Filing Number: 09-05
Subject: Contract with County
Keywords: appearance of impropriety, appointed official, board member, conflict, contract, County official, disclosure, impropriety, non-profit, private business, recusal, representation, undue influence, vendor
Decision By: Commissioners: Thomas P. Collins, Edward Danberg, V. Eugene McCoy, John McMahon
Contact Email: admin@nccethics.org
 
Status: Active

Question:

             Whether a County official who is on the board of a non-profit may participate in the formation or execution of a contract between the non-profit and a company which is acting as an agent for the County.

Conclusion:

             No. The official must recuse himself from all of the board's discussions, negotiations, votes, or contract formation with the County or its agents. Unless the official recuses himself from all matters relating to the non-profit's business with the County, he will violate the Code's prohibitions on representing private entities and on creating an appearance of impropriety. Since he has only non-discretionary involvement with the finalized non-profit contract, he is not required to recuse himself in his County function but may choose to do so.

Facts:

             A County official serves on the board of a non-profit that historically has only very infrequent involvement with New Castle County. An agent of the County has approached the non-profit regarding a land use matter. The board of the non-profit must negotiate for the appropriate value and enter into a contract with the County. The official has only non-discretionary authority over the final contract in his County position since his department is not responsible for the negotiations or approving the contract.

Code or Prior Opinion:

            New Castle County Code Section 2.03.103B(2), Restrictions on representing another's interest before the County, states, in pertinent part: "No county official may represent or otherwise assist any private enterprise with respect to any matter before the County. . . ."1 The non-profit is a private enterprise.
 
            Additionally, one of the Code's conduct rules, Section 2.03.104 A, also recites a prohibition affecting the exercise of County authority by an official even when direct financial conflict is not at issue. Subsection A prohibits exercise of official authority which creates an appearance that the decisions or actions of a County official or his or her department are influenced by factors other than the merits of the matter for decision. This prohibition exists because such conduct undermines public confidence in the impartiality of the governmental body with which the employee or official is associated.2
 
            The standard for judging the creation of such an appearance for judicial public officials has been described in Delaware courts 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 re Williams, 701 A.2d 825, 832 (Del. Super. 1997). In determining the relevant circumstances, the courts advise the Commission to look at the totality of facts. The Commission has long applied this standard to the conduct of County officials and employees.
 
Prior Commission Opinions
 
 
            The general rule for participation of County employees and officials in outside non-profit activity is found in Advisory Opinion 05-24. In that matter an elected official was permitted to join the board of a non-profit as long as he revealed the potential areas of conflict to both the private entity and the appropriate County authority and requested that both the entity and the County permit him to recuse himself from the activities which cause the appearance of conflict, including policy making, promotion, or other activities concerning the non-profit's relationship with the County.
 
            Unfortunately, recusal is sometimes not sufficient to avoid violations of the Code. Advisory Opinion 06-03 involved a more difficult matter and had a different conclusion. In that case, an official was appointed by the County Executive to the board of directors of a non-profit related to the County. The official's County job involved responsibility for contract negotiations with the non-profit. The Commission found that the official had to resign from the board as she could not sustain the appropriate fiduciary duty to both the board and the County during contract negotiations. Recusal from the negotiations was found to be inadequate as it would unfairly deprive the public of the official's important services and the official's abstention from voting on the contract would not ameliorate the appearance that the non-profit unfairly benefited in the negotiations.
 
            Another facet of the problem arose in Advisory Opinion 07-06. In that matter, the Commission required the County to use the public notice and bid procedure for a contract which was of interest to a non-profit headed by a County official. Although the Code did not require public bidding in the particular situation, the Commission found that substitution of another signer on the contract or recusal on the part of the official would not prevent the creation of an appearance of impropriety because of the high status of the official and the unavoidable responsibility of the official to manage the contract. It determined that absent use of the notice and bid procedure, a reasonable member of the public would conclude that the contract was awarded to the non-profit because of the official's relationship to County government, not as a result of its merits.
 
            Finally, in Advisory Opinion 97-05, an appointed official, an employee of an elected official, was a member of a non-profit organization which represented itself before the elected official's agency on land use matters. The appointed official wished to assume a leadership role in the organization. The Commission found that while she could remain a member she could not assume leadership because "in such a capacity she would be dealing with the same matters that she and her direct superior address in their County positions. She also would be advocating positions upon which her direct superior would need to vote and that situation would create an appearance that the organization would be receiving preferential treatment and/or confidential information . . .   ."
The Commission held that "when a County Official has a high profile, leadership position in an organization whose purpose and/or actual activities center upon influencing County government, an appearance exists that the County official is mingling the two positions and raises impartiality concerns. The appearance would exist that the County Official would be using the authority of her office to further the benefit of the organization."

Analysis:

            Unlike a County employee who would only be restricted from representing the non-profit before his own department, the requester in this case is an appointed official and Code Section 2.02.103B(2) restricts him from participating in representation of a private entity before any County department. Therefore, unless the official recuses himself from the negotiations between the non-profit and the County, he would violate this prohibition. See n. 1, supra.
 
            Additionally, recusal also satisfies his obligation to prevent an appearance of impropriety by assuring the public that the negotiations with the non-profit reflect impartiality on the County's behalf. The situation in this case is most similar to that of the official in Advisory Opinion 05-24. The general rule stated in that case applies because, unlike the officials in the other cases cited above where more than recusal was required, the official's non-profit has no ongoing relationship with the County, his County position does not require his direct involvement with the non-profit, and the non-profit's primary business is not land use or advocacy before the County. Therefore, application of the general recusal rule would be effective in preventing the appearance that the non-profit unfairly benefited in the negotiations in the land use matter.

Finding:

             The official must recuse himself from all of the board's discussions, negotiations, votes, or contract formation with the County or its agents. Unless the official recuses himself from all matters relating to the non-profit's business with the County, he will violate the Code's prohibitions on representing private entities and on creating an appearance of impropriety. Since he has only non-discretionary involvement with the finalized non-profit contract, he is not required to recuse himself in his County function but may choose to do so.
 
            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 10th DAY OF JUNE 2009.
 
______________________________
Thomas P. Collins, Chairperson
 
Decision: Unanimous

Footnotes:

1 New Castle County Code Sec. 2.03.103 Prohibitions relating to conflicts of interest.
B.     Restrictions on representing another's interest before the County.
1.     No County employee or County official may represent or otherwise assist any private enterprise with respect to any matter before the County Department with which the employee or official is associated by employment or appointment.
2.     No county official may represent or otherwise 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 other employer by which the County official is employed.
3.     This subsection shall not preclude any County employee or County official from appearing before the County or otherwise assisting any private enterprise with respect to any matter in the exercise of his or her official duties.

2 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.