Opinion  EC-COI-86-7

Date:	04/29/1986
Organization:	State Ethics Commission

Members of the state Designer Selection Board are special state employees required to comply with §§ 4, 5, 6, 7 and 23 of the conflict of interest law.

Facts

You are a member of the Designer Selection Board (DSB) within the Executive Office of Administration and Finance. On behalf of the eleven member DSB, you are requesting a comprehensive opinion regarding the applicability of the conflict of interest law to DSB members.

The appointment of members of the DSB is governed by G.L. c. 7, § 38B(a). By statute, the DSB consists of four registered architects, four registered engineers, one general contractor and two public members. Id. Members of the DSB are reimbursed for all necessary expenses incurred in the discharge of their official duties. G.L. c. 7, § 38B(b). The jurisdiction of the DSB is set forth in G.L. c. 7, § 38C(a), which provides:

(a) The board shall have jurisdiction over the selection of all designers, programmers, and construction managers performing design services in connection with any building project for all public agencies within the provisions of paragraphs (1), (2), and (4) of section forty-A, except those public agencies within the provision of section thirty eight K, and the procedures promulgated by any agency of the commonwealth for such selection by any housing authority subject to paragraph (3) of said section, unless a specific exemption from the board's jurisdiction is provided under this section.

Section 40A of c. 7, referred to in the quoted section of § 38C, brings the following within DSB jurisdiction:

1. All building projects undertaken by any state agency. G.L. c. 7, s.40A(1). "Building project" and "state agency" are defined in G.L. c. 39A(g1/2) and (v), respectively.^[1] The DSB is responsible for the actual selection of design finalists and semi-finalists for building projects of state agencies.
2. All building projects undertaken by any building authority. G.L. c. 7, § 40A(2). See G.L. c. 7, § 39A(e) for the definition of "building authority."^[1] The DSB is responsible for the actual selection of design finalists and semi-finalists for building projects of building authorities unless such building authorities fall within the provisions of G.L c. 38K, which exempts from DSB jurisdiction design contracts of cities and towns.
3. Housing projects within the jurisdiction of the department of community affairs. G.L. c. 7, § 40A(3). The DSB is responsible for reviewing selection procedures promulgated for housing projects, but does not select designers for such projects. See G.L. c. 7, s.38C(a). Temporary exemptions from DSB jurisdiction are available under G.L. c. 7. § 38C(b).
4. All capital facility projects of cities and towns for which specific approval or authorization by the general court or a state agency is otherwise required and for all capital facility projects of all other public agencies not included within the scope of paragraphs (1), (2) and (3). G.L. c. 7, s.40A(4). See G.L. c. 7, § 39A(g) and (r) for definitions of "capital facility project" and "public agency". The DSB is responsible for the actual selection of design finalists and semi-finalists for such capital facility projects. Temporary exemptions from DSB jurisdiction are available under G.L. c. 7, § 38C(b). Capital facility projects of cities and towns are generally exempt from DSB jurisdiction under G.L. c. 7, § 38K.^[2]

In addition, the DSB is charged with publishing guidelines to assist public agencies (e.g. cities and towns) not otherwise subject to its jurisdiction in carrying out their responsibilities, and such agencies may request the DSB to exercise jurisdiction over the selection of designers for a specified period of time or a specified project. G.L. c. 7, § 38K(b) and (c)^[2].

In summary, the DSB, in fulfillment of the purpose of G.L. c. 7, § 38A 1/2 through § 38 O to improve and maintain "the integrity of the system for procurement of designers' services within the commonwealth," is charged with three different levels of responsibility for and involvement in public construction:

(a) actual selection of finalists and semi-finalists for design contracts for state agencies and building authorities;

(b) review of designer selection procedures for housing projects; and

(c) publication of guidelines to assist agencies outside DSB jurisdiction (cities and towns and agencies thereof).

By statute, the DSB shall grant an exemption for two years from its jurisdiction to each public agency in categories (3) and (4) listed above, provided they have filed the required application and meet the standards set out in the statute. See G.L. c. 7, § 38C(b) and (c).

