergency One fire trucks in Eastern Pennsylvania, which includes
Coolbaugh Township, Monroe County.
5. Since at least the summer of 1998, the Coolbaugh Township Fire Department
discussed the need for additional fire trucks.
a. The Fire Department believed the need existed to acquire two fire trucks
due to possible commercial and industrial growth in the area.
b. As a member of the Fire Department, Harry Smith was aware of the
identified need.
c. During this time period, the Fire Department informally discussed
financing with the Township Board of Supervisors.
6. The Coolbaugh Township Volunteer Fire Company formed a fire truck selection
committee ( "Committee ") to identify types of trucks needed and to develop
specifications for two fire trucks to be provided to the Board of Supervisors.
Smith, 99- 008 -C2
Page 3
a. Harry Smith was not a member of the Fire Truck Selection Committee,
but participated in meetings of the Committee.
7. Harry Smith attended at least three (3) Fire Truck Selection Committee meetings
when discussions occurred regarding the purchase of the vehicles.
a. Smith was asked to provide information because he was considered the
most knowledgeable member of the Fire Company regarding fire trucks.
8. Harry Smith's participation in the Selection Committee meetings including [sic]
presenting information regarding specifications, accessories and performance
issues for Emergency One fire trucks.
a. Harry Smith provided specifications to the Committee for a 50' mid -
mount tele -boom fire truck.
b. Smith obtained these specifications from his employer, Guardian Fire
Equipment.
c. The specifications were for a vehicle manufactured by Emergency One
and sold through Guardian.
d. The specifications of the mid -mount tele -boom were exclusive to
Emergency One vehicles.
9. Sometime prior to September 15, 1998, Harry Smith advised his sales manager,
Robert Smith at Guardian Fire Equipment, Inc. of Coolbaugh Township's desire
to purchase two (2) new fire trucks.
a. Harry Smith requested that Robert Smith send the specifications for an
Emergency One 50' mid -mount tele -boom fire truck to the Coolbaugh
Township Volunteer Fire Company for review.
b. The mid -mount tele -boom is an exclusive feature of Emergency One.
10. Robert Smith met with Fire Department and Township officials on four
occasions between April 21, 1998 and November 3, 1998.
a. Robert Smith made presentations after Harry Smith provided the
Emergency One specifications to the Committee.
11. The specifications provided by Harry Smith were the basis of the specifications
approved by the Fire [Truck] Selection Committee.
a. The specifications approved by the Fire [Truck] Selection Committee
were specifically designed for Emergency One equipment.
b. The specifications were prepared by Robert Smith, Harry Smith's sales
manager.
12. It is a common practice when a fire department wants to purchase a particular
type of fire equipment apparatus to have that manufacturer prepare the
specifications.
a. The specifications can then be prepared to favor the particular
manufacturer and eliminate other bidders.
Smith, 99- 008 -C2
Page 4
13. Harry Smith did not contact any additional fire truck manufacturers to inform
them of Coolbaugh Township's interests in purchasing two (2) new fire trucks.
a. Smith did not obtain truck specifications from other manufacturers for
the Committee to review.
14. In the fall of 1998, prior to the bid announcement by Coolbaugh Township,
Harry Smith contacted Bangor Township Fire Chief Larry Lobe to coordinate a
demonstration of that department's Emergency One 95' aerial platform in
Coolbaugh Township.
a. Bangor Township Fire Company brought their 95' Emergency One aerial
platform fire truck to Coolbaugh Township in 1998 prior to any decisions
being made as to they [sic] types of trucks to purchase.
b. Harry Smith was present with other members of Coolbaugh Township
Volunteer Fire Company during the demonstration.
c. Harry Smith was the only Guardian Fire Equipment, Inc. sales
representative present during the demonstration.
15. This presentation resulted in the Committee selecting the 95' aerial platform as
the second fire truck to be purchased.
16. Prior to September 1998, the Board of Supervisors and the Volunteer Fire
Department discussed the purchase of two new fire trucks.
a. Discussions resulted in targeting for [the] purchase of a 50' mid -mount
tele -boom fire truck and a rear mount aerial platform truck.
1. Harry Smith, in his capacity as a Township Supervisor, participated
in discussions with the Fire Department leading to this type of
vehicle being recommended to the Board of Supervisors.
