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HomeMy WebLinkAbout80-052 LawlisRE: Surplus Property, Sales Dear Dr. Lawlis: I. Issue: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 December 3, 1980 OPINION OF THE COMMISSION John F. Lawlis, Jr., PH.D. Deputy Secretary for Procurement Department of General Services 414 North Office Building Harrisburg, PA 17120 80 -052 As Deputy Secretary for Procurement in the Department of General Services (DGS) you posed the following questions in relation to the conflict of interest provisions of the Ethics Act: 1. May employees of the Department of General Services, who are involved in determining the price of surplus property which is to be sold to the general public, purchase this property? 2. Employees of the Department of General Services are prohibited from bidding on and purchasing used (surplus) cars which are sold by DGS at auctions, but may other State employees purchase these cars at such auctions? II. Factual Basis for Determination: The Department of General Services receives requests from various agencies.to dispose of surplus or unserviceable property, including cars used by those agenices. Officers within the agencies assigned to perform such tasks (the Property Officer, in the case of property other than the cars and the Automotive Officer in the case of cars) files the appropriate form with DGS requesting that property be considered as "surplus." John F. Lawlis, Jr., PH.D. December 3, 1980 Page 2 DGS is then charged with the responsibility of accep- ting this property, evaluating same, presenting it to other agencies for transfer or disposing of the property by other means. See Section 510 of the Administrative Code, 71 P.S. 190. Employees of DGS process this property, recommend the method of its disposal, if the property has not been selected for transfer to another agency (See 4 Pa. Code 43.1) and establish a value for the property. This function in the case of surplus cars is performed by the Bureau of Vehicle Management within DGS and by the Surplus . Property Division in the case of other types of property. Sales of surplus property other than cars, may be by auction, (4 Pa. Code 45.22), competitive bids (4 Pa. Code 45.15); negotiation or pre- determined fixed price (4 Pa. Code 45.12 - 45.14). In practice, according to officials within your Department all cars are sold at auctions and the majority of property other than cars is sold by authorized methods other than auction. Merchandising and storage of surplus property, other than cars, is limited to the Harrisburg location (Commonwealth garage), for the most part, if the property is not disposed of by local sale. III. Applicable Law: In reviewing the questions presented, the following provisions of the Ethics Act are applicable: 'Section 1. The legislature hereby declares that public office is a public trust and that any effort to realize personal financial gain through public office other than compensation provided by law is a violation of that trust. In order to strengthen the faith and confidence of the people of the State in their government, the legislature futher declares that the people have a right to be assured that the financial_ interests of holders of or candidates for public office" present neither a conflict nor the appearance of a conflict with the public trust. Because public confidence in government can best be sustained by assuring the people of the impartiality and honesty of public officials, this act shall be liberally construed to promote complete disclosure." 65 P.S. 401. John F. Lawlis, Jr., PH.D. December 3, 1980 Page 3 "Section 3(a). No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a.member of his immediate family, or a business with which he is associated." 65 P.S. 403 (a) . Pertinent provisions of the Administrative Code are reprinted below: "Whenever any furnishings or other personal property of this Commonwealth, shall be no longer of service to the Commonwealth, it shall be the duty of the department, board, or commission, in whose possession such property shall be or come, to put such property into the custody of the Department of Property and Supplies: Provided, however, That in the case of any perish- able property which is not in the city of Harrisburg, the department, board, or commission, having possession of the same, may sell it in such manner, and upon such terms, as the head of the department, or the board, or commission, may,determine..." 71 P.S. 190. "The heads of all administrative departments, the several inde- pendent administrative boards and commissions, the several' departmental administrative - boards and commissions, are hereby empowered to prescribe rules and regulations, not inconsistent with law, for the government of their respective John F. Lawlis, Jr., PH.D. December 3, 1980 Page 4 departments, boards, or commis- sions, the conduct of their employees and clerks, the dis- tribution and performance of their business, and the custody, use, and preservation of the records, books, documents, and property pertaining thereto." 71 P.S. 186 IV. Discussion: The basic question is whether it is an con- flict or presents an appearance of a conflict of interest for employees of the Department of General Services (DGS) to purchase surplus property (other than cars) or for other Commonwealth employees to purchase surplus cars at public auctions conducted by DGS. The Commission recognizes that, pursuant to the authority of 71 P.S. 186 the Secretary of DGS has already promulgated rules prohibiting DGS employees from purchasing surplus cars at auctions. This is commen- dable and this point need not be discussed further, although the Commission notes that in accordance with the discussion below, it probably would rule, if presented with the question, that the purchase of such cars by DGS employees presents at least an appearance of a conflict of interest. In regard to the first question as to DGS employees- - may they purchase surplus property, other than cars - -the Commission concludes that they may not purchase such property. Essentially, the same logic that led the Secretary of DGS to prohibit DGS employees from purchasing surplus cars at auctions conducted by DGS is applicable. This logic compels the conclusion that a similar prohibiton exists as to DGS employees vis -a -vis ether surplus property. In relation to surplus property, other than cars, the logic is perhaps more compelling. This is true because in the process of selling surplus cars, after passing through the DGS examination and evaluation system surplus cars are at least offered for sale at an open and public auction where bids are presented orally. With surplus