Advisory Opinion No. 2002-21

Application Of Conn. Gen. Stat. §1-84(i) To Compensation
Agreement Of Director Of Office Of Workforce Competitiveness

A recent examination of the records of the Office of Workforce Competitiveness by the Auditors of Public Accounts ("OWC") raised a question regarding the application of Conn. Gen. Stat. §1-84(i) to the compensation agreement of the Director of the OWC. That provision of the Code Of Ethics For Public Officials requires contracts between the State of Connecticut and a state employee or public official to be awarded through an open and public process. Subsection 1-84(i) also prohibits an executive head of an agency from entering into "any contract with that agency." In order to determine the application of this language to the OWC, it is necessary to review the establishment of that Office, as well as the selection of its Director.

In April of 1999, Governor Rowland issued Executive Order No. 14, which established the Office of Workforce Competitiveness and appointed Mary Ann Hanley as its Director. The Governor had announced his plans as early as mid-March of 1999, when he issued a press release naming Ms. Hanley as his Workforce Competitiveness Advisor. Then, in July of 1999, the Governor issued a second Executive Order, No. 14-A. This second Executive Order was identical to the first, except that Ms. Hanley was not specifically named as the Director. In May of 1999, Ms. Hanley and the Office of Policy and Management ("OPM") entered into a one-year personal services agreement, in which Ms. Hanley agreed "to coordinate development of a statewide plan to implement the federal Workforce Investment Act of 1998." Ms. Hanley submitted invoices to and received payments from OPM during the contract period. Although the contract documents do not mention the OWC, it appears that Ms. Hanley’s duties included operating as Director of the OWC. See Attorney General’s Opinion letter, dated May 11, 2000, to Mary Ann Hanley, Director of the OWC.

During the 2000 legislative session, the General Assembly passed a bill that established the OWC as a separate statutory entity. See P.A. 00-192, effective July 1, 2000. Thereafter, Mary Ann Hanley and the OWC entered into a personal services agreement. The agreement was signed on behalf of the OWC by a Deputy Commissioner of the Department of Administrative Services ("DAS"), apparently in response to an opinion of the Office of the Attorney General that the OPM Secretary did not have the authority to sign contracts for the OWC. See Memorandum to DAS Commissioner Barbara Waters from Deputy OPM Secretary Pamela Law, dated August 25, 2000. The scope of work to be performed under this second personal services agreement was substantially the same as under the earlier agreement with OPM. At no time was the selection of the OWC Director put out to a competitive bid.

Turning first to the issue of the application of the §1-84(i) ban on any contracts between an agency and its executive head, this prohibition was added by the General Assembly in 1996, after a company controlled by the head of the State’s economic development agency had contracted with that agency’s tourism division. See Public Act No. 96-11, section 1. Although the legislative history is sparse, it appears that the restriction was specifically intended to prevent use of office for business purposes once the executive head of an agency has been established. There is no reference in the legislative record to prohibiting the initial hiring of an agency head under a personal services agreement. See Connecticut General Assembly House Proceedings, 1996, Vol.39, Part 2, pp.588-591, and Connecticut General Assembly Senate Proceedings, 1996, Vol. 39, Part 4, pp.1197-1205. Even acknowledging that Ms. Hanley had effectively assumed the position of OWC Director prior to the statutory recognition of the OWC, and was compensated for that work under a contract with OPM, her contracts with the OWC have been limited to personal service agreements to act as that agency’s head. Therefore, without clear legislative intent to the contrary, a head of an executive agency may enter into an employment agreement with his or her agency, which agreement establishes him or her as the agency head.

Subsection 1-84(i) also contains a requirement that any contract between the State and a public official or state employee, other than a contract of employment as a state employee, must be awarded through an open and public process, including prior public offer of the contract opportunity and subsequent public disclosure of the bids received and the ultimate contract awarded. That section contains one exception to this "open and public process" requirement: "Nothing in this subsection shall be construed as applying to any public official who is appointed as a member of the executive branch or as a member or director of a quasi-public agency and who receives no compensation other than per diem payments or reimbursement for actual or necessary expenses, or both, incurred in the performance of his duties unless such public official has authority or control over the subject matter of the contract." At the time that Ms. Hanley was contracting with the State to accept the position as OWC Director, she was also a public official serving as a member of the Board of Directors of the Capital City Economic Development Authority ("CCEDA"). Ms. Hanley has indicated that she receives no compensation for that position, and that the CCEDA has no authority or control over the OWC. Therefore, her service on the CCEDA Board does not trigger the application of §1-84(i) to her hiring as the OWC Director.

Turning to an analysis of the hiring process, it is essential to take cognizance of the Code’s definitions of "Public official" and "Member of an advisory board." "Public official" includes "…any person appointed to any office of the…executive branch of state government by the Governor…"; but specifically excludes advisory positions. Conn. Gen. Stat. §1-79(k). "Member of an advisory board" includes "…any individual (1) appointed by a public official as an advisor…(2) who receives no public funds…and (3) who has no authority to expend public funds or to exercise the power of the State." Conn. Gen. Stat. §1-79(h).

Applying these definitions, it is clear that when Ms. Hanley entered into the original employment agreement with OPM in May, 1999 she was not yet a public official by virtue of her service as the Governor’s Workforce Competitiveness Advisor, but was functioning as an advisor within the meaning of §1-79(h). Therefore, this initial agreement did not have to comply with the provisions of §1-84(i).

When Ms. Hanley entered into subsequent annual personal service agreements, she was a "Public official" by virtue of her paid position as the Director of the OWC. However, these subsequent agreements do not constitute new contracts but, rather, were routine modifications of the initial May, 1999 personal services agreement. As noted supra, Ms. Hanley’s duties have not significantly changed from year to year; nor has her hourly rate of compensation. While the number of hours has been modified (e.g., increasing 10% from 1999 to 2000) this amendment alone is insufficient to turn the annual renewals of Ms. Hanley’s personal services agreement into new contracts. As the Commission has previously held, "A routine modification of a contract, making changes which are not seriously inconsistent with the original contract, does not appear to be ‘entering into a contract’ as that term is used in subsection 1-84(i), General Statutes." State Ethics Commission Advisory Opinion No. 81-2. 42 CLJ 39, p. 10 (3/24/81). Therefore, consistent with this precedent, the routine renewals of Ms. Hanley’s employment agreement did not require compliance with §1-84(i).

This conclusion is not only consistent with contract law and Commission precedent, it is consistent with common sense. Subsection 1-84(i) was intended to insure that state contracts for goods and services are openly and fairly awarded. This Code provision was not intended to require that the Governor go through a process of prior public offer before appointing his agency heads.

By order of the Commission,

Rosemary Giuliano
Chairperson