Opinion  EC-COI-84-140

Date:	12/20/1984
Organization:	State Ethics Commission

A state employee would violate § 7 of the conflict of interest law if he and his partners were to contract with his state agency for the lease of office space.

Facts

You currently serve on a full-time basis as an employee with the Department of Mental Health (DMH). (Description of responsibilities omitted).

You have recently become aware of a request for proposals issued by the state Division of Capital Planning and Operations (DCPO) seeking to rent office space for a DMH office. You expect that DCPO will issue a similar proposal in the near future for office space in the same area. You and two partners own office property in the area and may be interested in responding to the requests for proposals.

Following the enactment of G.L. c. 7, § 40G in 1980, St. 1980 c. 579, § 12, DCPO became responsible for renting space for use by state agencies. However, the process which DCPO currently uses to rent office space for DMH includes DMH at several key stages. Once DMH notifies DCPO that it needs to rent office space. DCPO authorizes the process to proceed and will place an advertisement requesting proposals in the central register. DMH also places a similar advertisement in the local newspaper. Following the receipt of proposals, DCPO will submit the bids to DMH for its review and recommendation. DMH will thereafter submit a formal recommendation to DCPO, which will make the final selection. DCPO then authorizes DMH to enter into formal lease negotiations with the successful bidder. The final lease will be signed by DCPO, the bidder and DMH, with the Attorney General approving the form of the lease. The money for payment of the lease will come from the DMH budget. Problems incurred by DMH during the tenancy will be addressed generally to the Attorney General, although occasionally DCPO may become involved in correcting the problems. 

Question

 1. In view of your status as a DMH employee, does G. L. c. 268A permit you to lease office space for use by DMH?

 2. If the answer to question no. 1 is "No," may your partners lease office space for use by DMH?

Answer

1. No.

2. No.

Discussion

As a DMH employee, you are a state employee for the purpose of G.L. c. 268A. Section 7 of c. 268A generally prohibits state employees from having a financial interest in a contract made by a state agency. An office space lease signed by DMH and DCPO would be a contract made by a state agency. Because you own the building in which the office space is located and would be leasing the space to DMH, you would have a financial interest in the lease. Therefore, absent your eligibility for an exemption under G.L. c. 268A, § 7, your financial interest in the lease would be prohibited as long as you remain a DMH employee. 

Prior to 1983, it was virtually impossible for a full-time state employee to contract with other state agencies. However, following the enactment of St. 1982, c. 612, the General Court created an exemption for state employees under § 7(b).^[1] A primary condition for your qualification for the exemption is that you are not employed by the contracting agency or by an agency which regulates the activities of the contracting agency, and do not participate in or have official responsibility for the activities of the contracting agency.

As a signatory to the lease, DCPO is a contracting agency. Further, in view of the role which DMH currently plays in the lease award process, DMH is also a contracting agency for the office space which it seeks to rent. Specifically, a process which involves DMH in the advertising, selection, negotiation, signatory, budgetary and utilization stages necessarily make DMH a contracting agency along with DCPO. This is not to say that the Commission will always treat DMH as a contracting agency. When DCPO achieves its goal of administering G.L. c. 7, § 40G without the current practice of participation by the user state agencies, then the Commission's conclusion may change. However, based on the current practice, both DCPO and DMH are contracting agencies for § 7 purposes. Therefore, since your financial interest would be in a contract made by DMH, a contracting agency which employs you, you will not qualify for the § 7(b) exemption. No other exemptions are available to you.

The application of § 7 will continue as long as you have a financial interest in the lease. If your partners were to pursue the request for proposals and enter into a lease with DMH and DCPO, the prohibition of § 7 would continue to apply because, as a partner, you would retain a financial interest in your partners' lease of the building space. Assuming that you terminated the partnership and divested yourself of any ownership interest in the building, your former partners would be free to contract with DCPO and DMH.

End Of Decision 

^[1] G.L. c. 268A, § 7(b) exempts a state employee other than a member of the general court who is not employed by the contracting agency or an agency which regulates the activities of the contracting agency and who does not participate in or have official responsibility for any of the activities of the contracting agency, if the contract is made after public notice or where applicable, through competitive bidding, and if the state employee files with the state ethics commission a statement making full  disclosure of his interest and the interests of his immediate family in the contract, and if in the case of a contract for personal services

1. the services will be provided outside the normal working hours of the state employee,
2. the services are not required as part of the state employee's regular duties, the employee is compensated for not more than five hundred hours during a calendar year, and
3. the head of the contracting agency makes and files with the state ethics commission a written certification that no employee of that agency is available to perform those services as a part of their regular duties.