Question

How do the provisions of the conflict of interest law, G.L. c. 268A, apply to DSB members?

Answer

DSB members are considered special state employees for the purposes of the conflict law, and are subject to the restrictions discussed below.

Discussion

1. Jurisdiction

Members of the DSB are state employees as defined in the state conflict of interest law, G.L. c. 268A. § 1 et seq., and, as a result, are subject to the provisions of that chapter. See EC-COI-84-87; 81-75. Because DSB members are part-time state employees, they qualify for special state employee status under G.L. c. 268A. § 1(o), meaning that the conflict law will apply less restrictively to them under certain circumstances.

Section 38F(e) of c. 7 also contains limitations on the activities of DSB members, providing as follows:

(e) For the purposes of chapter two hundred and sixty-eight A and subject to the penalties therein, no member of the board shall participate in the selection of a designer as a finalist or semi-finalist for any project if the member or any member of his immediate family:

(i) has a direct or indirect financial interest in the award of the design contract to any applicant;

(ii) is currently employed by, or is a consultant to or under contract to, any applicant;

(iii) is negotiating or has an arrangement concerning future employment or contracting with any applicant; or

(iv) has an ownership interest in, or is an officer or director of, any applicant.

The Commission has previously concluded, on the basis of a review of this section's legislative history, that the Legislature intended both to emphasize certain principles contained in G.L. c. 268A and to require stricter standards in some cases for participation in the DSB selection process. EC-COI-81-75. Any interpretation which negates either of these statutory provisions would be inconsistent with the clear legislative purpose of dealing effectively with conflicts of interest in the selection of designers. See, Final Report to the General Court of the Special Commission Concerning State and County Buildings, v. 7, pp. 188-283(1980).

II. Application of the Conflict Law Provisions to DSB Members

A. Section 7

Section 7 of G.L. c. 268A prohibits a state employee from having a financial interest in a contract made by a state agency. For this prohibition to apply, there must be a state contract involved. Thus, if a DSB member's firm has a contract with a municipality, which involves no state funding, § 7 would not apply even if the municipality had requested the DSB to exercise jurisdiction pursuant to G.L. c. 7, § 38K(c). Alternatively, once a financial interest, either directly or indirectly, in a state contract is identified, a DSB member becomes subject to the § 7 prohibition. Whether such a financial interest violates the conflict law depends upon whether the DSB member qualifies for an exemption to § 7 given the particular facts of the situation. The potential exemptions to § 7 available to DSB members as special state employees are G.L. c. 268A, § 7(d) and § 7(e), which provide that the § 7 prohibition shall not apply

(d) to a special state employee who does not participate in or have official responsibility for the activities of the contracting agency and who files with the state ethics commission a statement making full disclosure of his interest and the interest of his immediate family in the contract (disclosure form enclosed), or

(e) to a special state employee who files with the state ethics commission a statement making full disclosure of his interest and the interests of his immediate family in the contract, if the governor with the advice and consent of the executive council exempts him. (disclosure form enclosed)

1. Building Projects Undertaken By a State Agency or a Building Authority

The DSB clearly "participates" in or has official responsibility for" the activities of such a state agency (namely DCPO) or such building authorities because the DSB is responsible for the actual selection of design finalists and semifinalists for the building projects of such entities. A DSB member who is a prime designer or a consultant to the prime designer on such a project would, therefore, not qualify for the § 7(d) exemption, and could only perform such work if he files the required disclosure and receives a governor's exemption under § 7(e). Where it is the DSB member's firm^[3] which has the contract subject to the DSB process, and the member is not personally performing services under that contract, he must insulate himself from any share of the firm's proceeds^[4] which are attributable to that contract if he has not received a governor's exemption. If a DSB member's interest in the contract predates his appointment to the Board, the same result obtains: he must either receive a § 7(e) governor's exemption or insulate himself from the proceeds of the contract if his firm continues to perform work under the contract.^[5] A DSB member having an interest in a construction contract for a project where the designer was originally selected by the DSB would be similarly restricted. Of course, where a DSB member has an interest in a state contract which is not the subject of DSB action, he may comply with § 7 by simply filing the § 7(d) disclosure statement with the Commission.

