Whether an employee of the Department of Community Services may privately contract at his own expense for repairs to his personal residence with a business that participates in the Department's housing rehabilitation programs which he manages?

          The unique circumstances surrounding a potential private contract between the employee and a business which is currently an approved contractor for work in his Department's programs negate a conflict of interest or an appearance of impropriety. The employee does not have a personal relationship with the principals of the business and neither he nor any relative has a financial interest in the company. Furthermore, although the employee manages subordinates who review and monitor the work of the approved contractor and his position normally involves official action to enable payments to the approved contractor, the departmental procedures to be used to eliminate his authority in relation to the approved contractor for the duration of the employee's private relationship with that business, the prescreening of approved contractors by a Department other than the employee's, the employee's solicitation of three bids from contractors both within and outside the County supervised program, the parity of the bids he has received, the publicly available information about the quality of the approved contractor's work, the payment from the employee's personal funds, and, most importantly, the absence of any circumstances in this situation which involve the employee's status as a County employee in the private contract eliminate the possibility of appearance of impropriety.

          The Department of Community Services administers programs of housing rehabilitation which are entirely supported by federal funds from the Department of Housing and Urban Development (HUD). The County receives a fee from the federal authorities to administer the programs. There are several types of rehabilitation programs involving both grants and low interest loans to eligible low and moderate-income homeowners.

 

         New Castle County is paid by HUD to determine eligibility of the homeowners according to federal standards, to review the bids from the contractors according to established guidelines, and to see that the conditions of the contracts between the homeowner and the contractor selected by that person are satisfied before rendering grant or loan payments as agent for the federal government. The Department of Community Services is subject to periodic federal audit of the program.

 

          Contractors approved for participation in certain of the housing programs are selected by the Purchasing Department after making a successful public bid for inclusion in the program. Purchasing makes multiple awards of such contracts for the various trades involved and forwards the list of successful bidders to the Department of Community Services. The approved contractors are required to submit a bid to the homeowner and the Department of Community Services for each individual job they seek. The Department screens the bids for compliance with federally approved standards and assists the homeowner in making a selection, if requested. Payments available under the grant or loan programs provide funds for the low bidder, plus or minus 15%. If the homeowner wishes to contract for a bid that exceeds that level he must produce his own funds for the excess. The Department inspects the work of the selected contractor for compliance with the federally approved contract conditions and makes payment from federally supplied funds.

 

          An employee of the Department of Community Services who has management and supervisory responsibility for several federally sponsored housing rehabilitation programs has sought three bids for roof replacement on his personal residence at his own expense, including one bid from a business that participates in the Department's rehabilitation programs (hereinafter the "approved contractor"). The value of his contract is expected to be approximately $5000.00. He has received two of the three bids solicited and the bid he received from the approved contractor is slightly higher than the other bid.

 

          The approved contractor advertises in the media in New Castle County. The employee is interested in that roofer because he is aware of the quality of work performed by that business. He does not have a personal relationship with the principals, neither he nor any relative has a financial interest in the company, and he does not directly supervise the approved contractor's work under the contracts that the Department monitors. However, he manages the employees who review bids, monitor contracts, perform inspections and he personally approves payments to the contractors under the programs he manages.

           There are two principles which the Commission must address in analyzing this request for an opinion, Conflict of Interest and Appearance of Impropriety.

 

          Section 2.03.l03 (A)(1) of the Ethics Code sets forth the activities prohibited as a conflict of interest, as follows:

 

No County employee or County official 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 County 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.

 

          In examining this Code provision, it must first be determined whether the employee is using the authority of his office or confidential information for his private benefit. Certainly, it would be expected that the employee would accrue private benefit from contracting to have his roof replaced but there is no evidence that benefit has any connection with his official position. The approved roofer is one, which advertises to the public, and which has come into the Department program through a public bid process. There is no evidence that the employee or any member of his immediate family or a business with which he is associated will secure a "private benefit" under the proposed contract because of his employment with the County. To the contrary, the reported bid from the approved contractor is higher than the bid from the roofing company which has no association with the County. Finally, the employee will "benefit" from the contract in the same manner as any other homeowner who needs to maintain the physical condition of his personal residence by replacing a roof. Therefore, the employee creates no conflict of interest by selecting the County approved contractor to replace the roof on his private residence at his own expense.

 

          Section 2.03.104(A) of the Ethics Code sets forth the activities prohibited as an appearance of impropriety. It states:

 

No County employee or County official shall engage in conduct which, while not constituting a violation of Section 2.03.l03 (A)(l), 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 decisions or actions of the County employee, County official or governmental body are influenced by factors other than the merits.

          Provided that the Department of Community Services adopts one additional procedure, the provisions of this Code section would not be violated by acceptance of the bid of the approved contractor. The unique circumstances described by the party requesting this Opinion help to negate an appearance of impropriety: the prescreening of approved contractors by a Department other than the employee's; the solicitation of three bids from contractors both within and outside the County supervised program; the parity of the bids received, the publicly available information about the quality of the contractor; the payment from the employee's personal funds; and, most importantly, the absence of any circumstances in this situation involving the employee's status as a County employee with the private contract.

 

          However, to ensure that the confidence of the public in the impartiality of the Department of Community Services is not undermined by the acceptance of a private bid from an approved contractor in a situation where an employee exercises official authority over that contractor, the Ethics Code requires disclosure at the Departmental level. The Department General Manager must establish a procedure in which any employee with supervisory, contractual, or regulatory responsibility in relation to an approved contractor, or any contractor currently performing services in departmental programs, would be required to disclose to the General Manager the proposed private relationship with the approved or performing contractor, the circumstances under which that relationship arose, and the expected duration of the relationship. The General Manager, in turn, shall take appropriate precautions to see that the employee has no involvement in or official authority over departmental matters concerning the contractor for the duration of the private relationship with the contractor.