Advisory Opinion No. 2002-22

Application Of Post-State Employment Provisions Of §1-84b(f) To
Employment With Or Ownership Of Subcontracting Company

Pursuant to Conn. Gen. Stat. §1-84b(f), "[n]o former public official or state employee (1) who participated substantially in the negotiation or award of (A) a state contract valued at an amount of fifty thousand dollars or more . . . , or (2) who supervised the negotiation or award of such a contract . . . shall accept employment with a party to the contract . . . other than the state for a period of one year after his resignation from his state office or position if his resignation occurs less than one year after the contract . . . is signed." Pursuant to the State Ethics Commission’s regulations, "[f]or the purposes of subsection (f) . . . of section 1-84b employment shall include work as an independent contractor." Regs. of Conn. State Agencies §1-81-38(d).

The State Ethics Commission has been asked how §1-84b(f) would apply to a state employee who admittedly participated substantially in the negotiation or award of such a contract who wishes to leave state service and either purchase an ownership interest in, or become employed by, a company -- Company B -- that is a subcontractor of the company which received such a contract, Company A. The subcontracting company, Company B, constitutes a Disadvantaged Business Enterprise (DBE). Under the state contract, the primary contract recipient, Company A, was required to utilize DBEs, and specified in its contract proposal that it would use Company B. According to the state employee, the opportunity to purchase Company B did not exist when Company A’s contract was awarded. The state employee nevertheless admits that he learned of the opportunity through a coworker "grapevine."

The State Ethics Commission recently held in the context of §1-84b(f) that the former Director of Contracts and Purchasing for the state Department of Information Technology (DOIT) was prohibited from working for any party to such a state contract for one year, regardless of whether his work was performed as an employee or independent contractor of the state contract recipient. State Ethics Commission Advisory Opinion No. 2001-21, 63 Conn. L.J/ 15, p. 9E (10/9/01). In that case, where the former DOIT Director owned a business that was going to assist companies to which he had previously awarded contracts in responding to additional state invitations to bid, he was precluded from working even as an independent contractor for said companies.

Thus, the Commission has already answered the question of whether or not a former state employee who participated substantially in the award of a contract valued at $50,000 or more to company A may own an interest in company B that is subcontracting with Company A. As an owner of the subcontracting company B, the former state employee would be an independent contractor of the state contractor, Company A. Therefore, the state employee would be prohibited from purchasing an ownership interest in Company B for at least one year after leaving state service if the contract were signed within one year before he left state service. Id.; see also State Ethics Commission Advisory Opinion No. 91-20, 53 Conn. L.J. 10, p. 3C (9/3/91)(ownership interest in organization contracting with business in regulated industry violates §1-84b(c)).

The second question -- whether or not a former state employee may become employed by, rather than acquiring an ownership interest in, Company B – lends itself to a more fact-specific analysis. The State Ethics Commission has previously held that the post-state employment provisions of the Code are personal to the former public official and do not extend to his or her employer. State Ethics Commission Advisory Opinion Nos. 89-13, 50 Conn. L.J. No. 46, p. 1C (5/16/89); 91-20, supra. In particular, in Advisory Opinion No. 91-20, the Commission addressed a similar issue in the context of post-state employment in the regulated industry, pursuant to Conn. Gen. Stat. §1-84b(c). There, the Commission held that it would be permissible for a former state employee to accept employment with a lobbying organization representing clients in the regulated industry, even if it were not permissible for the person to own an interest in the lobbying organization. Of course, said employment was ruled permissible with the caveat that such an arrangement not be devised in order to thwart the purpose of the ethics law. Therefore, barring any other ethical issues, a state employee, pursuant to Conn. Gen. Stat. §1-84b(f), could leave state service to accept employment with Company B, a subcontractor of Company A with which the state contracted.

The analysis, however, cannot end there. In such a case, if the state employee in his official capacity were involved, however inadvertently, in the creation of the employment position with Company B, it would constitute a use of position for financial gain for the state employee to accept employment with the subcontracting firm. In other words, if the state contract awarded to Company A with the participation of the state employee facilitated the creation of the position with Company B, it would be a violation of Conn. Gen. Stat. §1-84(c) for the state employee to later accept employment with Company B. See Advisory Opinion No. 97-1, 58 CLJ 35, p. 3E (2/25/97) (professor who was instrumental through his state employment in creating, privatizing and funding company violates §1-84(c) by accepting outside employment with the entity).

In this case, the state employee admits that he learned of the opportunity for employment with and/or acquisition of Company B through his state coworker. Without more, that fact alone would not bar the employee from accepting employment with Company B. Here, the state employee also admits that he participated substantially in the award of the state contract that required a DBE subcontractor. Finally, the state employee indicated that he was aware that Company A planned to use Company B as a subcontractor before the time the contract was awarded. Taken together, these facts counsel against permitting the employee to accept post-state employment with Company B. To do so under these circumstances would constitute a use of office for financial gain.

By order of the Commission,

Rosemary Giuliano
Chairperson