2. No specific manufacturer was indicated during those discussions.
3. The specifications presented to the Supervisors were exclusive to
Emergency One.
a. The Board was unaware that the specifications were
exclusive to Harry Smith's company.
17. At the September 14, 1998 Coolbaugh Township Board of Supervisors meeting,
Harry Smith made the motion to pay for the cost of the advertisement of the
Township's Volunteer Fire Company bid for new fire trucks and to authorize the
Township Secretary to advertise the bid. This motion carried 4 -0 with Harry
Smith participating.
a. The specifications were delivered to the Board by Harry Smith.
b. Smith advised the Township Secretary [that] it was appropriate to
advertise only in the local newspaper, the Pocono Record.
1. The Board of Supervisors was interested in obtaining a number of
quotes.
Smith, 99- 008 -C2
Page 5
2. Advertising locally would limit the number of quotes to vendors
with access to the Pocono Record.
18. Advertisements for new fire trucks appeared in [the] Pocono Record on October
17, 1998 and October 21, 1998.
a. The Pocono Record is a local newspaper serving the Pocono Mountain
area of Northeastern Pennsylvania.
b. Bids were being accepted until October 30, 1998 for a Custom Chassis
Aerial Platform and a 50' Mid -Mount Commercial Chassis Boom.
c. Detailed specifications were listed as being available at the Coolbaugh
Township Municipal Center.
d. Bruce Henry, Assistant Fire Chief for the Coolbaugh Township Volunteer
Fire Company, was identified as the contact person.
19. Harry Smith acted as Guardian's liaison with the Township and the Fire
Department during the process of developing specifications for the fire truck
purchase.
a. Smith performed this function at the direction of Guardian Management.
20. After the specifications were developed and prior to the trucks being advertised,
Harry Smith advised [the] Fire Truck Selection Committee members and the
Board of Supervisors that he had reviewed the specifications.
a. Questions had been raised whether the specifications developed by
Guardian would enable other companies to bid.
b. Harry Smith advised Fire Company members and the Supervisors that the
specifications submitted by Guardian Fire Equipment, Inc., were generic
and fairly written to encourage bids from all manufacturers.
c. In reality, the specifications were exclusive to the equipment sold by
Guardian.
d. Smith was asked by one Supervisor whether quotes would be obtained
from American LaFrance, a manufacturer of fire equipment.
1. Smith advised the Supervisor that American LaFrance was no
longer in business.
2. American LaFrance continues to make sales of fire trucks.
e. Smith did not advise the Board of Supervisors that he had participated in
the request for and the delivery of the specifications to the Fire
Department or that he had chosen the specifications.
21. The Board of Supervisors relied on Harry Smith's input because of his expertise
with Emergency One trucks.
22. The specifications approved were identical to the specifications obtained by
Harry Smith from Guardian.
Smith, 99- 008 -C2
Page 6
23. The specifications, as advertised, eliminated all bidders except those dealing in
Emergency One equipment.
a. The only company authorized to sell Emergency One equipment to
Coolbaugh Township was Harry Smith's employer, Guardian Fire
Equipment.
24. Emergency One is the only fire truck manufacturer which produces fire trucks
with the following specifications required by Coolbaugh Township:
a. 50' Mid -mount tele -boom
b. 95 foot aerial platform
c. Structural safety and stability factor of 2 1 /2 to 1
1. NFPA requirement is 2 to 1 ratio, which other manufacturers
follow.
d. Maximum operator spread of 13' 8" on the outrigger system
1. Other manufacturers' maximum spread exceeds 13' 8 ".
e. The 95' platform specification requiring aluminum aerial ladders
f. Rear mount aerial windows requiring worm gear drive
g. Torque box integral part of chassis frame
25. Although Emergency One manufacturers [sic] a 50' rear -mount tele -boom similar
to other fire truck manufacturers, Harry Smith provided specifications for a 50'
mid -mount tele -boom, which is exclusive to the Emergency One equipment sold
by his employer, Guardian Fire Equipment.
26. The specifications, as presented by Harry Smith, contained "no exception[s]"
clauses for both the 50' mid -mount tele -boom and the 95' rear -mount aerial
platform.
a. No other fire equipment apparatus manufacturers could meet these
specifications.
