Public Agency

Do you work for a “Public Agency?” O.R.C. Section 102.01 defines a “Public Agency” as “...the general assembly, all courts, any department, division, institution, board, commission, authority, bureau or other instrumentality of the state, a county, city, village, or township, the five state retirement systems, or any other governmental entity,” with some limited exceptions. Those that work for—or contract with—Public Agencies should be aware of the legal prohibitions in contracting.

Public Official or Employee

Once you have determined whether you work for a Public Agency, the next consideration is whether you are a “Public official or employee,” which O.R.C. Section 102.01(B) defines as “any person who is elected or appointed to an office or is an employee of any public agency,” with some limited exceptions. Odds are that if you are elected to or employed by a Public Agency, then you are subject to the ethical contracting laws.

Public Contract

The final inquiry is whether you are dealing with a “Public Contract.” For purposes of O.R.C. Section 2921.42(I), the term “public contract” is defined to include:

(a) The purchase or acquisition, or a contract for the purchase or acquisition, of property or services by or for the use of the state, any of its political subdivisions, or any agency or instrumentality of either, including the employment of an individual by the state, any of its political subdivisions, or any agency or instrumentality of either;

(b) A contract for the design, construction, alteration, repair, or maintenance of any public property.

Influence

Public Officials cannot have a financial or fiduciary interest in contracts with their own agency. Specifically, O.R.C. § 2921.42(A)(1) instructs that a Public Official shall not knowingly “Authorize, or employ the authority or influence of the public official’s office to secure authorization of any public contract in which the public official, a member of the public official’s family, or any of the public official’s business associates has an interest.”

Dissecting key parts of the statute then, a Public Official, cannot authorize or influence the awarding of a contract to herself, a family member, or a business associate. The “authorize” language is not applicable to all Public Officials because not all Public Officials—which includes employees—have the power to authorize contracts. In short, “The Ethics Commission has held that a public contract will be deemed to have been authorized by a public official, legislative body, board, or commission for purposes of R.C. 2921.42(A)(3), where the public contract could not have been awarded without the approval of the public official, the position in which he serves, or the public entity with which he serves.”

The “Influence” portion of the statute refers to a broader set of activities and prohibits the Public Official from influencing others at the Public Agency with regard to the decision to award a contract to the official, his family, or business associates.1

For the purpose of this prohibition, “Member of Family” has been defined as “1) grandparents; 2) parents; 3) spouse; 4) children, whether dependent or not; 5) grandchildren; 6) brothers and sisters; or 7) any person related by blood or marriage and residing in the same household.”2

Interest

In addition to the prohibitions against influencing a decision—either through authorization or influencing others—a Public Official cannot have an Interest in a public contract. O.R.C. § 2921.42(A) (4) directs that a Public Official can not “have an interest in the profits or benefits of a public contract entered into by or for the use of the political subdivision or governmental agency or instrumentality with which the public official is connected.” One simple example is that a Public Official cannot normally sell things to her own Public Agency. There is, however, a statutory exception to this rule.

O.R.C. § 2921.42(C) provides that exception and allows for just such a contract so long as ALL of the following apply:

(1) The subject of the public contract is necessary supplies or services for the political subdivision or governmental agency or instrumentality involved;

(2) The supplies or services are unobtainable elsewhere for the same or lower cost, or are being furnished to the political subdivision or governmental agency or instrumentality as part of a continuing course of dealing established prior to the public official’s becoming associated with the political subdivision or governmental agency or instrumentality involved;

(3) The treatment accorded the political subdivision or governmental agency or instrumentality is either preferential to or the same as that accorded other customers or clients in similar transactions; and

(4) The entire transaction is conducted at arm’s length, with full knowledge by the political subdivision or governmental agency or instrumentality involved, of the interest of the public official, member of the public official’s family, or business associate, and the public official takes no part in the deliberations or decision of the political subdivision or governmental agency or instrumentality with respect to the public contract.

Employing this exception is not something to take on lightly. The criteria of Division (C) are strictly construed against the public official, and the official must show compliance with all four requirements in the exception.3

Where to Turn for Help

When considering the ethical implications of a contract, the best source of information is your attorney. In addition to legal counsel, the Ohio Ethics Commission website (www.ethics.ohio. gov) has a wealth of information including Bulletins and Advisory Opinions.