CEO 86-36 -- May 15, 1986

CONFLICT OF INTEREST

CITY UTILITIES COMMISSION MEMBER OWNING STOCK IN AND RECEIVING PENSION FROM CORPORATION DOING BUSINESS WITH COMMISSION

To: (Name withheld at the person's request.)

SUMMARY:

No prohibited conflict of interest exists where a city utilities commission member owns stock in and receives a pension from a large, publicly held corporation selling electrical distribution items to the commission through a sealed, competitive bidding process, so long as the conditions of the exemption contained in Section 112.313(12)(b), Florida Statutes, are met.

QUESTION:

Does a prohibited conflict of interest exist where you, a city utilities commission member, own stock in and receive a pension from a large, publicly held corporation which sells electrical distribution items to the commission through a sealed, competitive bidding process?

Under the conditions specified in this opinion, your question is answered in the negative.

In your letter of inquiry you advise that you serve as a member of the City of New Smyrna Beach Utilities Commission. You also advise that you receive an annual pension from a large, publicly held corporation with which you were employed for over 40 years. In addition, you own shares of common stock in the corporation which amount to approximately .00078% of the outstanding number of common shares.

The Utilities Commission has made purchases from the corporation primarily of electrical distribution items such as meters and transformers. Purchases are made using a sealed, competitive bidding process, with awards going to the lowest or best evaluated bid.

The Code of Ethics for Public Officers and Employees provides in relevant part:

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. [Section 112.313(7)(a), Florida Statutes (1985).]

This provision prohibits a public officer from having a contractual relationship with a business entity which is doing business with his agency.

Here, we find that you have a contractual relationship with the corporation by virtue of your receipt of a pension from the company as well as your ownership of stock in the corporation. See CEO 82-65, CEO 80-11, and CEO 79-16.

We further find that the corporation is doing business with the Utilities Commission through its sales of electrical items to the Commission. Please note, however, that this would not be true if a corporate subsidiary is the business entity which is doing business with the Utilities Commission. In previous opinions we have treated each corporate subsidiary as a separate "business entity" in applying the Code of Ethics. See CEO 85-31, CEO 79-55, and CEO 78-20.

However, the Code of Ethics provides an exemption from the prohibition of Section 112.313(7) where:

(b) The business is awarded under a system of sealed, competitive bidding to the lowest or best bidder and:

1. The official or his spouse or child has in no way participated in the determination of the bid specifications or the determination of the lowest or best bidder;

2. The official or his spouse or child has in no way used or attempted to use his influence to persuade the agency or any personnel thereof to enter such a contract other than by the mere submission of the bid; and

3. The official, prior to or at the time of the submission of the bid, has filed a statement with the Department of State, if he is a state officer or employee, or with the supervisor of elections of the county in which the agency has its principal office, if he is an officer or employee of a political subdivision, disclosing his interest, or the interest of his spouse or child, and the nature of the intended business. [Section 112.313(12)(b), Florida Statutes (1985).]

In order to comply with the terms of this exemption, an official must abstain from participating in the determination of bid specifications and the determination of the lowest or best bidder, must in no way use his influence to persuade the agency to enter into a contract, and must make the appropriate disclosure. We have promulgated CE Form 3A, Interest in Competitive Bid for Public Business, for use in making the disclosure required by this exemption. Copies of this form should be available from the County Supervisor of Elections.

Although the exemption requires the official to make disclosure prior to or at the time of the submission of the bid, we are aware that in your present circumstances you probably will not know whether the corporation will submit a bid on any particular matter. Therefore, we are of the view that you may file the appropriate disclosure form with the Supervisor of Elections once in order to cover any business which the corporation may do with the Utilities Commission by competitive bid. It appears that you will be required to abstain from determining bid specifications for any item on which the corporation may bid and to abstain from voting on the award of the contract if the corporation submits a bid. If the corporation does not submit a bid, or if one of its corporate subsidiaries submits a bid, you may vote on the award of the contract.

Accordingly, we find that so long as these conditions are met, no prohibited conflict of interest exists by virtue of your ownership of stock in and receipt of a pension from the corporation.