The Ethics Commission has received an inquiry concerning whether it would be a violation of the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law) for a member of the Board of Regents (the Member) of the University of Maryland (the University) to be the primary owner of a firm that bids on and receives a major University construction project. The Member has been on the University's Board of Regents (the Regents) since March, 1981. He is also the majority stockholder in a corporation that owns and manages real estate and that also does construction. Through this corporation he is the primary owner of a general contracting firm (the Construction Company) that anticipates submitting a construction bid on the proposed expansion of the Shock Trauma Center facility at the University's Baltimore City Campus.
The Shock Trauma Center Project is a major capital construction project of the University, with an estimated cost of $46 million for planning, construction and equipment; the construction effort is expected to represent $32 million of this cost. The Project was initiated by the University through a Medical Center Development Task Force established in October, 1980, and other basic policy actions taken prior to the Member's service as a Regent. Once the fundamental program decision is made in this type of capital project, there is an established process for its implementation. Staff of the program agency prepare a plan that is submitted to the agency head or controlling board (here the Regents). Once approved, this plan is the basis for legislative appropriation of planning funds. A planning group is then established, including, in this case, staff from the Departments of State Planning (DSP), General Services (DGS), and Budget and Fiscal Planning, the University, the Health Services Cost Review Commission, and the Health Planning Commission. The result of this planning effort is a program plan, which becomes the basic bidding document on which selection of an architect-engineer is based. This selection is made by the General Professional Services Selection Board, part of DGS, with the final approval by the Board of Public Works.
The architect-engineer produces a building design and specifications. These materials are reviewed by the user agency (here the University), DGS and DSP, and ultimately become the Invitation for Bid on which contractors base their bids. Award is made to the lowest responsive and responsible bidder. Though the general mandate is to select the low bidder, the bids are evaluated by DSP, DGS and the user agency, following sometimes substantive and subjective criteria, to determine that the low bidder meets the requirements for responsiveness and responsibility. The construction contract, after BPW approval, is executed between the selected contractor and the Department of General Services. Supervision and inspection of the construction is carried out by the Construction Division of DGS or by a private contractor under its direction. User agency personnel may visit the site and would be expected to be involved in progress meetings. Except in a bona fide emergency, only DGS has the authority to act on changes, and all disputes and contract appeals are handled through DGS by its legal staff.
University officials indicate that primary involvement of the Regents in such projects is to approve the University's capital budget requests, which would include planning and other appropriation requests as one of several items. After the initial program approval in 1980, the Shock Trauma Center Project was considered by the Regents as part of a supplemental budget request for planning funds in October 1981, and was included as one of 23 capital projects presented as part of the University's fiscal 1984 capital budget. According to the University's Executive Vice President, the Regents have been involved in the Project most recently (June 1983) in their unanimous vote on the capital budget submission for fiscal year 1985. This submission included 29 items, one of which was the construction funds for the Shock Trauma Center.
The Executive Vice President indicates that the Member has participated in no way in consideration of the Shock Trauma Center Project except on two occasions to concur in a total budget submission. He states that "in all other respects, *the Member* has had no involvement with the Shock Trauma Center Project, including its programming, site selection, design, cost estimating, determination of need, determination to include in the capital budget submission, and determination of its priority relative to other University projects."
This request presents issues primarily under §3-103(a) of the Public Ethics Law. This section is a key provision of the Law, absolutely barring officials and employees from having financial interests or employment relationships with entities that have or are negotiating contracts with their agency (subsection (a)(1)(i)). This provision further prohibits any other employment that would impair an individual's impartiality or independence of judgment. In our view the absolute bar of subsection (a)(1)(i) does not apply here. Though a Regent is viewed as a State official, and his agency has been considered to be the University as a whole, the contract here would be with DGS and not with the University. Thus, despite his agency's significant involvement in the Shock Trauma Center Project, it does not fit within the strict criteria of §3-103(a)(1)(i) involving entities that contract with an official's agency.