27. The 50' mid -mount tele -boom safe load limits specifications contained a "no
exceptions" clause for ladder load ratings which are unique to the Emergency
One equipment sold by Guardian.
Safe Load Limits:
The ladder shall have the following load ratings established in the
unsupported fully extended configuration and maintain a minimum 2.5 to
1 safety factor on yield strength on materials. The weight rating of each
person shall be 250 lbs. All loads assume 50 additional pounds of
equipment at the tip. A 2 to 1 stability factor shall be maintained during
the following conditions.
Condition #1. Tip load only, no water flowing.
Smith, 99- 008 -C2
Page 7
Elevation Capacity Pounds
- 10 to 30 degrees 1 person 250#
30 to 45 degrees 2 people 500#
45 to 85 degrees 3 people 750#
Condition #2. Distributed loads no water flowing. These ratings include
one person at the ladder tip.
Elevation Capacity Pounds
- 10 to 45 degrees 3 people 750#
45 to 85 degrees 6 people 1500#
Condition #3. Ladder tip load while flowing 1000 GPM.
Elevation Capacity Pounds
- 10 to 45 degrees None 0
45 to 85 degrees 1 person 250#
28. The ladder certification for the 50' mid -mount tele -boom also contained a "no
exceptions" clause for specifications unique to Emergency One equipment sold
by Harry Smith's employer.
a. A minimum of 2.5 to 1 structural safety factor based on the yield
strength of the material. This safety factor shall include 2.5 times the
dead weight of the aerial, combined with a 2.5 to 1 live Toad safety
factor and shall be applicable to all components used in the construction
of the aerial device, including all substructure and jack components.
29. The specifications for the rear -mount aerial platform contained a "no
exceptions" clause for ladder certification identical to those for the mid -mount
tele -boom.
30. At least two other companies, Pierce and American LaFrance (LTI), who
specialize in fire truck sales did not bid because of the way the specifications
were written to include the no exceptions clauses.
31. On October 2, 1998, two weeks prior to the specifications being approved by
the Board of Supervisors and advertisements appearing in the newspapers,
Robert Smith requested pricing from Emergency One for the 50' mid -mount tele-
boom truck.
a. Robert Smith requested pricing on specifications identical to those
[which] Harry Smith provided to the Township Fire Truck Selection
Committee.
b. Robert Smith knew what specifications to price prior to the
advertisements based on his information that the Committee had
reviewed only Emergency One specifications.
32. At the November 3, 1998 Board of Supervisors meeting, it was announced that
one (1) bid was received for the custom chassis aerial platform and the 50' mid -
mount commercial chassis boom from Guardian Fire Equipment.
a. No decision was made by the Board to award the contract.
Smith, 99- 008 -C2
Page 8
b. The Supervisors sent the bid material to the Fire Company for review and
recommendation.
33. Guardian Fire Equipment, Inc.'s bid for the custom chassis aerial platform and
the 50' mid -mount commercial chassis boom included the following:
a. One (1) 1999 Emergency One 95' aerial platform for $576,448.00
b. One (1) 1999 Emergency One commercial chassis 50' mid -mount boom
for $309,777.00
c. Total bid price for both pieces of equipment was $886,225.
34. The Guardian bid was sent by the Board of Supervisors to the Coolbaugh
Township Volunteer Fire Company for review and recommendation on
November 3, 1998.
35. On November 17, 1998, the Board of Supervisors voted unanimously to table
approval of bids for the fire truck purchase.
a. The matter was tabled pending review by the Fire Department.
b. Harry Smith was present and participated in the action.
36. Guardian Fire Equipment, Inc. was awarded the bid for the 1999 Emergency
One 95' aerial platform and the 1999 Emergency One commercial chassis 50'
mid -mount boom at the December 1, 1998 Board of Supervisors meeting.
a. The motion carried 4 -0 -1; Harry Smith abstained from voting.
b. A motion was also approved to pay for the two (2) fire trucks over a ten
year lease purchase agreement.
c. That motion carried 4 -0 -1 with Harry Smith abstaining from voting.
d. Smith did not provide a reason for either of the abstentions.
