| Date: | 06/28/1986 |
|---|---|
| Organization: | State Ethics Commission |
A car dealership selected to sell police vehicles to police departments pursuant to a collective bid is prohibited by sections 3 and 23(b)(2) from offering discounts to those officials involved in selecting the dealership to participate in the collective bid.
Car dealership ABC was awarded a contract for police cars in 1986 under the Greater Boston Police Council (GBPC) Collective Purchasing Program conducted pursuant to G.L. c. 7, §22B.
The police car bid is a "collective bid" as defined in the law which allows any department or agency to use the bid even though they are not members of the GBPC. One such non-member, municipal agency, XYZ, recently purchased 9 police cars from dealership ABC under this collective purchasing program. Individual XYZ police officers have no involvement in the collective purchasing program bidding or contract award process, nor do they have involvement in XYZ decisions to utilize the program rather than to bid its purchases independently. In addition, individual officers have no discretion regarding the choice of car dealers to be used for repairs or other service on XYZ vehicles.
In the police car purchase program, the GBPC drafted specifications, invited bids and awarded the contract. The contract was awarded to the lowest compliant bidder. Dealership ABC was the lowest bidder of three compliant bids for the police car purchase program. (Twenty-eight invitations to bid were sent out with three responses). The purchase decision was made by the executive committee of GBPC. The executive committee is elected by the membership. The membership consists of the police chiefs or heads of the participating police departments or offices. The executive committee is comprised of police chiefs. Currently, there is a chairman and three members.
The XYZ Assistant Administrator for Fiscal Affairs, the Director of Public Safety, and the Contract Attorney were jointly responsible for the decision to participate in the program, as opposed to bidding individually. These same people will make future decisions whether to participate in the program. The decision to participate in the program includes a number of subsidiary decisions, such as choice of options, choice of accessories, whether to purchase or lease, the length of lease or financing, whether to purchase options at dealership ABC or another car dealer, and other procurement specifications.
Contact with dealership ABC for warranty service or problems is handled by the XYZ garage Fleet Manager. If he is unable to handle or resolve a problem, he will refer the matter to the legal department, which is a separate office from the Contract Attorney. The Fleet Manager has the discretion to have warranty service provided at dealership ABC, or any other authorized dealer of that type of car. The Fleet Manager or legal division would communicate any contract difficulties to the Director of Public Safety or Contract Attorney.
Dealership ABC has advertised that it will sell new cars at $100 over dealer invoice cost to any law enforcement officer "to show appreciation for being awarded the Greater Boston Police Council bid. "XYZ police officers would like to take advantage of this offer.
Does G.L. c. 268A permit XYZ officials[1] to accept the discount from car dealership ABC?
No. Those XYZ employees who decide whether XYZ will participate in the program, or who monitor warranty compliance or service, may not accept the discount because they would be in receipt of an item of substantial value for or because of their official actions. Other XYZ officials or officers who are not involved in the purchase, warranty, compliance, or service of the vehicles may not accept the discount because they would be in receipt of an unwarranted privilege of substantial value not properly available to similarly situated individuals.
The sections of the conflict law which apply to the facts of this opinion are §3 and §23.
Section 3(b) of G.L. c. 268A prohibits a public official from accepting an item of substantial value for or because of any official act performed or to be performed by such employee.[2] The intent of this provision of the conflict law has previously been articulated by the Commission. As the Commission stated In the Matter of George Michael, 1981 EC 59, 68:
A public employee may not be impelled to wrongdoing as a result of receiving a gift or a gratuity of substantial value in order for a violation of section 3 to occur. Rather, the gift may simply be a token of gratitude for a well-done job or an attempt to foster goodwill. All that is required to bring section 3 into play is a nexus between the motivation for the gift and the employee's public duties. If this connection exists, the gift is prohibited. To allow otherwise would subject public employees to a host of temptations which would undermine the impartial performance of their duties, and permit multiple remuneration for doing what employees are already obliged to do -- a good job.
Thus, there need be no showing of an explicit understanding that the gratuity is being given in exchange for any specific act performed or to be performed. Michael, supra at 68. Indeed, any such quid pro quo understanding would raise extremely serious concerns under §2 of c. 268A (the "bribe" section). Thus "[a]ll that is required to bring section 3 into play is a nexus between the motivation for the gift and the employee's public duties. If this connection exists, the gift is prohibited." Id.
