Opinion

Opinion EC-COI-85-28

Date: 04/02/1985
Organization: State Ethics Commission

A full-time state employee who wishes to start a business is subject to several restrictions under the conflict of interest law. He may neither perform work on referrals from a state agency, nor act as the agent of his business in seeking contracts with state agencies. He may have a financial interest in a state contract only if he qualifies for an exemption under § 7. Once he leaves his state position, he may not work privately on matters which previously came before him in his state position.

Table of Contents

Facts

You are employed full-time by state agency ABC as a product designer. The clients for whom you design products are so-called "class member," members of the plaintiff class in a lawsuit. You would like to start a product design business which would service persons who are not class members. In connection with this, you would like to investigate whether there would be a significant market for your services. You would like to investigate both private and public sources such as state agencies, with a view to eventually entering into business relationships with such entities should there be such a market. If there is a market for your services, you would incorporate. You also have been approached recently by some private parties who would like you to do some product design work for them You would be paid for this work out of non-state funds.

Questions

1. What limitations would G.L. c. 268A place on your activities while you are a state employee?

2. What limitations would G.L. c. 268A place on your activities if and when you leave state service?

Answer

You are subject to the following limitations.

Discussion

1. Limitations on you while you are a state employee

The sections of G.L. c. 268A, the conflict of interest law, that are applicable to your situation are §§ 4, 6, 7 and 23. Section 4 regulates what state employees may do "on the side." It provides in relevant part that no state employee may receive compensation from or act as agent for anyone other than the commonwealth or a state agency in relation to any particular matter[1] in which the commonwealth or a state agency is a party or has a direct and substantial interest. Applying these provisions to your inquiry about doing product design for private parties, you may perform that work as long as the client is not a referral from a state agency or a class member. See e.g. EC-COI-83-101, 82-42.[2] Section 4 is also relevant to your question as to whether you can approach state agencies regarding your proposed business. The Commission has concluded in previous opinions that acting solely on one's own behalf does not constitute acting as an agent of a non-state party for purposes of § 4.[3] You have stated that, at this time, you would be limiting your inquiries to whether or not there would be any interest on the part of other state agencies in your product design services. You are not seeking this information on behalf of a business that is already in operation. Thus, you would not be acting as an agent for anyone other than the commonwealth in making initial inquiries. The result might well be different if your business were further along in the planning stage or you had definite plans to incorporate. The Commission's view would also be different if it appeared from a given set of facts that an individual were proceeding in a particular way so as to circumvent the provisions of G.L. c. 268A.[4]

Section 6 places limits on your activities as a state employee with regard to your private interests. It provides in pertinent part that no state employee may officially participate[5] in any particular matter in which he or a business organization in which he is serving as an officer, director or employee has a financial interest. This section would prohibit you, for example, from participating as an ABC employee in the ABC contract bidding process if either you or your company were bidding on a contract.

Section 7 prohibits a state employee from having a financial interest, directly or indirectly, in a contract made by a state agency, in which the commonwealth or a state agency is an interested party. This section would prohibit you and/or any business of yours, for example, from entering into a vendor relationship with a state agency while you are a state employee, or from being paid for your non-ABC design services with state funds. There are two exceptions to this broad prohibition which might be applicable to you. The first states that § 7 does not apply to a state employee...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.

Assuming that these requirements are met, you and/or your business could contract with any state agency except ABC while you are a state employee. The second exception states that § 7 does not apply to a state employee who provides services or furnishes supplies, goods and materials to a recipient of public assistance, provided that such services or such supplies, goods and materials are provided in accordance with a schedule of charges promulgated by the department of public welfare or the rate setting commission and provided, further, that such recipient has the right under law to choose and in fact does choose the person or firm that will provide such services or furnish such supplies, goods and materials. 

Section 23 contains general standards of conduct applicable to all state, county and municipal employees. It provides in pertinent part that no employee may use or attempt to use his official position to secure unwarranted privileges or exemptions for himself or others. This section would prohibit you from using your ABC position to obtain a clientele for your private business. See e.g. EC-COI-84-131. It also prohibits you from using state resources, time or supplies to further your personal interests. See e.g. EC-COI-84-52.

    2. Limitations on you as a former state employee

      If and when you leave your ABC position you will be subject to the provisions of §§ 5(a) and 23.[6] Section 5(a) prohibits a former state employee from acting as agent for or receiving compensation from anyone other than the commonwealth or a state agency, in connection with any particular matter in which the commonwealth or a state agency is a party or has a direct and substantial interest and in which he participated as a state employee. The subject of product design is not itself a particular matter, nor is the purpose of G.L. c. 268A to prohibit individuals from using the expertise they have gained in state employment.[7] Provision of product design services to ABC clients would, however, constitute a particular matter. Thus you are prohibited from acting as agent for or being paid by anyone other than the state in connection with the provision of design services to agency clients. The provision of § 23 applicable to former state employee prohibits them from using confidential information acquired in the course of their official duties to further their personal interests. You could not, for example, take advantage of confidential ABC evaluative criteria for contract awards to obtain business for yourself.

       

      End Of Decision

      [1] For purposes of G.L c. 268A, § 1(k) "particular matter" is defined as "any judicial or other proceeding, application, submission, request for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, decision, determination, finding, but excluding enactment of general legislation by the general court and petitions of cities, towns, counties and districts for special laws related to their governmental organizations, powers, duties, finances and property."

      [2] These citations refer to previous advisory opinions issued by the Commission. Copies of this and all other advisory opinions may be obtained at the Commission's offices.

      [3]See e.g. EC-COI-83-28, 83-12.

      [4] The § 4(c) prohibition applies to you personally and would not prohibit you from having someone else represent your business before any state agency. See e.g. EC-COI-85-16.

      [5] For purposes of G.L. c. 268A, § 1(j), "participate is defined as "participate in agency action or in a particular matter personally and substantially as a state, county or municipal employee, through approval, disapproval, decision, recommendation, the rendering of advice, investigation or otherwise."

      [6] It is not necessary to consider the application of § 5(b) here because you have stated you have no official responsibility for the operation of product design department within at ABC.

      [7]See e.g. EC-COI-84-113; Guide to the Conflict of Interest Law, p. 14 (1983).

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