37. A sales agreement between Coolbaugh Township and Guardian Fire Equipment,
Inc. for the purchase of two (2) new fire trucks was signed by Coolbaugh
Township Supervisor James Frutchey and Guardian Fire Equipment, Inc.
representative Robert Smith on December 8, 1998.
a. The agreement was signed by James Frutchey in his capacity as
Chairman of the Board of Supervisors.
38. On December 8, 1998, Coolbaugh Township issued a $200,000.00 non-
refundable deposit check to Guardian Fire Equipment, Inc. for the purchase of
two (2) new fire trucks.
a. Check number 106 from the PLGIT /ARM Coolbaugh Township
Emergency Services account was endorsed by James Frutchey, Chairman
and Harry Smith, Treasurer on December 7, 1998.
b. The payment was issued prior to the Board of Supervisors vote on
December 15, 1998.
Smith, 99- 008 -C2
Page 9
1. Smith participated in approving this payment.
39. The payment made on December 8, 1998 was contrary to policy adopted on
December 16, 1997 on the motion of Harry Smith requiring that no payments
be made prior to a vote of the Board.
40. On December 23, 1998, Coolbaugh Township Secretary Linda Frutchey advised
Robert Smith [of] Guardian Fire Equipment that Guardian Fire Equipment was
awarded the bid for the two fire trucks totaling $886,225.00.
a. Attached to the 12/23/98 letter was Township purchase order number
285 for the two vehicles.
41. Robert Smith, Guardian Fire Equipment sales manager, was aware that Guardian
would be awarded the contracts for the fire trucks prior to the official action of
the Board.
a. Smith was aware of the time frame when the sales contract would be
signed and when the order would be placed.
42. On November 18, 1998, Robert Smith advised Paul Stephenson, Aerial Product
Manager for Emergency One, that Guardian was awarded the bid on both
trucks, that contracts would be signed the first week of December, and [that]
the order would be down shortly thereafter.
a. This information was provided by Robert Smith fourteen (14) days prior
to the Board of Supervisors making a decision to award the contract.
b. A sales contract was signed between the Township and Guardian during
the first week of December 1998.
43. This information was not available to the public prior to December 1, 1998.
44. On November 23, 1998, Robert Smith prepared Factory Discount Authorization
forms for both fire trucks, which were submitted to Emergency One, which
contained the following information:
95' Rear Mount Tele -Boom 50' Mid -Mount
Total E -One Net:
Dealer Equipment:
Delivery:
Dealer Commission:
Total Bid Price:
Factor[y] Discount
Adjusted Bid Price:
Total Time on Deal:
Specs:
$501,148.00
$ 39,500.00
$ 4,800.00
$ 30,000.00
$624,448.00
< $ 48,000.00>
$576,448.00
6 Months
100% E -One
$270,977.00
$ 15,000.00
$ 3,800.00
$ 20,000.00
$337,779.00
< $ 32,762.00>
$309,777.00
6 Months
100% E -One
45. The Factory Discount Authorization form submitted by Robert Smith to
Emergency One noted [that] the customers (Coolbaugh Township) wanted
Emergency One trucks but [that the trucks] must be under their budget.
Smith, 99- 008 -C2
Page 10
a. Smith also noted as a reason for the discount was that both fire trucks
were 100% Emergency One specifications.
46. On January 19, 1999, the Coolbaugh Township Supervisors approved a ten
year fire service contract with the Coolbaugh Township Fire Company.
a. The motion was made by Harry Smith and approved by a 4 to 0 vote.
47. The ten year agreement covering the period from 1999 through the year 2008
provided for annual payments from the Township to the Fire Department as
follows, including payments for the new fire trucks:
a. On or before August 15 of each of the years in the term of this contract
the amount of $20,000.00 will be paid into the Township's Emergency
Services Fund as repayment for the 1998 compensation from the
Emergency Services Fund; and
b. During each month of the term of this contract the amount of $6,586.71
will be paid to Guardian Fire Equipment for the 1999 Emergency One 50'
Boom and 95' Platform Truck. The total annual amount of such monthly
payments is $79,040.52; and
c. The balance of the compensation for each year, as set forth above, (the
annual amount Tess the payments to the Emergency Services and General
Funds) shall be paid directly to the Company in the amount of
$80,000.00.
