This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on November 5, 1999, basing its approval solely on the facts and circumstances stated herein.

May a housing authority contract with a security company owned by one of its employees and the employee's spouse if the housing authority determines that the security company's bid is the lowest and best bid?

Your opinion request to the Office of the Attorney General dated September 28, 1999, was referred by that Office to the Mississippi Ethics Commission on October 1, 1999, as your request involves the above issue that concern the Mississippi conflict of interest laws.

State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. Therefore, this opinion does not address the Mississippi laws outside the Commission's jurisdiction nor the governmental entity's internal rules and regulations.

The pertinent conflict of interest laws to be considered here are:

Code Section 25-4-101 states:

"The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments."

Code Section 25-4-103 (a), (c), (f)(i)(ii), (g)(v), (h), (k)(i)(ii)(iii)(iv), (p)(i)(ii)(iii) and (q) states:

"(a) 'Authority' means any component unit of a governmental entity.

(c) 'Business' means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company, self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a nonprofit corporation or other such entity, association or organization receiving public funds.

(f) 'Contract' means:

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:

(v) Any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.

(h) 'Governmental entity' means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

(k) 'Material financial interest' means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other. Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:

(i) Ownership of any interest of less than ten percent (10%) in a business where the aggregate annual net income to the public servant therefrom is less than One Thousand Dollars ($1,000.00);

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00);

(iii) The income as an employee of a relative if neither the public servant or relative is an officer, director or partner in the business and any ownership interest would not be deemed material pursuant to subparagraph (i) or (ii) herein; or

(iv) The income of the spouse of a public servant when such spouse is a contractor, subcontractor or vendor with the governmental entity that employs the public servant and the public servant exercises no control, direct or indirect, over the contract between the spouse and such governmental entity.

(p) 'Public servant' means:

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government.

(q) 'Relative' means the spouse, child or parent."

Code Section 25-4-105 (3)(a) and (4)(d) states:

"(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:

(d) May be a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent: (i) where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws; or (ii) where the contractual relationship involves the further research, development, testing, promotion or merchandising of an intellectual property created by the public servant."

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.

The Housing Authority of the City is now accepting sealed bids for Security Services within the Housing Authority's 330 low income housing units located inside the City.

One of the Housing Authority's employees, which is our financial officer and her spouse, which is a police officer for the City Police Department own a security company and provide services for several locally owned businesses and Housing Authorities within the State.

This employee states that she does not deal with the day to day operations of the security guards, only accounting and secretarial services of the security company.

This employee also is not associated on a day to day basis dealing with the residents of the Housing Authority and is no way associated in the bidding process or in the daily decisions. The Housing Authority Board of Commissioners and the Chief Executive Officer are the decision and rule making executives.

The Housing Authority Board and myself see no conflict in this employee's security company submitting a bid on patrolling our complexes, and feel there would not be any conflict of interest but would appreciate the opinion from your office concerning this matter or matters of this nature.

Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is as follows.

Code Section 25-4-105 (3)(a), cited above, prohibits an employee of a governmental entity, including a city and/or its housing authority, from having a material financial interest in a business that is a contractor, subcontractor or vendor with the governmental entity.

It is clear from the facts presented that the housing authority employee has a material financial interest in the security company as defined in the above cited Code Section 25-4-103 (k).

Therefore, Code Section 25-4-105 (3)(a) does prohibit the housing authority from accepting the bid and thereby contracting with the security company owned by its employee and her spouse.

In this instance, the only exception to the above set forth prohibition imposed by Code Section 25-4-105 (3)(a) is found in the above cited Code Section 25-4-105 (4)(d), as the security service contract would be with the housing authority which is the authority of the governmental entity employing her as its chief financial officer. This exception being "where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws."

The exception set forth in Code Section 25-4-105 (4)(d) does not limit a good or service "reasonably available from two (2) or fewer commercial sources" to a specific geographical area such as a city.

Therefore, it is the Commission's position that the exception set forth in Code Section 25-4-105 (4)(d) would not apply in this instance and that Code Section 25-4-105 (3)(a) would prohibit the housing authority from accepting the bid of and thereby contracting with the security company owned by its employee and the employee's spouse.

The issue presented by the requestor also must be viewed as it relates to Code Section 25-4-101, set forth above. This code section sets the tone for the conflict of interest laws as the Legislature's "Declaration of Public Policy." This public policy can be summarized as any circumstance having the potential of creating suspicion among the public and reflecting unfavorably upon the state or local government should be closely reviewed by public servants with the intent to reduce or eliminate any suspicion on the part of the public which detracts from the public's trust in state or local government.

Clearly, a housing authority contracting with a security company owned by its chief financial officer and the chief financial officer is a circumstance that can be expected to create suspicion among the public and reflect unfavorably upon the housing authority. Therefore, Code Section 25-4-101 would preclude such a contract as it would be contrary to public policy.
 
 
 
 

Ronald E. Crowe

Executive Director