Filing Number: 17-01
Subject: Appearance of Impropriety
Keywords: agency head, appearance of impropriety, compensation, conflict, consultant, Department of Land Use, disclosure, Executive Office, financial interests, impropriety, official business, private advantage or gain, professional services, undue influence, unwarranted privilege, vendor
Decision By: Johanna Bishop, Eric Monzo, Paula Jenkins-Massie, Sally Jensen, Robert Ralston, Charles Toliver
Contact Email: admin@nccethics.org
 
Status: Active

Question:

Whether the waiver requested by the Department Land Use of the two-year post-employment restriction, found in Section 2.03.103.D of the New Castle County Code, should be waived in order that it may contract with a former County employee to perform an evaluation of whether the objectives of a departmental strategic plan have been met?

Conclusion:

The waiver request is granted. On balance, the undue hardship to the County in enforcing the post-employment provision exceeds the personal benefit to the former employee. It could reasonably be said that the work performed by the New Castle County Land Use Department affects the lives of every resident of the County. The new Administration is attempting to evaluate the progress the Department has made on initiatives outlined in a strategic and operational work plan which was adopted over 2 years ago. Soon after it was adopted, however, changes in personnel may have limited the efficacy of the implementation of the plan.  To perform an evaluation of the status of this plan, the Land Use Department needs someone with practical experience in land use planning, but also someone who has specific knowledge of: (1) the plan itself; (2) the administration, structure, and management of this Department; and (3) the New Castle County Unified Development Code. The Department anticipates a short-term duration for this contract (perhaps two months) at an approximate total cost of $14,900.  The rate of pay to this former County employee under this contract amounts to 62% of the rate of pay she received as a County employee.

Facts:

A Department of Land Use (“Department”) employee (“Former Employee”) resigned from County employment effective near the end of May, 2015.  Prior to the Former Employee’s resignation, she was highly instrumental in drafting a vision and strategic operational work plan (‘Plan”) for the Department. The Plan was implemented before the Former Employee resigned, and its implementation has continued during the last couple of years.  No one was hired to replace the Former Employee until the term of the new Administration began recently.  At this juncture, the Administration would like to assess the progress made on initiatives outlined in the Plan in an effort to improve the County land use development review process, as well as other regulatory functions performed by the Department. Hiring the Former Employee to perform this contractual work results in a cost savings to the County in that any other consultant hired would have a steep learning curve which would be time-consuming and costly.  More importantly, however, given that the Plan was created with significant input and management from the Former Employee, and was developed with the use of her extensive background and experience in government and municipal land use planning and management, the Former Employee is in a unique position to provide the Administration and the Department with a through and meaningful review and evaluation of the progress made on the Plan since its adoption by the Department.  The proposed contract with the Employee is calculated to run for two months at a cost of $14,900, which represents a rate of pay that is 62% of the Employee’s former rate of pay when employed by the County.  The duties to be performed by the Former Employee under this contract are not duties assigned to any other County employee.  Thus, hiring the Former Employee will not duplicate a current County job classification. 

Code or Prior Opinion:

New Castle County Code Sections

           In this case, the Former Employee would be performing duties similar to those for which she had been directly and materially responsible during the course of her County employment. Section 2.03.103 D of the New Castle County Code prohibits a person who has served as a County employee or County official from “represent[ing] or otherwise assisting any private enterprise on any matter involving the County for a period of two (2) years after termination of employment or official status with the County, if the person gave an opinion, conducted an investigation or otherwise was directly and materially responsible for such matter in the course of official duties as a County employee or official. Nor shall any former County employee or County official disclose confidential information gained by reason of public position nor shall the person otherwise use such information for personal gain or benefit.”

            Sections 2.03.105 A and B provide authority to the Commission to grant a waiver from the prohibition:

A. Notwithstanding the provisions of this Division, upon the written request of any County Department or of any individual who is or was a County employee or County official, the Commission may grant a waiver of the specific prohibitions governing post-employment restrictions if the Commission determines that the literal application of such prohibition in a particular case is not necessary to achieve the public purposes of this Division or would result in an undue hardship on any current or former employee, official or County Department. Any such waiver may be granted only by written decision of the Commission. …Any person who acts in good faith reliance upon any such waiver decision shall not be subject to discipline or other sanction hereunder with respect to the matters covered by the waiver decision provided there was a full disclosure to the Commission of all material facts necessary for the waiver decision.

B. Any application for a waiver, any proceedings and any decision with respect thereto shall be maintained confidential by the Commission provided that:

1.      Public disclosure shall be made by the Commission upon the written request of the applicant;

2.      The Commission may make such public disclosure as it determines is required in connection with the prosecution of any violation of this Division;

3.      The Commission shall report to appropriate Federal and State authorities substantial evidence of any criminal violation which may come to its attention; and

4.      In the event that a waiver is granted, the waiver decision and the record of all proceedings thereto shall be open to public inspection.

State Ethics Code Interpretations

             County Code Section 2.03.103.D and Section 2.03.105.A and B are substantially identical to the post-employment prohibition and waiver authority granted to the Delaware Public Integrity Commission (hereinafter “PIC”) recited in the Delaware Code at Title 29, chapter 58. Because the County Ethics Code is required to be at least as strict as the State Code, interpretations by the PIC are informative. See, 29 Del.C. §5802(4).  The PIC has discussed the post-employment provisions several times. In PIC Ethics Bulletin 007, issued May 22, 1998, that Commission described the State law and made reference to similar federal government provisions:

[L]ike other conflict of interest statutes, post-employment provisions are meant to insure public confidence in the integrity of the government. It is said public confidence in government has been weakened by a widespread conviction that government official use their office for personal gain, particularly after leaving the government. There is a sense that a “revolving door” exists between industry and the government [which] leads to a suspicion that personal profit was the motivation. There also is public concern that former employees may use information, influence, and access acquired during government service for improper and unfair advantage in later dealings with that department or agency. Reflecting that concern, post-employment laws set a “cooling off period” in certain areas which the ex-employee dealt with while working at the agency. [Citations omitted].

