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 12, 1996, basing its approval solely on the facts and circumstances stated herein.

May a university award construction projects to a lumber company when university employee owns approximately 15 percent of the lumber company's stock?

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

Code Section 25-4-103(c), (g)(v), (h), (k)(i)(ii), 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 non-profit corporation or other such entity, association or organization receiving 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).

(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(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."

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 the university from contracting with the lumber company since the university's employee has a material financial interest in the lumber company. The university's employee owns approximately 15 percent of the lumber company. Therefore, his ownership interest is a material financial interest as defined in the above cited Code Section 25-4-103(k).

Code Section 25-4-105(4)(d)(i), cited above, provides an exception to the prohibition set forth in Code Section 25-4-105(3)(a). This exception would allow the university to contract with the lumber company if, and only if, the goods or services involved were reasonably available from two (2) or fewer commercial sources, provided such transactions complied with the public purchases laws. [Emphasis added]

The exception set forth in the above cited Code Section 25-4-105(4)(d)(i) does not limit a good or service "reasonably available from two (2) or fewer commercial sources" to a specific geographical area such as a county. A building supply company or building contractor in an adjoining county would be a reasonably available commercial source.

Ronald B. Crowe Executive Director