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HomeMy WebLinkAbout03-595 SaffronRonald J. Saffron, Esquire 135 East Market Street, Suite 105 Blairsville, PA 15717 Dear Mr. Saffron: ADVICE OF COUNSEL October 9, 2003 03 -595 Re: Conflict; Public Official /Employee; School Director; Business With Which Associated; Contract; Vote. This responds to your letter of September 9, 2003, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Ha.GS. § 1101 et seq., presents any prohibition or restrictions upon a school director who is an officer and employee in a company with regard to contracting between the school district and the company. Facts: As Solicitor for the Blairsville - Saltsburg School District ( "School District "), you seek an advisory on behalf of Michael A. LaMantia ( "LaMantia "), a School Director. Lamantia was appointed by the Board of School Directors on July 21, 2003, to fill a vacancy created by the resignation of another School Director. LaMantia's term expires on December 2003. In a private capacity, LaMantia is the President, Secretary, and an employee of D. LaMantia Company, Inc., a corporation owned and operated by LaMantia's father and other family members who hold the ownership interest in the company. LaMantia has no stock ownership in D. LaMantia Company, Inc. The company, which is based in Blairsville, Pennsylvania, is engaged in the wholesale of fresh produce and is the only wholesale produce vendor located in the immediate area. D. LaMantia Company, Inc. has been in business since 1882. Over the past 50 years, the School District and its predecessor school districts have purchased fresh produce from D. LaMantia Company, Inc., for its cafeteria because of its close proximity to the School District and the fact that it delivers the produce to the School District's cafeteria facilities as needed. The School District's Saffron /LaMantia 03 -595 October 9, 2003 Page 2 annual purchases for produce have totaled approximately $6,100 while the average monthly invoices for the produce have ranged from $400 to $600. You state that the School District has no written contract with D. LaMantia Company, Inc.; rather, the cafeteria manager orders fresh produce on an as needed basis. Because of the uncertainty of the quantity of fresh produce that may be needed for operation of the cafeteria at any given time, and the fluctuating market prices for fresh produce, the cafeteria manager is unable to secure bids or quotes, and vendors are unwilling to provide firm bids or quotes, for such items for the entire year. Your further state that since the typical invoice for each purchase is less than $600, the School District is not required by law to bid or secure quotes prior to purchasing the produce. Based upon the above facts, you pose the following inquiries: 1. Whether continued business by the School District with D. LaMantia Company, Inc. would constitute a violation of the Ethics Act; and 2. Given that the Public School Code of 1949 does not require the School District to bid or secure quotes for the purchase of fresh produce, whether LaMantia could avoid a conflict of interest by abstaining from voting on the approval of the payment of the invoices submitted by D. LaMantia Company, Inc., and by publicly announcing and disclosing the nature of his interest as a public record in a written memorandum filed with the Secretary of the Board of Directors. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1'107(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, LaMantia is a public official as that term is defined in the Ethics Act, and hence LaMantia is subject to the provisions of that Act. Section 1103(a) of the Ethics Act provides: § 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: § 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 Saffron /LaMantia 03 -595 October 9, 2003 Page 3 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, 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. "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 1103(f) of the Ethics Act provides as follows: § 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 Saffron /LaMantia 03 -595 October 9, 2003 Page 4 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. 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 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: § 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 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 Saffron /LaMantia 03 -595 October 9, 2003 Page 5 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). 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 your inquiry, it is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use 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. 