Advisory Opinion No. 96-14 Re: Lynn Bibeault A. QUESTION PRESENTED The Public Ethics Officer for the RI Department of Health requests an advisory opinion on behalf of the Department Program Manager for the Health Risk Assessment Unit, an employee who oversees the management of the lead abatement contracting process. The employee questions whether procedures established for awarding lead abatement contracts sufficiently limit conflicts of interest that may arise given that the Unit has hired, on a temporary basis, a Lead Inspection and Lead Hazard Reduction Compliance Specialist whose son operates a company that bids on lead abatement contracts. B. SUMMARY It is the opinion of the Rhode Island Ethics Commission that the procedures implemented by the Program Manager of the Health Risk Assessment Unit of the RI Department of Health adequately address potential conflicts of interests arising from the Unit's management of lead abatement contracts and a temporary employee's relationship to a lead abatement contractor. The temporary employee previously operated a lead abatement business now operated by his son; that company bids on lead abatement contracts. The procedures implemented by the Program Manager require the temporary employee to (a) relinquish his lead hazard reduction contractor agent license and any financial interest in his son's company, (b) refrain from disclosing any confidential information that may confer a competitive advantage to his son's company, (c) notify the Department Manager of any potential conflicts of interest, and (d) adhere to prohibitions set forth in the Code of Ethics. C. DISCUSSION 1. Facts Recently the Office of Environmental Health Risk Assessment of the Department of Health hired Dave Johnson to serve as a temporary Lead Inspection and Lead Hazard Reduction Compliance Specialist.(1) In this position, Mr. Johnston is responsible for enforcing the requirements of the Lead Hazard Reduction Program; reviewing lead inspector reports; assisting property owners in the preparation of specification for the treatment of interior and exterior lead hazards; inspecting work performed by private lead inspectors; and reviewing bid proposals and preparing loan closing documents for lead hazard reduction activities. To fulfill his responsibilities, Mr. Johnston must contact homeowners regarding the selection of a company to perform lead abatement services.(2) Mr. Johnston previously operated a business which provided lead inspection\abatement services. Before he accepted the position with the Department of Health, Mr. Johnston divested himself of all financial interest in that company and dissolved said company. Mr. Johnston's son, however, assumed the business and formed a new corporation, J. & Sons, Inc. Concerned about potential conflicts with the employment of Mr. Johnston, the Program Manager of the HUD Lead Hazard Reduction Program required him [Johnston] to sign a written agreement which mandated that he a) resign his position in J. & Sons, Inc and forbear from any further financial interest in J. & Sons, Inc. or in any other business which offers lead hazard reduction or lead inspection services; b) relinquish his Agent License throughout the period of employment by the RI/HUD Lead Hazard Reduction Program (Program); c) refrain from discussing or disseminating any confidential Program information which would confer a competitive financial advantage in obtaining or performing lead inspection or lead hazard reduction activities; d) declare any potential conflicts of interest to the Program Manager, especially compliance activities related to J. & Sons, Inc. or relatives; and e) comply with the Rhode Island Code of Ethics, R.I. Gen. Laws § 36-14-5. Also, the Petitioner prohibited Mr. Johnston from performing any quality assurance or compliance activities on contracts awarded to his son's company, J. & Son's Inc. Recently J. & Sons Inc. submitted the lowest bid for a lead abatement contract.(3) However, because the Program's bidding specifications require that the difference between the lowest bid and the next highest bid not exceed twenty percent (20%), the Homeowner requested new bids for this contract.(4) 2. Analysis Here, the Petitioner, recognizing potential conflicts inherent in the employment of a contractee whose son's operates a business that does business for the Department of Health, seeks guidance as to whether the process implemented by the Program Manager for the Health Risk Assessment Unit complies with the Code of Ethics and limits any potential conflicts. Under the Code of Ethics, an employee or official may not participate in any matter in which he has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of his duties in the public interest. See R.I. Gen. Laws §§ 36-14-5(a), 36-14-7(a).(5) Pursuant to R.I. Gen. Laws § 36-14-5(d), a public official or employee is also prohibited from using his public position or confidential information received through his position to obtain financial gain, other than that provided by law, for himself or herself or a family member. Additionally, the Code of Ethics prohibits a person subject to the Code or any person within his or her family from entering into a contract with the state unless the contract had been awarded through an open and public process. See R.I. Gen. Laws § 36-14-5(h). Also, the Code of Ethics requires a public official or employee to fulfill certain procedural guidelines under the provisions of R.I. Gen. Laws § 36-14-6 if, in the discharge of his or her official duties, he or she is called upon to make a decision that will or may reasonably be expected to directly result in an economic benefit to himself or herself, a business associate, or a family member.(6) Before taking or refusing to take any action for which he or she may have an interest, the interested official\employee must prepare a written statement sworn to under the penalties for perjury describing the matter requiring action and the nature of the potential conflict. The interested official\employee must also deliver a copy of this statement to the Commission and, if the interested individual is not a member of a legislative body, to his or her superior (who should, if reasonably possible, assign the matter to another person who does not have a conflict). After considering the restrictions placed on the interested contractee and the relevant provisions of the Code of Ethics, we conclude that the implemented program addresses potential conflicts of interest created by the contractee's employment and ensures that the Program Manager will be notified of any future conflicts. In reaching this conclusion, we relied on the Petitioner's representations that the contractee, Mr. Johnston, will a) relinquish his lead hazard reduction contractor agent license and any financial interest in his son's company; b) refrain from disclosing any confidential information that may confer a competitive advantage to his son's company; c) notify the Department Manager of any potential conflicts of interest, and d) adhere to prohibitions set forth in the Code of Ethics. Footnotes (1) Mr. Johnson is compensated at an hourly rate (without benefits) from the proceeds of a grant jointly administered by the Rhode Island Housing, Mortgage and Finance Corporation. (2) According to the Petitioner, local offices of the Rhode Island Housing, Mortgage and Finance Corporation identify and select the homes needing lead abatement. Provided that the bidding process complied with the state's bidding specifications, homeowners are entitled to select the company to perform the work in their home. Homeowners receive a list of all contractors who are qualified to bid on a job. (3) The Petitioner advises that, although J. & Sons, Inc. has bid on several projects, this company has not been awarded a lead abatement contract. (4) The state's biding process requires that a contract be re-bid if two bids submitted fall outside of twenty percent of each other. (5) Substantial conflict is defined as a "direct monetary gain" or a "direct monetary loss" that accrues, by virtue of the public official's activity, to that individual, a family member, a business associate, an employer, or any business which the public official represents. See R.I. Gen. Laws § 36-14-7(a). (6) Regulation 36-14-6001, defines "reasonably foreseeable" as greater than "conceivable," but need not be certain to occur. Code Citations: 36-14-5(a) 36-14-5(d) 36-14-5(h) 36-14-6 36-17-7(a) Keywords: Nepotism Family: business interest Contracts