New York State
Ethics Commission


Advisory Opinion No. 91-5: Interpretation of the interplay between subdivisions 4 and 7(a) of §73 of the Public Officers Law which govern a State officer or employee bidding on a contract to provide goods and services to a State agency.

Introduction

The following advisory opinion is issued in response to a written inquiry from the New York State Office of Mental Retardation and Developmental Disabilities ("OMRDD") as to application of subdivisions 4 and 7(a) of §73 of the Public Officers Law to the circumstance where a State employee submitted a bid to OMRDD for a contract to be awarded after public notice and competitive bidding.

Pursuant to the authority vested in the New York State Ethics Commission ("Commission") by §94(15) of the Executive Law, the Commission hereby renders its opinion that §73(7)(a) of the Public Officers Law, which restricts the receipt by a State employee of compensation for services rendered in relation to a matter before a State agency in connection with a contract for the sale of goods or services, does not prohibit a State employee from submitting a bid on a contract to provide goods or services to a State agency.

Background

The New York State Institute for Basic Research in Developmental Disabilities ("IBR"), a research facility of OMRDD, sought to contract for repair of centrifuges at IBR.(1) Notice was sent by IBR to at least five vendors and the bid was advertised in the "New York State Contract Reporter" on April 9, 1990.(2) Bids were received from [Company 1], [Company 2] and [Company 3].(3) The contract was awarded to the lowest bidder, [Company 1], a company whose sole shareholder is a full-time employee of the State University of New York at Stony Brook.(4) The bid was signed by the employee in his capacity as President of [Company 1].

[Company 2], the next lowest bidder, objected to the award of the contract to [Company 1] based upon the above-mentioned provisions of §73(7)(a) of the Public Officers Law.(5) OMRDD argues that §73(4) of the Public Officers Law allows a State employee to sell goods or services to a State agency so long as such goods or services are provided pursuant to an award of a contract after public notice and competitive bidding and that, therefore, the contract was properly awarded to [Company 1]. Thus, the inquiry presented by OMRDD requires that the Commission interpret and apply both subdivisions 4 and 7(a) of §73 of the Public Officers Law.

Section 73(4) of the Public Officers Law states, in pertinent part, the following:

(a) No . . . state officer or employee . . . or firm or association of which such person is a member, or corporation, ten per centum or more of the stock of which is owned or controlled directly or indirectly by such person, shall (i) sell any goods or services having a value in excess of twenty-five dollars to any state agency . . . unless such goods or services are provided pursuant to an award or contract let after public notice and competitive bidding.

Subdivision 7(a) of §73 of the Public Officers Law provides, in pertinent part, the following:

No statewide elected official, or state officer or employee other than in the proper discharge of official duties . . . shall receive, directly or indirectly, or enter into any agreement express or implied for, any compensation, in whatever form, for the appearance or rendition of services by himself or another in relation to any case, proceeding, application or other matter before a state agency where such appearance or rendition of services is in connection with:

(i) the purchase, sale, rental or lease of real property, goods or services, or a contract therefor, from, to or with any such agency; . . .

Subdivision 7(a) of §73 was added to the Public Officers Law as part of the Ethics in Government Act ("Act") of 1987, which established strong ethical standards to govern the conduct of public officers and employees.(6) According to the Governor's Approval Message of August 7, 1987, the Act provides for "restrictions on dealings with government, which will bar public officers and employees from . . . doing business with the State in the absence of competitive bidding." (emphasis added.)

Discussion

The Commission must reconcile the restrictions of subdivision 7(a) of §73, which prohibit a State employee from appearing or rendering services for compensation before a State agency in relation to any matter in connection with the sale of goods or services to a State agency, with subdivision 4.

It is a fundamental rule of statutory construction that a statute or legislative act is to be construed as a whole and that all parts of an act are to be read and construed together to determine the legislative intent.(7) The rules of statutory construction also provide that, in general, all the provisions of a statute must be harmonized with each other as well as with the general intent of the whole statute. Effect and meaning must, if possible, be given to the entire statute and every part and word thereof.(8) Thus, it is frequently held an entire act must be taken into consideration and read so that each word therein will have meaning and will not cancel and render meaningless another word or sentence.