2. Housing Projects Within the Jurisdiction of EOCD

Where there is a funding arrangement between EOCD and a local housing authority for a housing project, a DSB member's contract with that housing authority would come within the § 7 prohibition. Having reviewed the DSB's enabling legislation, the Commission reaffirms its finding in EC-COI-84-87 that, due to DSB's jurisdiction to review the EOCD selection procedures promulgated for housing projects, DSB members participate in or have official responsibility for activities of the EOCD. Consequently, the § 7(d) exemption is unavailable to DSB members with financial interests in such housing projects. The remaining options include a § 7(e) governor's exemption or insulation from the receipt of housing project contract proceeds, as described above.

3. Municipal Projects  

Financial interests in distinctly municipal projects are not subject to the § 7 prohibition inasmuch as they do not constitute financial interests in state contracts. When state funding is involved, a DSB member's contract to perform work on a municipal project does come within § 7. However, cities and towns are specifically exempted from DSB jurisdiction pursuant to G.L. c. 7, § 38K [i.e. they need not utilize the two-year exemption procedure provided in G.L. c. 7, § 38C(b)]. While the DSB does publish guidelines pursuant to G.L. c. 7, § 38K(b) to assist municipalities in the establishment of designer selection procedures, the Commission concludes that this interrelation by itself does not rise to the level of DSB members "participating in or having official responsibility" for the activities of municipalities. DSB members having a financial interest in municipal project contracts may therefore comply with § 7 by filing a § 7(d) disclosure form with the Commission.

This result necessarily changes in instances where a municipality, in connection with projects receiving state funding, requests the DSB to exercise jurisdiction regarding the selection of designers pursuant to G.L. c. 7, § 38K(c). In such cases, the DSB member's contract with the municipality would be subject to the DSB process, requiring him to obtain a § 7(e) governor's exemption.

4. Capital Facility Projects of All Other Public Agencies

This category includes public agencies such as Massport, the Mass. Convention Center Authority, the Government Land Bank, and the Water Resources Authority. The DSB's statutory jurisdiction includes the actual selection of design finalists and semifinalists for the building projects of such entities. However, these agencies are eligible to apply for two year exemptions from DSB jurisdiction pursuant to G.L. c. 7. § 38C(b), and in fact most of the agencies in this category have applied to the DSB for such an exemption. Section 38C(b) provides that the DSB "shall" grant such an exemption if the required application has been filed by the agency provided, however, that the board shall withhold an exemption if the board determines that the designer selection procedure proposed by the public agency does not substantially incorporate the procedures required in section thirty-eight B to thirty-eight J, inclusive, and section thirty-eight M, or that the selection of finalists will not be made with the advice of design professionals or that the procedure proposed by the public agency does not satisfy the purposes of sections thirty-eight A 1/2 to thirty-eight O, inclusive, as set forth in said section thirty-eight A 1/2, or that withholding such an exemption is in the best interest of the commonwealth. In granting the original exemption to these agencies, DSB members were integrally involved in developing and/or assessing the designer selection procedures of these agencies which would qualify for the two year exemption, whereas the renewal of these exemptions requires less participation on the part of DSB members. However, DSB members retain the right to accept or reject the DSB Executive Director's recommendations regarding a renewal exemption and to outright withhold an exemption or renewal as requested by an agency. If the DSB withholds an exemption, jurisdiction over designer selection for such agencies reverts to the DSB until the agency makes the changes in its procedures required for an exemption to be granted. Due to the DSB's authority in this regard, the Commission concludes that DSB members "participate in or have official responsibility for" the activities of these public agencies, rendering a § 7(d) exemption unavailable.

