For Immediate Release - January 17, 2014

Ethics Commission Approves New Regulation

On January 16, 2014, the State Ethics Commission unanimously approved a new regulation that will permit public employees to have financial interests in government contracts that pre-dated their public service, and, in some circumstances, to have financial interests in new or amended government contracts entered into after they became public employees, if they are similar to prior government contracts, and so long as certain safeguards are in place.

“The regulation is intended to allow business men and women to enter public service without having to make a choice between giving up their business interests and serving in a public position,” said Commission Chair Barbara A. Dortch-Okara.  “We are very pleased with the final result, as we believe it protects the underlying concerns of the conflict of interest law by preventing the use of an ‘inside track’ to obtain contracts or favorable treatment, while ensuring a fair and reasonable application of the law.”

The regulation arose out of an opinion given to Senator Daniel Wolf on August 2, 2013, in which he was advised that his financial interests in two state contracts between Cape Air, the airline in which Senator Wolf has an ownership interest, and the Massachusetts Port Authority were prohibited by Section 7 of G.L. c. 268A, the state conflict of interest law.  The only options available to Senator Wolf were to resign his public position, fully divest his financial interests in Cape Air or terminate Cape Air’s agreements with Massport.  On September 5, 2013, Senator Wolf, joined by 11 other persons, submitted a petition pursuant to G.L. c. 30A, § 4, asking the Commission to adopt a regulatory exemption from the conflict of interest law.  That petition proposed an exemption for state elected officials.  On September 19, 2013, the Commission denied the petition but directed staff to draft an alternative exemption.  The Commission undertook a process that included two public hearings and a public comment period.  The new regulation, which applies to all state, county and municipal employees, whether elected or appointed, is the result of that process.

The approved regulation creates a broad exemption to the conflict of interest law by allowing public employees to retain financial interests in public contracts that pre-dated their entry into public service until those contracts terminate.  It also creates a more narrow exemption, allowing public employees to have financial interests in new or amended contracts, which are entered into after they became public employees, if those contracts are substantially similar to a contract with a public agency that pre-dated the public employee’s entry into public service, and in which the employee had a financial interest, and the following additional requirements are met:

  • The new or amended contract must be awarded pursuant to a “competitive bidding” process, as defined in the conflict of interest law; or its terms must be non-negotiable, and the contract must be available to all who meet the eligibility requirements for the contract, in accordance with a standard process that incorporates objective standards and eligibility criteria. 
  • The public employee did not participate or have official responsibility for the contents, design, making, award, or management of the contract, and did not participate in or have official responsibility for determining the eligibility requirements of the contract;

The regulation also permits public employees to have financial interests in public contracts obtained through inheritance or by transfer from an immediate family member because of the family member’s incapacitating disability.

A public employee using any of the new regulatory exemptions must file a public disclosure regarding the contract and his financial interest in it, and may not communicate, directly or indirectly, with any public agency concerning any public contract in which he has a financial interest.

The approved regulation is anticipated to become effective as of January 31, 2014.

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