DOING BUSINESS WITH ONE'S AGENCY; CONFLICT OF INTEREST

CITY COMMISSIONER OWNING OFFICE SUPPLY BUSINESS SELLING GOODS TO CITY USING "PIGGY-BACK" CONTRACT WITH NEIGHBORING MUNICIPALITY

SUMMARY:

A prohibited conflict of interest would not be created under Sections 112.313(3) and 112.313(7)(a), Florida Statutes, were a business owned by a city commissioner to sell office supplies to the city under the terms of a purchasing agreement with another governmental entity. But for the filing of a CE Form 3A, "Interest in Competitive Bid for Public Business," prior to or at the time the business and the other governmental entity entered into the purchasing agreement, the transaction would comply with the terms of the competitive bid exemption in Section 112.313(12)(b), Florida Statutes. However, if a CE Form 3A is filed the first time the commissioner's business receives a purchase order from her city using the purchasing agreement of another governmental entity, we would apply Section 112.316, Florida Statutes, to permit the transaction. CEO 96-32 and CEO 84-84 are referenced.

QUESTION:

Does a prohibited conflict of interest exist where a city commissioner's office supply business sells goods to the city under a purchasing agreement with another governmental entity?

Under the specific circumstances addressed herein, your question is answered in the negative.

We are advised that this opinion is sought on behalf of Christine Coke, a City Commissioner for the City of Ft. Pierce. She asks whether her office supply business can conduct limited business with the City without violating the Code of Ethics, when the City's purchases are made by "piggy-backing" off the terms of a contract between a neighboring city and the Commissioner's business.¹ You explain that purchases made by her City would be under the exact terms of a contract awarded to her company by another city under a sealed, competitive bid. She had no influence in that process; in fact, the original contract was awarded before she was even elected to the City Commission.

You further explain that there are two scenarios which could give rise to a business transaction between the City and the Commissioner's business: for small office supply-type items, a City employee would contact the store and place an order. The order would be filled with the exact pricing contained in the competitively bid contract awarded to the other governmental entity with the City billed accordingly. For larger purchases, such as furniture, the City often gets price quotes from a variety of sources. The quote given by the Commissioner's store would be at the same pricing as is contained in its competitively bid contract with the other governmental entity. If its quote is the lowest, the City would then issue a purchase order and the Commissioner's business would fill the order based on the piggy-backed contract's rates.

The applicable provisions of the Code of Ethics for Public Officers and Employees are as follows:

DOING BUSINESS WITH ONE'S AGENCY.-No employee of an agency acting in his or her official capacity as a purchasing agent, or public officer acting in his or her official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his or her own agency from any business entity of which the officer or employee or the officer's or employee's spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or the officer's or employee's 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 the officer's or employee's own agency, if he or she is a state officer or employee, or to any political subdivision or any agency thereof, if he or she 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 or when such offices are on property wholly or partially owned by the legislator. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(c) Appointment to public office.

(d) Beginning public employment.

[Section 112.313(3), Florida Statutes.]

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 or she 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 or her private interests and the performance of his or her public duties or that would impede the full and faithful discharge of his or her public duties. [Section 112.313(7)(a), Florida Statutes.]

Section 112.313(3), Florida Statutes, prohibits the Commissioner from acting in an official capacity to purchase office supplies from her business as well as from acting in her private capacity to sell supplies to the City. Section 112.313(7)(a), Florida Statutes, prohibits the Commissioner from having a contractual relationship with a business entity doing business with the City, and it also prohibits continuing or frequently recurring conflicts between private interests and the performance of public duties, or those which impede the full and faithful discharge of public duties. Both provisions would be violated were the Commissioner's office supply business to sell goods to the City, unless one of the exemptions in Section 112.313(12), Florida Statutes, were applicable. The exemption that comes closest to addressing the situation is Section 112.313(12)(b), Florida Statutes, for competitively bid transactions. It provides:

EXEMPTION.-- . . . In addition, no person shall be held in violation of [Section 112.313(3)] or [Section 112.313(7)] if:

(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 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;

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.

In CEO 84-84, Question 1, we concluded that the Code of Ethics would not be violated where a member of the High Speed Rail Commission was employed by IBM and where IBM sold and leased equipment to the Commission. There, we noted that because the contracts had been awarded under a competitive bid with another agency (DMS), purchases off the State contract would not create a continuing or frequently recurring conflict on the part of the Commission member. That opinion was subsequently cited in CEO 96-32, where we concluded that the Code of Ethics would not be violated where a school board purchased photocopying equipment from a business which employed a school board member, where the purchase was made off of a State bid/contract list.

Applying the rationale of CEO 84-84 and CEO 96-32 to the circumstances here, we believe that when the City purchases office supply goods under either scenario—either small orders of supplies or larger orders of furniture—from a competitively bid contract between the Commissioner's office supply company and another governmental entity, the Commissioner has not violated Sections 112.313(3) and 112.313(7)(a), Florida Statutes. In order to clarify our reasoning, we note that the competitive bid exemption in Section 112.313(12)(b), Florida Statutes, does not quite fit the circumstances, particularly the requirement that the official file the CE Form 3A prior to, or at the time of submission of the bid. That requirement may not be practicable in these circumstances because, at the time the public official's business submits a bid in response to a solicitation by another governmental entity, the public official may not know whether her own agency will seek to make purchases by utilizing the other governmental entity's contract. However, inasmuch as pooling the purchasing power of government agencies reduces the costs of procurement and provides greater value, thereby saving taxpayer dollars, we would not want the technicalities of complying with the requirements of Section 112.313(12)(b), Florida Statutes, chiefly the filing of CE Form 3A, "Interest in Competitive Bid for Public Business," to be an obstacle for taking advantage of cooperative purchasing agreements between governmental entities as long as the other requirements of Section 112.313(12)(b) have been met. In this regard, we note that Section 112.316, Florida Statutes, provides:

CONSTRUCTION.-It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his or her duties to the state or the county, city, or other political subdivision of the state involved.

Therefore, as long as the City Commissioner files a CE Form 3A prior to or at the first time her business receives a purchase order from her own agency that piggy-backs off an existing, competitively bid contract with another governmental entity, we would apply Section 112.316, Florida Statutes, to conclude that the Code of Ethics for Public Officers and Employees would not be violated where the City purchases office supplies from her business under the terms of its purchasing agreement with another governmental entity. Duplicate filings for successive purchases under the same purchasing agreement would be unnecessary. As you have advised that the Commissioner has already filed a CE Form 3A regarding the competitively bid contract her business has with another governmental entity, she need not file another.

Your question is answered accordingly.

ORDEREDby the State of Florida Commission on Ethics meeting in public session on September 7, 2007 and RENDERED this 12th day of September, 2007.

____________________________________

Albert P. Massey, III, Chairman

^[1] We are reminded in your letter of inquiry that the Commissioner was a respondent in a complaint proceeding involving past purchases by the City from her office supply business. We found probable cause to believe that the situation violated Sections 112.313(3) and 112.313(7)(a), F.S., but took no further action in Complaint Nos. 06-116 and 07-004 (Consolidated).