B. Section 6

Section 6 of c. 268A prohibits a state employee from participating^[6] as such an employee in a particular matter^[7] in which he, his immediate family or partner, a business organization in which he is serving as officer, director, trustee, partner or employee, or any person or organization with whom he is negotiating or has any arrangement concerning prospective employment has a financial interest. The Commission reaffirms its finding in EC-COI-81-75 with respect to the § 6 restrictions on DSB members. Namely, a DSB member may not participate in any Board proceedings concerning the selection of designers for projects subject to the selection jurisdiction of the DSB for which he, his firm or partners of his firm have submitted applications. Further, a DSB member may not participate in any Board review of the selection procedures involving local housing projects within the jurisdiction of EOCD for which he, his firm or partners of his firm have applied. While DSB members do not make the final selection in such cases, the Commission concludes that their role in reviewing the proposed selection procedures and in granting a G.L. c. 7 § 38C(b) exemption constitutes participation in the selection decision in view of the substantial control statutorily afforded the DSB over the selection process.

G.L. c. 268A, § 6 further provides that any state employee whose duties would otherwise require him to participate in such a prohibited matter must disclose to his appointing official and the Ethics Commission the nature and circumstances of the matter and the financial interest involved. The appointing official may then (1) assign the matter to another employee, (2) assume responsibility for it himself, or (3) make a written determination, to be filed with the Ethics Commission, "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 the employee, in which case it shall not be a violation for the employee to participate in the matter." Accordingly, a DSB member may participate in such matters only if he makes the required disclosure to his appointing official and receives the written certification described above, with a copy of that determination being filed with the Commission. The specific disclosure requirements contained in G.L. c. 268A, § 6 are not nullified by the absence of disclosure requirements in G.L. c. 7, § 30G(e).^[9]  

It should be noted that even if the DSB member files the required § 6 disclosure and either receives the required certification or in fact abstains on the matter, he would have to address the § 7 issues. As discussed supra, many cases will require the DSB member to obtain a § 7(e) governor's exemption.

C. Section 5

The restrictions on former state employees are set out in G.L. c. 268A, §5. Section 5(a) permanently prohibits a former state employee from acting as the agent or attorney for, or receiving compensation from, anyone other than the state in connection with any particular matter in which the state is a party or has a direct and substantial interest and in which he participated as a state employee. For example, a former DSB member would be prohibited from being a consultant to a designer on a project for which the DSB had jurisdiction over the selection process and in which the DSB member had participated. Similarly, a former DSB member would be prohibited from challenging, on behalf of a private party, selection procedures he had participated in approving. These restrictions would last only for the duration of that particular matter, e.g. until the end of an agency's two year exemption period the DSB member had participated in granting.

Section 5(b) prohibits a former state employee for one year from personally appearing before any court or agency of the Commonwealth as agent or attorney for anyone other than the Commonwealth in connection with any particular matter in which the state is a party or has a direct and substantial interest and which was under his official responsibility as a state employee during the last two years of his state employment. This provision would prohibit a former DSB member for one year from personally appearing before EOCD, the DSB or any other state agency in connection with any designer selection determinations which had been within the DSB's jurisdiction during the past two years.

D. Section 4

Section 4 of Chapter 268A prohibits a special state employee from acting as the agent or attorney for, or receiving compensation from, anyone other than the state in relation to any particular matter in which the state is a party or has a direct and substantial interest and in which he has participated or which is or within one year has been a subject of his official responsibility. For instance, § 4 prohibits a DSB member from acting as agent^[10] for or appearing before the DSB on behalf of his firm or any other private party. Because the partners of a DSB member's firm would be similarly restricted under G.L. c. 268A, § 5(d)^[11] it appears that a DSB member's firm would be required to hire an independent consultant for any appearances before the Board. The DSB member would further be required to insulate himself from the proceeds of any resulting contract^[12] if he did not obtain a § 7(e) governor's exemption.