48. Guardian Fire Equipment realized a profit of at least $60,000.00 for the sale of
the two fire trucks to Coolbaugh Township.
a. 95' Rear -mount $40,000.00 Dealer Commission
b. 50' Mid -mount $20,000.00
Total $60,000.00
49. Guardian's commission policy for sales of fire trucks is 25% of the profit
received by the company.
a. A commission of $15,000 would be paid for the sale to Coolbaugh
Township based on $60,000 profit.
b. Commissions are paid after delivery of the fire trucks to the municipality.
50. Records of sales of fire trucks and apparatus by Harry Smith maintained by
Guardian confirm the following in regards to equipment sold and earnings.
Year Trucks Sold
1994 Eagle McClure
Rosetto
1995 Fogelsville
Plains
1996
W -2
$ 6,890.00
$14,646.00
$ 745.00
Smith, 99- 008 -C2
Page 11
1997
1998
1999
III. DISCUSSION:
Pocono Summitt
West Pittston
Covington
Bangor
Coolbaugh
Coolbaugh
Section 1103. Restricted activities.
$ 9,000.00
$ 0.00
51. These documents reflect Harry Smith being credited for the sale of two fire
trucks to Coolbaugh Township in 1999.
a. Earnings for all 1999 sales are not depicted.
52. Commissions were not paid by Guardian for the Coolbaugh Township truck
purchases as of August 1, 1999.
a. Robert Smith was to receive a fee of $6,000.00 for his role in the sale.
53. The private pecuniary benefit to Guardian Fire Equipment Company, Harry
Smith's employer, as a result of the sales of the fire trucks to the Township
totaled $60,000.00.
At all times relevant to this matter, the Respondent, Harry Smith ( "Smith ") has
been a public official subject to the provisions of the Public Official and Employee
Ethics Act ( "Ethics Act "), Act 9 of 1989, as codified by Act 93 of 1998, 65 Pa.C.S.
§1101,e semc.
The issue is whether Smith violated Section 1 103(a) of the Ethics Act regarding
the allegation that he used the authority of his office for the private pecuniary benefit
of himself or a business with which he is associated when he participated in actions,
discussions and decisions of the Coolbaugh Township Board of Supervisors regarding
the purchases of fire trucks from Guardian Fire Equipment, Inc., a company where he
is employed as a sales representative.
(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 term "conflict of interest" is defined under 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
Smith, 99- 008 -C2
Page 12
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.
65 Pa.C.S. §1102.
Section 1 103(a) of the Ethics Act prohibits a public official /public employee
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.
Having noted the issues and applicable law, we shall now summarize the
relevant facts.
Smith has served on the Coolbaugh Township Board of Supervisors ( "Board ")
since 1993. Smith has been a member of the Coolbaugh Township Volunteer Fire
Company ( "Fire Company ") since 1957. Smith has also been employed by Guardian
Fire Equipment, Inc. ( "Guardian ") since 1992, where he specializes in selling fire trucks
and related apparatus on a commission basis.
Since approximately 1998, the Fire Company discussed the need to acquire two
new fire trucks due to possible commercial and industrial growth. Financing for the
trucks was informally discussed with the Board. As a member of the Fire Company,
Smith was aware that the Fire Company needed additional trucks.
The Fire Company formed a Fire Truck Selection Committee ( "Committee ") to
identify what types of trucks it needed to purchase and to develop specifications for
two fire trucks for submission to the Board. Smith was not a member of the
Committee, but was asked to provide information regarding fire trucks because he was
considered the most knowledgeable member of the Fire Company. Smith's
participation in Committee meetings included providing specifications to the Committee
for a 50' mid -mount tele -boom fire truck, which specifications could only be met by
one fire truck manufacturer, Emergency One.
At the direction of Guardian management, Smith acted as Guardian's liaison
with the Township and the Fire Company during the process of developing
specifications for the fire truck purchase. Between April 21, 1998 and November 3,
1998, Guardian's sales manager met with Fire Company and Township officials on
four occasions to make presentations relating to the fire truck purchase. The
specifications that were eventually approved by the Committee were based upon the
specifications that were provided to the Fire Company. Smith did not inform any other
fire truck manufacturer that Coolbaugh Township wished to purchase two new fire
trucks or obtain truck specifications from any other manufacturer for the Committee
to review.
