Filing Number: 05-04
Subject: Bidding Process
Keywords: appearance of impropriety, bidding, business, conflict, contract, County official, private business, public bid, public notice, vendor
Decision By: Commissioners: Dennis S. Clower, Loren Grober, Wendy Jamison, Stephanie McClellan, V. Eugene McCoy, John McMahon, Ernest Price
Contact Email: admin@nccethics.org
 
Status: Active

Question:

           Whether a business with which a County official is associated is prohibited from contracting for professional services with the County unless a public notice and competitive bidding procedure is used.

Conclusion:

            A business which is associated with a County official is prohibited from contracting with the County for professional services unless a public notice and competitive bidding procedure is used.

Facts:

           A County official is employed by a law firm which anticipates soliciting professional services contracts from New Castle County. This law firm regularly solicits and performs legal work for corporations, businesses and municipalities in neighboring states. The official had been a member of a smaller firm which did not solicit such contracts when it was merged into the present employer.1 The official understands that the Ethics Code prohibits him from participating in or voting on measures which involve his employer or any of its clients and that he may not represent the employer or its clients on any matter before any agency or office of the County.2 He is not a partner in the law firm and does not have an equity interest in the firm. He states that both he and his firm understand that he may not receive any direct or indirect benefit related to such contracts if they were to be formed with the County.3

Code or Prior Opinion:

Code provisions
 
          The New Castle County Ethics Code section 2.03.102 defines the following terms:
 
Business means 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 or she is associated means 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; and
 
Financial interest means any interest representing more than five (5) percent of a corporation, partnership, sole proprietor ship, firm, enterprise, franchise, organization, holding company, joint stock company, receivership, trust, or any legal entity organized for profit.
 
          Code Section 2.03.103 (B)(2) prohibits County officials from representing or assisting any private enterprise before the County but specifically excludes other members of such an official's firm from this prohibition as follows:
 
No county official may represent or other wise assist any private enterprise with respect to any matter before the County. This prohibition is to be considered personal to the County official and is not, for purposes of the New Castle County Ethics Code only, deemed to impact other members of a firm, business, or to her employer by which the County official is employed.
 
          New Castle Code Section 2.05.502(B)(6)(b), exempts professional legal service contracts from notice and bid requirements if the Ethics Code conflicts of interest provisions are not involved. It states as follows:
 
Procurement of legal services shall not be subject to bidding requirements in this Section unless the provisions of Section 2.03.103 are invoked. However, the County Attorney shall submit a written statement to the Chief Administrative Officer detailing the legal services required, the attorney and/or firm selected and the reasons therefore. This statement shall be available for public view.
 
          Section 2.03.103 recites the prohibitions relating to conflicts of interest and the restrictions on the exercise of official authority. Section 2.03.2.03.103 (C) states:
 
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 one (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 such 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. (Emphasis added)
 
Commission Precedent
 
          Prior Commission advice about the intersection of Code provisions about professional services contracts and bid requirements is limited. In Commission Order 04-05, the Commission found that a non-bid professional services contract executed with the sibling of a high ranking county official would have created an appearance of impropriety absent the specific authority and continuing approval of County Council.4 In Advisory Opinion 94-06, the Commission construed the predecessor Code section for 2.03.103 C5, and ruled that if an official accepted outside employment with an employer who contracts with the County for non-bid professional services, the contractor would be thereafter barred from contracting with the County.

Analysis:

           Personal or private interests conflicts can arise from a public official's private relationships, business relationships, outside employment or contracts with the government. A government official who is also a practicing attorney may not involve himself in private representation that "disable[s] him from properly performing his official duties." In re Ridgely, 106 A.2d 427, 471 (Del. 1954). Section 2.03.103 (B)(2) of the Ethics Code specifically states that the prohibition on representation of a private enterprise before the County by a County official is not applicable to similar representation by other members of a firm or business employing the official. Thus, there is no general prohibition preventing the official's law firm from seeking to contract with the County for legal services. Section 2.05.502(B)(6)(b) of the New Castle County Procurement Code does not require that County departments use public competitive bidding procedures when awarding legal services contracts. However, Section 2.03.103(C) of the New Castle County Ethics Code prohibits the official's law firm from forming a contract of over $500.00 with the County without public notice and competitive bidding.

Finding:

          The official's law firm is not barred from soliciting a legal services contract with New Castle County but the firm may form such contracts only when they are publicly noticed and competitively bid.
 
          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 9 th DAY OF MARCH, 2005.
 
_____________________________
Dennis S. Clower, Chairperson
 
Decision: Unanimous

Footnotes:

1 Section 2.03.104 B states: No County employee or County official shall acquire a financial interest in any private enterprise which such employee or official has reason to believe may be directly involved in a decision to be made by such official or employee in an official capacity on behalf of the County. The official did not "acquire" a financial interest since he has no equity interest in the firm.

2 Section 2.03.103(A)(1) states: No County employee or official knowingly or willfully shall use the authority of his or her office or employment or any confidential information received thorough 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. (Emphasis added) See also, Advisory Opinion 99-01(An official must recuse himself if he is aware that a client of his law firm has a financial interest in a matter even though his law firm does not represent the client in that matter.)

          The purpose in prohibiting a public official from representing or otherwise assisting a private enterprise before the County "is to insure that contracts are not awarded out of favoritism, undue influence, and the like." Delaware Public Integrity Commission Opinion Nos. 98-01, 98-11. Section 2.03.103 (B)(2) states: "No county official may represent or other wise assist any private enterprise with respect to any matter before the County. This prohibition is to be considered personal to the County official and is not, for purposes of the New Castle County Ethics Code only, deemed to impact other members of a firm, business, or to her employer by which the County official is employed."

3 9 Del.C. sec. 346 Gifts or rebates; penalty.
Whoever, by special contract or otherwise, does or performs any work, labor or service of any kind for, or furnishes any merchandise, goods, printing, tools, implements, machinery or materials of any kind or description, to or for the use of any county or the governing body of any county or any elected official of any governing body in his official capacity, and directly or indirectly to any elected official of any county or to any other person whomsoever, gives, conveys, allows, offers or tenders any rebate, commission, profit, gift, emolument, rake-off or any pecuniary benefit whatsoever from the price of or on account of or because of the doing or performing of such work, labor or service for any county, governing body or elected official thereof, or from the price of or on account or because of the furnishing of merchandise, goods, printing, tools, implements, machinery or material of any kind or description to or for the use of any county, governing body or elected official thereof, shall be fined in such amount as is determined by the governing body, but not less than 3 times the amount of the price charged by the offending person for the work, labor, service, merchandise, goods, printing, tools, implements, machinery or material so done or furnished by the offending person, and also shall be adjudged, deemed and held incapable of thereafter performing any service, or furnishing any material or merchandise whatsoever to, for or for the use of the counties, governing bodies or any elected official thereof, forever. (Emphasis added)

4 Section 2.03.104 A states:
          No County employee or County official shall engage in conduct which, while not constituting a violation of Section 2.03.103 (A)(1), 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 the decisions or action of the County employee, County official or governmental body are influenced by factors other than the merits.

5 Section 2-30.2(e) provided in pertinent part:
          No county official or employee or his spouse or child or any business in which the [county official or employee] or his spouse or child is associated shall enter into any contract valued at $500 or more with the county . . . 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.