CEO 95-23 -- August 31, 1995
CONFLICT OF INTEREST
COUNTY JUVENILE WELFARE SERVICES BOARD MEMBER
EMPLOYEE OF STATE UNIVERSITY CONTRACTING WITH BOARD
To: John W. Bakas, Jr., Esquire, McWhirter, Reeves, McGlothlin, Davidson, Rief & Bakas, P.A. (Tampa)
No prohibited conflict of interest would be created were a State university that employs a member of a county juvenile welfare services board to contract with the board to train and assist providers of services to children and families. Under Section 112.313(3), Florida Statutes, the university would constitute a public agency rather than a business entity and the member would not be acting in a private capacity to sell services to the board. Under the first part of Section 112.313(7)(a), Florida Statutes, the contract would not constitute "doing business," because it is a relationship between two public agencies facilitating the delivery of governmental services, and because the member would derive no private gain from the contract. Further, no continuing or frequently recurring conflict between the member's private interests and the performance of his public duties or impediment to the full and faithful discharge of his public duties would be created by the contract. CEO's 92-40, 92-39, 90-76, 90-43, 90-21, 87-47, 87-21, 87-3, 84-19, 83-74, 83-39, 81-5, 80-5, 77-65, 76-77, and 76-2 are referenced.
Would a prohibited conflict of interest be created were a State university which employs a member of a local juvenile welfare services board to contract with the board to train providers of services to children and families?
Your question is answered in the negative.
By your letter of inquiry and accompanying materials, we are advised that Dr. Richard Briscoe ("member") serves as a member of the Children's Board of Hillsborough County ("Board"), an appointed position, and is employed by the University of South Florida, working in its Florida Mental Health Institute ("FMHI"). The Board exists pursuant to Part V, Chapter 125, Florida Statutes, and Hillsborough County Ordinance No. 88-28, and, you advise, levies taxes and funds programs that assist children and families.
In addition, in a telephone conversation between you and our staff, you advise that the Board generates funds for its operations through ad valorem taxes that amount to approximately ten and one half million dollars per year, and that these funds are spent for day care, job training, and other services, which are obtained through requests for proposals ("RFP"). Further, you advise that the Board enters into a separate contract with each nonprofit corporation, government agency, or for profit corporation that successfully submits an RFP. You describe these contracts as being more like an "independent contractor consulting contract" than a "grant."
You advise further that approximately 30 to 50 entities, most of whom are nonprofit corporations, called "Providers" receive funding contracts from the Board to provide services to children and families, through the RFP process, which you describe as "competitive." In addition, you advise that the Board evaluates the effectiveness of Providers and gives them technical assistance. FMHI, you advise, wants to apply to the Board for a funding contract to train and evaluate Providers. Additionally, you advise that some of the Providers who would be assisted by FMHI under a contract between FMHI and the Board also would be receiving funds from the Board under a separate contract between the Board and each individual Provider, some would be Providers who would not receive direct funding from the Board, and that it is probable that FMHI would give in-kind services to Providers. Further, you state that the potential relationship between FMHI and the Board "would link the special expertise of the University and the Children's Board in a beneficial collaboration."
In addition, we are advised by you that the member receives no salary for his service on the Board; that he was already employed by FMHI when he was appointed by the Governor to the Board; that FMHI is a part of the University, but its budget is a separate component of the University's budget; and that FMHI operates as a research institute, although it is subject to the control of the University. Further, you advise that the member's employment with FMHI is well known to the Board and the public and, thus, that the member's "accountability is constantly in the sunshine;" that the member would not participate in the establishment of the criteria or any scope of work contained in the Board's request for proposals; that the member would not participate in the preparation of FMHI's proposal to the Board to receive funding; and that the member would not participate in the evaluation of FMHI's proposal, either before or after the proposal is submitted to the Board. Also, you advise that proposals are competitively evaluated and ranked using a numerical format and that the potential FMHI funding contract would be evaluated at the Board by a rating team composed of equal numbers of Board employees and community individuals who are not employees of the Board and who have no connection with FMHI or the member.
