Advisory Opinion No. 2000-11

Re: Elizabeth Shelov

A. Question Presented

The Rhode Island Department of Health requests an advisory opinion regarding 1) whether special state contract employees at the Department of Health are subject to the State's Code of Ethics, and, if they are, 2) whether the regular private employer of a special state contract employee may participate in the preparation of a request for proposals (RFP), or review of bids, when the possibility exists that his or her regular private employer may respond to the RFP.

B. Summary

It is the opinion of the Rhode Island Ethics Commission that 1) special state contract employees at the Department of Health (the DOH) are subject to the State's Code of Ethics, in that the nature of their relationships with the DOH have more indicia of employment than that of an independent contractors, and 2) as employees subject to the State's Code of Ethics special state contract employees may not participate in the preparation of requests for proposals (RFP's), or the review of bids, if it is reasonably foreseeable that their regular private employer may respond to the RFP(s) at issue.

C. Facts

The Rhode Island Department of Health (DOH) periodically hires special state contract employees to assist with short to medium-term projects in the DOH, including the preparation of requests for proposals (RFP's), and the review of bids received in response to RFP's. Typically, private profit or not-for-profit enterprises privately employ individuals hired as special state contract employees. Sometimes the special employees work full-time for the DOH for a specified period of time while taking a leave of absence from their private employment. In other instances the special employees work a set or fluctuating number of hours for the DOH but continue to work and get paid by their private employer as well. In either case, the special employees are paid on an hourly basis, their attendance is reported through the DOH to the Department of Administration, and they are paid monthly with all appropriate taxes taken out of their pay by the State. The DOH typically hires these type of special employees because they have expertise and/or experience in a particular area, which means that may find themselves working on an RFP that could be responded to by their private employer. Therefore, the potential exists for the regular private employer of a special employee to respond to an RFP that the special employee helped prepare and/or for which he or she will review the bids.

D. Analysis

Commission Regulation § 36-14-2002(3) defines an employee of state and local government as, inter alia, "any individual receiving a salary from a state or municipal agency…on a full-time or part-time basis." The use of the term "salary" in this part of the definition was important in that it draws a clear distinction between those who are paid as independent contractors and those who are paid as employees. The former, except in some very narrow circumstances, are not bound by the prohibitions set out in the State's Code of Ethics. Conversely, all state and municipal employees are covered by the Code.

Based on the information provided to us for purposes of rendering this advisory opinion, we conclude that special state contract employees hired by the The Rhode Island Department of Health (DOH) are "state employees" as that term is defined in the Code of Ethics. Typically, private profit or not-for-profit enterprises privately employ individuals hired as special state contract employees. The special contract employees typically assist with short to medium-term projects at the DOH, including the preparation of requests for proposals (RFP's), and the review of bids received in response to RFP's. Sometimes the special employees work full-time for the DOH for a specified period of time while taking a leave of absence from their private employment. In other instances the special employees work a set or fluctuating number of hours for the DOH but continue to work and get paid by their private employer as well. In either case, the special employees are paid on an hourly basis, their attendance is reported through the DOH to the Department of Administration, and they are paid monthly with all appropriate taxes taken out of their pay by the State. Whatever their work schedules, the special employees receive payments as employees rather than independent contractors; receiving, for instance, W-2's from the State rather than 1099's. As a result, the nature of their relationships with the DOH and, by extension, the State is within the Code of Ethic's definition of "state employee."

As state employees the special employees are subject to all of the provisions and prohibitions of the Code of Ethics. The fact that they maintain a relationship with a private employer, either through a leave of absence or concurrent employment, does not affect their status with respect to the State.

Under the Code of Ethics, the a state employee may not participate in any matter in which he or she has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of his or her duties and employment in the public interest. See R.I. Gen. Laws §§ 36-14-5(a), 36-14-7(a). An employee may not accept outside employment that will impair his or her independence of judgment as to his or her official duties or employment. See R.I. Gen. Laws § 36-14-5(b). An employee also may not use his or her public employment or confidential information received through his public employment to obtain financial gain personally or for a business which he or she represents. See R.I. Gen. Laws § 36-14-5(d). Section 5(h) of the Code provides that public officials, as well as their relatives and business associates, may not enter into contracts with any state or municipal agency “unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure or all proposals considered and contracts awarded.” R.I. Gen. Laws § 36-14-5(h).

In previous advisory opinions, the Commission has advised public employees and officials seeking to contract with or provide services to the state or a municipality that they only could do so if the public entity used an open and competitive bidding process. See e.g., A.O. 97-72 (opining that the Charlestown Harbormaster, who also owned and operated a private business that sold and serviced diving equipment, could sell equipment to the Town only if it adhered to an open and public bidding process for such purchases); and A.O. 98-86 (concluding that a Westerly Town Councilor should not enter into lease arrangement unless it was pursuant to an open and public process nor could he submit a bid if he had participated in or otherwise influenced the bid development process).

In addition, the Commission previously has found that public officials or employees who participate in the bid development process for a public entity place themselves, their family members and their business associates in a privileged position with respect to other bidders. By so doing they contravene the “open and public process” required under the Code. See A.O. 95-60 (finding Narragansett Town Engineer would violate the Code of Ethics were he to accept a subcontract from Alpine Ski & Sports in the event that said company, also his employer, is awarded a contract from the Narragansett Town Council to provide scuba diving training to the Narragansett Police Department Dive Team given that the petitioner provided input as to the training involved for scuba diver certification).

Therefore, as employees subject to the State's Code of Ethics special state contract employees may not participate in the preparation of requests for proposals (RFP's), or the review of bids, if it is reasonably foreseeable that their regular private employer may respond to the RFP(s) at issue.

Code Citations:

36-14-5(a)
36-14-5(b)
36-14-5(d)
36-14-5(e)
36-14-5(h)
36-14-7(a)

Related Advisory Opinions:

99-37
98-123
98-112
98-95
98-86
98-50
97-148
97-136
97-90
97-72
97-66
97-50
97-48
96-41
95-90
95-60
95-41
93-87

Keywords:

Contracts
Private Employment