CEO 11-18 – October 26, 2011

CONFLICT OF INTEREST; VOTING CONFLICT

HOSPITAL DISTRICT COMMISSIONER SHAREHOLDER IN
SPECIALTY ELECTRICAL CONTRACTING COMPANY
SUBCONTRACTING WITH GENERAL CONTRACTORS ON
NON-DISTRICT RELATED PROJECTS

To:        Mr. Samuel S. Goren, General Counsel, North Broward Hospital District (Ft. Lauderdale)

SUMMARY:

No prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, were the electrical contracting firm of a hospital district commissioner to subcontract with general contractors on non-district related projects. The hospital district commissioner would have a contractual relationship with his firm, but it is his firm, not he personally, that would have a contractual relationship with general contractors doing business with the hospital district. See CEO 88-43, as well as CEO 07-2, CEO 91-7, CEO 85-18, and CEO 84-8. Inasmuch as the hospital district commissioner intends to abstain from voting on matters involving general contractors, where his firm has or is actively pursuing business relationships with the general contractors, his actions would comply with Section 112.3143(3), Florida Statutes. See CEO 89-45, Question 2.


QUESTION:

Would a prohibited conflict of interest be created where the family-owned specialty electrical contracting firm of a Hospital District Commissioner subcontracts on non-District related projects with general contractors who do work for the Hospital District?


Your question is answered in the negative.


In your letter of inquiry, you relate that this opinion is sought on behalf of Mr. Richard Paul-Hus, a member of the North Broward Hospital District's Board of Commissioners. The Commissioner is also a shareholder in a family-owned business that is a specialty electrical contracting company. Initially, it focused on the installation of airfield lighting at major airports, you relate, but its business units now include airfield services, electrical services, disaster services, federal services, power services, renewable energy, and telecom services. We are advised that through the company's electrical services division, it has business relationships with a number of general contracting firms which retain the company to act as a subcontractor on various construction projects. From time to time, the District retains general contracting firms for District projects, which are awarded by Commission vote. Although the Commissioner's company does not directly pursue any work with the Hospital District and does not work for general contractors on Hospital District projects, it may be engaged by or pursue subcontracting opportunities with general contractors on other non-District projects, and you ask whether this creates a prohibited conflict of interest for the Commissioner.

Section 112.313(7)(a), Florida Statutes, provides:


CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.— No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he or she is an officer or employee, . . . ; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his or her private interests and the performance of his or her public duties or that would impede the full and faithful discharge of his or her public duties. [Section 112.313(7)(a), Florida Statutes.]

Section 112.313(7)(a), Florida Statutes, prohibits a Hospital District Commissioner from having a contractual relationship with a business entity that is doing business with his agency, and also prohibits contractual relationships which create continuing or frequently recurring conflicts between private interests and public duties, or which impede the full and faithful discharge of public duties.1

In CEO 88-43, we opined that a water management district governing board member did not violate Section 112.313(7)(a), Florida Statutes, where his paving company subcontracted with a general contractor on a district project. In that situation, we concluded that because the board member's employment or contractual relationship was with his paving company, not with the general contractor selected for the district project, it did not violate the Code of Ethics for his paving company to do work for the general contractor. This same rationale is cited in other opinions rendered by this Commission: see CEO 07-2, CEO 91-7, CEO 85-18, and CEO 84-8. Accordingly, we do not find that the first part of Section 112.313(7)(a), Florida Statutes, would be violated where the Commissioner's company works on non-District projects with general contractors who are performing work for the District.

Nor do we view this situation as creating a continuing or frequently recurring conflict under the second part of Section 112.313(7)(a), Florida Statutes, as there is no indication that the Hospital District is frequently selecting or overseeing general contractors who work on District projects, or that the Commissioner otherwise faces an impediment to the full and faithful discharge of his public duties where his company is a subcontractor with some of the same general contractors selected to work on District projects.

With regard to the voting conflict statute and whether the Hospital District Commission would be required to abstain from voting on the selection of general contractors where his company is or will be subcontracting with the general contractors on other projects, Section 112.3143(3), Florida Statutes, provides:


No county, municipal, or other local public officer shall vote in an official capacity upon any measure which would inure to his or her special private gain or loss; which he or she knows would inure to the special private gain or loss of any principal by whom he or she is retained or to the parent organization or subsidiary of a corporate principal by which he or she is retained, other than an agency as defined in s. 112.312(2); or which he or she knows would inure to the special private gain or loss of a relative or business associate of the public officer. Such public officer shall, prior to the vote being taken, publicly state to the assembly the nature of the officer's interest in the matter from which he or she is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his or her interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes.

This statute prohibits the Hospital District Commissioner from voting on a matter that inures to his special private gain or loss, or to the special private gain or loss of a principal by whom he is retained.

In CEO 89-45, Question 2, we opined that a city commissioner should abstain from voting on projects, where he had submitted a steel package bid or was in the process of negotiating with the contractor or developer at the time of the vote, and file the memorandum of voting conflict form—CE Form 8B. We concluded that he could gain from the contractor's or developer's willingness to contract with him, as well as from his own agency's action favoring the development to the degree that he should abstain from voting. Where he had not submitted a bid or engaged in negotiations with the contractor or developer, he was not required to abstain from voting. This advice is still appropriate. Inasmuch as the Hospital District Commissioner has already indicated that he plans to abstain from any vote awarding a Hospital District contract to a general contractor where his company has or is actively pursuing business relationships with the general contractor, we believe his actions in this regard would comply with Section 112.3143(3), Florida Statutes.

Your inquiry is answered accordingly.


ORDERED by the State of Florida Commission on Ethics meeting in public session on October 21, 2011 and RENDERED this 26th day of October, 2011.


____________________________________

Susan Horovitz Maurer, Vice-Chair


[1]We do not address Section 112.313(3), Florida Statutes, as the Commissioner's company will not be providing services to the Hospital District.