CEO 82-9 -- January 25, 1982

CONFLICT OF INTEREST

SPOUSE OF D.H.R.S. DISTRICT ADMINISTRATOR SERVING AS DIRECTOR OF NONPROFIT CORPORATION RECEIVING FUNDING FROM D.H.R.S.

To: Max B. Rothman, District Administrator, D.H.R.S., Miami

SUMMARY:

A prohibited conflict of interest would be created were a nonprofit corporation of which the spouse of a Department of Health and Rehabilitative Services District Administrator is a director to receive funding from the District to provide vocational training and other services to Cuban entrants. Section 112.313(3), Florida Statutes, prohibits a public employee acting in his official capacity from purchasing any services for his agency from a business entity of which his spouse is a director, and in this instance the nonprofit organization is selling services to the Department. CEO's 77-16 and 77-164 are distinguished.

QUESTION:

Would a prohibited conflict of interest be created were a nonprofit corporation of which your spouse is a director to receive funding from the Department of Health and Rehabilitative Services, where you are the district administrator responsible for awarding the funding?

Your question is answered in the affirmative.

In your letter of inquiry you advise you are employed by the Department of Health and Rehabilitative Services as the District Administrator for District XI. You also advise that your wife is a member of the Board of Directors of an Hispanic, nonprofit civil rights organization which intends to apply for funds under a formal bid process established by the Department to provide vocational training and other services to Cuban immigrants. The State will contract with agencies using funds received from the Federal government for the provision of services to eligible members of the immigrant population. As District Administrator, you advise, you ultimately will review and approve staff recommendations concerning the award of contracts. Finally, in a telephone conversation with our staff, you advised that your wife is not an employee of the nonprofit organization and that she receives no compensation for serving on its Board of Directors.

The Code of Ethics for Public Officers and Employees 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. [Section 112.313(7)(a), F.S. (1981).]

This provision prohibits a public employee from being employed by a business entity which is doing business with his agency. However, this provision does not contain any prohibition upon the affairs of a public employee's spouse, and therefore the provision does not apply to your situation. See CEO 80-20.

The Code of Ethics also provides:

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 purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or 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 to any political subdivision or any agency thereof, if he is serving as an officer or employee of that political subdivision. 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 or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(d) Beginning public employment.

[Section 112.313(3), F.S. (1981).]

This provision prohibits you from acting in an official capacity to purchase any services for your agency from a business entity of which your spouse is a director. We find that the nonprofit organization involved here is a "business entity." That term is defined broadly in Section 112.312(3), Florida Statutes, to include "any corporation . . . [or] association . . . doing business in this state," which makes no distinction based upon whether a corporation or association has been organized as a profit-making enterprise. See also CEO 78-18, in which we found a nonprofit youth center to constitute a "business entity."

The only remaining question under the statute is whether you would be purchasing any services for District XI from the nonprofit organization if the organization were to be awarded a contract. In two previous opinions we have made a distinction between organizations which sell services to a public agency and those which provide services to clients by virtue of a contract with the agency; we have found those organizations in the latter group not to come within the contemplation of the statute. See CEO 77-16 and CEO 77-164.

However, under further reflection on this interpretation we are persuaded that when the Department contracts with an entity to provide services for a designated clientele, the Department is purchasing services for itself, as contemplated by Section 112.313(3), Florida Statutes. Where the Department has the responsibility of providing for specified services to a particular clientele, a contract with another entity to provide those services is a purchase of those services for the Department. The services purchased by the Department are being purchased under a contract which sets standards for those services.

Accordingly, we find that a prohibited conflict of interest would be created were a nonprofit corporation of which your spouse is a director to receive funding from District XI of the Department of Health and Rehabilitative Services, where you are the District Administrator responsible for awarding the funding.