Source: http://www.osc.state.ny.us/legal/1991/legalop/op91-30.htm
Timestamp: 2018-04-23 05:26:59
Document Index: 563196287

Matched Legal Cases: ['§800', '§800', '§800', '§800', '§800', '§800', '§801', '§802', '§104', '§163', '§250', '§408', '§103', '§408', '§800', '§800', '§802', '§801', '§20', '§73', '§802']

Opinion 91-30
CONFLICTS OF INTEREST -- Interest in Contract (purchases under State or county contract)
GENERAL MUNICIPAL LAW, §800(2): A town board member who is employed as a sales representative for a corporation which holds State and county contracts and whose duties as sales representative require direct involvement in the procurement of contracts with the town would have a prohibited conflict of interest if the town purchases materials in excess of $100 under the State or county contract.
You ask whether a town board member who is employed as a sales representative for a corporation which holds State and county contracts would have a prohibited conflict of interest if the town purchases materials in excess of $100 under the State or county contract. You state that the board member's duties as a sales representative require direct involvement in the procurement of contracts with the town.
General Municipal Law, Article 18 (§800 et seq.) contains provisions of law relative to conflicts of interest of municipal officers and employees (see General Municipal Law, §800[4],[5]). A municipal officer or employee has an "interest" in any contract with the municipality if he or she receives a direct or indirect pecuniary or material benefit as the result of the contract (General Municipal Law, §800[3]) and is also deemed to have an interest in any contract of a corporation of which he or she is an officer, employee, director or stockholder (General Municipal Law, §800[3],[c],[d]). For this purpose, a "contract" includes any express or implied claim, account or demand against or agreement with the municipality (see General Municipal Law, §800[2]). An interest in a contract is prohibited if the officer or employee, individually or as a member of a board, has the power or duty to: (a) negotiate, prepare, authorize or approve the contract or approve payments thereunder; (b) audit bills or claims under the contract; or (c) appoint an officer or employee who has any such duties (General Municipal Law, §801), and none of the exceptions contained in Article 18 are applicable (see General Municipal Law, §802).
General Municipal Law, §104 generally authorizes political subdivisions, without competitive bidding, to purchase materials, equipment and supplies under State contracts through the New York State Office of General Services subject to rules promulgated by the Office of General Services pursuant to State Finance Law, §163. Under the Office of General Services' rules and regulations, a political subdivision may make purchases directly from a State contract vendor pursuant to any State commodities purchase contract let by the Office of General Services "which specifies such purchasing by political subdivisions ..." (9 NYCRR §250.5[a]; see Office of General Services Purchasing Memorandum CL-262, page 3). Further, section 104 expressly provides that the municipality purchasing from the State contract vendor "shall accept sole responsibility for any payment due the vendor" and that "[a]ll purchases shall be subject to audit and inspection by the political subdivision ... for which made".
Counties are similarly authorized to extend their purchase contracts to political subdivisions. Pursuant to County Law, §408-a(2), a county governing board may authorize the inclusion of a provision in a purchase contract whereby purchases may be made under the contract by any political subdivision located within the county. General Municipal Law, §103(3) authorizes political subdivisions located within a county to purchase materials, equipment and supplies under such a county contract, subject to rules established by the county pursuant to County Law, §408-a, without competitive bidding. Section 103(3), like section 104, provides that the purchase is subject to audit and inspection by the political subdivision making the purchase and that the purchasing political subdivision shall accept sole responsibility for any payment due the vendor.
Based on these provisions, it is clear that a town purchasing through the Office of General Services under section 104 or through a county contract under section 103(3) has a "contract" with the State or county vendor within the meaning of General Municipal Law, §800(2) because the purchase involves an agreement by the town to purchase from the State or county contract vendor and the vendor has a claim against the town for payment (see 1980 Opns St Comp No. 80-633, p 171; 1974 Opns St Comp No. 74-1363, unreported; 27 Opns St Comp, 1971, p 47). The town board member is deemed to have an "interest" in those contracts because he is an employee of the vendor (see General Municipal Law, §800[3][c]). Unless one of the exceptions in General Municipal Law, §802 is applicable, that interest is prohibited because the board member has powers and duties specified in General Municipal Law, §801 (see Town Law, §§20[3][b],[e], 64[6], 118).
Unlike Public Officers Law, §73(4), which contains a prohibition against State officers and employees (and certain firms, associations and corporations) from selling goods or services to the State "unless such goods or services are provided pursuant to an award or contract let after public notice and competitive bidding", there is no exception in General Municipal Law, §802 for contracts which are either competitively bid or not subject to competitive bidding pursuant to section 104 or section 103(3) (see 1981 Opns St Comp No. 81-113, p 116; Opn No. 80-633, supra; 1974 Opns St Comp No. 74-1363, unreported; 27 Opns St Comp, 1971, supra). Thus, the only exception which is pertinent in this instance is contained in subdivision 1(b) of section 802. That section provides an exception when the conflict of interest results from the status of the municipal officer or employee as an officer or employee of the contracting entity, if the remuneration of such employment will not be directly affected as a result of the contract and the duties of such employment do not directly involve the procurement, preparation or performance of any part of the contract. Since the board member's duties as a sales representative require direct involvement with the procurement of the vendor's contracts with the town, however, this exception is not applicable here. Further, abstention from discussions and voting on a contract will not cure a prohibited conflict of interest under Article 18 (1988 Opns St Comp No. 88-8, p 13; 1987 Opns St Comp No. 87-75, p 111). Therefore, it is our opinion that the board member would have a prohibited conflict of interest if the town purchases materials in excess of $100 under State or county contracts from the corporation which employs the board member.