Official Opinion 98-8
Georgia Department of Human Resources
You have requested my opinion as to whether a Community Service Board (hereinafter “CSB”), which has a contract with the Georgia Department of Human Resources (hereinafter “Department”), is prohibited from subcontracting with a provider who is a member of the General Assembly. It is my opinion that a CSB that has a contract with the Georgia Department of Human Resources may subcontract with a provider who is a General Assembly member only where there is no impermissible conflict of interest.
In your letter, you wrote that the Department, through its regional mental health, mental retardation and substance abuse boards, has numerous contracts with CSBs to provide disability services to the citizens of Georgia. A CSB consists of members appointed by the county governing authorities from nominations by the boards of health of the counties within the boundaries of the CSB, and thus is not a state agency. See O.C.G.A. § 37-2-6 (b). In many instances, the CSBs have subcontracted with providers to assist the CSBs in carrying out their contractual obligations to the Department.
Article I, Section II, Paragraph I of the Georgia Constitution provides that “[p]ublic officers are the trustees and servants of the people and are at all times amenable to them.” As the Georgia Supreme Court emphasized in Georgia Dep’t of Human Resources v. Sistrunk, 249 Ga. 543, 547 (1982), a public official “‘can not use his trust to promote his own personal interest.’” (quoting Caruthers v. Corbin, 38 Ga. 75, 91 (1868)).
Official Code of Georgia Annotated Section 45-10-21 (hereinafter “Code”) contains legislative declarations pertaining to the prohibition against conflicts of interests by public officials. Specifically,
It is essential to the proper operation of democratic government that public officials be independent and impartial, that governmental decisions and policy be made in the proper channels of the governmental structure, that public office not be used for private gain other than the remuneration provided by law, and that there be public confidence in the integrity of government. The attainment of one or more of these ends is impaired whenever there exists a conflict between the private interests of an elected official . . . and his duties as such.
O.C.G.A. § 45-10-21 (a).
To that end, O.C.G.A. § 45-10-24 (a)(1) provides that:
Except as provided in subsection (b) of this Code section, it shall be unlawful for any part-time public official who has state-wide powers, for himself or on behalf of any business, or for any business in which such public official or member of his family has a substantial interest to transact any business with any agency.
“Public official” is defined as “any person elected to a state office.” O.C.G.A. § 45-10-20 (9). Section 45-10-20(10) defines “state-wide powers” as “those powers exercised by public officials which affect and influence all of state government.” Public officials who exercise such powers include “members of the General Assembly.” Id. “‘Transact any business’ means to sell or lease any personal property, real property, or services on behalf of oneself or on behalf of any third party as an agent, broker, dealer, or representative . . . .” O.C.G.A. § 45-10-20 (12).
This office addressed the following conflict of interest question in a 1982 opinion: “May a public official or a business entity with which he is affiliated, as an owner or fiduciary, enter into a subcontract with or sell goods, services, etc., to a third party who is performing a state contract?” 1982 Op. Att’y Gen. 82-82, p. 174. The Attorney General wrote that the courts that have considered this question generally have held that:
[S]o long as there was no understanding or agreement for a purchase between the contractor and the public official or business entity, in which the public official is an owner or fiduciary, prior to the letting of a government contract, the primary contractor may purchase materials or services from a public official or business entity in which he has an interest.
Id. at p. 174-75. However, if there was such an understanding or agreement to purchase prior to the contract’s execution, the contract is void or voidable. Id. at p. 175.
A 1997 Attorney General opinion reiterated the well-established doctrine that a public official may not profit from public business entrusted to his care. 1997 Op. Att’y Gen. 97-29 (October 6, 1997). Although that opinion focused on an issue distinct from the instant query, the opinion cautioned that the possibility exists that subcontracts between public officials and government contractors may be invalid, since “the prohibition is against the official contracting with himself either ‘directly or indirectly.’” Id. For example, such a conflict could exist where a county school board member knows that if a certain contractor is hired for a school board construction project, the board member will be employed as the subcontractor. Id.
Similarly, a conflict of interest would arise if a CSB selected a legislator, or a business in which the legislator is an owner or fiduciary, as its subcontractor solely because of the legislator’s ability to influence the CSB’s budget, vis-a-vis the Department’s budget. However, this would not be the only situation in which a conflict could exist. Each transaction must be examined to determine that there is no opportunity for any such conflict to arise.
Based upon the foregoing authorities, it is my opinion that a CSB may subcontract with a General Assembly member to purchase services to assist the CSB in meeting its contractual obligations to the Department only where there is no impermissible conflict of interest. This conclusion does not relieve the legislator from the fiduciary duties, responsibilities, and limitations imposed by his status as a trustee of the people.
STEPHANIE M. BALDAUFF
Assistant Attorney General
Subsection (b) provides that this section shall not apply to:
(1) [a]ny transaction made pursuant to sealed competitive bids; (2) [a]ny transaction when the amount of a single transaction does not exceed $250.00 and when the aggregate of all such transactions does not exceed $9,000.00 per calendar year; (3) [a]ny transaction involving the lease of real property to or from any agency if such transaction has been approved by the State Properties Commission or the Space Management Division of the Department of Administrative Services; and (4) [a]ny transaction involving the purchase of surplus state property at a public auction.
O.C.G.A. § 45-10-24 (b). Sixteen additional exceptions to the general prohibition contained in O.C.G.A. § 45-10-24 are found in O.C.G.A. § 45-10-25. For purposes of this opinion, it is assumed that the subcontracts described in your letter do not fall within one of the enumerated statutory exceptions.