04.01
OPINION NO. 04-01
The Chair of the State Information Technology Board (hereinafter "Board" or "SITB") has asked whether he may remain a member of the Board if an information technology corporation he established in 1992 is a subcontractor on a recently awarded information technology contract with the State Department of General Services. For the reasons set forth below, the Requestor's continued service on the Board is not permissible under §15-502(b) of the Maryland Public Ethics Law, Md. Code Ann., State Gov't Title 15 (Supp. 2003) if his corporation is a subcontractor on the State contract, and further, an exception cannot be applied to allow the activity.
The SITB was created by statute in 1994 to provide advice and counsel in the development of an information technology master plan for the State (Chapter 493, Acts of 1994). The current law, §3-407, Md. Code Ann., State Fin. & Proc. Title 3 (Supp. 2003) provides for a thirty-four (34) member board consisting of thirteen (13) ex-officio members representing the Secretary or the Secretary's designee from principal State departments, including the Department of General Services ("DGS"). Additionally, there are representatives from the Maryland House of Delegates, the Maryland Senate, the Association of Community Colleges, the Maryland Independent College and University Association, and the Maryland Association of Public Library Administrators. The Chief Judge of the Court of Appeals also appoints a representative of the Judicial Branch.
The Governor is also required to appoint six individuals who are "members of the public with significant information technology experience" and five individuals who are "representatives from information technology companies or associations with expertise in information technology or electronic commerce." See §§3-407(a)(2)(ii) and (ix). The Board was placed in the Department of Budget and Management ("DBM") and given statutory duties to (1) Provide advice and counsel to the Chief of Information Technology in the development of the information technology master plan; (2) Study existing and emerging Internet and information technology; (3) Develop standards and make recommendations concerning Internet-based commerce; (4) Develop standards and make recommendations concerning Internet user privacy; (5) Make recommendations concerning Internet-based crime; (6) Make recommendations concerning the deployment of Internet-based applications and services for State government and educational institutions; and (7) Provide advice and counsel to the Chief of Information Technology on such other matters as the Chief may request. See §3-409.
DBM's Office of the Chief of Information Technology (hereinafter "Chief") was also created by legislation (§3-410 Md. Code Ann., State Fin. & Proc. Title 3 (Supp. 2003)). The Chief is responsible to the Secretary of DBM for "developing, maintaining, and enforcing statewide information technology standards, policies, and procedures." The Chief is also responsible for "developing and maintaining a statewide information technology master plan that will be the basis for the management and direction of information within the Executive Branch of State government." The Chief provides technical assistance and advice to the Secretary and units of State government concerning information technology matters. See §3-410(d).
The Requestor was appointed to the SITB by the Governor in March 2003 to complete a term expiring June 30, 2003. He was subsequently re-appointed to the three-year term beginning July 1, 2003 and was designated chairman. He was appointed to fill a position that required an individual who was a representative from an information technology company. See §§3-407(a)(2)(ix).
The Requester has a variety of entrepreneurial interests. In 1992, he founded an information technology consulting firm that provides services in management consulting, computer system support and integration. He is the sole owner and CEO of the firm, which now employs 45 individuals. At the time of his appointment to the SITB, the firm was a subcontractor on two information technology contracts with State agencies. 1
Procurement for State agencies in Maryland is controlled by the requirements set forth in the State Finance and Procurement Article of the Annotated Code of Maryland. The Board of Public Works ("BPW") is given authority to "control procurements" in the Executive Branch (with some exceptions) by setting policy, adopting regulations, and establishing operational procedures. See §12-101. The BPW is composed of the Governor, Comptroller, and the State Treasurer and was established by the Constitution of 1867.
Subject to the authority of the BPW, certain State departments were given control and oversight for particular procurements. Section 12-107, Md. Code Ann., State Fin. & Proc. Title 12 (Supp. 2003), assigns to DBM control authority for procurements of information technology equipment and associated services. See also COMAR 21.02.01.04 and 21.02.03.02. DBM's Office of Information Technology provides technical assistance, advice, conducts and manages statewide information technology procurements and contracts, and makes recommendations concerning information technology matters.
During 2003, DGS officials determined to seek solutions to various information technology concerns in the department by "out-sourcing" with a contractor for a three to five year period. The contractor was expected to provide consultants with expertise to assist DGS staff on "task orders" under a master contract. The task orders could involve providing support personnel for System Software Engineering Support, Network Support, Email Systems, Security Management, Training, Workstation Support, Help Desk Support, and Internet Design or other Technical Support. As a result of this contract, DGS officials expected to reduce its current IT staff to 3 individuals while using approximately 14 consultant professionals.
