Advisory Opinion No. 2000-8

Application Of The Code’s Conflict Of Interests Provisions To
The Award Of A State Contract

The Honorable Nancy Wyman, State Comptroller, has asked the State Ethics Commission for an advisory opinion regarding the following matter.

The Comptroller, in conjunction with the Departments Of Information Technology and Administrative Services is developing a plan to upgrade the State’s core financial computer systems. As an initial step in the process, each agency will appoint a project coordinator to manage and make final recommendations to the agency heads on all aspects of the project. The Comptroller wishes to know whether, consistent with the requirements of The Code Of Ethics For Public Officials, she may appoint her Director Of Comptroller Information Technology to the position of project coordinator.

Specifically, the project will involve a competitive proposal process for an Enterprise Resource Planning (ERP) software package. It is anticipated that among the companies bidding to provide this package will be Oracle and People Soft. The proposed Project Coordinator will be getting married, in June of this year, to a Senior Director at Oracle. This individual is an internal consultant for the company and does not have, nor will have, any involvement with clients, contracting or ERP software sales. The individual’s compensation, including annual bonuses, is totally separate from and unaffected by the Company’s ERP software sales. The individual also currently owns 722 shares and has an exercisable option on 5,251 shares of Oracle Stock (out of nearly 3 billion outstanding shares). The proposed Project Coordinator owns 100 shares of People Soft (out of nearly 2.5 million outstanding shares).

Based on the above facts, guidance is requesting regarding:

1. Whether the ownership of a nominal amount of shares in a company that will bid on a state project by the Project Director and/or his fiancée is in any way violative of the Code Of Ethics; and

2. Whether the employment of the Project Director’s fiancée by a company that will bid on a state project, in a position that is wholly unrelated to the project, is in anyway violative of the Code of Ethics?

The Code’s conflict of interests provisions are set forth in Conn. Gen. Stat. §§1-85 and 1-86. Pursuant to §1-85, a state employee has a substantial conflict of interests, if required to take an official action which specifically and directly affects the financial interests of the individual, his or her spouse, a dependent child or a business with which associated. Pursuant to §1-86(a), a state employee has a potential conflict of interest, if required to take official action which, either specifically or as a member of a group, affects the financial interests of the individual, his or her spouse, parent, brother, sister, child, spouse of a child or a business with which associated; unless the interest is de- minimis or not distinct from that of a substantial segment of the general public.

As a preliminary matter, the Code’s conflict of interests provisions do not extend to official actions affecting one’s fiancée. For purposes of this Opinion, however, it is assumed the individual will be the state employee’s spouse by the time the ERP contract award decision is made.

1. It is essentially impossible to reasonably predict or attribute any specific effect on either Company’s stock price resulting from the award of the contract at issue. Consequently, the stock ownership of the state employee and his spouse-to-be do not create an impermissible conflict under the provisions of the Code.

2. In pertinent part, the term "business with which he is associated" is defined in the Code to include businesses in which the State employee or an immediate family member is: an owner, the holder of five percent or more of the outstanding stock, a member of the board of directors or an officer. Conn. Gen. Stat. §1-79(a). The term does not encompass the employer of an immediate family member. Given this definition and given the fact that the contract award will not affect the financial interests of the spouse-to-be, there is, again, no impermissible conflict under the Code.

Therefore, there exists no impediment, under The Code Of Ethics For Public Officials, which would prevent the Comptroller from appointing her Director Of Information Technology to the Project Director position in question.

By order of the Commission,

Stanley Burdick,
Chairperson