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Letter Ruling

Letter Ruling Public Enforcement Letter 90-4: Woodward Spring Shop

Date: 01/18/1990
Organization: State Ethics Commission
Referenced Sources: G.L. c. 268A, the Conflict of Interest Law

Table of Contents

Woodward Spring Shop c/o Tom Woodward

P.O. Box 458
Newport, New Hampshire 03773

Dear Mr. Woodward:

As you know, the State Ethics Commission has conducted a preliminary inquiry regarding an allegation that you, as President of Woodward Spring Shop, paid for the expenses of Holbrook Fire Chief William Marble and Firefighter David Kincus to travel to Florida inspect a new fire truck.  The results of our investigation (discussed below) indicate that the conflict of interest law may have been violated in this case.  In view of certain mitigating circumstances (also discussed below), the Commission, however, does not feel that further proceedings are warranted.  Rather, the Commission has determined that the public interest would be better served by bringing to your attention the facts revealed by our investigation and by explaining the application of the law to such facts, trusting that this advice will ensure your future understanding of the law.  By agreeing to this public letter as a final resolution of this matter, the Commission and you are agreeing that there will be no formal action against you and that you have chosen not to exercise your right to a hearing before the Commission.

I. The Facts

1.  Woodward Spring Shop (Woodward) was a private business run by you.[1]  Woodward Spring Shop was engaged in the repair of automobiles, trucks, buses and fire apparatus, the sale of auto and truck parts, and the sale of fire apparatus for FMC rue Apparatus, a manufacturer with home offices in Orlando Florida.  Woodward was a dealer representative for FMC since 1983.  Woodward also serviced Holbrook Fire Department vehicles.

2.  In November, 1986, the Holbrook town meeting appropriated money for the purchase of a new fire truck on a lease purchase basis.  On January 8th and 9th, 1987, the town’s request for bids was published in two local newspapers.  Woodward and Emergency One, another fire apparatus manufacturer, picked up the specifications and submitted bids.  The specifications had been prepared largely by Holbrook Firefighter David Kincus, who reviewed various fire trucks and bid packages from other cities and towns.  The specifications do not call for an inspection trip.

3.  On January 16, 1987, Selectman Frank McGaughey opened the bids.  FMC offered a lease purchase agreement which called for a $70,000.00 down payment and three equal payments of S32,610.78 with interest calculated at 6%.  Emergency One offered a lease purchase agreement which called for a $70,000.00 down payment and three equal payments of $32,675.00 with interest calculated at 7.3%.  When interest was factored into each bid, FMC was the lowest responsible bidder.  Chief Marble awarded the bid to FMC with town counsel’s approval.

4.  Chief Marble signed the fire apparatus contract on behalf of the Town of Holbrook on January 21, 1987.  This contract called for delivery of the truck within 120 calendar days from the date FMC received the check.  While it was originally anticipated that the truck would be delivered in August of 1987, it was not delivered and accepted by the town until May, 1988.

5.  Around August of 1987, FMC prepared and transmitted blueprints (“approval drawings”) of the fire truck. These were reviewed by Firefighter Kincus (and other firefighters), who made numerous changes to them and returned them to Woodward.  At that point, you decided that an inspection trip was necessary to ensure that the truck was built to these specifications. You offered to take Chief Marble and Firefighter Kincus to Florida to inspect the fire truck.

6. You made reservations for yourself, Chief Marble and Firefighter Kincus to fly to Orlando on November 17, 1987.  Each round-trip ticket cost $392.50 and was billed to your personal American Express card.  Upon arriving in Florida, you went to FMC’s factory.  You then checked into the Holiday Inn in Orlando.  You paid for the room that Chief Marble and Firefighter Kincus shared, which cost $56.00 per day.

7.  The following day, you went to FMC’s plant with Chief Marble and Firefighter Kincus, who had the standard tour of the factory.  You observed the Holbrook fire truck under construction.  You went to lunch at Chile’s, a local bar and grill, with other FMC personnel.  It appears that one of the FMC employees picked up this tab.  Upon returning to the factory in the afternoon, you attended to other business while Chief Marble and Firefighter Kincus met with various plant engineers and went over the blueprints for the Holbrook truck. You left the plant at approximately 6:30 and probably went to Charlie’s Steak House for dinner with Chief Marble and Firefighter Kincus.  You paid the bill.  On November 19th, you drove with Chief Marble and Firefighter Kincus to the plant in the morning.  You attended meetings not related to the Holbrook fire truck.  The Holbrook truck was to undergo a pump test; however, for unknown reasons, that did not happen.  Chief Marble and Firefighter Kincus took your rented automobile back to the hotel to pick up their suitcases and check out.  They may also have stopped at a local mall.  Chief Marble and Firefighter Kincus returned to the factory to meet you and you all flew home on the 6:00 P.M. flight.

8.  Apart from airfare, meals, and the hotel room, Chief Marble and Firefighter Kincus did not receive any entertainment or other gratuities from Woodward or FMC.

9.  The Commission is aware of no evidence that you knew your actions in providing travel expenses for Chief Marble and Firefighter Kincus would violate the conflict of interest law.  In fact, it appears to be a common practice for fire chiefs to inspect the fire trucks which they purchase.  The practice serves a legitimate public interest, because fire trucks generally are customized to meet the needs of a particular locality.