The first issue is whether a discount in the purchase price of an automobile advertised as "100 over invoice" is an "item of substantial value" within the meaning of §3. G.L. c. 268A does not define what constitutes "substantial value" for the purposes of §3 but rather leaves that determination for case-by-case consideration.[3]
In absence of evidence to the contrary, the Commission concludes that a "$100 over invoice" sale is of substantial value. The word "invoice" is specifically defined in the regulations of the attorney general adopted pursuant to the consumer protection statute, G.L. c.93A, 940 CMR 5.02(5). Invoice means the total consideration paid by the dealer to the manufacturer, and where no holdback, rebate, promotional fee or any other consideration has been or will be paid by the manufacturer. The Commission will view the advertisement at face value and, therefore, will not assume that "$100 over invoice" has variable meaning or is subject to manipulation.[4]
A second factor in determining whether §3 has been violated is whether the item of value has been given for any "official act performed or to be performed." Clearly, this element is met where a vehicle is sold at a discount to a member of the executive committee, or to a member of the GBPC where the body approves the contracting decision of the executive committee. In this case the employees are in a position to use their authority in a manner which could affect the giver of the discount. A more specific question is whether the XYZ Assistant Administrator, the Director of Public Safety, the Contract Attorney, or the Fleet Manager may participate in the discount. Although the decision of XYZ to participate in the program had been made prior to the time of the discount, future official decisions of these named officials in their dealings with dealership ABC is reasonably foreseeable. Communication of contract experience to GBPC, whether favorable or unfavorable, is a foreseeable future act of the named employees. At a minimum, complete objectivity is required in order for these officials to exercise properly their official responsibilities, which may include whether to renew participation in the program, where to service purchased vehicles, whether to purchase certain options or accessories, where to purchase those options, when to dispute warranty compliance, when to add options after purchase, and determining the terms and conditions of service and normal maintenance. Complete loyalty is owed the public when these decisions are made, no matter how inconsequential those decisions may appear. This principle is reflected in the language of the law. In referring to an "official act performed or to be performed,” §3(b) also includes prior and future acts by the official. See, In the Matter of George A. Michael, 1981 EC 59, 68.
It might be argued that the discount was given solely to show appreciation for obtaining the GBPC contract, and that the award of the contract is distinct from the subsequent participation of XYZ in the program. The necessary and logical consequence of a bid award, however, is a continuing service relationship with participants in the program. At a minimum, service contacts are likely, if for no other reason than to maintain the effectiveness of the warranty. The Commission is not bound by dealership ABC's characterization of its reason for giving the discount. Dealership ABC obviously hopes to obtain future contracts, to expand the agencies who participate in the program, and to increase its service revenue incident to sales. In this context future dealings with public officials will inevitably result from the bid award.[5]
The Commission concludes that acceptance of a discount offered to certain public officials also violates §23[6] of the conflict law where the discount is not available to a broad base of public and private groups and the discount is of substantial value. The concerns which the conflict law addresses in §3 do not generally arise where the discount does not potentially affect the performance of duties of public employees. See EC-COI-84-80. Section 23, however, raises different concerns. Whereas §3 is concerned with the potential effect a gift or salary supplementation may have on the performance of public duties, §23 is concerned with courses of conduct raising conflict questions in the mind of the public or the appearances of conflict. A discount which is available to a discrete public group, such as law enforcement officers, raises a conflict under §23 because the discount is given precisely because the recipients are public officials and for no other reason. See EC-COI-83-4. There is no statutory authorization or other justification for providing to law enforcement officers a privilege which is not available to private citizens or other public officials.[7] The discount is unwarranted because it is a privilege "not properly available to similarly situated individuals," such as members of private groups and other public employees. See G.L. c. 268A, §23(b)(2). Thus the discount in this case is distinguishable from a discount which is available to a broad base of public and private groups which are the natural constituency of the vendor. EC-COI-83-4.
In the case of a selective discount to a public employee, the employee is able to realize a benefit from which the public is excluded. Receipt of such a benefit negates the trust that the public is entitled to place in public employees: that public, not private, interests are furthered when the employee performs his duties. In such a case the private citizen may reasonably ask why a public official is entitled to compensation or benefits over and above what the taxpayer has authorized and from which he has been excluded. As the Commission stated in EC-COI-83-4, §23 prohibits as an unwarranted privilege a favoritism policy under which "those who serve the people are treated better than the people themselves."[8]
