CEO 81-58 -- September 17, 1981

CONFLICT OF INTEREST

ADMINISTRATOR OF ARCHITECTURAL COORDINATION AND PLANNING WITH DEPARTMENT OF GENERAL SERVICES FORMING CORPORATION TO SELL SIGNS TO PUBLIC AND PRIVATE ENTITIES

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

SUMMARY:

Generally, no prohibited conflict of interest would be created were the Administrator of the Architectural Coordination and Planning Section of the Department of General Services to form a corporation to sell signs to public and private entities other than the Department or to sell signs for construction projects administered by the Department. However, Section 112.313(7), Florida Statutes, prohibits a public employee from having a contractual relationship that will create a continuing or frequently recurring conflict of interest or that would impede the full and faithful discharge of his public duties. This provision would be violated were the Administrator's corporation to sell to a professional firm or other business entity under contract with the Department whose performance would be subject to review by the Section or by a project director within the Section. Similarly, the provision would be violated by sales to a professional firm under consideration by a selection committee on which the Administrator or a subordinate employee were serving.

QUESTION:

Would a prohibited conflict of interest be created were a corporation formed by you, the Administrator of the Architectural Coordination Section of the Bureau of Construction, Department of General Services, to sell signs to public and private entities other than the Department, the Department of Health and Rehabilitative Services, and construction projects administered by the Department?

Your question is answered in the negative, subject to certain restrictions set forth below.

In your letter of inquiry you advise that you are the Administrator of the Architectural Coordination Section of the Bureau of Construction, Department of General Services. You also advise that the Bureau of Construction is responsible for the administration of the State's fixed capital outlay program for all projects appropriated under section 2 of each appropriation act and for the administration of other projects as assigned. These responsibilities follow each project from review of the appropriation request through design, construction, and the resolution of all problems inherent in the development of a project.

In a conversation with our staff, you advise that the Bureau is composed of four Sections: the Architectural Coordination Section, the Engineering Coordination Section, the Construction Administration Section, and the Contracts Section. Once an appropriation has been made for a fixed capital outlay project, you advised, an architect under your supervision from your Section is appointed as project director to review a scope document containing directions for the architect or engineer on the project. Once this document is approved, an advertisement for professional architectural or engineering services is published for projects costing more than $100,000. Under the Consultants' Competitive Negotiations Act a selection committee then is assigned composed of the Director of the Division of Building Construction and Property Management or his representative, the Chief of the Bureau of Construction or his representative, the Project Director for the project, a representative of the using agency, and other members if necessary. You advise that usually you do not sit as a member of the selection committee except when the project is particularly large or complex. Once the selection committee has selected three professional firms and designated the most highly qualified firm, assuming the approval of the Executive Director of the Department, negotiation of a contract with the professional firm begins. Generally, you advise that the contract is negotiated by the Project Director, the Contracts Administrator, who is the head of the Contracts Section, and a representative of the using agency. Occasionally you may be involved in the negotiation process if you participated as a member of the selection committee.

Once the contract with the architectural firm has been signed by the Executive Director, the architect prepares a design of the project, and bids for the construction of the project are received. The architect then makes a recommendation to the Bureau for the award of the construction contract, which must be approved by persons in the Department ranging from the Project Director up to the Executive Director, who signs the contract for construction. When construction begins, the Project Director is no longer involved, as the architect supervises construction with review by the Construction Section of the Bureau. You also advise that you are not responsible for negotiations with the contractor, and you do not become involved in the selection of the contractor; but if there is a problem with the architect or engineer under contract which cannot be resolved by the Project Director, you will become involved directly with that architect or engineer. In addition, you advise that you are responsible for managing the Department's signage shop, which provides signage for selected fixed capital outlay projects administered by the Department and in buildings operated by the Department.

You further advise that you have formed a corporation which will design, manufacture, sell and install signage systems, with a market emphasis on building owners, developers, governmental agencies, building managers, building designers (such as architects, interior designers, industrial engineers, graphic designers, etc.), and contractors. You own approximately fifteen percent of the corporation, you advise; you are the chairman of its board of directors, and you plan to participate actively in the management and direction of the company. Finally, you advise that the corporation will not make any sales to the Department of General Services, the Department of Health and Rehabilitative Services, or to construction projects administered by your Department.

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 (1979).]

This provision prohibits you from having a contractual relationship with a business entity which is doing business with your agency. As the term "agency" is defined in Section 112.312(2), Florida Statutes, to mean any State department, division, or bureau, we find that your "agency" for purposes of the Code of Ethics is the Bureau of Construction.

We also find that the various architects, engineers, and contractors under contract with the Department are doing business with the Bureau of Construction. Although contracts with these types of professional firms and contractors are entered into by the Executive Director of the Department, it is clear that the Bureau is responsible for overseeing performance under the contract.

However, we find that if your corporation sells signage to an architect, engineer, or contractor doing business with the Bureau, you would not have a contractual relationship with that architect, engineer, or contractor. Under the circumstances you have presented it would be your corporation and not you, personally, which would have such a contractual relationship. Similarly, in CEO 79-1, a copy of which is enclosed, we advised that Section 112.313(7)(a), Florida Statutes, would not prohibit a county commissioner from being a principal in a corporation which sold tires to businesses granted a franchise by the county commission. As in CEO 79-1, we feel obligated to point out that Section 112.313(7)(a) would prohibit you from personally contracting with such professional firms to sell signage. Since sales would be made by the corporation, no prohibited conflict of interest would be created, although the situation would result in the appearance of such a conflict of interest.

Section 112.313(7)(a) also prohibits a public employee from having any 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. We are of the opinion that your relationship with your corporation would create such a conflict of interest if your corporation were to sell to a professional firm or other business entity under contract with the Department whose performance is subject to review by the Architectural Coordination Section or by a project director within the Section, or if your corporation were to sell to a professional firm under consideration by a selection committee on which you serve or on which a project director subject to your supervision is serving. Such a conflict of interest would not be created were sales to be made to business entities over which the Architectural Coordination Section has no review authority, but over which another Section of the Bureau might have such authority, since your authority within the Bureau is limited to the Section which you administer.

Accordingly, we find that subject to the conditions set forth in the preceding paragraph, no prohibited conflict of interest would be created were a corporation formed by you to sell signs to public and private entities other than the Department, the Department of Health and Rehabilitative Services, and construction projects administered by the Department.