April 13, 1992

FACTS:

Page 405

You are an officer of a private consulting corporation
offering policy development and other management advisory services
to government and health care providers. In particular, you have
over ten years experience in mental health and hospital management.
Your firm has had numerous contracts with various state agencies to
provide expertise to the Commonwealth in the area of health and
mental health planning and financial management.

Page 405

Recently, the Commonwealth has received responses from acute
general hospitals to a Request for Proposals (RFP) to provide
psychiatric care as part of the Commonwealth's proposed
privatization of mental health care. A new RFP has been released,
seeking assistance in the evaluation of the hospital proposals and
in the implementation of contracts with the hospitals. Your firm is
one of the firms which has been selected to perform these services.
The firm's responsibilities will include: formulating baseline data
by reviewing the financial information provided by the hospitals
and developing objective measures to judge the hospital's
proposals; developing a risk analysis tool to assist the DMH in
determining which of the hospital responses may present too much
risk; and assisting DMH in its negotiations with the selected
hospitals.

The executed contract expressly names you as the project
director and names four other firm employees to be project
managers. Each of these individuals' resumes is attached and
incorporated by reference into the contract. Each of the named
individual's qualifications in pertinent areas is diagramed in a
chart in the response to the RFP. Each of the individuals is also
noted on an organization chart for the program. According to your
response to the RFP, which is incorporated into the contract, the
project managers will: "manage the daily project tasks and
administrative matters and act as liaison with the Commonwealth's
designated contract persons; coordinate, direct, and supervise the
conduct of work plan activities and tasks performed; manage the
project budget, resource requirements, and work schedules; plan and
monitor the execution of the project; manage the preparation of
progress reports; and provide technical guidance." See Response,
V-3. Your response notes that this project will require managers
with expertise in health care and hospital financing, as well as
expertise in the legal/regulatory and program policy aspects of the
project. See Response V-4. Each of the named individuals has
experience in each of these areas and most of the individuals have
past experience working in other health policy projects involving
the Commonwealth. Also, you agreed to obtain prior written approval
from the Commonwealth prior to substituting management,
supervisory, or key professional personnel named in the contract.
Response I-3.

You state that all of the parties specifically seek your
expertise in this project and that you will be considered a special
state employee under G.L. c. 268A, but you question whether the
other named individuals in your firm will also be considered state
employees.


QUESTION:


Are the other four named individuals considered to be state
employees under G.L. c.268A, 1(q), by virtue of the contract
between the Commonwealth and the firm?


ANSWER:


Yes.


DISCUSSION:


In the enactment of G. L. c. 268A, the Legislature established
an expansive definition of the term "state employee"[1] This
definition covers not only individuals who hold full-time
employment with a state agency, but also consultants who provide
services on an intermittent basis, whether or not they receive any
compensation. See, e.g., EC-COI-89-35 (private consultants state
employees where services expressly contracted and agency
contemplating specific expertise); 86-21 (private artist is a state
employee where specific services contracted for); 85-4 (president
of consulting group is a state employee where services being
provided are within his expertise); 83-129. However, the fact that
a corporation contracts with the state, without more, does not
confer state employee status on all of the employees of the
corporation. See, e.g., EC-COI-92-6; 86-21 (project manager without
more is not a state employee by virtue of employer's contract with
state agency); 83-39 (contract calls for services of firm as a
whole, not individuals); 85-4 (same). For example, in EC-COI-86-21
a question arose whether an individual who was named in a contract
to perform artwork and an individual who was not specifically named
but who was the project director were state employees for purposes
of G.L. c. 268A. In finding that the named individual was a state
employee, but that the project manager was not, the Commission
stated that "such an employee is covered by the definition if the
terms of the contract indicate that his specific services are being
contracted for." EC-COI-86-21; see also, EC-COI-83-165 (consultant
specifically named, contract also identified compensation and
personnel schedule for work); 83-129 (named project leader and
state required to consent to any change of leader); 80-84 (contract
specifically contemplates all partners in firm will work on
project).

The Commission has established certain factors it will weigh
in determining whether an individual who is an employee or officer
of a private corporation which

Page 406

contracts with a public entity will be deemed to be a public
employee. EC-COI-87-19; 87-8. These factors include:

1. whether the individual's services are expressly or
impliedly contracted for;

2. the type and size of the corporation;

3. the degree of specialized knowledge or expertise required
of the service. For example, an individual who performs highly
specialized services for a corporation which contracts with a
public agency to provide those services may be deemed to be
performing services directly to that agency;

4. the extent to which the individual personally performs
services under the contract, or controls and directs the terms
of the contract or the services provided thereunder; and

5. the extent to which the person has performed similar
services to the public entity in the past. EC-COI-89-35; 86-
21; 87-19
.

No one factor is dispositive; rather the Commission will
balance all of the factors based on the totality of the
circumstances. After weighing your circumstances, we conclude that
the individuals in your firm who are named in the contract are
state employees under the conflict of interest statute.[2] Of
significance are the facts that each individual is expressly named
in the contract, designated on the organization chart, and
delegated specific tasks to perform under the contract.
Additionally, you may not substitute other persons in these
positions without notifying and, presumably, receiving permission
from the Commonwealth. We also note that the contract emphasizes
the expertise of the individuals in the area of healthcare
financing and policy, which are the areas in which the Commonwealth
is seeking assistance. See, EC-COI-89-35 (where contract mentions
references to health care management and consultant's prior
experience in field, state agency could reasonably infer it was
obtaining consultant's expertise in this area under contract).

This is unlike the situation where the officers of a
corporation enter a contract with the state and provide no further
services other than general oversight of their employees, or
where a contract specifies a generic program manager. See, EC-COI-89-6.
Viewing the totality of the contract, it is apparent that the
Commonwealth is seeking specific expertise in health care
management and financing, and by the selection of your firm, the
agencies could reasonably infer that the named individuals would
provide that expertise. Finally, we see no evidence in the contract
that the agencies intended to treat your status differently from
the other individuals so named or that the other individuals were
not necessary to the performance of the contract.[3]

-----------------------------------
[1] "State employee," a person performing services for or
holding an office, position, employment, or membership in a state
agency, whether by election, appointment, contract of hire or
engagement, whether serving with or without compensation, on a
full, regular, part-time, intermittent or consultant basis,
including members of the general court and executive council.

[2] We call your attention to the conflict of interest
provision in the Commonwealth contract which you signed, which
states "The Contractor understands that any person individually
named in Attachment C (Key personnel). . . to provide services
under this Contract may become a spacial state employee subject to
the provisions of Chapter 268A of the General Laws." Each of the
individuals in question was individually named in Attachment C.

[3] While the parties may not, by contract, obviate the
application of G.L. c.268A, they may amend or draft a contract
based upon the firm's ability, rather than an individual's ability,
to provide services. See, EC-COI-86-21; 83-89 (contract calls for
services of firm as a whole, not individuals); 82-134 (agency
contracted for services of corporation, not individual).

End Of Decision