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HomeMy WebLinkAbout01-592 GerhardWilliam H. Gerhard 1436 Wetzel Run Drive Weatherly, PA 18255 Re: Conflict; Public Official /Employee; School Director; Charter Bus Company; Business With Which Associated; Immediate Family Member; Spouse; Bid; Contract. Dear Mr. Gerhard: ADVICE OF COUNSEL September 17, 2001 01 -592 This responds to your letters of August 8, 2001 and August 16, 2001, by which you requested 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 school director with regard to continuing to serve on the school board where: (11) the school director is employed by a charter bus company owned by his spouse; and (2) the charter bus company may bid on and receive contract(s) to do a special education bus run or field trips for the school district. Facts: As a School Director for the Weatherly Area School District, you seek an advisory from the State Ethics Commission based upon the following submitted facts. You state that your wife owns "Country Coach, Inc.," a charter bus company. You are employed by Country Coach, Inc. to operate the company and the busses. The Weatherly School Board is requesting bids from private contractors for a special education bus run. You ask whether you may remain on the School Board if Country Coach, Inc. bids upon and receives the contract for the run. Additionally, Country Coach, Inc. may submit quotes for Weatherly Area School District field trip contracts. You state that generally, the School Board does not take action with regard to field trips. Rather, individual teachers who are in charge of the field trips obtain three quotes and award the contract to the one submitting the lowest quote. Given these facts, you ask whether you may remain on the School Board if Country Coach, Inc. submits quotes for field trip contract(s) and performs the field trip runs under contract(s) with the School District. Gerhard, 01 -592 September 17, 2001 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), (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 School Director for the Weatherly Area School District, you are a public official subject to the provisions of the Ethics Act. Sections 1103(a), (f), and (j) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest.. (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. (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 Gerhard, 01 -592 September 17, 2001 Page 3 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(a), (f), (j). The following terms pertaining to the above provisions 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 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. "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, Gerhard, 01 -592 September 17, 2001 Page 4 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. 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. 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 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. 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 addition to the above provisions, it is noted that 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. In applying Sections 1103(a), (f), and (j) of the Ethics Act to the facts which you have submitted, it is clear that your wife is a member of your immediate family, and that Country Coach, Inc. is a business with which you and your wife are associated. Although Section 1103(a) of the Ethics Act would not prohibit you from having outside business activities or employment, you could not use the authority of your public position as School Director, or confidential information received by being in your public position, for the advancement of your or your wife's private pecuniary benefit or that of a Gerhard, 01 -592 September 17, 2001 Page 5 business with which you /your wife is /are associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order No. 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order No. 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity, such as the review /selection of its bids or proposals, Gorman, Order No. 1041. In each instance of a conflict of interest, you would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j). Your specific inquiries shall now be addressed. You ask whether you may remain on the Board of the Weatherly Area School District if: (1) Country Coach, Inc. bids upon and receives the School District contract for the special education bus run; or (2) Country Coach, Inc. submits quotes for field trip contract(s) and performs field trip runs under contract(s) with the School District, given that generally, the School Board does not take action with regard to field trips, but rather, individual teachers in charge of the field trips obtain three quotes and award the contract to the one submitting the lowest quote. You are advised that Section 1103(a) of the Ethics Act would not prohibit you from remaining on the Board of the Weatherly Area School District if Country Coach, Inc. submits quotes or bids to the School District to obtain contract(s) to perform the special education run or field trips. However, such matters would present conflicts of interest for you in your capacity as a School Director. For example, pursuant to Section 1103(a), you would have a conflict of interest as to using the authority of your public position as a School Director or confidential information received by being in such position to solicit or promote business activity between Country Coach, Inc. and the Weatherly Area School District. To the extent that you would, in your public capacity, have involvement as to reviewing or selecting such bids or proposals, a conflict of interest would exist. See, Fletcher, Opinion 89 -018 (School director employed by contractor which transported school district students was prohibited from voting on transportation contracts or serving on the transportation committee). Additionally, you would have a conflict of interest in approving /signing payments to Country Coach, Inc. As for Section 1103(f) of the Ethics Act, you are advised that for each contract valued at $500 or more between Country Coach, Inc. and the Weatherly Area School District, the requirements of Section 1103(f) of the Ethics Act set forth above would have to be strictly observed. Parenthetically, although the contracting in question would not be prohibited under the Ethics Act provided the restrictions and requirements of the Ethics Act would be observed, a problem could exist as to such contracting under the Public School Code of 1949. In the instant situation, the Public School Code of 1949, as amended, provides as follows: §3 -324. Not to be employed by or do business with district; exceptions. No school director shall, during the term for which he was elected or appointed, as a private person engage in any Gerhard, 01 -592 September 17, 2001 Page 6 business transaction with the school district in which he is elected or appointed, be employed in any capacity by the school district in which he is elected or appointed, or receive from such school district any pay for services rendered to the district except as provided in this act... . 24 P.S. §3 -324. Since the proposed contracting may be prohibited by the above quoted provision, it is suggested that you seek legal advice in that regard. 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. Conclusion: As a School Director for the Weatherly Area School District, 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 seq. Your wife is a member of your immediate family. Country Coach, Inc. is a business with which you as an employee and your wife as owner are associated. Section 1103(a) of the Ethics Act would not prohibit you from having outside employment /business activities subject to the restrictions, conditions, and qualifications as noted above. You may not use the authority of your public position as School Director, or confidential information received by being in your public position, for the advancement of your or your wife's private pecuniary benefit or that of Country Coach, Inc. Although Section 1103(a) of the Ethics Act would not prohibit you from remaining on the Board of the Weatherly Area School District if Country Coach, Inc. submits quotes or bids to the School District to obtain contract(s) to perform a special education run or field trips, such matters would present conflicts of interest for you in your capacity as a School Director. In each instance of a conflict of interest, you would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j). For each contract valued at $500 or more between Country Coach, Inc. and the Weatherly Area School District, the requirements of Section 1103(f) of the Ethics Act set forth above would have to be strictly observed. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. It is suggested that legal advice be obtained with regard to the possible applicability of the Public School Code of 1949. 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 Gerhard, 01 -592 September 17, 2001 Page 7 Commission by hand delivery, United States mail, delivery service, or byy 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