In light of the foregoing, the Commission determines that subdivisions 4 and 7(a) of §73 of the Public Officers Law are to be read as complementary, rather than contradictory. It is clear that the Legislature, when it added the present language of §73(7)(a) to the Public Officers Law, intended to provide specific restrictions on State employees doing certain business with the State. It is equally evident that, in enacting §73(7)(a), the Legislature did not intend to render §73(4) meaningless. Therefore, the Commission has sought to reconcile these two subdivisions in such a way as to recognize the Legislature's intentions.(9)

Subdivision 4 of §73 of the Public Officers Law permits State officers and employees and corporations in which such individuals own or control 10 percent or more of the stock to sell goods or services to the State where there has been an award of a contract after public notice and competitive bidding.

Subdivision 7(a) of §73 of the Public Officers Law bars a State employee from receiving compensation for appearing or rendering services before a State agency in relation to any case, proceeding, application or other matter where such an appearance or rendition of services is in connection with the sale of goods or services or a contract therefrom to such agency. This subdivision of §73 is concerned with compensated appearances and the rendition of services in relation to obtaining or representing one to obtain sales of goods or services to State agencies or contracts for such purpose.

When the two subdivisions are read together, and, in order to harmonize their meaning and to still give effect to their intent, subdivisions 4 and 7 of §73 permit a State officer or employee to sell goods or services to the State where there is competitive bidding, provided that the State officer or employee does not make a prohibited compensated appearance or render any services on behalf of himself or another before a State agency in order to secure the contract. This prohibition would preclude, for example, a compensated personal "appearance" by a State employee at a bidder's conference or compensation for submitting the actual contract bid or for rendering services for compensation in the preparation of such a bid.(10) The Commission concludes that a State officer or employee may submit a bid to a State agency in those cases where the contract is to be let after competitive bidding, provided that the State officer or employee does not receive compensation either for the submission of the bid or its preparation or any personal participation in the presentation of the bid/proposal to the awarding agency personnel.

The Commission has also, consistent with the rules of statutory construction, examined other sections of the Ethics in Government Act of 1987, to determine the Legislature's intent in enacting §73(7)(a). Section 18 of the Act provides that the provisions of §73(7)(a) shall not apply to the appearance or rendition of services before a State agency of an attorney, who is also a State employee covered by the restrictions, who had been involved in such a matter prior to January 1, 1988, if the substitution of new counsel would impose a substantial hardship on the client. Section 18, by its reference to attorneys, implies that §73(7)(a) was intended to prohibit compensated appearances and rendition of services before the State agencies of individuals acting in a representative capacity and that §73(7)(a) was not intended to curtail the rendition of services by State officers and employees before State agencies after an award after notice and competitive bid.(11)

It is important to note that §73(7)(a) only prohibits compensated appearances and the rendition of services in regards to the obtaining of the sale and the submission of the bid to a State agency. Section 73(7)(a) does not prohibit compensation to a State officer or employee who may perform or be retained to perform services pursuant to the contract after it has been awarded through the competitive bidding process, provided that the compensation does not relate back to any appearances or services performed in the obtaining of the contract.

In the instant case, the IBR advertised in the "New York State Contract Reporter" for bids on a contract to repair centrifuges at IBR. On April 30, 1990, [Company 1], a company whose sole shareholder is a full-time employee of the State University of New York at Stony Brook submitted a bid on the contract. The employee provided OMRDD with an "Agency Proposal for Furnishing Supplies" which contained a detailed explanation of the bid and signed the Proposal in his capacity as President of [Company 1]. There is no indication that the State employee was compensated for the submission of the bid to OMRDD which, if so, would have been a prohibited appearance and a violation of §73(7)(a) of the Public Officers Law. [Company 1] was awarded the contract because its bid was $5,000 lower than the closest competitor. The State employee may now perform services pursuant to the contract and receive compensation for such services without violating the prohibitions of §73(7)(a).

Notwithstanding the fact that §73(4) may be satisfied, an award of a contract to a State officer or employee after public notice and competitive bidding may violate the provisions of §74 of the Public Officers Law. Section 74 is concerned with both actual conflicts of interest and their appearance. Thus, an award of a contract by a State agency after public notice and competitive bidding to an employee of the same State agency could raise a §74 appearance issue, although §73(4) has been technically satisfied.(12) In the present case, no such inference of an appearance of a conflict is present, as OMRDD and SUNY at Stony Brook are two different State agencies. There is, also, no indication that the State employee in question used his position at Stony Brook to obtain the contract, or that his ability to perform the contract will in any way impair his ability to fulfill the responsibilities of his State position.