This project required DBM review. In addition to reviewing the information technology specifications, DBM officials were required to review the contract for compliance with §13-402 Md. Code Ann., State Pers. & Pens. Title 13 (Supp. 2003). This provision is the statement of the legislative policy to "use State employees to perform all State functions in State-operated facilities in preference to contracting with the private sector to perform those functions." The law gives DBM the authority to certify a service contract as exempt from the preference where the potential economic advantage of entering the contract is not outweighed by the preference for having State employees perform the work.
Initially DGS officials contacted DBM and reviewed whether a DBM Statewide Technical Assistance Task Order Contractor could be used to accomplish DGS objectives. DGS and DBM employees apparently discussed it and a decision was made that DGS needs would not be met under the statewide contract and a separate procurement was required. DGS employees subsequently completed a draft of a Request for Proposals ("RFP") and specifications, which were reviewed by individuals at DBM. Two employees of DBM's Procurement Unit in the Division of Policy Analysis in the Secretary's office reviewed the proposed procurement documents. Additionally, an employee in the State Information Technology Section of the Office of Information Technology reviewed the drafts. After the comments by DBM employees were taken into account, DGS employees finalized the RFP and issued it in December 2003. The procurement officer and contract manager were DGS employees.
DGS subsequently received 10 technical and price proposals. DGS established an evaluation committee consisting of three DGS employees, and one employee each from the Department of Business and Economic Development and the Department of Human Resources. The Committee completed its review and recommended an offeror to the Secretary of DGS and DBM. DGS received DBM's certification under §13-404(c) Md. Code Ann. State Pers. & Pens. Title 13 (Supp. 2003). The selection of the successful bidder and contract were subsequently presented to and approved by the BPW as part of the DBM "Action Agenda" in April 2004. The successful offeror's proposal and contract included the Requestor's consulting firm as a subcontractor. The estimated total contract value could be as high as $1.9 million over five years with the proposed subcontract to the Requestor's firm having a value in excess of $425,000.
The issue before us is the application of §15-502, Md. Code Ann., State Gov't Title 15 (Supp. 2003) to the Requestor. Section 15-502 prohibits an official or employee from being employed by or having a financial interest in an entity subject to the authority of the governmental unit with which the official or employee is affiliated or with an entity that is a subcontractor on a contract with that official's or employee's governmental unit.
The Requestor is a public official by virtue of his service on the SITB. 2 The governmental unit with which he is affiliated is the DBM.3. The factual question for us is whether the Requestor has an employment or financial interest with an entity subject to the authority of DBM or is a subcontractor on a contract with DBM. We recognize that DGS will be the user agency and beneficiary of the procurement of consultant services. DGS employees conducted procedural aspects of the recent procurement such as the pre-bid conference, the establishment of the proposal evaluation committee, and selection of the successful offeror-vendor. The contract will be implemented at DGS's work site. The procurement officer and the contract manager were and are DGS employees. However, the State in adopting its procurement requirements has determined that DBM will be the control agency for information technology equipment and associated services procurements. In the specific procurement at issue in this request, DBM staff members exercised specific oversight and review responsibilities. DBM was specifically required to certify that the contract for services satisfied the requirements of §13-404(c) Md. Code Ann. State Pers. & Pens. Title 13 (Supp. 2003). The information technology contract was presented to the Board of Public Works as part of the DBM action agenda and when the contract was approved by the BPW, the Board granted DBM the authority to approve the unilateral exercise of the renewal options at the 4th and 5th year renewal options. Given all of DBM actions and responsibilities in the present matter, we conclude that the contractor and its subcontractors are "subject to the authority" of DBM for purposes of the application of §15-502(b) of the Ethics Law. We conclude that the Requestor's employment and financial interest in his corporation would be prohibited if he were to remain on the SITB unless an exception is allowed.
An exception is allowable pursuant to §15-502(c)(1) when we determine pursuant to our regulations that the particular situation presents no conflict of interest or appearance of conflict. Our regulations implementing this provision (COMAR 19A.02.01) define circumstances where the relationships between an official's duties or his agency and the private employment or interest are sufficiently remote that the possibility of a conflict or appearance of conflict is unlikely. 4 The current circumstances present a significant appearance of conflict. The appearance to the public is that the Chair of the SITB, whose board has a statutory assignment to advise the Chief of Information Technology in DBM, is the subcontractor on a State contract that required the review and support of DBM and staff of the Office of Information Technology. The Requestor also sits on the Board that includes the Secretary of DGS (or his designee) who signed off on the contract resulting from the procurement.
