Ethics Opinion Number 1005-04
Code of Ethics Opinion
(A specific opinion, limited to these facts)
Whether or not it is a violation of the Ethical Principles and Code of Conduct (EP&COC) for an employee who serves on an Evaluation Committee for a Request for Proposal (RFP) for the Purchasing Department to be a former employee of one or more of the companies responding to the RFP?
The University issued a RFP (UK-0386-4) for Multi-Media Rights for all UK media events/activities, including athletics. The RFP is expected to result in a multimillion dollar contract. A seven person Evaluation Committee was appointed to review the responses. One of the committee members has disclosed that he is a former employee of two of the companies responding to the RFP. The committee member further disclosed that (1) he owns no stock in either company, (2) he "cashed in" any funds in his retirement plans, and (3) he will gain nothing financially through a UK contract with either company. The employee's letter disclosing his relationship with both companies is attached as Attachment A.
It should be noted that, procedurally, the Evaluation Committee reviews all of the responding proposals to the RFP and makes recommendations to the Director of Purchasing as to the most responsive proposals (probably the top two or three proposals). The Director of Purchasing negotiates a "final and best" proposal from these responding companies. The University Committee on Press, Radio, and Television and President Todd review the best proposals and make their recommendations. After receipt of this input, the Director of Purchasing notifies the selected respondent. With advice of the Legal Office, Purchasing negotiates a contract with the selected company.
There is no violation of the EP&COC.
Considering this fact situation, possible applicable sections of the Ethical Principles and Code of Conducts include the following:
- Under Conflict of Interests the document states, "Confidence in the University of Kentucky is put at risk when the conduct of University members does, or may reasonably appear to, involve a conflict between private interests and obligations to the University."
- Further, under Conflict of Interests, it states: "It is essential that potential conflicts be disclosed and reviewed by the University. After disclosure, the University can make an informed judgment about a particular activity and require appropriate oversight, limitations, or prohibitions in accord with this policy. It is important to remember that each relationship is different, and many factors often will need to be considered to determine whether a conflict of interest exists."
- Under the section on Financial Advantage, the EP&COC states: "Members of the University community must exhibit personal integrity, honesty and responsibility in all actions. Official position or office shall not be used to obtain financial gain or benefits for oneself or members of one's family or business associates. Any action that creates the appearance of impropriety should be avoided. Purchases and contracts shall not be made with an employee of the
University of Kentucky for any item of supply, equipment, or service, nor may an employee have any interest, directly or indirectly, in any purchase made by the University of Kentucky. An indirect interest may be defined as a real or perceived use of a University position or office with respect to a purchase or contract, leading to financial or other benefits to the individual or a member of his or her family. An indirect interest includes situations where a business owned or controlled by a family member does business with the University area where the employee is assigned."
Since the committee member is not presently employed by either company, has no stock interest in either company, and has no benefits with either company, the Committee concludes that there is no ethics issue with his serving on the Evaluation Committee.
The nature of a conflict of interest is that a decision-maker would tend to make a decision in favor of a party because the decision-maker has some financial interest or some financial gain for her/himself or a family member. Thus, the results would be that a decision-maker would make a decision on behalf of her/his own interest and thus a decision that is contrary to the University's interest. In the facts presented, there is simply no evidence of any financial interest on behalf of the decision-maker that would suggest that he might make a decision that is not in the best interest of his present employer, the University.
While intended to eliminate unethical and inappropriate behavior, the EP&COC document was not intended to make the University's processes less effective. When there are less than a dozen major companies that are qualified to bid on a significant (multimillion dollar) contract, it is to the advantage of the University that persons who have experience working at such companies serve on an Evaluation Committee. Persons with expertise in the field were employed by UK for that exact experience. These persons and those who work with the party to a contract are the best persons to serve on evaluation committees. The Committee does not believe that there are any ethics concerns with the facts presented.
The Committee refers to Ethics Decision # 1001-04. In that case, the issue concerned RFP evaluation committee members who were former employees of a company bidding on a new super-computer. We concluded that a former employee with no interests (financial benefits) with the former employer could serve and vote on the matter; we concluded that former employees with interests (stock, retirement plan benefits) with the former employer could serve on the committee, but could not vote. The decision in this present case is totally consistent with our previous decision. We do not believe that actions of the employees in one department (athletics) should be held to a different and higher ethics standard than the actions of employees in another area (Information Technology).
Finally, the Committee notes that this one Committee member is not the final decision maker. As a member of the Evaluation Committee, he is one of six members that vote on the top two or three proposals. Then, as a member of the University Committee on Press, Radio and Televisions, he is an ex-officio member and one of eight voting members of that Committee.
Recommended Course of Action
The Committee member should serve on the Committee, be a full participant in the process, and vote on the final decision for awarding the contract.