 Similarly, the Delaware legislature sought to insure public confidence in the integrity of government. 29 Del.C. §5802. It set a two–year “cooling off period” in areas where the former employee was “directly and materially responsible,” etc. 29 Del.C. §5805(d). This limits the actual or perceived unfair advantage in subsequent dealings with a department or agency. Commission Op. No 97-18. Thus, this Commission has held that Delaware’s post-employment provision is an attempt to eliminate concerns that when a State employee moves from State employment to private employment that they do not use their former State position to get a “leg-up” on others in the private sector who also seek to deal with the government. Commission Op. No 97-11. Additionally, it is to avoid the risk that after a State employee moves to the private sector that they will not exercise undue influence on their former colleagues. Commission Op. 96-75.

            In coming to a decision about a waiver, the Commission also must scrutinize the conditions of the post-employment contract to see if the contract comports with the goal of preventing unjust enrichment of the Former Employee and promoting the public confidence in the integrity of County government. Compensation must be reasonable for obtaining information acquired through former employment and the contract period must be limited to only that period of time necessary to ameliorate the undue hardship to the Department. The remuneration to the Former Employee must reflect arms' length dealing between the Department and the Former Employee to avoid any appearance of favoritism.

Analysis:

An employment contract granted shortly after retirement or resignation on the basis of expediency, merely because an employee acquired special expertise in the course of paid County employment, would not qualify for a waiver because the reasoning underlying the prohibition would be contravened. Such a contract would create an impression of unjust enrichment to a Former Employee who capitalizes, for private benefit, on knowledge acquired in a public position to the disadvantage of competitors for the position.

             Even if a Former Employee capitalizes on such knowledge, however, a waiver request may be granted if the "undue hardship" to the County standard is satisfied. "Undue hardship" has been defined by the PIC as "excessive hardship". This phrase means more than ordinary hardship for the County.  Ordinary hardship encompasses any loss of a productive, long-term employee which affects continuity and work flow in a government agency. As noted by the PIC, undue or excessive hardship is not created simply because it would be cheaper or easier to hire a former employee. In a number of opinions, the PIC found that if waivers were granted on grounds of cheaper cost or continuity, a retired employee would always have a "leg up" and be at a competitive advantage over other vendors and the post- employment bar would be meaningless. See, e.g., PIC Commission Op. 97-41. Additionally, waivers on the basis of cost or continuity raise the specter of favoritism and unfair dealing. Justifying a contract on such grounds would have the net effect of not only defeating the legislative purpose of the two year cooling off period but also weakening public confidence by creating the impression that government encourages its officials and employees to trade upon their offices for future personal gain at the taxpayer's expense.

            When, however, undue hardship to the County has been shown to exist, the Commission has granted applications for waiver. In New Castle County Commission Waiver 14-01, the department stated that the retiree possessed unique and exclusive knowledge about the system he created. Thus, the retiree was the only source consultation for the successor as to how to process certain financial aspect of grant funds.  If the post-employment prohibition had been enforced, the hardship for the department and the public which relies on its services would have exceeded the perceived personal benefit to the retired employee, especially if he received only a moderate rate for his services.  

            In New Castle County Commission Waiver 11-01, the Commission granted a waiver where the department wanted to hire by contract a manager who had recently retired.  The retiree had been responsible for implementing all of the medical and voluntary benefits, including pension benefits, for approximately 1450 employees and 1200 retirees. This employee had also been responsible for the Department budget closeout occurring at the time, the fiscal year start up, and financial reporting processes as well as heading up modifications to the County's pension plans pursuant to recently enacted ordinances. The department did not believe it could timely recruit and train a new employee to execute the retiring employee's duties without severe disruption to the pension program and its beneficiaries. It requested a 9-month window in which to contract with the retiring employee for her services in performing many of the tasks for which she was previously responsible. The department expected to require services from the retiree on a part time basis and proposed an hourly rate pegged at 80 to 85% of her former hourly salary, which gave the Commission pause.  Due to the nature of the hardship facing the County at the time, however, the Commission granted the waiver.

            In the waiver at hand, the Department is attempting to evaluate the progress which has been made on a work plan primarily created by the Former Employee when she was employed by the County.  The Department performs functions which are vital to the everyday life of the citizens of New Castle County, and beyond.  Achieving optimal and/or better efficiency and performance in the Department is a critical need and a major objective of the new Administration.  To effect those purposes, the hiring of the Former Employee at a rate of pay which is less than her County employment rate of pay, for a two-month contract duration, at an anticipated cost of $14,900, in this instance, satisfies the conditions in the Ethics Code for the granting of a waiver. 

Finding:

A waiver of the two-year post-employment prohibition pursuant to the undue hardship standard is GRANTED for under the facts and circumstances presented by the Department in this request and Commission decision.    

In rendering this opinion, this Commission has applied the New Castle County Ethics Code, which establishes the minimum level of ethical conduct required of County officials and employees.

 

BY AND FOR THE NEW CASTE COUNTY ETHICS COMMISSION

ON THIS 15TH DAY OF FEBRUARY, 2017.

 
Johanna P. Bishop, Chairperson
               New Castle County Ethics Commission              

                                                                        

 

Decision:  Unanimous