Nor do we believe that this situation comes within the inconsistent employment provision of subsection (a)(1)(ii), even though this section does not rely on the more technically defined contractual relationships of subsection (a)(1)(i), but more generally prohibits any employment that would impair a person's impartial and independent judgment. As a primary owner of the Construction Company, as well as its President and Chief Executive Officer, the Member has an employment relationship with the company. However, we do not believe that this employment would be inconsistent under §3-103(a)(1)(ii), as, in implementing this provision we have generally looked to the relationship between the official's responsibilities and his private activities to determine whether they raise clear and serious concerns about the official's ability to carry out his duties impartially. In this situation, even though the Regents constitute the primary policy-making body for the University, they would, according to the Member and University officials, not be operationally involved in the day-to-day management of the Shock Trauma Center Project or the construction contract.
University officials have emphasized that the Regent's primary role is in making budget priority and general policy decisions, and have stated that the Board is seldom involved in particular decisions regarding University programs and contracts. Even though a successful bidder would have a continuing relationship with both DGS and the University for the duration of the construction period, the University indicates that this involvement would be with program directors of the Shock Trauma Center, the University Hospital, and the University Administration. The Board of Regents would not be expected to participate in these activities on an ongoing basis. Moreover, the Member, who serves on the Health Committee of the Regents, indicates that this Committee is not called upon to take any action regarding the Shock Trauma Center. He states that he does not recall the Project coming up specifically in the context of Regent or committee action, and states also that he has never been involved in any of the University's funding or other presentations to the Maryland Legislature.
Under all of these circumstances, we believe that application of §3-103(a)(1)(ii) to a situation such as this involving a single contract would read more into this impairment provision than was intended when this provision was enacted. Given the Member's description of his duties and activities on the Board and in its committees, he would not appear to be involved in any specific actions where his private affiliation could be expected to impair his impartial judgment. Also, given the significant and substantial role played by University administrative staff, the competitive bidding process, and the fact that any construction contract would be with another agency, we believe that the Member's private business would be too remote from his official duties as a Regent to raise the types of impairment concerns addressed by this provision. We therefore conclude that §3-103(a)(1)(ii) would not be a bar to the Member's employment affiliation with an entity that bids on and enters into a construction contract with the University.1
Though the Member's affiliation with the Construction Company would thus not be barred by §3-103(a) of the Ethics Law, he should, of course, be aware of the application of other provisions of the Law, should his firm be awarded the contract and any matters relating to or involving the Project come before the Regents or any subcommittee on which he serves. Section 3-101 of the Law, for example, prohibits non-ministerial participation by officials in any matters in which they or certain relatives or business associates have an interest or are involved as parties. This bar would cover any participation, including general discussion and recommendations as well as voting or other formal actions. (See our Opinion No. 80-17 for a more detailed discussion of our application of §3-101.2
Sections 3-104 and 3-107 could also be of concern to the Member. These sections prohibit respectively the use by a public official of the prestige of his office or of official confidential information for his own economic gain or that of another. The Member has indicated that if his firm is awarded the construction contract, he would refrain from participating on its behalf in any matters involving the contract. He should take care to avoid these and any other activities regarding the contract, since his status as a Regent is likely to be known and he should avoid any situation where his participation could be construed as improper use of his prestige under §3-104. He should also take care to absent himself from policy, contract, budget or other discussions regarding the Shock Trauma Center Project, to avoid any actual or apparent problems arising under §3-107 of the Law, through his access to information about the project that would not generally be available to a contractor.
Herbert J. Belgrad, Chairman
Reverend John Wesley Holland
Betty B. Nelson
Barbara M. Steckel
Date: September 28, 1983
1 It should also be noted that in view of our understanding from the Member that his duties do not include "matters substantially relating to or affecting the subject matter" of the Shock Trauma Center Project, the prohibition of §3-105 of the Law would also not appear to apply here.
2 Except as otherwise specifically cited to the Maryland Register, Opinion citations are to Ethics Commission Opinions published in COMAR Title 19A.