Opinion  EC-COI-85-81

Date:	10/29/1985
Organization:	State Ethics Commission

A full-time state employee would violate §§ 4 and 7 of the conflict of interest law if he were to work for a private company after hours under a contract made by his own state agency. If he leaves his full-time position to work for the company under the contract, he will remain a state employee if the contract contemplates that he will perform certain specialized functions.  He would continue to be subject to §§ 4, 7 and 23 of the law.

Facts

You are currently employed full-time by the state agency ABC. Approximately one-third to one-half of your present job duties involve defining and coding parameters to be entered into the control files of the reporting subsystem unit of the management information and claims processing system (system). XYZ, the firm which ABC has contracted with to run the system, has recently submitted a proposal to form a unit. You would like to contract with or be hired by XYZ to perform the unit functions you presently perform for ABC, if and when the running of the unit is transferred to XYZ.

Questions

1. Would G.L. c. 268A permit you, as a full-time ABC employee, to contract with XYZ on a part-time basis to perform these control-file maintenance functions?

2. Would G.L. c. 268A permit you to work full-time for XYZ under the state contract?

Answers

1. No.

2. Yes, subject to the restrictions of §§ 4, 7 and 23 discussed below.

Discussion

1. Limitations on you while you remain ABC 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 in which the commonwealth or a state agency is a party or has a direct and substantial interest. The term "particular matter" includes, among other things, an application, submission, contract, decision or determination. G.L. c. 268A, § 1(k). The proposed contract between XYZ and ABC for XYZ to run a unit would constitute a particular matter. Because the state would be a party to that contract, you would violate § 4 by receiving compensation from XYZ private funds or a federal funding source for services rendered pursuant to that contract. It is the fact that your control-file maintenance duties for XYZ would be connected to the ABC-XYZ contract, not that the contract would necessarily call for your services, which calls the § 4 prohibition into play. Similarly, you would violate § 4 by representing XYZ in any capacity before a state agency, including signing its contracts or appearing on XYZ's behalf before a state agency.

In addition, G.L. c. 268A § 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 from working for any company on a state contract as long as you remain a state employee, or from being paid for your XYZ services with state funds. There is only one exception to this broad prohibition potentially available to you. The § 7(b) exemption 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 part of their regular duties." If you remained an ABC employee while contracting part-time with XYZ, you would be "employed by the contracting agency" and accordingly would be ineligible for the § 7(b) exemption.^[1]

2. Application of the conflict law to you as a full-time XYZ employee working on the state contract

If you relinquish your ABC position in order to perform the unit work for XYZ on a full-time basis under the state contract, the conflict law will apply to you less restrictively. You are currently the sole person at ABC defining and coding parameters to be entered into the control files of the unit. You state that this is a "very specialized function" which requires knowledge of the control files and their limitations, the system and regulations. If and when XYZ enters into a contract with ABC to assume responsibility for the unit, and you are contemplated as the individual who will perform the control file maintenance duties for XYZ, you will remain a state employee for Chapter 268A purposes. The Commission has held in prior conflict opinions that a private firm employee, who is contemplated as the one who will provide services under a state contract and who will be paid with state funds from that contract, is to be considered a state employee under the conflict law, See e.g. EC-COI-85-45; 80,84.^[2]

Because of your continuing status as a state employee, you would not be subject to the § 5 restrictions on former state employees. Instead, you would remain subject to the § 4 and § 7 prohibitions discussed above. For example, you would be prohibited from performing services and being paid under a second state contract (e.g. the XYZ contract with ABC for XYZ to run the system) unless you qualified for one of the § 7 exemptions. Section 4 would prohibit you from being paid by XYZ or any other non-state party in connection with a contract or other particular matter in which the state is a party or has a direct and substantial interest. Additionally, you would be subject to the general standards of conduct set forth in Section 23. That section provides in relevant part that no state employee shall use or attempt to use her official position to secure unwarranted privileges for herself or others, or by her conduct give a reasonable basis for the impression that any person can improperly influence or unduly enjoy her favor in the performance of her official duties.^[3]

In summary, the conflict law prohibits you as a full-time ABC employee from performing services on a part-time basis for XYZ under its state contract, regardless of whether such services are financed with state or private funds. The conflict law would not prohibit you from working full-time on unit duties for XYZ under its state contract and being paid with state funds, subject to the §§ 4, 7 and 23 restrictions on any work you might assume in addition to that position.

 

End Of Decision

^[1] Because § 4 and § 7 prohibit your proposed XYZ employment while you remain a full-time ABC employee, it is unnecessary to discuss the § 6 restrictions and the § 23 standards of conduct which are also applicable.

^[2] If you were not named or specifically contemplated in the contract or if you were hired by XYZ to perform tasks unrelated to the state contract, you would not be considered a state employee. For chapter 268A purposes, you would then be a former state employee subject to the restrictions of § 5. In such an event, you should renew your advisory opinion request with the Commission.

^[3] On July 9, 1985, 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.