II. The Conflict Law

Section 3(a) of G.L. c. 268A prohibits anyone, otherwise than as provided by law for the proper discharge of official duty, from giving, offering or promising anything of substantial value[2] to any municipal employee for or because of any official act[3] performed or to be performed.

Your payment of the travel expenses of Chief Marble and Firefighter Kincus as described above raises serious concerns under §3(a).  The act of inspecting the fire truck was an official act.  By providing travel  expenses for these municipal employees to inspect the fire truck, you gave something of substantial value for an official act.  The Commission has ruled that vendor-subsidized travel for or because of official acts violates the conflict of interest law.  See, EC-COI-82-99 and EC-COI-88-5.  Absent a statute or regulation authorizing this, a vendor may not pay for a public employee’s travel expenses.  See EC-COI-88-5. The Commission believes that “business travel” has historically been too vulnerable to abuse to be treated otherwise.  See, In the Matter of Carl D. Pitaro, 1986 SEC 271 (where Brockton Mayor received all expense paid trip to Florida to view a hotel built by a developer who proposed to build a similar hotel Brockton, the Commission held that the travel privilege of substantial value accrued to Mayor Pitaro and not to the City of Brockton, notwithstanding the public purpose served by the trip).

Sound public policy requires the prohibition of these kinds of payments. As the Commission stated in EC-COI-82-99 (where members of the state board of registration traveling to view equipment proposed by a manufacturer for approval by the board were prohibited from receiving travel expenses from this manufacturer),

a system wherein the manufacturers of products pay for trips by state employees is clearly open to abuse by the state employees as well as the manufacturers. State employees could exploit this system in order to procure unwarranted privileges. And, the public impression that state employees were improperly influenced in their decisions could arise. Manufacturers, on the other hand, may view the quality of the accommodations and accouterments on these trips as more important than the quality of their products.

The Commission acknowledges that there may be legitimate public purposes to justify a public employee’s travel, and that the public interest may be furthered by allowing private business entities to pay for a public employee’s travel expenses.  The Commission’s policy is designed to ensure that public employees’ integrity is not compromised in the name of conserving public funds.  Thus, while the conflict law prohibits direct payment of travel expenses by vendors, trips such as this may be lawfully accomplished without risk of violating the conflict of interest law in the following ways.

First, cities and towns may adopt an ordinance, bylaw, or charter provision regulating vendor payments for travel expenses.  Such an enactment could ensure that the travel expenses are legitimate and directly related to the public purposes served by the travel.  For example, a municipality could require that the vendor identify the purpose and cost of the propose travel, and that the public employee secure the approval of the governing body before undertaking the trip.  This would ensure that the expenses are legitimate, and minimize the risk that the public employee is being “wined and dined” at the public’s expense.[4]

Alternatively, G.L. c. 44, §53A may provide a statutory vehicle by which a private party may pay traveling expenses for public officials.  This section of the municipal finance law would appear to allow a city or town to accept grants from a private corporation or individual and, in turn, the city may expend such funds for the specific purpose intended with the approval of the mayor and the board of selectmen.  Thus, if FMC decided to pay the travel expenses of members of the fire department to attend an inspection trip, FMC could probably do so by providing the necessary expenses to the town with the acknowledgement that the donation or gift is to be used to pay for travel expenses. This procedure allows for scrutiny by the city treasurer or auditor as to the reasonableness of the expenses incurred by the public employees.  This would substantially reduce the potential for abuses.  The application of G.L. c. 44, §53A to trips is ultimately a matter of municipal finance law.  Municipal officials should review this statute with city solicitors and town counsel before implementing a procedure for vendor payments of travel expenses.[5]

Finally, a city or town presumably could reimburse an employee for trip expenses incurred for business travel.  The city or town could then bill the vendor for the costs of the public employee’s travel expenses.  This alternative should also be reviewed with town counsel.

III. Disposition

Based on its review of this matter, the Commission has determined that the sending of this letter should be sufficient to ensure your understanding of, and your future compliance with, the conflict of interest law.[6]  This matter is now closed.  If you have any questions, please contact me at 727-0060.

[1] While originally located in Quincy, Massachusetts, this enterprise has recently stopped doing business in Massachusetts.

[2] The Commission has found $50.00 to be substantial value. See, Commonwealth v. Famigletti, 4 Mass. App. 584, S87 (1976).

[3] “Official act,” any decision or action in particular matter or in the enactment of legislation.

[4] Travel expenses paid by a vendor under such an ordinance would be “otherwise as provided by law” under G.L. c. 268A, §3 and would not give rise to a violation.

[5] We note that evidence adduced during this inquiry suggests that FMC sponsored a “Fly-In Program” through which fire chiefs were flown to FMC’s plant in Orlando, Florida for the express purpose of selling fire trucks to the chiefs.  Such trips also violate G.L. c. 268A, §3(b), because the chiefs receive travel expenses in return for their official acts in purchasing FMC’s fire trucks.

[6] The Commission could have directed the staff to commence adjudicatory proceedings in which, if you were found to have violated §3, fines of up to $2,000.00 for each violation could be imposed.  The Commission chose to resolve this matter with a public enforcement letter because 1) there appears to be a widespread misconception among public employees that such payments are permissible, particularly among various fire departments, where inspection trips appear to be common, 2) there were no frills involved in these trips, and 3) the Commission knows of no evidence that you were aware that these payments violated the law.

Referenced Sources: