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HomeMy WebLinkAbout00-629 ConfidentialADVICE OF COUNSEL December 12, 2000 00 -629 Re: Conflict; Public Official /Employee; Member; General Assembly; Business With Which Associated; Contract; Authority. This responds to your letter of November 6, 2000 by which you requested a confidential advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. §1101 et seq., presents any prohibition or restrictions upon a Legislator with regard to an A Authority, where the member sits on a legislative committee /subcommittee that is involved with issues affecting the A Authority, and it is anticipated that the A Authority will enter into a contract with a business with which the Legislator is associated. Facts: As a Member of the Pennsylvania General Assembly, specifically the B, you seek a confidential advisory from the State Ethics Commission. You have submitted facts which may be fairly summarized as follows. As of the submission of your inquiry, your various legislative committee assignments include the C, D, E, and F committees of the B. In addition, you serve as the Chairman of Subcommittee G. Your other assignments include H and I. You are a founder of Firm J, a K firm ( "Firm "). The Firm was formed in 1989. The Firm is licensed by Pennsylvania and is a Pennsylvania S corporation. You have been, in one capacity or another, an employee, officer or director of the Firm since its inception. You state that you hold a minority financial interest in the Firm, which financial interest has been routinely reported on your Statements of Financial Interests. You acknowledge that the Firm is a 'business with which you are associated." You state that the Firm has responded to a Request for Proposals ( "RFP ") issued by an A Authority, specifically Authority L ( "Authority "). The Authority is a public authority created pursuant to Pennsylvania law. It is governed by board members who are appointed by County M. As one of the largest N entities in Pennsylvania, the Authority is the recipient of substantial state and federal funding. The RFP seeks a K firm to conduct 0 for the Authority. You have submitted pages 18 -19 of the RFP, which pages are incorporated herein by reference. Confidential Advice, 00 -629 December 12, 2000 Page 2 You have also submitted a copy of a letter dated October 27, 2000, addressed to you from the Chief Financial Officer of the Authority, which letter is also incorporated herein by reference. The letter notes, inter alia, that the Firm has submitted a response to the Authority's RFP; that you are both a principal in the Firm and a Member of the Pennsylvania B; and that you serve on Committee C and as Chairman of Subcommittee G. Given that Committee C has major involvement with P issues that affect the Authority, the letter asks that you seek an advisory opinion as to whether an award of a contract by the Authority to the Firm may create a possible "conflict of interest" or the appearance of a "conflict of interest" under the Ethics Act. The letter states that the Authority has not given and will not give any advantage to the Firm when rating proposals because of your position on Committee C. The letter states that the fact that you are a member of Committee C has not influenced and will not influence the selection process used by the Authority to determine the most qualified firm to perform the requested services. You state that in seeking a K firm to provide professional services, the Authority has utilized an open and public competitive process, including prior public notice. You further state that all proposals that may be considered and contracts that may be awarded will be subject to subsequent public access as a matter of public record. You state that the contract will be in excess of $500. Finally, you state that you would not have any supervisory or other responsibility for any services that the Firm would render to the Authority. Based upon the above submitted facts, you ask whether a contract between the Firm and the Authority would present a conflict of interest for you under the Ethics Act. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. § §1107(10), (11), 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 Member of the Pennsylvania General Assembly, specifically the B, 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 1103(a) of the Ethics Act provides as follows: § 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 pertaining to Section 1103(a) are defined in the Ethics Act as follows: § 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 Confidential Advice, 00 -629 December 12, 2000 Page 3 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. "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. "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. 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 1103(f) of the Ethics Act provides as follows: (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 Confidential Advice, 00 -629 December 12, 2000 Page 4 jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa.C.S. §1103(f). Section 1103(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 1102 of the Ethics Act, the term "governmental body with which a public official or public employee is or has been associated" is defined as follows: §1102. Definitions "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. 65 Pa.C.S. §1102. When Section 1103(f) applies, the "open and public process" which it requires 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: § 1103. 