Annual Report: Advisory Op. No. 00-32
September 1, 2000
Mr. Richard B. Carter
Delaware Heritage Commission
Carvel State Office Building, 4th Floor
820 North French Street
Wilmington, DE 19801
Advisory Op. No. 00-32 - Representing and Assisting Before One's Own Agency
Hearing and Decision by: Arthur G. Connolly, Jr., Vice Chair
Commissioners Paul E. Ellis, Mary Jane Willis, Arthur V. Episcopo, and Clifton H. Hubbard
Dear Mr. Carter:
The State Public Integrity Commission, based on the following law and facts, grants a waiver for you to accept a grant from the Delaware Heritage Commission (DHC), of which you are a member, to update a history you wrote in 1984 on former Governor John Townsend.
When a State employee, officer or honorary official does business with the State, they must submit a "full disclosure" to the Commission. 29 Del. C. § 5806(d). "Full disclosure" means sufficient information to decide if the conduct violates the Code. Here, you and the agency acknowledged that accepting the grant would result in a violation, and asked for a waiver. The prohibitions requiring a waiver are: (1) the restriction on contracting with the agency to which you are appointed, 29 Del. C. § 5805(b)(1); and (2) the requirement for public notice and bidding, 29 Del. C. § 5805(c).(1)
The Commission may grant a waiver if the literal application of the prohibition is not necessary to achieve the public purposes of the statute or would result in an undue hardship on the employee or the agency. 29 Del. C. § 5807(a).
The public purpose served by prohibiting contracting with one's own agency was noted in a 1971 Court opinion. W. Paynter Sharp & Son v. Heller, Del. Ch. 280 A.2d 748, 752 (1971)). In Heller, the Court upheld an agency's decision not to contract with one of its appointees, saying that when State officials contract with their own agency the concern is that the award of such contracts "has been suspect, often because of alleged favoritism, undue influence, conflict and the like." Commission Op. No. 98-23 (citing Heller). The Court noted that, at that time, the State had no conflicts of interest law. Subsequently, the Code of Conduct was passed, and restricted State officials from dealing with their own agency. 29 Del. C. § 5805(b)(1). This insures that State officials do not use their influence within their own agency to affect the decisions of their colleagues or employees or use their access to information or influence within their own agency to obtain preferential treatment, unfair advantage, or unwarranted privileges, private advantage or gain. Commission Op. No. 98-23.
As the public purpose is to insure the contract does not result from favoritism; undue influence, etc., we looked at why DHC wants to contract with you. DHC selected you to update the history of former Governor Townsend because in 1984, many years before you were a DHC appointee, you wrote a lengthy history on Governor Townsend. In writing that book, you obtained historical documents, conducted interviews, established a trusting relationship with the family, etc. DHC is now publishing a series of histories on all of Delaware's former Governors as part of a series. Thus, you are the person most familiar with the history of the former Governor, and have the information and expertise to update the book. Further, other authors have been selected to write histories of other former Governors. Thus, this is not a unique opportunity created solely for you. The histories will be completed in a consistent format and made available for purchase at $5. You will not receive any portion of those sales. In updating your 1984 book, you will accomplish such things as adding footnotes to make it more scholarly, adding information that was not included in the initial writing, etc. Also, you will scan the existing book into a desktop publishing program to reformat it so it will be consistent in appearance with the other histories in the series. An additional step you will take that other authors are not taking is to make the book camera ready.
Based on those facts we conclude that the public purpose-insuring that the contract was not based on favoritism, undue influence, etc.-has been served. Thus, the literal application of the restriction against contracting with one's own agency is not necessary to serve the public purpose and a waiver is granted.
Regarding the requirement for public notice and bidding, Delaware Courts have held that: "Statutes dealing with bidding on public work are to be construed in the light of their primary purpose-to protect the public against the wasting of its money. These statutes seek to prevent waste through favoritism and yet permit proper supervision over the qualifications of the bidders. Thus, there is the desire to see that public officials have public work done as cheaply as possible." Fetters v. Mayor and Council of Wilmington, Del. Ch., 72 A.2d 626(1950); Heller, supra; and Delaware Technical and Community College v. C&D Contractors, Inc., Del. Supr., 338 A.2d 568 (1975).
The Code of Conduct includes two methods by which the Commission can address the issue of expenditure of funds on a State contract: (1) public notice and bidding or (2) insuring that there is arms' length negotiation. 29 Del. C. 5805(c). Public notice and bidding aids in avoiding favoritism by creating a public record that insures such things as qualifications of bidders and fairness in prices. Here, public notice and bidding would be merely perfunctory because of the reasons given above concerning why your qualifications resulted in your selection. Thus, to insure the public purpose is served we review your situation under the arms' length negotiations standard.
