State agency ABC, as the operator of the XYZ transportation facility, is the landlord for several major car rental companies. Each of these car rental tenants offers some type of discount program for corporate travellers. These programs are available to all business organizations, both public and private, on a nationwide basis.
Discount programs for corporate travellers involve central corporate billing services, express rental and return procedures, a modest reduction in the daily rental rate charged the business[1], unlimited free mileage and a modest bonus of frequent flyer mileage. All but the last of these is offered or given to the corporate client as an entity. The frequent flyer mileage award can only be awarded to the individual traveller.
ABC was approached recently by one of the car rental companies and invited to participate in that company's corporate program. ABC is aware that most, if not all, of the car rental company's competitors offer similar programs. ABC is attracted to the savings and convenience participation in such a program would produce. ABC would need to investigate all the available programs, and not just this particular car rental company's, to determine which company to choose as the exclusive ABC car rental company, in order to seek the maximum volume discount.
1. Do G.L c. 268A, s.s.3 and 23 permit ABC to enroll as an entity in the corporate traveller car rental discount program of one of its car rental tenants and to use that car rental company as ABC's exclusive car rental company?
2. Do G.L. c. 268, s.s.3 and 23 permit ABC's employees to accept as individuals and have credited to their personal accounts the frequent flyer bonus points that accompany state-funded car rentals where the point recipient is not the chooser of the car rental company?
1. ABC State Agency enrollment in a selected corporate traveller car rental discount program
Section 3(b) of G.L. c. 268A prohibits anyone from giving anything of substantial value to a present or former state, county or municipal employee for or because of any official act performed or to be performed by such an employee. Section 3(b) reverses the prohibition and indicates a public official may not accept an item of substantial value for or because of an official act performed or to be performed.
The Commission has determined that an item of substantial value is anything valued at $50 or more.[2] Although each individual corporate traveller car rental discount would be worth only a few dollars a day per rental, the cumulative value of all of these discounts would quickly exceed $50. The Commission has indicated that regular, periodic gratuities that are not in and of themselves "substantial value" will be evaluated in the cumulative and found to constitute "substantial value"
[Page 215]
where a course of conduct is involved. {Commission Advisory No. 8} on Free Passes at 2. This would be such a situation.
Although the cumulative value of the discount would constitute something of substantial value, s.3 would not be applicable to this situation because the Commission has held a gift from a private party for use by a government agency does not violate s.3. See, EC- COI-88-20; EC-COI-84-114. In addition, we note that the discount's availability is based upon ABC's organizational status rather than its landlord/tenant relationship with a given car rental tenant.
Similarly, although s.23(b) (2) of the conflict law prohibits a public employee from using or attempting to use his or her position to secure for his or herself or others unwarranted privileges or exemptions which are of substantial value and which are not properly available to similarly situated individuals, a gift from a private party for use by a government agency does not violate s.23. See, EC-COI-87-38; EC-COI-84-114. Since the discount is not aimed at an individual, there is no opportunity and no incentive for an individual employee to use his or her position to secure the award for individual benefit.[3]
2. ABC State Agency's employees' acceptance of frequent flyer bonus points produced by state funded car rentals.
Section 3(b) of G.L. c. 268A, as indicated above, prohibits a state employee from accepting or receiving anything of substantial value, otherwise than as provided by law for the proper discharge of official duty, for or because of official acts or acts within that employee's official responsibility. Section 3(b) is designed to prevent the receipt of items of substantial value to public employees in addition to their Salaries for performing their official duties. Although the typical corporate car rental frequent flyer bonus award has no immediate cash value, ten such awards may be worth a first-class upgrade on a domestic flight. We think that "substantial value" in its cumulative sense might quickly be reached by the genuinely frequent stat-financed car renter. "While the term 'substantial value' has been frequently interpreted in the context of cash payments to public employees, the Commission has also held that the scope of s.3 includes gifts which lack an immediately ascertainable cash value but which nonetheless possess substantial prospective worth and utility value." EC-COI-83-70 at 2. This is such a case. The cash value of these points, in the cumulative as they are paid out in frequent flyer bonus certificates, is undisputed as witnessed by the flourishing coupon broker industry and the litigation surrounding that industry.
It is clear, however, that ABC state agency's severance of the relationship between the rental car company chooser and the prospective bonus point recipient serves to make the grant of the bonus points completely beyond the control of the recipient. The "official act" to be targeted here is car rental company selection and those employees who have done the choosing will not be the recipients. In short, the manner in which the bonus points are awarded vitiates the authority the state agency travellers may have in their state positions in connection with the car rental companies.[4] See, EC-COI-83-39. Accordingly, s.3 of G.L. c. 268A is not implicated here.
Section 23(b) (2)'s prohibition on the use or attempted use of official position to secure unwarranted privileges or exemptions of substantial value which are not properly available to similarly situated individuals is applicable here, however. Although these points are available to a large number of, although by no means all,[5] private employees who travel on business, they are not routinely available to large numbers of public sector employees. Employees of the federal government, for example, may not accrue for their personal use airline promotional awards, frequent flyer points or frequent flyer bonus points earned on official government business. Discount Coupons and Other Benefits Received in the Course of Official Travel, 63 Comp. Gen. 229(1984); B-215826, January 23, 1985.
Although the phrases "similarly situated individuals" and "unwarranted privilege" are not defined in the conflict of interest law, the Commission has defined these terms by looking to "industry-wide practice" and "large private and public sector employees." See, EC-COI-87-37. Although the Commission acknowledges that car rental agencies in offering these bonus points, are engaging in an industry-wide practice, it is not, by any means, universal practice to permit public or private business travellers to accrue these points for personal use.[6] Therefore, we conclude that it would be an unwarranted privilege of substantial value not properly available to similarly situated individuals within the meaning of s.23 (b) (2) of the conflict law to permit state employees to accept as individuals and have credited to their personal accounts the frequent flyer bonus points that accompany state-funded car rentals.[7]
