An opinion has been requested as to the application of the nonparticipation provisions of §3-101 of the Public Ethics Law (Article 40A, §3-101, Annotated Code of Maryland, the Ethics Law) to an official in the Data Processing Division of the Office of the Comptroller, in view of the fact that his brother is an employee of an agency data processing vendor (the Vendor). Based on the specific circumstances of this situation, and the nature of these relationships, we advise that an exception can be applied to allow the Requestor's involvement in computer projects and procurements, with certain limitations.
The Office of the Comptroller of the Treasury is established by the Maryland Constitution and headed by an elected Constitutional Officer. The Office includes a Deputy Comptroller and eight Divisions, one of which is the Data Processing Division. The Requestor is the head of this Division. His responsibilities are to manage the Comptroller's Annapolis and Baltimore Data Centers, which provide automation support to Comptroller functions as well as to entities throughout State government. Each Center has a Director who reports to the Requestor and is responsible for day-to-day operations. The Office of the Comptroller is also by statute assigned the responsibility for fiscal management of the 24 Offices of the Clerks of the Circuit Court in the 23 counties and Baltimore City. In 1987 when the Legislature decided that the Clerk's Offices should be automated, a separate item in the Clerk's Offices budget was added for automation, and this responsibility was assigned to the Comptroller. Given his experience in this area, the project was assigned to the Requestor as part of his regular duties.
The Requestor indicates that much of the day-to-day operation of the data centers is handled by the Directors of the Centers and their staff. His primary work thus involves budgeting for the program, the clerk's office project, and procurement. Given the size of the operation, the procurement aspects of the job are substantial, and the Vendor is a regular competitor in the procurement actions. The Office owns mainframe computers and disk drives that are the Vendor's equipment. Disk drives purchased about 3-1/2 to 4 years ago, and magnetic tape systems purchased more recently, involve different suppliers. The Requestor and the Deputy Comptroller both indicate that in the next year additional purchases of various types of equipment are also expected. These purchases involve substantial funding, and it is expected that the Vendor would be a bidder on these procurements, as it is a large supplier of such equipment.
Though it has not been the successful bidder on major recent equipment procurements, the Vendor has continuing business with the Office both in supplying automation support services and in software and maintenance agreements relating to the equipment currently used. These activities amount to about $2 million per year. The Vendor is not primarily involved as a supplier of system programming, except for very large systems. It is involved with the system being developed for use by the Clerk's Offices. The Requestor has served as procurement officer and contract manager in these actions. He does not have final decision authority in these matters, as final agency approvals are by the Comptroller or Deputy Comptroller. Also, all of these large purchases must be approved by the BPW, and all computer purchases must be approved by the Department of Budget and Fiscal Planning. It is recognized by both the Requestor and the Deputy Comptroller, however, that his function as procurement officer will involve significant and substantial input in and impact upon these procurements, and that the Vendor will be expected to be a bidder.
This request results from the fact that the Requestor has a younger brother who is employed by the Vendor as a senior systems analyst. His brother has worked for the company since 1968, two years before Requestor began to work for the State (at the Budget Office). He has worked in a Colorado office of the company for most of this time. He is not a high-level manager for the company. He provides systems development services on a project-by-project basis, usually directed at internal company needs. The Requestor indicates that his brother is not involved in sales and has not had duties or projects that involve him in Maryland projects or the Vendor's marketing in Maryland, or its dealings with the Comptroller or other Maryland State agencies. Requestor indicates that he and his brother do not see each other often. He advises that when they do get together or talk, he has not discussed specific issues arising under his job with his brother.