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 Confidential Advice, 00 -629 December 12, 2000 Page 5 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). The above provisions of the Ethics Act shall now be applied to your inquiry. You ask whether the Ethics Act would present any prohibition or restrictions upon you with regard to the Authority if the Authority would enter into a contract with the Firm, a business with which you are associated. You are advised that Section 1103(a) of the Ethics Act does not prohibit public officials /public employees from having outside business activities or employment. However, subject to certain exceptions delineated in the definition of "conflict" or "conflict of interest" above, Section 1103(a) of the Ethics Act ordinarily applies to prohibit the public official /public employee from using the authority of his public position —or confidential information obtained by being in that position —for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Ordinarily, a public official /public employee with a conflict under the Ethics Act is required to abstain fully and to fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Members of the Pennsylvania General Assembly have the following privileges under the Constitution of Pennsylvania: Privileges of Members Section 15. The members of the General Assembly shall in all cases, except treason, felony, violation of their oath of office, and breach of surety of the peace, be privileged from arrest during their attendance at the sessions of their respective Houses and in going to and returning from the same; and for any speech or debate in either House they shall not be questioned in any other place. Constitution of Pennsylvania, Article 11, Section 15. The Constitution of Pennsylvania further provides: Vote Denied Members with Personal Interest Section 13. A member who has a personal or private interest in any measure or bill proposed or pending before the General Assembly shall disclose the fact to the House of which he is a member, and shall not vote thereon. Constitution of Pennsylvania, Article 111, Section 13. Confidential Advice, 00 -629 December 12, 2000 Page 6 In reviewing the above constitutional provisions and pertinent case law, the State Ethics Commission has held that: The activities of a member of the General Assembly insofar as such relate to legislative actions, defined as the introduction, consideration, debating, voting, enactment, adoption or approval of legislation, are constitutionally controlled. Such legislative actions are therefore exempt from the purview of the State Ethics Act and the State Ethics Commission. . the application of the State Ethics Act to non - legislative activities are in no way affected by this opinion. Corrigan, Opinion 87 -001 at 4 (Emphasis added); see also, Confidential Advice, 00 -621. Thus, Legislators are subject to the provisions of the Ethics Act and the jurisdiction of the State Ethics Commission to the extent their activities do not constitute "legislative actions," that is, the introduction, consideration, debating, voting, enactment, adoption or approval of legislation. Id. See, e.g., Friend, Order 800. Under the facts which you have submitted, you are advised that Section 1103(a) of the Ethics Act would not apply to restrict you as to the Authority conditioned upon the assumptions that: (1) there would be no use of confidential information received by being in your public office for a prohibited private pecuniary benefit; and (2) any uses of authority of office as to the Authority would fall within the above definition of 'legislative actions' and would therefore be exempt from the purview of the Ethics Act and the State Ethics Commission. As for Section 1103(f) involving contracting, the restrictions of Section 1103(f) would not apply to contracting between the Firm and the Authority because the Authority is not part of the governmental body with which you are associated. As a Member of the B, the governmental body with which you are associated is the B, together with Boards, Commissions, Committees and the like upon which you serve in an official capacity. See, e.g., Sharp, Opinions 90 -009 and 90- 009 -R, Lloyd, Advice 99 -566, Young, Advice 99 -527, and Krebs, Advice 99 -501 (defining the "former governmental body" of former Members and staff of the House and Senate of Pennsylvania). 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 Legislative Code of Conduct. Conclusion: As a Member of the Pennsylvania General Assembly, specifically the B, you are a public official subject to the p rovisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 et seq. Legislators are subject to the provisions of the Ethics Act and the jurisdiction of the State Ethics Commission to the extent their activities do not constitute "legislative actions," defined as the introduction, consideration, debating, voting, enactment, adoption or approval of legislation. Under the submitted facts that: (1) Firm J, a K firm ("Firm"), is a business with which you are associated; (2) the Firm has responded to a Request for Proposals ( "RFP ") issued by Authority L ("Authority"), which is one of the largest N entities in Pennsylvania and the recipient of substantial state and federal funding; (3) as a Member of the B, you serve on Committee C and as Chairman of Subcommittee G; and (4) Committee C has major involvement with P issues that affect the Authority, you are advised that Section 1103(a) of the Ethics Act would not apply to restrict you as to the Authority conditioned upon the assumptions that: (1) there would be no use of confidential information received by being in your public office for a prohibited p rivate pecuniary benefit; and (2) any uses of authority of office as to the Authority would fall within the above definition of Confidential Advice, 00 -629 December 12, 2000 Page 7 "legislative actions" and would therefore be exempt from the purview of the Ethics Act and the State Ethics Commission. The restrictions of Section 1103(f) would not apply to contracting between the Firm and the Authority because the Authority is not part of the governmental body with which you are associated. As a Member of the B, the governmental body with which you are associated is the B, together with Boards, Commissions, Committees and the like upon which you serve in an official capacity. 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 pursuant to 51 Pa. Code §13.20. 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. Sincerely, Vincent J. Dopko Chief Counsel