The Requestor testified before us that in his brief term as Chair of the SITB, the Board has met only approximately five (5) times since June of 2003. The meetings, which are open to the public, are relatively brief, lasting no more than one and one-half hours. He advised that he and the Vice Chair have determined the agenda for each meeting that have focused generally on the efficient use of technology and a report from various agencies on the implementation of information technology systems within its jurisdiction. The Requestor further advised that until recently DBM did not have permanent staff assigned to SITB to assist it in its duties. 5 The minutes of the meetings reflect that the DGS contract was not discussed. However, the Chief of Information Technology briefed the SITB at its February 2004 meeting in general terms on the status of State contracts that would be "re-competed" in the future.
We have considered the Requestor's comments and his description of the limited SITB activities during the past year. However, in view of the General Assembly's mandate to the SITB to advise and recommend to the Chief of Information Technology regarding a statewide information technology master plan and DBM's responsibility as the control agency for procurements related to information technology equipment and services, we conclude that an exception cannot be granted under all of these circumstances. We believe that §15-502(b) provisions reflect a statutory intention that affiliations with entities that are subject to the authority of the governmental unit present such a potential for conflict that they will generally be prohibited. The exception provision, in our view, is to overcome this intention only where the circumstances are so clearly remote that a conflict or appearance of conflict can be avoided. We are unable to come to this conclusion in this situation because SITB advises the Chief of Information Technology and the Chief and DBM have statutory duties related to information technology in individual agencies. Therefore we advise the Requestor this activity cannot be allowed by our §15-502(c)(1) exception regulation.
The Requestor has suggested that our opinion may reduce the number of qualified persons who may be willing to serve on the SITB if it means that the individual's employer may not bid on and receive information technology contracts with the State after the individual's appointment to the Board. Our opinion is not meant to limit the pool of appointees, but rather to provide advice on the requirements of the law. The Ethics Law is clear and has been uniformly applied by us in the past to require avoidance of situations that could impair a State agency's credibility and damage the public's trust in its implementation and mission. We note that the Law allows the appointing authority pursuant to §15-502(c)(4) to appoint individuals to boards and commissions who may have employment or financial interests that are otherwise prohibited if the interest and/or employment is disclosed at the time of appointment to the appointing authority, the Ethics Commission, and the Senate. This exemption allows the appointing authority to find qualified individuals and to make appointments with full knowledge of the conflicting interests or employment. However, the law does not allow officials already serving on boards and commissions to acquire new interests or employment prohibited by §15-502(b).
Dorothy R. Fait, Chair
Ava S. Feiner, Ph.D.
Julian L. Lapides
Robert F. Scholz
Date: May 27, 2004
1 The Requestor apparently disclosed both his ownership interest and employment with his consulting firm and the fact that the firm had two subcontracts with State agencies in background material he gave to the Governor's Appointments Office. He did not file, however, a request for a time of appointment exemption as provided in §15-502(c)(4), Md. Code Ann., State Gov't Title 15 (Supp. 2003) with either the Government's Appointment Office or the Commission.
2 Section 15-103 identifies individuals appointed to boards and commissions as public officials if the board has decision-making authority or acts as a principal advisor to one with such authority. Here, the SITB is a principal advisor to the Chief of Information Technology as to matters related to the master information technology master plans and other matters within the Chief's jurisdiction.
3 We have consistently advised in the past that a person's agency is the cabinet level department of which his or her particular program is a part. Therefore, Requestor is affiliated with DBM as a result of his appointment to the SITB. See our Opinion Nos. 95-11 and 96-01.
4 We have discussed the application of our regulations in a variety of opinions. See Opinion Nos. 82-40 and 82-44 for a discussion of the history and development of the exception criteria contained in the regulations. See also Opinion Nos. 98-2, 96-08, 93-10, 89-12, and 88-27.
5 We also note that the position of Chief of Information Technology for DBM was vacant for eighteen (18) months from August 2002 to February 2004. The position had been filled by three individuals during the nineteen (19) months prior to August 2002. The Commission was not presented with information regarding the activities of the SITB during that time period.
