OPINION NO. 99-05
A request for advice has been submitted as to whether and how the post-employment and procurement ethics provisions of the Law apply to the possible employment by the Chief of Special Projects in the Department of General Services with an Energy Service Company that is a bidder on and possibly a vendor under an indefinite delivery contract in the energy performance program. We advise that as described and assuming the Requestor properly disqualifies himself from certain aspects of these transactions, that the procurement ethics limitations of §15-508 of the Ethics Law would not bar a new employer from participating in this program, but that in view of his past participation, constraints on his particular assignments for a new employer would result from application of the Ethics Law's post-employment restrictions (§15-504(b)).
The Requestor is a manager in the Division of Facilities Planning, Engineering, and Construction in the Department of General Services. He works on the agency's Energy Performance Projects and oversees the monitoring of energy consumption bills and related aspects of the energy performance contracts. The Energy Performance Project is a DGS-managed program designed to implement comprehensive energy efficiency and savings by assisting State agencies in achieving mandated reduction in energy consumption. The basic process entails a competitive procurement for an Indefinite Delivery Contract (IDC) through which up to six Energy Services Companies (ESCO) are selected to be on a "short list" from which assignments of projects identified by various agencies are made by the DGS. When an assignment is made, a vendor prepares a proposal for a feasibility study for the particular facility. Subsequently an agreement is executed with the vendor and the feasibility study (Phase I) is completed with the expectation that the vendor and DGS will subsequently enter into a contract to implement the actions identified in the feasibility study for a negotiated price (Phase II). There are thus three procurement-type transactions relating to any given project-the initial qualifying RFP resulting in the IDC and selection of the "short list," the proposal and agreement for the Phase I feasibility study when a particular project is assigned to a vendor, and the agreement for the Phase II implementation.1 Board of Public Works approval is required for all three of these transactions.
The energy performance program is in the second stage of operation, having been initiated with an RFP in 1997 that led to several projects, and which expired in February 1999. A second round of pre-qualification for a new IDC is under way based on a November 1998 RFP. The Requestor is the key agency manager responsible for the Energy Performance Contract Program. He was significantly involved in development of the initial IDC and in monitoring and managing the projects developed under it. He was also responsible for generation of the RFP materials for the current RFP. There were several qualifying bids which are under evaluation, all either large companies or subsidiaries of large utility companies. Up to six will be qualified.
The Requestor has asked for advice because he is considering leaving State service and given his experience in the energy efficiency field, would like to consider employment with an energy service company, possibly one of the vendors involved in past projects or likely to be qualified under the current procurement. The request thus presents issues under the three Ethics Law provisions that arise regarding State employees who leave or are planning to leave State service (State Government Article, Title 15, Annotated Code of Maryland). The first is the nonparticipation provision in §15- 501 of the Law. This section prohibits an employee from participating in any matter in which he has an interest or which involves as a party an entity with which he is negotiating or has an arrangement regarding prospective employment. This would include a situation where the Requestor has applied for employment, for example. Therefore the Requestor may not participate in matters where he has applied to be employed by a proposed vendor.
The second provision potentially applicable here is the procurement ethics provision in §15- 508 of the Law. This section bars an entity or individual who assists an executive unit in drafting specifications, an invitation for bids or a request for proposals from submitting a bid or proposal for that procurement, or assisting another person directly or indirectly, who is submitting a proposal for that procurement. Though impacting primarily on private individuals and entities who are involved in defining an agency's needs in the context of a procurement, this provision also has implications for State employees who are involved in specification or RFP preparation tasks as employees and then leave the State to become employees of private entities that are or expect to be involved in submitting a bid or proposal on the procurement. Basically, the result of this provision is that if a State employee becomes an employee of a private company at all (whether or not he proposes to participate for the new employer in the proposal/bid), then the company is excluded from any involvement in bidding on a procurement in which the employee was involved as described in the Law.
In our view application of the specification assistance prohibition of §15-508 to the Energy Performance Contract process would impact all three of the transactions involved in any given project. More specifically, in the situation here the Requestor assisted DGS in preparing the Request for Proposals for the energy performance IDC that is ongoing, and had he been employed by any of the vendors prior to submission of their IDC bid, §15-508 would have applied to bar the vendor from being involved as a bidder. As it is clear from the facts here, however, that the proposals of the vendors involved have already been submitted, prior to a time when the Requestor would become an employee, we conclude that the §15-508 bar could not apply to exclude a vendor from involvement in the main IDC contract.