Prior to September of 1998, the Board and the Fire Company discussed
purchasing two new fire trucks, a 50' mid -mount tele -boom truck and a rear mount
aerial platform truck. Smith, in his capacity as a Township Supervisor, participated
in discussions with the Fire Company which eventually lead to a recommendation to
the Board to purchase that particular type of vehicle.
Smith, 99- 008 -C2
Page 13
In the fall of 1998, prior to Coolbaugh Township's bid announcement, Smith
contacted the Bangor Township Fire Chief to coordinate a demonstration of the Bangor
Township Fire Department's Emergency One 95' aerial platform. The demonstration
took place before Coolbaugh Township made any decision as to the types of trucks
to purchase. Smith and other members of the Fire Company were present during the
demonstration but Smith was the only Guardian sales representative there that day.
At the conclusion of the demonstration, the Committee decided to purchase a 95'
aerial platform as its second fire truck.
After the specifications were developed and prior to the bid advertisement,
Smith advised the Committee and the Board that he had reviewed the specifications
for a 50' mid -mount tele -boom fire truck. No specific manufacturer was discussed and
the Board was unaware that Emergency One was the only company that manufactured
a tele -boom truck meeting those specifications. The Board was also unaware that
Guardian was the exclusive dealer of Emergency One fire trucks.
Questions arose as to whether the specifications would enable other companies
to bid. Smith advised the Fire Company and the Board that the specifications
submitted by Guardian were generic and fairly written to encourage bids from all
manufacturers. One supervisor asked Smith whether quotes would be obtained from
American LaFrance, another fire equipment manufacturer. Smith told the supervisor
that American LaFrance was no longer in business when in fact that company was still
selling fire trucks. The Board relied on Smith's input because of his expertise with
Emergency One trucks. Smith did not advise the Board that he had participated in the
request for and the delivery of the specifications to the Fire Company or that he had
chosen the specifications. The specifications that were approved by the Board were
identical to the specifications that Smith obtained from Guardian.
Although the Board wanted to obtain a number of quotes, Smith advised the
Township Secretary that she should only advertise in the local newspaper serving the
Pocono Mountain area of Northeastern Pennsylvania, the Pocono Record. Advertising
locally would limit the number of quotes to vendors with access to the Pocono Record.
On October 2, 1998, two weeks before the Board approved the specifications
and advertised the bid, Guardian's sales manager requested a price quote from
Emergency One for the 50' mid -mount tele -boom fire truck in the exact amount that
Smith had quoted to the Committee; he knew that the Committee had only reviewed
specifications unique to Emergency One fire trucks and hence he knew what
specifications to price.
Advertisements for a Custom Chassis Aerial Platform and a 50' Mid -Mount
Commercial Chassis Boom appeared in the Pocono Record on October 17, 1998 and
October 21, 1998. The specifications contained several "no exceptions clauses" for
both the 50' mid -mount tele -boom and the 95' rear -mount aerial platform. No other
fire equipment apparatus manufacturer could meet those specifications.
On November 3, 1998, the Board announced that it had received one bid from
Guardian, for a custom chassis aerial platform and a 50' mid -mount commercial
chassis boom, totaling $886,225.00. The Board did not make a decision to award the
contract, but sent Guardian's bid to the Fire Company for review and recommendation.
On November 17, 1998, the Board voted unanimously to table approval of the bid
pending review by the Fire Company. Smith was present at the November 17, 1998
Board meeting and participated in that vote.
Prior to any official Board action, Guardian's sales manager knew that the
Township would award the fire truck contracts to Guardian as well as when the sales
Smith, 99- 008 -C2
Page 14
contract would be signed and when the order would be placed. On November 18,
1998, fourteen days before the Board awarded the contracts, the Product Manager for
Emergency One was advised that Guardian had been awarded the bid for both trucks,
that contracts would be signed during the first week of December, and that the order
would be placed shortly thereafter. This information was not available to the public
prior to December 1, 1998.
On December 1, 1998, the Board awarded the bid to Guardian by a vote of 4 -0-
1. The Board also approved a motion to pay for the two fire trucks through a ten year
lease purchase agreement by a vote of 4 -0 -1. Smith abstained from voting in both
Board actions but did not disclose the reason for his abstentions.
On December 8, 1998, the Chairman of the Board Supervisors entered into a
sales agreement for the purchase of the two fire trucks. On that same day, the
Township issued a $200,000.00 non - refundable deposit check to Guardian which was
endorsed by the Board Chairman and Smith as Treasurer.
