This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The opinion is based solely on the facts and circumstances as stated below and was approved by the Commission on February 8, 1996.

May a county purchase parts from an equipment company employing the spouse of the county's purchase clerk?

    The Mississippi Ethics Commission is restricted 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, Mississippi laws outside the jurisdiction of the Commission and internal rules and regulations of the governmental entity are not addressed by this opinion.

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), (d), (f)(i)(ii), (g)(i), (h), (k)(i)(ii)(iii)(iv), (1), (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 non-profit 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.

(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:

(i) Counties.

(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.

(1) '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 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(1), (3)(a) and (4)(d) state:

"(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:

(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 am writing to request a formal opinion on the following.

I am a Purchase Clerk for the County and have been since 1977. When the County was required to operate under the Unit System of County Government, the previous administration hired my husband as Road Manager. When the new administration took office in 1992, he was terminated. He, then, went to work for a heavy equipment company. Since the County has several pieces of equipment purchased from this company, I wrote for an opinion. Due to a pending court case, I was unable to get one.

Operating under the Central Purchasing System, I have tried to abide by the laws and be as ethical as I could. When purchasing parts for equipment, we usually get parts from the Company the equipment was purchased from, unless we can get the same quality at a lower price someplace else. On items that require two quotes, the Board of Supervisors tells me who to get the quotes from, if it is not an extremely large amount, I purchase from the lowest quote. On parts and labor quotes, the Board determines who to get quotes from and which one to use.

If, in your opinion, it is unethical for me to purchase from this company, what suggestion do you have.

    In addition to the above, the Commission's staff was provided the following facts and circumstances. The purchase clerk's spouse is the service manager for the equipment company. The county would deal directly with the spouse when the county was contracting with the company to provide parts and labor. The spouse does not own any interest in the company but his compensation is $5,000.00 or more annually.

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

    The purchase clerk has a material financial interest in the equipment company because of her spouse's employment contract Therefore, the county's contracting with the equipment company to purchase parts is prohibited by Code Section 25-4-1 05(3)(a) because the purchasing clerk is an employee of the county.

    Notwithstanding the above, the purchase clerk does not have a material financial interest in her spouse's employment contract, even though he is being compensated $5,000.00 or more annually, if the exception found in Code Section 25-4-103(k)(iv) is applicable.

    The exception found in Code Section 25-4-103(k)(iv) is applicable when the purchase clerk exercises no control over the contract between the equipment company employing the spouse and the county.

    Code Section 31-7-101, part of the Central Purchasing by Counties Law, in part, provides, "The central purchase system shall be administered by a county department of purchasing headed by a purchase clerk who shall be appointed by the county administrator, with the approval of the board of supervisors, in any county required to operate under a countywide system of road administration, or who shall be appointed by the board of supervisors in any other county. The purchase clerk shall not be a member of the board of supervisors. The purchase clerk shall be director of the department of purchasing."

    Code Section 31-7-103, part of the Central Purchasing by Counties Law, in part, provides, "The purchase clerk shall be responsible as hereinafter provided for the purchase of all equipment, heavy equipment, machinery, supplies, commodities, materials and services to be acquired for the county from successful bidders or other vendors, as authorized by law."

    Based on the above code sections from the Central Purchasing by Counties Law, the Commission finds that the exception set forth in Code Section 25-4-103(k)(iv) does not apply when the public servant is a county purchase clerk. The county purchase clerk clearly exercises both direct and indirect control over the county's purchasing procedures.

    Even though a public servant may have a material financial interest in a contractor, subcontractor or vendor with his or her governmental entity, the exceptions set forth in Code Section 25-4-105(4)(d) also will prevent a violation of Code Section 25-4-105(3)(a). In this instance, the exception found in Code Section 25-4-105(4)(d) that is applicable is subpart (i). Code Section 25-4- 105(4)(d)(i) states, "(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."

    However, where a county purchase clerk is the public servant with the material financial interest, the exception set forth in Code Section 25-4-105(4)(d)(i), while preventing a violation of Code Section 25-4-105(3)(a), will not prevent a violation of the above cited Code Section 25-4- 105(1).

    Code Section 25-4-105(1) applies in this instance because each time the county purchases from the equipment company employing the spouse, the purchase clerk because of her statutory duties, will in effect use her position to obtain a pecuniary benefit for a business with which she is associated as defined in Code Section 25-4-103(d).

    The only way to avoid a violation of Code Section 25-4-105(1) is for the public servant to totally and completely recuse himself or herself from the subject matter. However, the county purchase clerk cannot recuse herself from the purchasing process without placing herself in the position of not performing her statutory duties as set forth in the Central Purchasing by Counties Law.

    Therefore, Code Section 25-4-105(1) and (3)(a), in combination, prohibits the county from doing business with the equipment company employing the county purchase clerk's spouse.

    In addition to the above violation of the conflict of interest laws, the requestor must also consider the Legislature's "Declaration of Public Policy."

    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 it is 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, the company employing the spouse of the county purchase clerk when doing business with that county has the potential of creating suspicion among the public and reflecting unfavorably on the county.
 
 

Ronald E. Crowe Executive Director