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 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 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, Gorman, Order 1041. If a business with which the public official /public employee is associated or its client(s) would have matter(s) pending before the governmental body, the public official /public employee would have a conflict of interest as to such matter(s). Miller, Opinion No. 89 -024; see, also, Kannebecker, 92 -010. In each instance of a conflict of interest, the public 7)fficiWoublic employee would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) set forth above. The abstention requirement would not be limited to merely voting, but would extend to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In considering the above, it is clear that D. LaMantia Company, Inc. would be considered a business with which LaMantia, as an officer and employee, is associated. As a general rule, pursuant to Section 1103(a) of the Ethics Act, LaMantia would have a conflict of interest as to matters before the School Board that would financially benefit himself, a member of his immediate family, D. LaMantia Company, Inc., or D. LaMantia Company, Inc.'s client(s). As a School Director, LaMantia would specifically have a conflict as to business dealings between the School District and D. LaMantia Company, Inc.. In each instance of a conflict, LaMantia would be required to abstain and to observe the disclosure requirements of Section 1103(j) of the Ethics Act. Having established the above general principles, your specific inquiries shall now be addressed. Saffron /LaMantia 03 -595 October 9, 2003 Page 6 As to whether continued business by the School District with D. LaMantia Company, Inc. would transgress the Ethics Act, you are advised that your inquiry cannot be addressed within the statutory parameters of the Ethics Act, §§ 1107(10), (11) because the inquiry relates to the conduct of a governmental body, over which the Commission has no jurisdiction. The Ethics Act regulates the conduct of public officials/ public employees. As to your second inquiry, given that D. LaMantia Company, Inc. is a business with which LaMantia is associated, any contract that D. LaMantia Company, Inc. would have with the School District, if over $500, would be subject to the restrictions of Section 1103(f). Under Section 1103(f), LaMantia in his capacity as a public official would be prohibited from having any supervisory or overall responsibility for the implementation or administration of the contract. In addition, pursuant to Section 1103(a) of the Ethics Act, LaMantia, as a School Director, would have a conflict as to matters before the School Board that would financially impact D. LaMantia Company, Inc., such as the contract between D. LaMantia Company, Inc. and the School District, and any votes to approve the payment of invoices submitted by D. LaMantia Company, Inc. under such contract. Parenthetically, although the contracting in question would not be prohibited under the Ethics Act provided the requirements of Sections 1103(a), 1103(f), and 1103(j) are satisfied, a problem may exist as to such contracting under the Public School Code of 1949 as amended ( "Public School Code "). The Public School Code provides in pertinent part as follows: 3 -324. Not to be employed by or do business with district; exceptions (a) No school director shall, during the term for which he was elected or appointed, as a private person engaged [sic] in any 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 State Ethics Commission does not administer or enforce the Public School Code, it is suggested that LaMantia 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 Blairsville - Saltsburg School District ( "School District ), Michael A. LaMantia ( "LaMantia ") is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. 1101 et seq. D. LaMantia Company, Inc. would be considered a business with which LaMantia, as an officer and employee, is associated. Pursuant to Section 1103(a) of the Ethics Act, LaMantia would have a conflict of interest as to matters before the School Board that would financially benefit himself, a member of his immediate family, D. LaMantia Company, Inc., or D. LaMantia Company, Inc.'s client(s). As a School Director, LaMantia would specifically have a conflict as to business dealings between the School District and D. LaMantia Company, Inc.. The question of whether continued business by the School District with D. LaMantia Company, Inc. would transgress the Ethics Act cannot be addressed within the statutory parameters of the Ethics Act, §§ 1107(10), (11) because the inquiry relates to the conduct of a governmental body, Saffron /LaMantia 03 -595 October 9, 2003 Page 7 rather than a public official /public employee. Any contract that D. LaMantia Company, Inc. would have with the School District, if over $500, would be subject to the restrictions of Section 1103(f). Under Section 1103(f), LaMantia in his capacity as a public official would be prohibited from having any supervisory or overall responsibility for the implementation or administration of the contract. Pursuant to Section 1103(a) of the Ethics Act, LaMantia, as a School Director, would specifically have a conflict as to the contract between D. LaMantia Company, Inc. and the School District, and any votes to approve the payment of invoices submitted by D. LaMantia Company, Inc. under such contract. In each instance of a conflict, LaMantia would be required to abstain and to observe the disclosure requirements of Section 1103(j) of the Ethics Act. Although the contracting in question would not be prohibited under the Ethics Act provided the requirements of Sections 1103(a), 1103(f), and 1103) are satisfied, a problem may exist as to such contracting under the Public School Code of 1949 as amended, and therefore, it is suggested that LaMantia seek legal guidance in that regard. 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 § 13.2(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. Sincerely, Vincent J. Dopko Chief Counsel