Each of the vendors that would be qualified in the IDC selection process and be on the short list, however, would eventually be assigned a project and would (apparently within a short time frame, possibly 68 weeks) be preparing and submitting a proposal that would be the basis of a contract for its performance of the Phase I feasibility study part of the project. As to any of these projects, the Requestor will have been involved through the original IDC procurement in defining the requirements for the feasibility study and possibly in some part of the Phase I preproposal process. If he were to be involved as manager of the Energy Performance program in selecting the vendor for assignment of a particular project, and were to become an employee of the vendor while a Phase I proposal was pending and prior to its submission, then we believe that §15-508 would apply to exclude the vendor from proposal preparation and submission. Thus, in our view, if a vendor is to be involved as a qualified provider on the short list in submitting a Phase I proposal, this section would have the effect of restricting the Requestor from employment opportunities with a particular vendor during the 68 week period when an assignment has been made and the proposal is pending.
As discussed above, the Energy Performance Contract process envisions a subsequent contract for implementation of the energy conservation measures identified in the feasibility study. This later Phase II work is done pursuant to a separate contract document that reflects the particular circumstances and cost aspects relating to a particular facility. The contract includes provisions for implementation, auditing and between 1015 years of maintenance at a total project cost usually substantially higher than the initial phases of the project. The specifications for the project implementation Phase (the detailed description of the work to be done) are generated by the vendor as part of its scope of work under the Phase I agreement.
It appears in our view that these specifications are being developed more or less independently of the very beginning IDC procurement and involve a particularized detail that separates them from the specification prepared in either the IDC or the Phase I proposals. In essence, the review of the Phase I work product and negotiations about the planned constitute the specifications for the Phase II implementation. We therefore believe that although Requestor's involvement in either of these earlier transactions would not constitute specification assistance to bring §15-508 into play if he were to become an employee of the vendor at some time during the process of the project, this section could apply during the period of time after Phase I and while Phase II is being negotiated. Thus a vendor employer would not be excluded by this section from submitting its specifications for implementation by the fact of Requestor's employment in itself, unless the Requestor was involved in some significant way in the decision to accept the Phase I report and definition of the Phase II specifications.
The remaining question for the Requestor is thus application of the third Ethics Law provision, the post-employment limitation of §15-504(b) of the Law. This section of the Law prohibits a former employee from assisting or representing a party other than the State in a matter involving the State if the former employee participated significantly in the matter as part of his official duties. As a general matter, this section has not been interpreted to flatly bar any employment with an agency contractor or entity involved in a matter relating to the former agency, or the individual's working on matters or appearing before the former agency. Rather, it looks to identification of particular matters in which the individual was involved in any significant way in the context of their State service, and forbids assistance or representation as to these matters on behalf of another party. Applying this prohibition in most situations involves the question of whether the matter is the same matter and whether the person's participation while an employee was significant. From an Ethics Law perspective this section is different from §15-508 as its primary focus is on the actions of the former employee rather than those of the vendor.
The Ethics Commission has issued several opinions providing post-employment advice, particularly regarding the concept of a matter. In these and in related participation provisions in the Ethics Law (§15-501), this term has been interpreted (consistent with the approach of the Commission's predecessor agency, the Board of Ethics) to include any proceeding, application, submission, request for ruling or other determination, contract, claim, case or other such particular matter (Opinion No. 97-13). We have also, taking account of substantial federal case law relating to very similar federal requirements, considered whether a matter involves the same basic facts, related issues, the same or related parties, the time elapsed, the same confidential information, and the continuing existence of an important government interest (see Opinion No. 97-11). In this situation we believe it is clear, as noted above, that the Requestor has been significantly involved in DGS activities relating to the Energy Performance Contract program. He has been involved in specification drafting for both RFP's, has been a major player in the proposal evaluation process, and has been the monitor as to projects developed under the initial IDC.
Given the analysis discussed above regarding the IDC process and the references in the contractual documents it would appear that the entire effort is a matter anticipated and intended to be undertaken under the IDC program. Even the Phase II effort, though separately negotiated and involving facility-specific identified activities, is contemplated as part of the original agreement. Since the Requestor participated significantly in developing the IDC for both 1997 and 1998, we advise that he is barred under §15-504(b) from assisting it in any way on projects that arise from the IDC currently under procurement or the original IDC developed in 1997. This would include any project submitted to DGS and assigned to a vendor pursuant to its inclusion in the program, and would limit his ability to assist in any way in such a project at any time. Assuming that the timing of Requestor's employment with a vendor in relation to the various procurement transactions under this program allows his employment without application of §15-508 to disqualify the vendor, he would be limited by the post-employment prohibition only as to the particular projects arising from these two IDC's. He could work on federal projects, activities involving private entities, or on projects involving Maryland State or local facilities not being funded or processed under the Energy Performance Contract program with which he has been involved.
Charles O. Monk, II, Chair,
Dorothy R. Fait,
April E. Sepulveda
Date: August 27, 1999
1 Note that though the Phase II work is done pursuant to a later contract document that reflects the particular circumstances and cost aspects relating to a specific facility, the IDC anticipates this later effort, as the audit, engineering, construction and maintenance functions identified in the title are Phase II activities.