By Tara Hoke
The hypothetical situation described this month is based on an actual case involving the federal prosecution of a former human resources officer for the Federal Emergency Management Agency. While the case did not involve design professionals, the ethical issues raised can easily be applied to the procurement of architectural and engineering services.
Situation
A civil engineer and ASCE member holds a senior position in the port authority of an East Coast state. The port authority is seeking proposals for design services in connection with a multimillion-dollar marina revitalization project, and the engineer is assigned to serve on a selection committee to rank proposals from firms in accordance with the state's qualifications-based selection process
Based in large part upon the senior engineer's recommendations, the selection committee prepares a short list of three firms, one of them, a large firm, receiving the top recommendation. In accordance with the established process for qualifications-based selection, the port authority begins to negotiate with the top firm on pricing and other contract particulars. In doing so the authority once again relies heavily on the senior engineer's recommendations. Ultimately, the port authority reaches an agreement with the firm, awarding a contract to it that is highly favorable with respect to profit margin and other terms.
Shortly after the contract is awarded, the senior engineer announces that he will be leaving his position with the port authority to accept employment with the winning firm. The engineer's new job will not have any relation to the firm's contract with the port authority. However, it is noteworthy that the benefits of the new position include a significant salary increase and a large signing bonus
Some months later a former employee of the winning firm files a qui tam lawsuit against his former employer. A qui tam lawsuit-from a Latin phrase meaning "he who stands in for the king"-is a cause of action authorized by certain state and federal statutes that allows a whistle-blower to sue on behalf of the government for fraud against a public agency and to receive a percentage of any monies recovered. In this case, the former employee claims that the firm knowingly inflated its estimated labor hours and costs in its negotiations with the port authority, causing the contract to be awarded at a fraudulently high price.
The employee also alleges that a principal of the firm engaged in improper employment negotiations with the port authority's senior engineer during the agency's procurement process. He contends that the engineer took part in discussions with the firm about a possible job opportunity while serving on the agency's selection committee and that the prospect of a lucrative job offer influenced the engineer to assist the firm in winning the inflated contract award. Finally, he notes that the firm sought to conceal this influence by falsely dating its "initial" offer of employment to a day after the contract was awarded.
Question
Did the senior engineer's actions violate ASCE's Code of Ethics?
Discussion
Moving from government work to private employment is common in the careers of many professionals. Moreover, as a matter of principle, such mobility generally benefits all parties in that it gives employees a broader range of opportunities, allows private industry to recruit candidates with expertise on the regulation or enforcement side of their activities, and ensures that the public sector, by virtue of these openings, can draw upon a fresh pool of candidates seeking valuable government experience.
Nonetheless, this "revolving door" between the public and private sectors can often create circumstances that are replete with ethical pitfalls. Departing employees may use insider information in ways that are harmful to their former employers' interests, new employees may be hindered in a job role by preexisting loyalties, and, as alleged here, employees may be tempted to undermine their current employers' interests in the hope of securing work elsewhere.
Canon 4 of the Code of Ethics reads as follows: "Engineers shall act in professional matters for each employer or client as faithful agents or trustees, and shall avoid conflicts of interest." Furthermore, category (a) in the guidelines to practice for this canon says that engineers "shall promptly inform their employers or clients of any business association, interests, or circumstances which could influence their judgment or the quality of their services," and category (c) points out that engineers "shall not solicit or accept gratuities, directly or indirectly, from contractors, their agents, or other parties dealing with their clients or employers in connection with work for which they are responsible."
While the "business association" in this scenario might be merely the hope or promise of future work, this promise might still have been a sufficient "gratuity" to influence the member's judgment in selecting a contractor and negotiating contract terms. As such, the member's failure to disclose this interest to his public employer so that action could be taken to address the conflict would probably constitute a violation of canon 4. Moreover, if the prospect of employment influenced the member to support the offering firm's proposal over another, more deserving competitor, then the member may also have run afoul of canon 5's prohibition of unfair competition and of canon 6's "zero tolerance for bribery, fraud, and corruption."
In the case on which this scenario was based, a subsequent federal investigation revealed compelling evidence that the public employee had indeed engaged in improper conduct. Emails and other correspondence revealed that the public employee had worked to steer a lucrative public contract to the contractor at the same time he was seeking an employment offer from that contractor. He had persuaded his agency to increase the contract award in the hope of impressing his prospective employer. Ultimately, the member pleaded guilty to violating the federal criminal conflict of interest statute and received a sentence of two years probation and a substantial fine
Unfortunately, the crossing of legal and ethical lines is not always so easy to prove. There may be a gap of several months between a contract award and a public employee's decision to accept a job with the contractor; the public employee may be hired by a separate branch of a contractor operating in more than one location; or an offer may come from an unaffiliated organization that happens to have one or more owners in common with a government contractor. In the absence of correspondence showing undue influence during the procurement process or even of such circumstantial evidence as an offer with unusually large compensation or other incentives, how does one distinguish between a contractor's legitimate employment offer and an offer made in exchange for a public employee's abuse of the procurement process
Many state and federal entities have chosen to avoid the challenge of establishing motive by imposing flat restrictions on their employees' use of the "revolving door" in connection with procurement activity. For example, the Procurement Integrity Act bans federal employees from receiving any type of compensation from a contractor for a period of one year after the employee's involvement in a selection board, technical review team, or similar activity resulting in an award to the contractor of more than $10 million
Given the multitude of ethical strictures that apply to cases such as the above and the significant legal consequences for violating public procurement laws (including fines or criminal sentencing for individuals and debarment for contractors), it is essential for public employees and private contractors to exercise sound judgment before initiating any discussions of future employment. Though the "revolving door" may offer significant benefits to employer and employee alike, these benefits should only be explored in a way that honors the public employee's ethical obligations to serve his or her employer faithfully and that is in keeping with the spirit of public service.
Note: Special thanks are in order to K.N. Gunalan, Ph.D., P.E., D.GE, F.ASCE, the chair of ASCE's Committee on Ethical Practice, for his assistance with this article.
Tara Hoke is ASCE’s general counsel and a contributing editor to Civil Engineering.
© ASCE, ASCE News, February, 2015