E. Section 23

Section 23 of c. 268A contains general standards of conduct applicable to all state, county and municipal employees. These recently revised standards provide that no state employee shall knowingly, or with reason to know:

1. accept other employment involving compensation of substantial value, the responsibilities of which are inherently incompatible with the responsibilities of his public office;
2. use or attempt to use his official position to secure for himself or others unwarranted privileges or exemptions which are of substantial value and which are not properly available to similarly situated individuals;
3. act in a manner which would cause a reasonable person, having knowledge of the relevant circumstances, to conclude that any person can improperly influence or unduly enjoy his favor in the performance of his official duties, or that he is likely to act or fail to act as a result of kinship, rank, position or undue influence of any party or person.  It shall be unreasonable to so conclude if such officer or employee has disclosed in writing to his appointing authority or, if no appointing authority exists, disclosed in a manner which is public in nature, the facts which would otherwise lead to such a conclusion;
4. accept employment or engage in any business professional activity which will require him to disclose confidential information which he has gained by reason of his official position or authority;^[13]
5. improperly disclose material or data within the exemptions to the definition of public records as defined by section seven of chapter four, and were acquired by him in the course of his official duties nor use such information to further his personal interest.^[13]  G.L. c. 268A, s.23(b) and (c).

Application of these standards to DSB members focuses on the avoidance of being unduly influenced by the fact that a designer applicant had previously worked with or on the same project as a DSB member's firm. The member himself should disclose the prior relationship to his appointing authority, and all DSB members should avoid being improperly influenced by the fact of that relationship in reviewing that application. The last two standards prohibit a DSB member from using confidential information (e.g. non-public business information of a competitor) obtained by virtue of being on the Board to his personal advantage.


End Of Decision

[1] Exempted from subsection, (1) and (2) of G.L. c. 7. § 40A are building projects "to the extent provided for by sections forty B and forty-three C." Section 40B of c. 7 appears to exempt from these subsections ordinary maintenance costing less than $25,000 and not involving structural or mechanical work. Section 43C of c. 7 provides for supervision of the exempt maintenance and repair work of state agencies and building authorities. In certain cases, the exemption may be revoked pursuant to the order of the commissioner of administration. In a case of revocation, it appears that the responsibility for selection of designers for such maintenance and repair may be added to DSB's responsibilities.

[2] By G.L. c. 38K, referred to in G.L. c. 38C(a), contracts by cities and towns for design services, although not within DSB jurisdiction, must be awarded by selection procedures adopted in writing, "complying with the purposes and intent of sections thirty-eight A 1/2 to thirty-eight O [of G.L. c 7]" and certain other requirements. G.L. c. 7, § 38K(a).

[3] Partners in a DSB member's firm should also be aware of the limitations contained in G.L. c. 268A, § 5(d) which prohibits a partner of a state employee from acting as agent or attorney for 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 direct and substantial interest and which is the subject of the state employee's official responsibility.

[4] It should be noted that "insulation from the proceeds of a contract refers not only to direct payment under the contract, but also to any indirect benefit the DSB member could derive from the contract through his partnership in the firm. For example, monies from such a contract could not be figured into the totals used for any profit sharing arrangement of the firm in which the DSB member participates.

[5] This does not mean that the DSB member is ineligible to share in the proceeds for work performed before his appointment to the Board, even if payment is delayed so that he receives it while on the Board. The restriction applies only to work performed after his appointment.

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

[7] G.L. c. 268A, § 1(k) defines particular matter 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.

[8] Eight of the DSB members would make this disclosure to the Governor, while the three remaining members would disclose to the Mass. State Association of Architects, the Government Affairs Council of Design Professionals and the associated general contractor respectively. See G.L. c. 7, § 38B(a).

[9] See, jurisdiction discussion, supra.

[10] Acting as agent for a private firm means signing its contracts, acting as its advocate in application processes, submitting its applications, presenting supporting information on its behalf to the DSB or representing it in any way before the DSB. See EC-COI-84-6.

[11] See footnote 9, supra.

[12] Due to the substantial § 7 restrictions on a DSB member's financial interest in any such contract, the Commission finds it unnecessary to reach the overlapping s.4 prohibitions regarding the receipt of compensation.

[13] These two standards apply to former is well as current state employees.