CEO 75-211 -- December 15, 1975

CONFLICT OF INTEREST

BOARD OF REGENTS EMPLOYEES DIRECTORS OF BOARD OF EDUCATIONAL CONSULTING FIRM

To: Steve McArthur, Vice-Chancellor for Administration, State University System of Florida

Prepared by: Bonnie Johnson

SUMMARY:

Section 112.313(3), F. S. 1975, prohibits a state officer from acting in a private capacity to transact business with his own agency. The term "agency," however, is defined to mean, in part, "any department, division, bureau, commission, authority, or political subdivision of this state." See s. 112.312(1), F. S. 1975. Therefore, a consulting firm, one of whose directors is an employee of the State University System in the Department of Education, may not contract with the University System, the employee/director's agency. No conflict would exist, however, were the firm to contract with other divisions of the State Department of Education inasmuch as they are deemed to be separate "agencies" for purposes of the Code of Ethics.

QUESTION:

Would a prohibited conflict of interest be created where I, Vice-Chancellor for Administration of the State University System of Florida, own a material interest in a management consulting firm seeking to contract with the State Department of Education?

You inform us in your letter of inquiry that you hold approximately 11 percent of the stock in MGT of America, Inc., and serve as Chairman of the Board of Directors of the corporation. You are not, however, an employee or operating officer of the company.

The applicable section of the Code of Ethics for Public Officers and Employees provides as follows:

DOING BUSINESS WITH ONE'S AGENCY. -- No employee of an agency acting in his official capacity as a purchasing agent or public officer acting in his official capacity shall either directly or indirectly for his own agency purchase, rent, or lease any realty, goods, or services from any business entity of which he, his spouse, or child is an officer, partner, director, or proprietor, or in which such officer or employee, his spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to his own agency if he is a state officer or employee, or, if he is serving as an officer or employee of any political subdivision, to that subdivision or to any agency thereof. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business. This subsection shall not affect nor be construed to prohibit contracts entered into prior to:

(a) The effective date of this act;

(b) Qualifications for elective office;

(c) Appointments to public office;

(d) Beginning public employment

[Section 112.313(3), F. S., as amended by Ch. 75-208, Laws of Florida; emphasis supplied.]

In a previous opinion of this commission, CEO 75-196, we advised that ownership of a material interest in a business entity is sufficient within the context of s. 112.313(3) to constitute "acting in a private capacity" inasmuch as such holder would stand to profit substantially from company business dealing with his government agency or subdivision. Similarly, you would be prohibited, as a state employee, from acting privately, as a material interest holder in MGT, to sell services to your own agency. The question thus turns on what constitutes your "agency."

The term "agency" is defined in the Code of Ethics to mean:

any state, regional, county, local, or municipal governmental entity of this state, whether executive, judicial, or legislative, and any department, division, bureau, commission, authority, or political subdivision of this state, therein, and any public school, community college, or state university. [Section 112.312(1), F. S., as amended by Ch. 75-208; emphasis supplied.]

The State University System constitutes one of the four major divisions of the Department of Education, the other three being Public Schools, Vocational Education, and Community Colleges. Your "agency," pursuant to the underscored language above, is the State University System rather than the State Department of Education as a whole.

Therefore, a prohibited conflict of interest would be created were MGT to contract for services with the University System, your agency. No conflict would exist under the Code of Ethics, however, were MGT to contract with other divisions of the State Department of Education.