CEO 89-64 -- November 30, 1989

CONFLICT OF INTEREST

COUNTY COMMISSIONER OWNING AUTO PARTS BUSINESS SELLING TO COUNTY ROAD DEPARTMENT

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

SUMMARY:

A prohibited conflict of interest would be created under Sections 112.313(3) and 112.313(7), Florida Statutes, were an auto parts business owned by a county commissioner to sell parts to the county. However, if the county purchases auto parts on a rotating basis from all qualified suppliers in the county, the exemption provided in Section 112.313(12)(a), Florida Statutes, would apply and the transaction would not be prohibited. Also, Section 112.313(12)(f), Florida Statutes, may exempt sales where each transaction does not exceed $500.

QUESTION:

Would a prohibited conflict of interest be created were you, a county commissioner, to own an auto parts business which sells to the county road department?

Your question is answered in the affirmative, except under the conditions noted below.

In your letter of inquiry, you advise that you were elected to the Holmes County Commission in November, 1988. In September of 1989 you purchased an auto parts store in Bonifay, the County seat. This parts store sells auto parts to the County Road Department on a rotating basis. Each parts store in the City of Bonifay is on the rotation list. There also are two small auto parts businesses that are in the County, but outside the City of Bonifay. These are not on the County rotation list because they are in a different location than the County shop. You inquire whether you may do business with the County on this basis.

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

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 of 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), Florida Statutes].

The Code of Ethics also 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), Florida Statutes].

These two provisions would prohibit you from doing business with the County while you serve as a member of the County Commission.

However, the Code of Ethics also provides certain exceptions to these prohibitions. From the circumstances presented in your letter of inquiry, two of these exemptions potentially could apply to your situation. Section 112.313(12)(a) and (f), Florida Statutes, provide:

...no person shall be held in violation of subsection (3) or subsection (7) if:

(a) Within a city or county the business is transacted under a rotation system whereby the business transactions are rotated among all qualified suppliers of the goods or services within the city or county.

(f) The total amount of the subject transaction does not exceed $500.

The first exemption would permit your business to sell to the County if the County's purchases are rotated among all qualified suppliers in the "city or county." In CEO 79-17, we advised that this exemption did not apply where business was rotated only among those suppliers who had expressed interest in providing the service. Where a school board member desired to provide services to a school board program, we held that all qualified providers of services in the county would have to participate. In your case, this provision would require that in order for you to sell to the County, all qualified firms in the County would have to be included on the rotation list.

We have not considered previously what conditions may be placed on suppliers of goods or services for purposes of determining which firms are "qualified" under the terms of this exemption. Webster's Seventh New Collegiate Dictionary defines "qualified" as "having complied with the specific requirements or precedent conditions for an office or employment : eligible." Under this definition, it would seem that reasonable conditions could be placed on which suppliers would qualify to sell merchandise to the agency. For example, such conditions might include the ability to supply all needed merchandise to the agency or the ability to supply merchandise of acceptable quality or specifications. Similarly, a condition of proximity of the business to the agency needing the goods may be a reasonable qualification under the facts of a particular case. You note that two parts businesses outside Bonifay are not on the rotation list, apparently because of the distances involved in transporting parts to the agency where they are needed. If this condition is reasonable under the above rationale, exclusion of these businesses would not place your transaction outside the exemption. However, any conditions applied should not have the effect of unduly limiting the pool of qualified suppliers or unfairly benefiting the business of a public official. You do not specify where the excluded businesses are located, but we can see a clear distinction between those one mile outside the City limits and those thirty miles across the County. The determination of whether conditions placed on qualified suppliers are reasonable must be made in the context of particular fact situations. The condition of geographic proximity to the need for the goods is merely another condition similar to the ability to supply needed merchandise or to meet some other need of the agency as a purchaser. In addition, it is obvious that if a firm were given the opportunity to be listed but declined, it would not be a "qualified" firm and would not make the exemption inapplicable.

The second exemption which may apply to your situation is for transactions which do not exceed $500. Your letter of inquiry does not specify the size of the purchases involved, but it seems that any single purchase transaction of auto parts by the County may not exceed this amount. In CEO 86-80, we interpreted this provision to permit transactions where payment for each transaction did not exceed this limit. Applying this rationale to the facts you have presented, where each transaction by the County with your business does not exceed $500, it would not be prohibited. Additional transactions with the County, as your business again came up on the rotation list, would result in a new application of the $500 limit to that transaction. Of course, this assumes that each interaction with the County is a new transaction unrelated to those occurring previously and that the County is under no continuing obligation to purchase a particular quantity or value of parts from your business. Also, any attempt to use your position as County Commissioner to influence purchases or to benefit your business could violate the Code of Ethics' prohibition against misuse of position, contained in Section 112.313(6), Florida Statutes.

Accordingly, we find that a prohibited conflict of interest would be created were you to sell auto parts to the County, unless the business was rotated among all qualified suppliers or the amount of the subject transaction did not exceed $500.