Opinion  EC-COI-85-75

Date:	10/08/1985
Organization:	State Ethics Commission

Subject to certain limitations, the director of procurement for a state agency may serve as an unpaid member of the board of directors of a buying consortium which contracts with his agency. Section 6 of the conflict of interest law would prohibit his participation as the director of procurement in any informal or formal decision-making concerning bids or contracts between the consortium and the agency, and also in bids of any organization competing with the consortium for the same contract. In performing periodic job performance evaluations of employees who will participate in the award or monitoring of contracts with the consortium, he must avoid using his official position to secure unwarranted privileges for the consortium and from conduct which creates the impression that the consortium will unduly enjoy his official favor.

Facts

You are the director of procurement for state agency ABC. In that capacity you are responsible for the process by which ABC seeks competitive bids for the sale of products to and makes selections of vendors. Under the "best bid" procedure, you select the lowest bidder meeting your contract specifications. The process is not automatic but involves your exercise of discretion to determine whether the lowest bidder actually meets the contract specifications.

XYZ, a non-profit corporation, is a national educational buying consortium. XYZ bids competitively to sell products to institutions, and currently has substantial contracts with ABC. ABC is an eligible institution for the receipt of XYZ bids and for annual patronage refunds from XYZ.

XYZ has recently invited you to serve as an unpaid member of the XYZ board of directors for a three-year term. As a director, you would oversee a general manager and full-time paid staff who carry out the day-to-day operation of XYZ.

Question

Does G.L. c. 268A permit you to become a member of the XYZ board of directors while you also serve as ABC director of procurement?

Answer

Yes, although you will be subject to limitations on your activities both as director of procurement and as an XYZ director.

Discussion

As ABC director of procurement, you are a state employee for the purposes of G.L. c. 268A.

1. Limitation on Official Actions

Under § 6 of G.L. c. 268A, you are prohibited from participating^[1] in any particular matter^[2] in which a business organization in which you serve as director has a financial interest. The purpose of this restriction is to remove state employees from situations in which their loyalty to the state may be clouded by competing private loyalties.

If you accept the XYZ directorship, limitations under § 6 will come into play whenever XYZ applies for or is awarded a contract by ABC. Because XYZ is a business organization which has an obvious financial interest in the awarding of contracts for which it has bid, you must refrain from participating in any XYZ bids or contracts. The prohibition applies not only to formal decision making, but also to your reviewing and recommending decisions to others. Further, the § 6 prohibition extends to any particular matter in which XYZ has a financial interest. For example, if XYZ is one of several organizations which has submitted a bid, you are disqualified from participating not only on the XYZ bid but also on the bids of organization which are competing with XYZ for the same contract. See EC-COI-81-118.

Should matters affecting the financial interest of XYZ come before you, you must not only refrain from participation, but also notify your appointing official in writing about the financial interest, Your appointing official thereafter may either:

1. assign the particular matter to another employee;
2. assume responsibility for the particular matter; or
3. make a written determination that the interest is not so substantial as to be deemed likely to affect the integrity of the services which the commonwealth may expect from you, in which case it shall not be a violation for you to participate in the particular matter. Copies of such written determination shall be forwarded to you and filed with the Commission by the person who made the determination.

Unless you have received a written determination from your appointing official expressly permitting your participation in matters in which XYZ has a financial interest, you must continue to refrain from any participation in such matters.

You should also be aware that G.L. c. 268A, § 23 applies to your official actions. Under § 23(¶ 2), you may neither use your official ABC position to secure unwarranted privileges for XYZ, nor engage in conduct which gives reasonable basis for the impression that XYZ will unduly enjoy your favor in the performance of official duties. You should keep these principles in mind whenever you perform periodic job performance evaluations of ABC procurement department employees who participate in the award or monitoring of XYZ contracts.^[3]

2. Limitation on XYZ activities

Section 4(c) of G.L. c. 268A governs your activities as a XYZ director while you also serve as ABC director of procurement. Under § 4(c) you may not act as the agent or spokesperson for XYZ in relation to any particular matter in which the commonwealth or a state agency is a party or has a direct and substantial interest. For example, you may not appear on behalf of XYZ before any state institution in connection with a contract bid which XYZ has made. On the other hand, your periodic participation in XYZ board of director meetings will not, by itself constitute acting as the agent of XYZ.

 

End Of Decision

^[1] For the 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.

^[2] For the 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."

^[3] On July 9, 1983 the Supreme Judicial Court ruled that the Commission does not possess the jurisdiction to enforce G.L. c. 268A, § 23. The discussion contained above is based on prior Commission rulings and is intended to provide guidance to you.