Filing Number: 92-04
Subject: Conflict of Interest
Keywords: appearance of impropriety, bias, bidding, conflict, contract, developer, employee, family, financial interests, immediate family, impropriety, public bid, public notice, spouse, undue influence
Decision By: L. Susan Faw, Ethics Commission Counsel
Contact Email: admin@nccethics.org
 
Status: Active

Question:

          1. Whether it would violate the New Castle County Code of Ethics ("Ethics Code") if a County employee, whose job responsibilities include awarding contracts and implementing and administering those contracts, were to award a contract to a business owned by his spouse.
 
          2. Whether it would violate the Ethics Code if that County employee's spouse's business were to enter into a subcontract with a general contractor in connection with its performance of a contract with the County, with which contract the County employee was associated.

Conclusion:

          1.           Yes. Such conduct would constitute a conflict of interest under Section 2-30.2(a) of the Ethics Code.
 
           2.          Yes. Such conduct would violate the contract and bid restrictions under Section 2-30.2(e).

Facts:

           The County employee's job responsibilities include awarding contracts for the provision of certain services and materials to the County and implementing and administering those contracts. The County employee's spouse owns a business which provides such services and materials. The County employee's department's policy is to not solicit bids or proposals for projects involving less than a specific dollar amount. The County employee asks whether contracts may be awarded to his spouse's business. He also asks whether his spouse's business may enter into a subcontract with a general contractor in connection with its performance of a contract with the County, with which contract the County employee would be associated.

Analysis:

introduction
 
          The County employee's job responsibilities include awarding contracts for the provision of certain service3s and materials to the County and implementing and administering those contracts.  The County employee's spouse owns a business which provide such services and materials.  The County employee's department's policy is to not solicit bids orproposals for projects involving less than a specific dollar amount.
 
          The County employee asks whether contracts may be awarded to his spouse's business.  He also asks whether his spouse's business may enter into a subcontract with aq general contrqactor in connection with its performance of a contract with the County, with which the County employee would be associated.
 
Conflict of Interest
 
          The Ethics Code prohibits a County employee from engaging in conduct whihch constitutes a "conflict of interest".1  A "conflict or a conflict or interest" is defined under the Code as:2
 
Ue by a . . . county employee of the authority of his . . . employment for the privaqte pecuniary benefit or himself, a member of his immediate family or a vusiness with which he is accoaited.
 
"Authority of [ ] employment" if "[t]he actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular . . . position of county employment."  "A business with whihch he is associated" includes "[a]ny business in which . . . a member of [his] immediate family is a director, officer, owner or has a financial interest."3
 
          If the County employee were to award a contract ot his spounse's business, the County employee would be using the authority of his particular employment, i.e., the power to contract on the County's behalf, for the private pecuniary benefit of a business owned by his spouse.  This would constitute a conflict of interest which is expressly prohibited under the Ethics Code.4
 
Contract and Bid Restrictions
 
          Section 2-30.2(e) of the Ethics Code provides:
 
No . . . county employee . . . or any business in which . . . his spouse . . . if associated whall enter into any contract valued at five hundred dollars ($500.00) or more with the county or any subcontract valued at five hundred dollars ($500.00) or more with any person who has been awarded a contract with the county wich which the . . . county employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure or all proposals considered and contracts awarded.  In such a case, . . . the county employee . . . shall not have any supervisory or overall responsibility for the implementation or administration of the contract.  An contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction.5

Finding:

          This Section prohibits a County employee's spouse's business from entering into a subcontract, valued at $500 or more, with a general contractor, in connection with the general contractor's performance of a contract with the County, with which the County employee would be associated, - unless the contract with the general contractor has been awarded through "an open and public process". As noted earlier, it is the County employee's department's policy to not solicit bids or proposals for projects involving less than a specific dollar amount. This specific dollar amount is substantially in excess of $500.
 
          But even if a contract valued at $500 or more were awarded to the general contractor through "an open and public process", (which would necessitate a change in departmental policy), the violation of Section 2-30.2(e) of the Ethics Code would not be cured because the County employee is unable to delegate or assign "supervisory or overall responsibility for the implementation and administration of the contract". Therefore, were this County employee's spouse's business to subcontract with a general contractor in connection with its performance of a contract with the County, with which contract this County employee would be associated, there would be a violation of Section 2-30.2(e).
 
                                                          
L. Susan Faw
Ethics Counse
 
September 21, 1992l

Footnotes:

1 See Sec. 2-30.2(a). Restricted activities.
 
2 Defined terms are found in Sec. 2-30.1. Definitions.
 
3 "Immediate family" includes "a spouse or dependent child."
 
4 This is true regardless of whether the contract with the spouse's business was awarded in complete compliance with Sec. 2-30.2(e) (quoted above). In other words, it would not matter what the contract value was, whether it was awarded through an open and public process, or whether the employee could delegate or assign responsibility for the contract's administration, - the conflict of interest would remain.
 
5 "Contract" is defined as: "An agreement or arrangement for the acquisition, use or disposal by the county of consulting or other services or of supplies, materials, equipment, land or other personal or real property." See Sec. 2-30.1.