|Keywords:||bidding, business, conflict, consultant, contract, employee, financial interests, outside employment, private consulting, undue influence, vendor|
|Decision By:||Commissioners: John McMahon, Kathryn Denhardt, Eugene McCoy, Ernest Price, James R. Soles|
Whether a County employee may enter into an outside business association with a consultant who currently provides professional services to the employee's department under a non bid contract.1
The employee may not enter into a business association with the consultant for the duration of the consultant's contract with the County. The formation of a business association while the non bid professional services contract is in force would violate the Ethics Code by creating an appearance of impropriety and would violate the intent of the Code's restrictions on contract and bid.
The consultant holds a non-bid professional services contract with the County. The County employee making this request does not have direct or indirect authority to award any contract to the consultant. However, the employee has a working relationship with the consultant regarding the subject matter of the current contract and has opportunity to provide informal input on the value of the consultant's work to the Department head. The proposed outside business association is for a matter entirely unrelated to either the employee's or the consultant's function with the County and arises from an outside activity in which both persons coincidentally are involved.
Code or Prior Opinion:
The conflict of interest rules at New Castle County Code Section 2.03.103(A)(1) prohibit the use of official authority by a County official or employee "for the personal or private benefit of himself or herself, a member of his or her immediate family or a business with which he or she is associated."2 The Code's conduct rules at Section 2.03.104(A) recite a prohibition on creating an appearance that the decisions or actions of a County employee, County official or governmental body are influenced by factors other than the merits of the matter before it, thus undermining the public confidence in the impartiality of the governmental body with which the individual is associated.3 The Code also has rules regarding formation of County contracts when an official or employee is associated with the business seeking the contract. Section 2.03.103(C) prohibits the County from entering into a contract valued in excess of $500.00 without public notice and competitive bidding.4
In general, the Advisory Opinions hold that an employee may maintain an outside business association if it has no nexus with County government and does not create an appearance of impropriety. In this case although the project which is the subject of the business association has no relationship to County government, a principal of the proposed association has a current contractual relationship.
The Commission addressed a similar question concerning an outside business relationship with a professional services contractor in Advisory Opinion 94-06. In that matter the employee also did not have authority to award any contracts to the proposed employer but did have the authority and opportunity to indirectly influence such decisions arising from his duties to measure the contract's compliance with County goals. The Commission found that even scrupulous recusal by the employee from comment or suggestion regarding the contractor's performance would not be enough to avoid creating an appearance of impropriety if the employee entered into the business relationship. The Commission also noted the fact that the employee's business association with the contractor would prevent the County from awarding future contracts to that party in the absence of public notice and competitive bidding. In Advisory Opinion 97-07, the Commission held that an appearance of impropriety would exist if an employee obtained outside employment with an entity regulated by the County even if the employee's outside work was not reviewed by the County and the employee recused himself from any County review of the employer's work.
Conflict of Interest
The proposed business association arose from an outside activity in which both the employee and the consultant coincidentally participated. The employee's interest in that activity, not her County status, led to the shared determination to associate for a project which has no nexus with County government. There does not appear to be a any use of official position for private gain or financial conflict of interest in this matter.
Appearance of Impropriety
The Commission judges whether an appearance of impropriety would be created by a business association by using the standard developed by the courts for judicial public officials which has been described as "conduct [which] would create in reasonable minds, with knowledge of all the relevant circumstances that a reasonable inquiry would disclose, a perception that the official's ability to carry out [official duties] with integrity, impartiality and competence is impaired." In determining the relevant circumstances, the courts advise looking at the totality of facts. In re Williams, 701 A.2d 825, 832 (Del. Super. 1997); Advisory Opinion 05-06. In this case, if the association took place, a reasonable member of the public would believe that the employee, consciously or unconsciously, would be biased in favor of her business partner and, because New Castle County is a small geographic area, that her co-workers would be aware of that business relationship. The public would also reasonably suspect that that knowledge could create an impediment to the unbiased treatment of the consultant by the employee's County co-workers since those who are favorable to the employee would be tempted to show favoritism to the consultant, to the detriment of the public and fairness to competitors.