Any State employee, who after a public bid, receives a contract for services, must perform those services on his or her own time and without the use of any State resources or property (except for those provided by the contracting State agency as it would provide to any successful bidder). For example, in this instance, the individual from [Company 1] may not utilize State University resources or property or time to perform the services under this contract. Besides the potential for other statutory violations, the individual would be in violation of §74 of the Public Officers Law were he to do so.

Conclusion

The Commission concludes that the award of a contact for the repair of centrifuges by OMRDD to [Company 1], a company whose President is a full-time State employee who signed the contract bid, was proper, as §73(4) of the Public Officers Law permits State employees to sell goods or services to the State if the contract is awarded after public notice and competitive bidding; and, it appears that the State employee received no compensation for any appearance or rendering of services to obtain the contract, that would otherwise be prohibited by §73(7)(a).

This opinion, until and unless amended or revoked, is binding on the Commission in any subsequent proceeding concerning the person who requested it and who acted in good faith, unless material facts were omitted or misstated by the person in the request for an opinion.

All concur:

Joseph M. Bress, Chair

Angelo A. Costanza
Norman Lamm
Donald A. Odell, Members

Dated: November 15, 1990


Endnotes

1. Pursuant to §13.17(b) of the Mental Hygiene Law, IBR is designated as an institute for the conduct of medical research and other scientific investigation directed towards furthering knowledge of the etiology, diagnosis, treatment and prevention of mental retardation and developmental disabilities.

2. The notice that appeared in the "New York State Contract Reporter" provided the following:

09 Equipment, Service and Installation

Description: Sorvall centrifuges - full service maintenance agreement 5RCB, 4 each, plus additional charges.

Proposal due: 04/30/90, 10:00 a.m.

Contract Term: One year with 3 one year renewal options

Location: Institute for Basic Research

3. The bids were as follows: [Company 1], $16,663.00; [Company 2], $21,130.00; and [Company 3], $27,223.00.

4. According to OMRDD, the only known relationship between OMRDD and SUNY Stony Brook is that the medical school at Stony Brook may place interns at OMRDD facilities.

5. According to OMRDD, [Company 2] has not questioned whether there was proper public notice of the bid or that [Company 1] actually did submit the lowest bid.

6. Chapter 813 of the Laws of 1987.

7. See McKinney's Statutes §97.

8. See McKinney's Statutes §98.

9. As the courts of New York have stated, all statutes should be so construed, if possible, by a fair and reasonable interpretation, as to give full force and effect to each and all of them. Bull v. New York City Railroad Co., 192 N.Y. 361 (1908). Where there are two statutes relating to the same subject matter, they should be interpreted, if at all possible, so that both may be effective. Pelham v. North Pelham, 237 N.Y.S.2d 253, 38 Misc. 2d 234 (1962).

10. For a full discussion of the issue of when the submission of a contract proposal becomes a prohibited "appearance" under §73 of the Public Officers Law, see Commission's Advisory Opinion No. 89-7.

11. Although §18 of Chapter 813 referred to attorneys, the Commission recognizes that individuals serving in other capacities may be barred by §73(7)(a) from appearing or rendering services before State agencies to obtain contracts, etc., for themselves or others.

12. For example, if [Company 1] was owned by an OMRDD employee involved or otherwise connected to the bid process on behalf of the State agency, or if the spouse of the owner of [Company 1] was an OMRDD employee involved in the bid process on behalf of the State agency, or if any State officer or employee attempted to use his or her State position to secure the contract for [Company 1], potential violations of §74 would occur. For example, §74(3)(f) prohibits conduct giving the impression that a person can improperly influence him or unduly enjoy his favor in the performance of his official duties, or that he is affected by the kinship of another; §74(3)(g) says that a State officer or employee should abstain from making personal investments in enterprises which he has reason to believe may be directly involved in decisions to be made by him or which will otherwise create substantial conflicts between his duty in the public interest and his private interest.



URL: http://www.nysl.nysed.gov/edocs/ethics/91-05.htm