The request presents issues under the nonparticipation provision of §3-101 of the Ethics Law.1 This section provides that officials and employees may not participate in any nonministerial way in any matter in which they or certain listed relatives have an interest or which involves as a party a business entity with which they or any of the relatives has certain relationships. Subsection (a)(2) particularly addresses employment relationships held by the relative. An early Commission Opinion (No. 80-17) addresses several issues regarding application of the Law to relatives. This case involved the Director of the State Retirement Systems Investment Division, whose spouse intended to be employed with a stock brokerage firm. We advised that the spouse's employment would not be covered by the absolute prohibition of §3-103(a), but that the participation provisions of §3-101 would apply to limit the official's involvement in matters in which her firm was involved.
In that Opinion, we considered the concept of participation, basically following the approach of the predecessor law that participation includes involvement through advice, recommendation and other preliminary and staff involvement in addition to the actual and final responsibility for signing a contract or making a regulatory determination. Applied to the Requestor's situation, it is our view that his activities in connection with automation procurements would involve participation as intended by the Law. In evaluating the concept of being involved as a party for purposes of applying the specific provisions of subsection (a), we further advised in Opinion No. 80-17 that the fact that the spouse's firm was one of many in a general population of potential bidders did not automatically mean that every procurement of brokerage services would be within the prohibition. Rather, the prohibition against participation would apply when a procurement reached the stage where the firm became an identified and specific participant in the procurement. Again, we believe that in the situation presented here the Vendor would be involved as a party in matters in which the Requestor would participate, not only with regard to the clerk's office project, but with other anticipated procurements. It has participated in past similar procurements, and is a very large provider of equipment in this field.
We therefore conclude that the strict language of §3-101 would apply to the Requestor's participation in matters involving the Vendor, since brothers are specifically included in the relatives whose activities are covered by the section. This section, however, allows exception to its provisions based upon regulation or the opinion of an advisory body. We have not in the past exercised this authority, and as a general matter we believe that the participation provisions should be broadly applied. In fact, in applying the exception provisions to the strict employment prohibition of §3-103(a), one of the criteria has been consideration of the individual's involvement with the private entity, and particularly that there is no official participation in matters involving the private entity. Where a person actually has duties regarding a private interest or employer we have not allowed exception.
We thus believe as a general matter that participation in matters involving a restricted entity generally in itself negates the kind of remoteness that we think is necessary to meet the statutory criteria that there not be a conflict of interest or appearance of conflict. We recognize, however, that even in applying §3-101, the Legislature believed there could be some circumstances where exception from this provision can be allowed, after our specific review, because the involvements are so tangential that a conflict is unlikely. We believe that this is such a situation. Respondent's brother is not a high-level manager or policy-maker in the Vendor, which is itself a large company. He is not involved in the kind of activity in which the Vendor is engaged in Maryland, and is geographically located at a distant site. Further, he is separated not only from the Vendor's work here but also from regular contact with his brother. Other important factors are that this situation began prior to enactment of the Ethics Law and has existed 20 years without incident, and the fact that complete nonparticipation would leave the Requestor unable to render his State service. We are also advised that the agency believes that participation can be monitored under guidelines established by the agency.
We therefore believe an exception can be allowed pursuant to §3-101 to permit the Requestor to continue his duties as Director of Data Processing in the Comptroller's Office, including involvement in the court project and in procurement actions where the Vendor would be a bidder. We assume written guidelines will be prepared to assure that the practice will continue for Requestor not to be the final decision-maker in management and policy matters regarding these procurements, that evaluation committees will continue to be appointed by the Deputy Comptroller, and that the agency will monitor the situation. The Requestor should also disclose the relationship on Schedule I of his annual financial disclosure statement. Should new facts arise that would suggest a need for further review, this should be brought to our attention.
William J. Evans, Chairman
Rev. C. Anthony Muse
Robert C. Rice, Ph.D.
Barbara M. Steckel
Date: February 21, 1990
1 The strict and absolute bars against certain employment and interest relationships in §3-103(a) of the Ethics Law have as a general matter been viewed as applying directly to the State official or employee only, not to the holdings or employment of relatives. We find nothing in this situation that would require a different approach and therefore do not address this provision further here.