An equally important consideration is the Code prohibition on contracting with a business associated with an employee without public notice and bidding if the contract is in excess of $500.00. The consultant secured the professional services contract, valued in excess of $500.00, without undergoing a public notice and competitive bid process. To permit the employee to join the contractor after the contract has been awarded would be a circumvention of the Code prohibition.
Another consideration, not a matter of Code violation but perhaps overlooked, is that a business association between the employee and the consultant could negatively impact the consultant's professional services business. If the employee and the consultant associate for a business purpose, the Code would prohibit the County from renewing or entering into a contract in excess of $500.00 with the consultant unless public notice and bidding take place. See Advisory Opinion 05-04. Since public bidding generally does not occur for professional services contracts, the consultant would not have the opportunity to enter into such contracts with the County in the future.
A business association between the employee and the consultant New Castle County would violate the Ethics Code prohibition against creating an appearance of impropriety during the duration of the professional services contract. Additionally, the formation of a business relationship while the non bid professional services contract is in force would violate the intent of the contract and bid requirements of the Code. The employee may not enter into a business association with the consultant while the current contract is in force. In issuing this Advisory Opinion, the Ethics Commission is applying the New Castle County Code of Ethics, which establishes the minimum level of ethical conduct required of County officials and employees. The Commission cautions, however, that each County department, board, or other unit of County government is free to, and may impose as part of its own policy, additional or greater restrictions on its officials and employees than those set forth in this Opinion.
BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION ON THIS 8th DAY OF MARCH, 2006.
1Professional services contracts generally are exempt from the County notice and bid requirements. See New Castle County Code Sections 2.05.502 (A)(7)(a) and 2.05.502(B).
2 New Castle County Code Section 2.03.102 defines Business as "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. That section defines the phrase business with which he or she is associated as "any business in which the person is a director, officer, owner or employee; or a business in which a member of the person's immediate family is a director, officer, owner or has a financial interest."
New Castle County Code Section 2.03.103. Prohibitions relating to conflicts of interest, states in pertinent part:
A. Restrictions on exercise of official authority.
1. No County employee or official knowingly or willfully shall use the authority of his or her office or employment or any confidential information received through his or her holding County office or employment for the personal or private benefit of himself or herself, a member of his or her immediate family or a business with which he or she is associated. This prohibition 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 County official or employee, a member of his or her immediate family or a business with which he or she or a member of his or her immediate family is associated. There will be a rebuttable presumption of a knowing or willful violation of this section if the action benefits the County official or employee, his or her spouse, or his or her dependent children (whether by blood or by law).
3 New Castle County Code Sec. 2.03.104. Code of conduct.
A. No County employee or County official shall engage in conduct which, while not constituting a violation of Section 2.03.103(A)(1) [conflict of interest], undermines the public confidence in the impartiality of a governmental body with which the County employee or County official is or has been associated by creating an appearance that the decision or action of the County employee, County official or governmental body are influenced by factors other than the merits.
4 New Castle County Code Sec.2.03.103. Prohibitions relating to conflicts of interest.
A. . . .
B. . . .
C. Restrictions on contracting with the County. No County official or County employee his or her spouse, child, parent, step-parent or sibling of the whole or half-blood or any business with which the County official or County employee or his or her spouse, child, parent, step-parent or sibling of the whole or half-blood is associated or who has a legal or equitable ownership of more than five (5) percent (more than (1) percent in the case of a corporation whose stock is regularly traded on an established securities market) shall enter into any contract with the County (other than an employment contract) or any subcontract with a County contractor unless such contract or subcontract was made or let after public notice and competitive bidding. Such notice and bidding requirements shall not apply to contracts not involving more than five hundred dollars ($500.00) per year if the terms of the contract reflect arms' length negotiations, if the subcontractor is a sole source provider, or if there are exigent circumstances. There will be a rebuttable presumption of a knowing and willing violation of the section only if the contract or subcontract is awarded to a spouse or child of the County employee or official.