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HomeMy WebLinkAbout06-529 CONFIDENTIALADVICE OF COUNSEL March 20, 2006 06 -529 Re: Conflict; Public Official; Member; Municipal Authority; Former Employee of A; Independent Contractor; D; Vote; Business Relationship. This responds to your letter of January 30, 2006, 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., would present any prohibition or restrictions upon a municipal authority board member with regard to: (1) voting to retain an A that provides B services on C's for the authority, when the authority board member is a former employee of the A; or (2) voting to appoint a D as the authority E, when the authority board member has worked as an independent contractor for the D. Facts: As Solicitor for the F Authority, [name of county], Pennsylvania, you have been authorized by Authority Board Members, G and H to seek an advisory as to their prospective conduct. You have submitted facts that may be fairly summarized as follows. You state that G is a former employee of the A, which provides B services on C's for the Authority. G has indicated that he is no longer associated with the A. H has worked as an independent contractor or on a per project basis" for D's that are currently submitting competitive bids for the appointed position of E. You state that H was not and is not a regular day -to -day employee of any of those D's. Based upon the foregoing facts, you pose the following specific inquiries. (1) Whether G as an Authority Board Member would have a conflict of interest in matters pertaining to A and particularly with regard to voting to extend the Authority's contract with A based upon G's prior association with A; (2) What documentation should be submitted by G or the A to verify that there is no longer any association between G and the A and no expectation of any business relationship in the future; and Confidential Advice, 06 -529 March 20, 2006 Page 2 (3) Whether H would have a conflict of interest in voting to retain a D or appointing a D as Authority E when H has performed work or may in the future perform work for that D as an independent contractor or on a per project basis." 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 requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester 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 requester has truthfully disclosed all of the material facts. As Authority Board Members, G and H are "public officials" subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act pertaining to conflicts provide: § 1103. Restricted Activities (a) Conflict of interest. —No public official or public employee shall engage in conduct that constitutes a conflict of interest. (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 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), (j). The following terms pertaining to conflicts are defined by the Ethics Act as follows: § 1102. Definitions Confidential Advice, 06 -529 March 20, 2006 Page 3 "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. "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. "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. 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. Subject to certain voting conflict exceptions, Section 1103(j) of the Ethics Act requires a public official /public employee with a conflict of interest 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 addition, Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /public employee anything of monetary value and no Confidential Advice, 06 -529 March 20, 2006 Page 4 public official /public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /public 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 pertaining to contracting 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 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). The Ethics Act defines the term "contract" as follows: § 1102. Definitions "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. 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: Confidential Advice, 06 -529 March 20, 2006 Page 5 (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 addition to the above provisions of the Ethics Act, administrative notice is taken as to Section 5614(e) of the Municipality Authorities Act, which provides, in pertinent part, as follows: §5614. Competition in award of contracts (e) No member of the authority or officer or employee of the authority may directly or indirectly be a party to or be interested in any contract or agreement with the authority if the contract or agreement establishes liability against or indebtedness of the authority. Any contract or agreement made in violation of this subsection is void, and no action may be maintained on the agreement against the authority. 53 Pa. C. S. § 5614(e). In applying the above provisions of the Ethics Act to the instant matter, it is noted that Section 1103(a) of the Ethics Act 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; Rembold, Order 1303; Wilcox, Order 1306), or private customer(s)/client(s) (Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010). In Kannebecker, supra, the State Ethics Commission determined that a township supervisor, who in his private capacity was an attorney, would have a conflict of interest as to matters before the township involving ongoing clients or client(s) for whom he was on retainer, even if he would not represent such client(s) as to the matter pending before the township. The Commission determined that as a general rule, a conflict would not exist as to former client(s), but that under certain circumstances, a conflict could exist as to former client(s) depending upon factors such as the number of prior representations of the given client and the period of time over which such occurred. Confidential Advice, 06 -529 March 20, 2006 Page 6 The Commission has also held that a reasonable and legitimate expectation that a business relationship will form may support a finding of a conflict of interest. Amato, Opinion 89 -002. Having set forth the above general principles, your specific inquiries shall now be addressed. In response to your first question, it is initially noted that "business with which he is associated" is defined in the Ethics Act as "[a]ny 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. 65 Pa.C.S. § 1102. Per the submitted facts, G has factually represented that he is no longer associated with" the A. You are advised that G would not have a conflict of interest as an Authority Board Member in matters pertaining to the A and in particular a contract extension between the A and the Authority conditioned upon the assumptions that: (1) the A is no longer a business with which G is associated; (2) there is no reasonable and legitimate expectation that a business relationship will form between G and the A; and (3) there is no other basis for G to have a conflict of interest under Section 1103(a) of the Ethics Act as to such matters. Your second question is beyond the jurisdiction of the State Ethics Commission and therefore may not be addressed. In response to your third question, you are advised that H would have a conflict of interest with regard to retaining a D and in particular appointing a D as Authority E if he has a current business relationship with such a D. Miller, supra; Kannebecker, supra. A reasonable and legitimate expectation that a business relationship will form would also form the basis for a conflict. See, Amato, supra. As a general rule, a conflict would not exist for H solely on the basis of a former client relationship, but under certain circumstances, a conflict could exist as to former client(s) depending upon factors such as the number of prior representations of the given client and the period of time over which such occurred. Kannebecker, supra. The submitted facts are insufficient to enable a conclusive determination in this regard as to any particular D with which H has had prior business dealings, and so this Advice must be limited to providing the above general guidance. In each instance of a conflict, H would be required to abstain and to fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The restrictions and requirements of Section 1103(f) must be observed when applicable. 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 Municipality Authorities Act. It is recommended that H obtain legal advice regarding Section 5614(e) of the Municipality Authorities Act, 53 Pa.C.S. § 5614(e). Conclusion: As Board Members of the F Authority, [name of county], Pennsylvania, G and H are public officials subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. G would not have a conflict of interest as an Authority Board Member in matters pertaining to his former employer, the A, and in particular a contract extension between the A and the Authority conditioned upon the assumptions that: (1) the A is no longer a business with which G is associated; (2) there is no reasonable and legitimate expectation that a business relationship will form between G and the A; and (3) there is no other basis for G to have a conflict of interest under Section 1103(a) of the Ethics Act as to such matters. H would have a conflict of interest with regard to retaining a D and in particular appointing a D as Confidential Advice, 06 -529 March 20, 2006 Page 7 Authority E if he has a current business relationship with such D. A reasonable and legitimate expectation that a business relationship will form would also form the basis for a conflict. As a general rule, a conflict would not exist for H solely on the basis of a former client relationship, but under certain circumstances, a conflict could exist as to former client(s) depending upon factors such as the number of prior representations of the given client and the period of time over which such occurred. The submitted facts are insufficient to enable a conclusive determination in this regard as to any particular D with which H has had prior business dealings. In each instance of a conflict, H would be required to abstain and to fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The restrictions and requirements of Section 1103(f) must be observed when applicable. 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 requester 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