The $200,000.00 check was issued to Guardian before Smith and the other
Board Members voted to approve the payment on December 15, 1998. The payment
was contrary to Board policy that no payment be made prior to a vote of approval by
the Board. On January 19, 1999, Smith made a motion to approve a ten -year fire
service contract with the Fire Company. The motion passed by a vote of 4 -0. As a
result of the sale of the two fire trucks to the Township, Guardian realized a profit of
at least $60,000.00.
The records do not reveal Smith's earnings for 1999 because as of August 1,
1999, Smith had not received his commission of $6,000.00 for the sale of the fire
trucks to the Township.
Having summarized the above relevant facts, we must now determine whether
the actions of Smith violated Section 1103(a) of the Ethics Act.
The parties have submitted a Consent Agreement together with a Stipulation of
Findings wherein it is proposed to resolve the case by finding a violation of Section
1103(a) of the Ethics Act when Smith as a member of the Board of Supervisors
participated in actions, discussions and decisions of the Board regarding the purchase
of fire trucks from his employer, Guardian Fire Equipment Company, Inc; and by Smith
agreeing to pay $5,000.00 within 30 days of the issuance of this Order through this
Commission to the Commonwealth of Pennsylvania.
As to Section 1 103(a) of the Ethics Act, Smith used the authority of his position
as a member of the Board of Supervisors to facilitate the Township's purchase of fire
equipment from his employer, Guardian. In particular, Smith used the authority of
office as a Supervisor in controlling events to ensure that Guardian would be awarded
the contract for the two fire trucks. But for the fact that Smith was a Supervisor, he
could not have limited the specifications so that only Emergency One fire trucks, of
which Guardian is the exclusive dealer, could meet the bid specifications. Smith
directed that the advertisement for bids be limited to a local newspaper. Through such
action, only one bid was received - from Smith's employer, Guardian. Such actions
were uses of authority of office. See, Juliante, Order 809. Such uses of authority of
office resulted in a private pecuniary benefit consisting of the $60,000.00 profit to
Guardian and the $6,000 sales commission to Smith himself. Finally, these private
pecuniary benefits inured to Smith himself as well as to Guardian which is a business
with which Smith is associated. Accordingly, Smith violated Section 1103(a) of the
Ethics Act when he used the authority of his office for the benefit of himself or a
Smith, 99- 008 -C2
Page 15
business with which he is associated by facilitating the sale of fire equipment from
Guardian Fire Equipment, his employer.
As per the Consent Agreement, Smith is directed to make payment of $5,000
as per the terms noted above. Compliance with the foregoing will result in the closing
of this case with no further action. Noncompliance will result in the institution of an
order enforcement action.
Lastly, as to the Stipulation of Findings and Consent Agreement we believe that
the Consent Agreement is the proper disposition for this case based upon our review
as reflected in the above analysis and the totality of the facts and circumstances.
IV. CONCLUSIONS OF LAW:
1. Harry Smith, as a Supervisor in Coolbaugh Township, is a public Official
subject to the provisions of Act 9 of 1989 as codified by Act 93 of
1998, Chapter 11.
2. Smith violated Section 1103(a) of the Ethics Act when he used the
authority of his office for the benefit of himself or a business with which
he is associated by facilitating the sale of fire equipment from Guardian
Fire Equipment, his employer.
In Re: Harry Smith
ORDER NO. 1147
File Docket: 99- 008 -C2
Date Decided: 1/31/2000
Date Mailed: 2/11/2000
1. Harry Smith, as a Supervisor in Coolbaugh Township, violated Section 1103(a)
of the Ethics Act when he used the authority of his office for the benefit of
himself or a business with which he is associated by facilitating the sale of fire
equipment from Guardian Fire Equipment, his employer to the township.
2. Per the Consent Agreement of the parties, Smith is directed to pay $5,000
within 30 days of the issuance of this Order through this Commission to the
Commonwealth of Pennsylvania.
a. Compliance with the foregoing will result in the closing of this
case with no further action by the Commission.
b. Non- compliance will result in the institution of an order
enforcement action.
BY THE COMMISSION,
DANEEN E. REESE, CHAIR