property other than cars, such an open auction process is apparently rare. In fact, surplus property, other than cars is often sold in place, locally, with little or no advance advertisement of its availability. Even when sold in Harrisburg, the property is not "merchandised" to the public at easily recognized and /or accessible locations. John F. Lawlis, Jr., PH.D. December 3, 1980 Page 5 In light of these facts, the Commission must conclude that the potential for use of confidential information by DGS employees in relation to the sale of surplus property, other than cars, is as great, if not greater than, the potential for using such information surrounding the auction of surplus cars, which has already been prohibited by the Secretary of DGS. The Ethics Act requires that all those holding public office must present neither a conflict nor the appearance of a conflict with the public trust. No person may use confidential information obtained from his public job to secure financial gain for himself or his immediate family. In order to insure that these standards are met, we must rule that it would be an actual conflict of interest with this public trust if certain employees of DGS were to purchase surplus property other than cars. Our ruling in regard to the purchase of surplus property, other than cars, applies to DGS employees who operate within the Surplus Property Division of DGS. In particular, we hold that those employees within the Surplus Property Divi- sion who are charged with non - ministerial responsibilities of evaluating and determining prices for surplus property other than cars would be in a position of actual conflict of interest if they were to purchase such property. Since you have not supplied us with an employee roster or job descriptions which would identify these employees and /or job classifications affected, we will leave this task to you. If you require further specific advice on particular employees and /or job classifications, further Opinons /Advice of the Commission may be requested. In addition, the prohibiton would also extend to those individuals within DGS who hold supervisory roles over those employees within the Surplus Property Division who evaluate and /or' set prices for property. Finally, as we noted, the prohibition applied by the Secretary in regard to surplus cars as to all employees of DGS is logical. It seems designed to avoid even an appear- ance of a conflict of interest as to all DGS employees and their jobs. The Commission cannot clearly conclude that all employees of DGS should be precluded from purchasing surplus property, other than cars. However, it would be logical and commendable for the Secretary of DGS t� exercise his preroga- tives under the Administrative Code (71 P.S. 186) and extend the surplus car purchase prohibition that currently applies to all DGS employees to all DGS employees to bar all DGS employees from purchasing all surplus property - -cars and other property alike. We urge the Secretary to consider John F. Lawlis, Jr., PH.D. December 3, 1980 Page 6 this extension and believe that all DGS employees can avoid even the appearance of a conlfict of interest if the Secretary would preclude all DGS employees from purchasing any type of surplus property rather than to limit this prohibition to the sale of cars. The remaining question is whether employees of the Commonwealth, in general, may purchase surplus cars at auctions conducted by DGS. Assuming that no employees other than those working. for DGS play a role in evaluating and ascribing a price to such cars, the Commission cannot find any reason under the Ethics Act to impose a bar to such purchase as to other Commonwealth employees general. Of course, a particular DGS or non -DGS employee may not use his public office to acquire and /or use confidential information to obtain financial gain. Thus, a DGS or non -DGS employee may not call a friend in DGS, for example, obtain confiden- tial information as to the price, quality, condition etc. of a car or other property to be sold or auctioned and use that information to his advantage, with impunity. Such activity, by a DGS or a non -DGS employee alike would be prohibited. However, this possible activity by any employee can be addressed in the complaint process and does not necessitate the imposition of a complete ban on all surplus car or other property purchases by Commonwealth employees (other than DGS) in general. Such purchases, by non -DGS employees of the Commonwealth do not constitute, per se, either an actual conflict of interest or an appearance of a conflict of interest for the non -DGS employee of the Commonwealth. The potential for misuse of the public trust does not exist as to non -DGS employee of the Commonwealth to the same extent that it does as to DGS employees. A prohibition against purchases by employees of the Commonwealth, in general, is not logically, or legally warranted. IV. Conclusion: It would constitute an actual conflict of interest for DGS employees who perform non - ministerial functions in relation to evaluating and pricing any surplus property to then purchase that property. This logic applies to the purchase of surplus cars, which has already been precluded as to all DGS employees by the Secretary of DGS and surplus property other than cars, as well. Since the purchase of surplus property (other than cars) may involve or may be perceived to involve a conflict of interest as to all DGS John F. Lawlis, Jr., Esquire December 3, 1980 Page 7 employees, the Secretary is urged to extend the ban now applied to all DGS employees as to cars, to all DGS employees as to any type of surplus property processed by DGS. This extension would be logical, and legally under the Ethics Act, this would remove all DGS employees from the appearance of conflicts of interest in this area to the greatest extent possible. Of course, no DGS employee or other Commonwealth employee may use confidential information acquired in his role as public employee to obtain financial This prohibited activity, however, does not mean that a non -DGS employee has a conflict of interest or the appearance of a conflict if he purchases surplus property, cars or other- wise. As such, there is no reason to bar any Commonwealth employee - -other than DGS employees, as discussed above, from purchasing any type of surplus property from the Commonwealth. Pursuant to Section 7(9)(i), this opinion is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any civil or criminal proceeding, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the advice given. This letter is a public record and will be made available as such. PJS /rdp AUL J. SMITH Chairm.I