Delaware Courts, in ruling on arms' length negotiations, have noted that the "most economically meaningful way to judge fairness is to compare the price paid with the price likely to be available in alternative transactions." Commission Op. Nos. 98-23; 99-17 (citing Oberly v. Kirby, Del. Super., 92 A.2d 445(1991)). Here, DHC plans to contract with you for $4,000. It said that authors of history books on other former governors are being paid $3,000, but the additional money is because you will make your book camera ready, while the other authors will not. DHC will undertake the tasks and associated costs to make the other authors' books camera ready. Thus, the actual costs to the agency is essentially the same for all authors. Accordingly, your contract appears to be no more favorable than what is being paid as the market price to other authors writing histories of former governors.
We also note that when a contract is publicly noticed and bid, the results become a public record so that the public has access to information on the contract. Access to this information instills public confidence that the contract was not issued out of favoritism, etc. While public notice and bidding will not occur in this case, by law, when we grant a waiver the proceedings become a public record. 29 Del. C. § 5807(b)(4). Thus, the public will know that its concerns, such as the potential for favoritism, use of public office for an unfair advantage or gain, etc., were addressed. Thus, the literal application of the requirement for public notice and bidding is not necessary to serve the public purpose, and a waiver of that prohibition is granted.
Sincerely,
Arthur G. Connolly, Jr.
Vice Chair
AGC:lha
cc: Deborah P. Haskell, Executive Director, DHC
Lewis "Skip" Purnell, DHC
First, the contract is for $4,000.
We have already addressed the factors that demonstrate why DHC's decision to contract with you was not based on favoritism, but rather on your qualifications. Thus, the remaining issue deals with the question of whether the amount to be paid Logically, it would be Thus, the remaining issue identifies those facts
Similarly, Code of Conduct law requires that contracts of more than $2,000 be publicly noticed and bid, or if the contracts is for less than $2,000, it contract must reflect arms' length negotiations. 29 Del. C. § 5805(c). This insures that State officials do not obtain an unfair advantage or "leg up" on any competition, and reduces suspicions of favoritism or undue influence. Thus, we look at the particular facts to ascertain if the literal application of the restrictions are necessary to achieve those public purposes.
Here, because you would be the person most qualified to update your own book, DHC does not plan to publicly notice and bid the matter. Delaware Court have said that the purpose of public notice and bidding statutes is to open the procurement process to protect the public against the waste of government money. The statutory requirement for public notice and bidding We have already addressed the facts that demonstrate that your selection was not based on favoritism, etc., which is one of the purposes of public notice and bidding. Public notice and bidding also aids an agency in establishing a fair market value for the services. Here, while the agency will not be publicly noticing and bidding this matter, it has looked at the
2. As a DHC member, Mr. Carter would normally participate in deciding who gets such contracts. As that would violate 29 Del. C. § 5805(a)(1), he plans to recuse himself. However, seeking the contract from DHC would violate other Code provisions:
(1) representing or otherwise assisting a private enterprise before his own agency. 29 Del. C. § 5805(b)(1);
(2) contracting for more than $2,000 without notice and public bidding. 29 Del. C. § 5805(c); (the contract would be for $5,000 but DHC would not bid it because Mr. Carter, in DHC's opinion, is the best source to do the update because of his prior involvement).
3. As Mr. Carter would be receiving more than other authors writing what may be similar books, his conduct might also raise at least the appearance that he would: (1) receive preferential treatment in violation of 29 Del. C. § 5806(b); and/or (2) be using public office for private gain in violation of 29 Del. C. § 5806(e). The Commission may wish to ask the agency why the higher amount for him as compared to similar projects by other authors and may wish to ask Mr. Carter how he decided what his rate would be. It may also want to ask the agency why it is not asking Mr. Carter for a budget layout as it does with other recipients. The explanations may aid in deciding if the agency can diminish the appearances of impropriety.
4. DHC seeks a waiver based on an undue hardship to the agency. 29 Del. C. § 5807(a). DHC states that no other person can update the book as Mr. Carter worked closely with the family in the initial writing and has their trust; knows what information and footnotes are needed to make it more scholarly; is familiar with the documents used in initially writing the book so would know what information is supported by documents that need to be footnoted, etc.
5. The Commission needs to decide if those facts constitute an "undue" hardship on DHC. Specifically, you wish to accept a grant from the agency to which you are appointed, which is prohibited by 29 Del. C. § 5805(b)(1). Additionally, although the amount will be greater than $2,000, DHC does not plan to issue a public notice and bidding opportunity as required by 29 Del. C. § 5805(c).
The primary purpose of statutes governing bidding on public works is to protect public funds. Fetters v. Mayor and Council of Wilmington, 31 Del. Ch. 319, 72 A.2d 626 (1950); W. Paynter Sharp & Son, Inc. v. Heller, Del. Ch., 280 A.2d 748 (1971). ]
You and the agency explained that because of the additional work you will undertake in getting the book camera ready, you will receive $4,000 when it is anticipated that the other authors who are not performing such work will receive $3,000.
You and the agency explained that because of the additional work you will undertake in getting the book camera ready, you will receive $4,000 when it is anticipated that the other authors who are not performing such work will receive $3,000.
1. The Code also provides that State officials may not review or dispose of matters in which
they have a personal or private interest. 29 Del. C. § 5805(a)(1). No waiver is required for that
provision as you have recused yourself from participating in DHC's decision to contract with you.