Further, you advise that the member would not participate in the discussion of the FMHI proposal when the nine other Board members consider awarding the funding contract; would not attempt to influence the evaluation of the FMHI proposal; would not participate in the performance of the funding contract with FMHI; would not report on the performance of the funding contract or serve as an intermediary between the Board and FMHI regarding the funding contract; and would not supervise any part of the funding contract or any FMHI employees performing the funding contract. Additionally, you advise that the member would not receive any compensation or benefit, either general or specific, from the proposed funding contract, and that his employment status at FMHI would not be affected in any way as a result of the funding contract; that the member's supervisors at the FMHI would not receive any special benefit from the funding contract; and that the member would not oversee or evaluate the performance of the funding contract in his capacity as a Board member. Further, you advise us that the member would abstain from voting on any matter which may come before the Board involving the University, publicly state to the assembly the nature of his interest in the matter (FMHI employment) from which he is abstaining, and file a written memorandum as provided in Section 112.3143, Florida Statutes.
In addition, you advise that FMHI has special expertise and experience in providing the research, training, and evaluation services contemplated by the funding contract, and that FMHI would perform the funding contract as an independent contractor and would not be subject to regulation by the Board.
You also represent that the purpose of the potential funding contract is a governmental function of providing for the public welfare and, thus, in your view is not a proprietary or business function. Therefore, you state that "the Children's Board would not be 'doing business' with the FMHI through the funding contract." Further, you state that "[the member] can fully and fairly carry out all of his duties as a Children's Board member that are unrelated to the proposed funding contract."
Section 112.313(7)(a), Florida Statutes, is the portion of the Code of Ethics which contains the prohibitions relevant to your inquiry. Section 112.313(3), Florida Statutes, would not be at issue inasmuch as FMHI is a part of the University (a public "agency") and, therefore, is not a "business entity," and inasmuch as the member would not be acting in a private capacity to sell to the Board.
Section 112.313(7)(a) 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 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 private interests and the performance of his public duties, or that would impede the full and faithful discharge of his public duties.
Absent the applicability of an exemption under Section 112.313(12) or Section 112.313(15), Florida Statutes, or the application of Section 112.316, Florida Statutes, the first part or clause of Section 112.313(7)(a) would prohibit the member's being employed by an agency that is regulated by, or that is doing business with, his public agency.
For purposes of our analysis of your inquiry, the member's public agency would be the Board and his employment would be his position at FMHI. His position on the Board, since it is the holding of an office, would not constitute employment or a contractual relationship. See, for example, CEO 92-39.
Further, we find that the "agency" that would be contracting with the Board (arguably the agency "doing business" with the Board) would be the University, since "agency" is defined at Section 112.312(2), Florida Statutes, to mean
any state, regional, county, local, or municipal government entity of this state, whether executive, judicial, or legislative; any department, division, bureau, commission, authority, or political subdivision of this state therein; or any public school, community college, or state university. [emphasis supplied.]
See CEO 83-74, CEO 87-3, CEO 87-21, and CEO 87-47. Therefore, inasmuch as the agency that would be contracting with the Board is the same agency with which the member is employed, the first part of Section 112.313(7)(a) would be applicable if the Board "regulates" the University or if the contract between the University and the Board would constitute "doing business."
We know of no provision of law which would lead us to conclude that as State university (an institution under the control of the Board of Regents and other State-level officials) is subject to the regulation of a local social services board.
Regarding what constitutes "doing business" between one public agency and another, generally we have found that agreements between agencies do not amount to the agencies doing business with each other within the meaning of Section 112.313(7)(a), reasoning that a purpose of the Code of Ethics is to prevent private gain at public expense, not to prevent dealings between governmental entities. See CEO 76-2, Question 9 (agreements providing for the fulfillment of governmental services not "doing business"), CEO 80-5 (contract between school board and HRS regarding academic instruction within State hospital does not constitute "doing business"), and CEO 81-5 (one school board not doing business with another by virtue of joint resolutions of the boards whereby they agreed to cooperate in providing certain services). See also CEO 76-77, CEO 92-39, CEO 90-43, 84-19, 83-39. However, we also have opined that the extension of a grant from one agency to another constitutes "doing business." See CEO 77-65, CEO 90-21, CEO 90-76, and CEO 92-40.
