An advisory opinion has been requested as to whether a Technology Advisor to the Secretary of the Department of Economic and Employment Development (DEED) may pursue post-State employment with a private corporation created by the Secretary to implement a federal technology transfer grant, if the individual was involved in developing the grant project and establishing the corporation. Based on the information provided regarding the development of this program, we advise that employment by the Requestor as proposed would be prohibited by the post-employment provision of the Public Ethics Law.
The Requestor has been employed as Technology Advisor to the Secretary of DEED for two years. This request involves his possible future employment with the Maryland Health Care Product Development Corporation (the Corporation), an entity organized to implement a federal technology transfer program designed to stimulate transition of national industrial capability through application of defense and commercial resources to develop dual defense/private use technologies. After announcement of the program in March 1993, DEED was approached by private sector representatives with a proposal to develop a project for solicitation of funding support. The Requestor was assigned to be a lead DEED participant in the project development. The result was organization of a Regional Technology Alliance including DEED and representatives from the private sector. The Department was a significant and required participant in order to meet the federal requirement that grant funding be to a State government agency rather than directly to a private business entity. The grant request submitted by the Alliance identified the Requestor as one of several key personnel, committing 20 percent of his time to the project. After the grant was awarded the Corporation was set up, its initial Directors included the Secretary, the Requestor and a private businessman representing one of the suburban Maryland participating groups. At a subsequent organizational meeting the Requestor was elected as Secretary.
In July 1994 a cooperative agreement was executed between DEED and the sponsoring federal agency for a project entitled Maryland Health Care Product Alliance Deployment Project. The Agreement, executed on behalf of DEED by the Requestor, provides for the development of a demonstration project to transfer defense-related technologies in the creation of commercially viable new health care products and businesses. The Department is responsible under the agreement for developing and implementing the project, and on a best effort basis for overall project success, and is responsible for outreach to potential Maryland-based Alliance members. The State recipient is also to maintain records establishing costs and ensuring that matching resource requirements are met. This compliance monitoring is an ongoing DEED responsibility. The agreement identifies recipient key personnel who are considered essential to the project, requiring DEED to notify the federal agency of any changes, and prohibiting changes without federal approval. The Requestor is identified as the Project Director.
A grant agreement between DEED and the Corporation to implement the federal grant was executed in October 1994. This agreement specifically refers to and incorporates the Cooperative Agreement between DEED and the federal agency. The grant provides that communications to DEED shall be to the attention of the technology advisor in the Office of the Secretary, and is attested to on behalf of DEED by the Requestor. Subsequent to this agreement, the Requestor indicates that he was involved in maintaining the records of the organization in his capacity as Technology Advisor and was assisting the Chief Executive Officer of the Corporation in the operations of the organization. At the time this issue was presented to the Ethics Commission, in response to Commission staff advice, the Requestor discontinued his roles as Secretary and Chief Operating Officer of the Corporation. He and the agency counsel indicate that to some extent his absence has created problems for the project, which is in danger of missing "key milestones."
This request arises from a proposal that the Requestor be considered for employment with the Corporation, and presents primarily issues under the post-employment provisions of §3- 103(b) of the Ethics Law (Article 40A, §3-103(b), Annotated Code of Maryland, the Ethics Law). This section prohibits a former official or employee from assisting or representing a party other than the State in a matter involving the State for compensation if the matter is one in which the individual participated significantly while an employee. As a general matter, this section has not been interpreted to flatly bar any employment with an entity involved in matters relating to a former agency, or an individual's appearance before the agency. Rather, it looks to identification of particular matters in which the individual was involved in any significant way in the context of their State employment, and forbids assistance or participation as to these on behalf of another party. There is no time limit on this prohibition as to these particular matters.
The general philosophical basis of the provision, at least in part, is the avoidance of "switching sides" and the use for another party of special knowledge acquired in the context of one's State employment. Another goal is to avoid situations where an individual may be seen to be using a State position to create a private employment opportunity. The Law defines specific conduct and participation as prohibited. Applying this prohibition in most situations involves the question of whether the matter is the same matter and whether the person's participation while an employee was significant. In applying the prohibition the Commission has generally viewed participation as including more than final authority or responsibility for a matter. Participation involving personal supervision of the work of others or involvement in a required sign-off or concurrence capacity are activities that have been viewed as significant participation. Providing advice and recommendations as to a matter is also participation.
The Commission has issued several opinions providing post-employment advice.1 One of these directly to the point in the current situation is Opinion No. 81-15. In this request, an individual who had been in charge of a program and developed grant agreements with local government units was advised that the grant to the private entity was the same matter on which she had worked while an employee, and that she was barred by §3-103(b) from subsequent employment with a private subgrantee to implement the grant. We have also considered post-employment situations dealing with privatization arrangements regarding State programs. For example, in the privatization of a DEED program, subsequent employment was permitted for an employee, based on understandings regarding his solely operational duties in his DEED position and his complete lack of involvement in policy or management decisions relating to the privatization and transfer process.
In the situation here, it seems to be clear that the Requestor was significantly involved in this project from the beginning. He was assigned to be DEED's lead representative at the outset by the Secretary. He was an organizer of the Alliance and lead drafter of the grant request to the federal government. He was identified as the Project Director and key personnel, and a signator on behalf of DEED at each stage of the process. He was also an officer of and provided services to the Corporation to the extent that his current disqualification seems to be impacting on the Corporation's functioning. Under these circumstances we must conclude that the Requestor participated significantly in this grant program.
Also, in our view, since the Corporation is organized solely for the purpose of implementing the federal grant to DEED, his future employment with the Corporation assisting or representing it in this activity would be participation in the same matter in which he has been significantly involved as a DEED employee. To attempt to distinguish between "operational" activities and grant activities would involve drawing a line so careful and technical, that it would be almost impossible to distinguish between prohibited and permitted "assistance" under the Law. Given the prior opinions, the facts, and the clear language of the prohibition, we conclude that this is the type of activity that is intended to be barred in §3-103(b), and therefore advise the Requestor and his agency that his subsequent employment with the Corporation would be prohibited by this section of the Law.
Mark C. Medairy, Jr., Chairman
Michael L. May
Robert J. Romadka
April E. Sepulveda
Date: January 11, 1995
1 See Opinion Nos. 92-11, 91-13, 91-2, 90-12, 89-11, 86-24, 85-14, 85-9, 84-33, 83-12, 82-24, 82-17, 82-3, 81-15, and 80-1. Published in COMAR Title 19A.