This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on September 1, 2000, basing its approval solely on the facts and circumstances stated herein.

May the company of a state bureau director have a sub­consultant contract with an engineering firm pertaining to a city project?

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(c), (d), (e), (f)(i)(ii), (g)(ii)(v), (h), (i), (k)(i)(ii), (l) and (p)(i)(ii)(iii) states:

"(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.

(d) 'Business with which he is associated' means any business of which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

(e) 'Compensation' mean money or thing of value received, or to be received, from any person for services rendered.

(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:

(ii) Municipalities; and

(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.

(i) 'Income' means money or thing of value received, or to be received, from any source derived, including but not limited to, any salary, wage, advance, payment, dividend, interest, rent, forgiveness of debt, fee, royalty, commission or any combination thereof.

(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).

(l) 'Pecuniary benefit' means benefit in the form of money, property, commercial interests or anything else the primary significance of which is economic gain. Expenses associated with social occasions afforded public servants shall not be deemed a pecuniary benefit.

(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."

Code Section 25-4-105(1), (3)(a) and (4)(b)(c)(d) states:

"(1) No public servant shall use his official position to obtain pecuniary benefit for himself other than that compensation provided for by law, or to obtain pecuniary benefit for any relative or any business with which he is associated.

(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:

(b) May be a contractor or vendor with any authority of the governmental entity other than the 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 or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

(c) May be a subcontractor with any authority of the governmental entity other than the 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 subcontractor with any authority of the governmental entity of which he is a member, officer, employee or agent where the primary contract is let to the lowest and best bidder after competitive bidding or 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.

(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.

I take the occasion of this letter to request an official opinion regarding a newly appointed directorship position with the state of Mississippi and my company's existing sub-consultant contract with an engineering firm. Our sub-consultant contract is on the City's project.

We have been sub-consultants for the past four years. We have not rendered any services in the past three years. I ask the commission please provide me an opinion on this matter so that any inkling of a conflict of interest is immediately removed.

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

This opinion is written with the understanding that the engineering firm's and the requestor's company's sub-consultant contract is with the city and paid solely with city funds and with the understanding that the requestor by way of his directorship with the state has no control or approval, direct or indirect, over the city's project or its funding.

If the above understanding is not correct, then the requestor is advised that this opinion is no longer applicable and the additional facts and circumstances should be immediately submitted to the Commission for an opinion.

Based on the above understanding, a state employee's company is not as such prohibited by the state conflict of interest laws from having a sub-consultant contract with a totally separate government from the state such as with a city when the state employee as the director of a state bureau has no control or approval, direct or indirect, over the separate government's project or its funding.

Notwithstanding the above, the requestor is advised that Code Section 25-4-105(3)(a), cited above, will prohibit the engineering firm from being a contractor, subcontractor or vendor with the state should the requestor's company's sub-consultant contract with the engineering firm result in the requestor having a material financial interest in the engineering firm.

A material financial interest is defined in the above cited Code Section 25-4-103(k)(i)(ii).

Also, the requestor is advised that should he have a material financial interest in the engineering firm by way of his company's sub-consultant contract with the engineering firm that results in a violation of Code Section 25-4-105(3)(a) that there may be applicable exceptions depending on the specific facts and circumstances. These exceptions are cited above in Code Section 25-4-105(4)(b)(c)(d).

Notwithstanding the above, the requestor is advised to remain keenly aware of the above cited Code Section 25-4-105(1) and Code Section 25-4-101.

Code Section 25-4-105(1) prohibits a public servant, including one appointed to a directorship position with a state bureau, from using his position to obtain a pecuniary benefit for himself or a business with which he is associated.

Therefore, the requestor would be required by Code Section 25-4-105(1) to totally and completely recuse himself as the director of the state bureau from any matter concerning the engineering firm with which his company has a sub-consultant contract in order to be certain to avoid a violation of Code Section 25-4-105(1).

Code Section 25-4-101, cited above, is the Legislature's "Declaration of Public Policy." Code Section 25-4-101 sets the tone for the conflict of interest laws by declaring that elective and public office and employment is a public trust. The Legislature's "Declaration of Public Policy," in part, provides, "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."

Clearly, the requestor as the director of the state bureau considering or acting on any matter concerning the engineering firm with which his company has a sub-consultant contract is a circumstance that will raise suspicion among the public and reflect unfavorably upon the state bureau.

Therefore, to fully and completely comply with the public policy mandate set forth in Code Section 25-4-101, the requestor's company should not be doing business with any companies that are expected to be doing business with the state whereby they will be subject to the requestor's authority as the director of the state bureau. Certainly, the engineering firm with which his company has a sub-consultant contract is a perfect example of the requestor's company doing business with another company that should be avoided if the engineering firm is expected to be doing business with the state whereby it will be subject to the requestor's authority as the director of the state bureau.

Because of the serious public policy concerns and potential conflict of interest violations raised by this circumstance, the requestor is strongly advised to provided a copy of this opinion to the Governor and the executive director of the requestor's agency so that they are made aware of the appearance of impropriety resulting from the requestor serving as the director of the state bureau while continuing the operation of the requestor's private company.
 
 
 
 

Ronald E. Crowe

Executive Director