Therefore, it might be said that our decision as to whether the Board and the University would be doing business would turn on the issue of whether the contract amounted in substance to a grant or whether it amounted to the purchase of governmentally necessary services. However, inasmuch as an overriding purpose of the Code of Ethics is to prevent public gain at private expense and is not to prevent public agencies from dealing with each other in order to provide public services, we are not persuaded that the question of whether the contract between the Board and the University is substantively a grant itself has much substance. In the situation you describe, the contract between the Board and FMHI would not benefit the member in a private manner, since, as you represent, the member was already employed at FMHI when he was appointed to the Board and, as you state further,
[the member] would not receive any compensation or benefit either general or specific from the proposed funding contract and his employment and status at the FMHI would not be affected in any way as a result of the potential funding contract.
Thus, we find that the FMHI would not be doing business with the Board were they to enter into a contract under which FMHI would receive funds in order to provide training, services, and support to providers of services to children and families in the County, and thus that the member would have no prohibited conflict of interest under the first part or clause of Section 112.313(7)(a). Our decision in this regard is based upon the lack of private gain to the member combined with the fact that the contract would facilitate the delivery of governmental services that the Board exists to provide, and is not dependent on whether the relationship between the Board and FMHI substantively amounts to the awarding of a "grant."
Under the second part or clause of Section 112.313(7)(a), which addresses employment and contractual relationships which would create a continuing or frequently recurring conflict between a public official's private interests and the performance of his public duties or which would impede the full and faithful discharge of his public duties, regardless of whether or not the employment or contractual relationship is with a business entity or a public agency that is doing business with the official's public agency, we also find no prohibited conflict of interest. In both his Board capacity and his FMHI capacity, the member would not be taking part in matters related to the Board's use of FMHI or FMHI's acquisition of, or its provision of services under, its contract with the Board. Further, this lack of participation would not appear to impede the full and faithful discharge of his duties as a Board member in view of the fact that the Board awards 30 to 50 other funding contracts, levies taxes, and engages in various other public duties in regard to which the member would be able to participate fully.
Accordingly, we find that no prohibited conflict of interests would be created were the University to contract with the Board.
If the answer to Question one is in the affirmative, would the same answer apply if the Children's Board were to grant other funding contracts (for other services) to other University of South Florida divisions? In other words, if there is a prohibited conflict of interest regarding funding the FMHI, would any contract with the University create the same conflict?
This question has been rendered moot by our response to Question 1. However, since "agency" is defined to include "any state university," the University as a whole, and not just the particular division of it in which the member works, would be the agency with which he would be deemed to hold employment for purposes of Section 112.313(7)(a). See CEO 83-74, CEO 87-3, CEO 87-21, and CEO 87-47.
If the answers to Questions one and two are in the affirmative, would the same answer apply if the transaction is made pursuant to Section 240.229 or 240.241 and is specifically approved by the president of the University and the Chancellor?
Likewise, this question has been rendered moot by our response to Question 1. Nevertheless, Section 112.313(12)(h) does contain an exemption to conflicts under Sections 112.313(3) and 112.313(7)(a) that provides that no person shall be held in violation of Section 112.313(3) or Section 112.313(7) if
the transaction is made pursuant to s. 240.229 or s. 240.241 and is specifically approved by the president and the Chancellor. The Chancellor shall submit to the Governor and the Legislature by March 1 of each year a report of the transactions approved pursuant to this paragraph during the preceding year.
This exemption would negate a conflict under Sections 112.313(3) and 112.313(7)(a), provided its terms are strictly complied with. However, whether contracts such as that proposed between the Board and FMHI would constitute a transaction within the scope of Section 240.229 or Section 240.241 need not be answered in the context of this advisory opinion. Further, whether a particular contract would constitute such a transaction might very well require input from sources or authorities other than the Commission on Ethics.
In a generic sense, what are the requirements of the conflict of interest laws regarding Children's Board members and contracts with other organizations with which the Board members are associated?
This question cannot be answered inasmuch as it does not present an inquiry in a specific factual context in regard to a specific public officer or public employee. If, in the future, you have other specific questions, we will be happy to entertain them.
ORDERED by the State of Florida Commission on Ethics meeting in public session on August 31, 1995, and RENDERED this _____ day of September, 1995.
William J. Rish