Request By:
Dr. Dennis G. Lacy
Assistant Superintendent
Warren County Public Schools
806 Kenton Street
Bowling Green, Kentucky 42101
Opinion
Opinion By: Steven L. Beshear, Attorney General; Robert L. Chenoweth, Deputy Attorney General
You have asked the Office of the Attorney General for some advice regarding the conflict of interest provision of the new Model Procurement Code. Your question is whether your school may continue to do business with a school supply firm since the person who owns the school supply firm is married to one of the school system's employees. We believe the answer is in the affirmative. This law prohibits certain actions of individuals employed by a local public agency. The law does not declare with whom a local public agency (school district) may or may not do business.
Two sections of the Model Procurement Code must be considered. The first if 45A.445. Subsections (4) and (6) are particularly germane to our consideration and read as follows:
"(4) 'Financial interest' shall mean:
(a) Ownership of any interest or involvement in any relationship from which, or as a result of which, a person has, within the past three (3) years, received or is presently or in the future entitled to receive more than one thousand dollars ($1,000) per year, or its equivalent; or
(b) Ownership of more than a ten percent (10%) interest in any business; or
(c) Holding a position in a business such as an officer, director, trustee, partner, employe, or the like, or holding any position of Management.
(6) 'Immediate family' shall mean a spouse, children, grandchildren, parents, grandparents, brothers and sisters, and such other relatives as designated by the local public agency."
The other section is KRS 45A.455, specifically subsection (1) which reads:
"(1) It shall be a breach of ethical standards for any employe to participate directly or indirectly in any proceeding or application; request for ruling or other determination; claim or controversy; or other particular matter pertaining to any contract, or subcontract, and any solicitation or proposal therefor, in which to his knowledge:
(a) He, or any member of his immediate family has a financial interest therein; or
(b) A business or organization in which he or any member of his immediate family has a financial interest as an officer, director, trustee, partner, or employe, is a party; or
(c) Any other person, business, or organization with whom he or any member of his immediate family is negotiating or has an arrangement concerning prospective employment is a party. Direct or indirect participation shall include but not be limited to involvement through decision, approval, disapproval, recommendation, preparation of any part of a purchase request, influencing the content of any specification or purchase standard, rendering of advice, investigation, auditing, or in any other advisory capacity."
As we view the above provisions of the Model Procurement Code, what is prohibited as concerns the school employee, is participation, either directly or indirectly, in the procurement function relative to any items sold to the school by the school supply firm owned by the spouse. Note the scope of "direct or indirect participation" as spelled out in KRS 45A.455(1)(c), above. If the school employee has no involvement in any proceedings or matter regarding the procurement from the school supply firm by the school, we see no reason for any problems and certainly not a violation of the code which would cause the levying of punishment by a fine of not more than five thousand dollars ($5,000) or by imprisonment for not more than one (1) year or both, or the dismissal of the employee. See KRS 45A.990(7), copy attached. The prohibition goes to the school employee, not the school district.
If we may be of further assistance to you concerning this matter, please do not hesitate to contact us.