81.46

OPINION NO. 81-46

An opinion request has been received concerning whether employees of a regional health center (the Center) and the Department of Health and Mental Hygiene (DHMH) may accept air transportation and a meal from a potential contractor with their agency.

This request is presented by the Assistant Director of the Center. The Service Master Corporation (SMC) is a service maintenance organization with its corporate headquarters in Chicago. The Assistant Director indicates that he and other Center officials attended a DHMH meeting set up by the Department's Chief of Capital Budget, Engineering and Maintenance to evaluate ways in which such DHMH facilities could meet their maintenance needs. Service Master Corporation made a presentation at the meeting and was invited to the Center to do a no-cost overview of the facility. An evaluation was done and submitted, and in follow-up of that evaluation several DHMH and Center employees propose to go to Chicago to visit SMC's corporate headquarters and meet with management officials in the company. The visit would involve air flight to Chicago and return on the same day. The trip would be at SMC's expense with it providing air fare and lunch to the DHMH and Center officials.

The Assistant Director stresses his program and policy concerns regarding the benefits to the State of contracting for maintenance services. He indicates that this type of plant site visit is not unusual and that the purpose is to enable officials to familiarize themselves with the firm's corporate structure, to see the lay-out of the firm, and meet with its management personnel. If the reaction to SMC is favorable then a pilot project using their services could be instituted or the agency could go through the procurement process, soliciting bids from firms to perform the Center's maintenance duties under a contract. Any resulting contract would have to be approved through the standard procurement process, with signature by the Secretary of DHMH and approval by the Department of Budget and Fiscal Planning. The trip would involve the Assistant Director and the Center's Director, both of whom would be substantially involved in negotiation, execution and monitoring of any resultant contract. The other two officials are DHMH officials who have program interests that relate to facility maintenance and the general subject matter of the potential contract, though it is not clear that they would be officially involved in the formalities of this particular contract.

Procurement personnel in the Departments of General Services and Budget and Fiscal Planning have informally expressed reservations about the propriety of this transaction at this stage of the contracting process. They question the need for a visit to a corporate headquarters in these circumstances and express reservations about an agency's doing preliminary evaluation studies through a vendor rather than an independent consultant. Though the procurement process contemplates circumstances where a plant site visit, possibly at contractor expense, may be necessary, procurement personnel suggest that this type of situation is more appropriately anticipated after a contract is established or in connection with more formal and regulated aspects of the procurement process. They view the proposed situation here as a premature sales effort by the agency and a private vendor.

The issue raised here involves application of the provisions of §3-106 of the Public Ethics Law (Article 40A, § 3-106, Annotated Code of Maryland, the Ethics Law). This section prohibits solicitation or acceptance of gifts by a State official or employee from a person who is doing or seeking to do business with his agency or whose interests could be substantially affected by the employee's performance of his official duties. The term "gift" is defined to include the transfer of any thing of economic value without adequate and lawful consideration. (Section 1-201(p). SMC is plainly seeking to do business with the Center and with DHMH, and its interests could probably be affected by the official actions of at least some of these officials. The prohibitions of §3-106 would thus apply if the air transportation and lunch are viewed as gifts, and if the transaction does not fit within the exception provisions of §3-106.

The Commission has considered this provision in several contexts. In Opinion No. 81-6, for example, we disallowed acceptance of travel and expenses offered to an employee by a firm that sold computer services to the employee's agency. The Commission found that the situation there reflected "a relatively clear example of a situation where a private entity's marketing objectives compel the conclusion that the intention is to influence an official's view in favor of an entity." On the other hand, in its Opinion No. 81-31, the Commission approved the acceptance of air transportation from air carriers by State Aviation Administration employees, based on the view that the transaction constituted a gift to the agency rather than the individual employees.

In the situation presented in Opinion No. 81-31, the agency was clearly in control of the program that involved its employees' traveling to airline ticketing centers. In fact, it was using the travel expenses as an integral part of its own marketing program, and the proposed travel was within the context of an existing approved relationship between the agency and the air carriers. In that case the proper inclusion of the activity in the agency's program seemed to be clear. In this request, however, there is no established existing agency/vendor relationship, and there are questions as to whether this type of travel activity is appropriate within the State's procurement philosophy.

Therefore we do not believe that the principle discussed in Opinion No. 81-31 is appropriately applied here. In our view the provision of air transportation and meals constitutes the transfer of a thing of value as contemplated in the Ethics Law definition of gift. Thus, we view this travel offer as a gift under §3-106 of the Ethics Law. Moreover, such trips could affect an employee's personal attitude toward a contractor or a potential contractor, thus breaking down the arms length bargaining relationship that should exist between the State and entities with which it does business. Although it is not appropriate for the Ethics Commission to attempt to resolve issues relating to application of the State's procurement laws, we believe that to some extent the Ethics Law and the procurement provisions have a common goal of assuring that all persons dealing with the State through its officials and employees should be treated fairly and equally. We therefore conclude that the proffered transportation expenses are gifts to employees generally prohibited under §3-106(a).

We further conclude that these transportation expenses may not be accepted by employees under the exception provisions in subsection (b) of §3-106. Under this provision, an employee may accept a gift if it fits within one of the listed exceptions, provided that acceptance would not impair the employee's impartiality or independence of judgment, or, if the gift is of significant value, would not give the appearance of doing so or being designed to do so. The exceptions in subsection (b) include meals and beverages generally (subs. (1)), but only include transportation where the employee is a speaker or is participating in a panel (subs. (4)). Thus, transportation expenses are not generally excepted where travel does not involve some participatory activity by the official or employee. In this connection, in our Opinion No. 81-43, we allowed acceptance of meals by a University of Maryland employee attending a seminar sponsored by an accounting firm that contracts with his agency, but disallowed the proffered transportation and lodging expenses.

In any case, we believe that the situation here fits squarely within the approach of our Opinion No. 81-6. We believe that the obvious sales interests of SMC compel the conclusion that this trip is offered by the company in an effort to favorably dispose the agency officials to enter into a contract with the firm. Thus, in our view, the exception provisions of §3-106(b) may not be applied here to allow even the acceptance of meals under subsection (b)(1).

Herbert J. Belgrad, Chairman
    Jervis S. Finney
    Reverend John Wesley Holland
    Betty B. Nelson
    Barbara M. Steckel

Date: December 1, 1981