By Tara Hoke
Situation
Newspaper articles are forwarded to ASCE's Committee on Professional Conduct (CPC) detailing a reporter's investigation into an alleged conflict of interest involving two firms connected with the state's toll road commission. One is a consulting firm serving as the commission's engineering adviser; the other is an engineering contractor performing work on a major toll road expansion project. The articles allege that the firms had recently come under common ownership by a single holding company. They contend that, after the holding company's purchase of the two firms, the second firm had been awarded several hundred thousand dollars in fees by the commission, the awards made on a noncompetitive basis based on the first firm's recommendations.
The articles further state that the firms had failed to disclose this change in ownership to the state agency and that the transaction had been so secretive that "one toll road commission director refused to believe they had a common ownership until shown documentary evidence" by the reporter.
Among the individuals named in the newspaper reports are two ASCE members. One is a principal of the consulting firm and the firm's chief liaison with the toll road commission. The other is the president of the engineering contractor, as well as a minor shareholder in the holding company.
Question
Did these members violate ASCE's Code of Ethics in connection with their services to the state agency?
Discussion
Canon 4 of the code 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." This canon expresses an obligation that is central not only to engineering ethics but to all professional ethics: the professional's duty to serve the employer or client's best interests, even when doing so will be to the detriment of his or her personal or other professional interests.
While avoiding conflicts of interest is always the best means of ensuring faithful service to an employer or client, in practice this course of action is not always an option. Indeed, the language of canon 4 itself admits the possibility of an ethical dilemma. How does an engineer proceed, for example, when the best interests of his or her employer or client are not wholly consistent
One important means of dealing with situations in which a potential conflict is inescapable is proposed in category (a) in the guidelines to practice for canon 4: "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." Disclosing a conflict to all parties involved is important because it enables the parties to make informed decisions about the engineer's service. They can proceed on the belief that the engineer is still capable of performing objectively or can seek another means of securing independent expertise
Yet while disclosure is often key to navigating conflicts of interest, it is important for engineers to recognize that disclosure alone is not a cure-all for ethical quandaries. Engineers must still honor their ethical obligations with regard to truthfulness, integrity, and faithful service, and if in the end an engineer's conflict is such that he or she may not be able to adhere to those principles, then to truly be a "faithful agent" he or she may have to not only disclose information about a possible conflict but even step away from the situation giving rise to the conflict
Indeed, the code describes at least one situation in which stepping away from a conflict is not merely recommended but required. Category (d) in the guidelines to practice for canon 4 has this to say: "Engineers in public service as members, advisers, or employees of a governmental body or department shall not participate in considerations or actions with respect to services solicited or provided by them or their organization in private or public engineering practice." While this applies only to the limited case of an engineer involved in a public review of his or her private work, it is interesting to note that this provision does not expressly permit the engineer to resolve the issue by disclosure to the agency. This may reflect a recognition of the engineer's higher duty to the public welfare, or it may simply be that, because the public engineer's ultimate "client" in this case is the public that relies on the agency's services, disclosure to the agency alone is not sufficient to dispel the conflict
Applying these provisions to the case at hand, the members of the CPC felt that the ASCE members' conduct represented a potential violation of canon 4. First, neither member had disclosed the firms' common ownership until prompted to do so by the reporter's investigation. Second, for the engineer serving as a principal of the consulting firm, it appeared that he had offered advice in his public capacity concerning services from an organization that shared ownership with his firm.
When contacted by the CPC, the two members vehemently denied all suggestions of impropriety. They claimed that the holding company's purchase of the consulting firm had not been completed at the time of the news reports and that the holding company had no authority or influence over the consulting firm's actions. While a purchase agreement had been executed a year earlier, the firm's shares were still being held in escrow pending fulfillment of several conditions, one being a requirement that several key employees sign retention agreements to stay with the firm. The accused members argued that these employees would never have agreed to sign such agreements in the face of an improper arrangement, and they invited the CPC to contact these employees for corroboration. They further stated that while they expected the purchase would bar the contractor from future work for the commission, they considered the two entities at present to be operating independently of each other.
With regard to the consulting firm's involvement in steering work to the contracting firm, the members claimed that only three contracts had been awarded after the holding company's offer to the consulting firm had been executed. The first, they alleged, had been the subject of negotiations for some time prior to the purchase, and the consulting firm had not been involved in reviewing the proposal. The other two were additions to a contract already being performed by the contractor. The members claimed that these additions had been requested by the state agency, and while the consulting firm had reviewed the contractor's proposals, it had merely checked the submissions for conformity with the project scope and consistency with past fees
The members avowed that they had never taken any action to violate the agency's trust. They noted that despite six months of scrutiny by both the media and the public agency, no one had ever suggested that the contractor had received more than a fair and competitive fee for its services or that the consulting firm had not fully and fairly reviewed all work submitted by the contracting firm. Finally, they noted that the agency itself was satisfied that the firms had not acted improperly. In fact, it had recently renewed its long-standing agreement with the consulting firm
In view of the complex timing of the transactions and the absence of interest on the part of any state investigative entity, the members of the CPC ultimately felt that they lacked sufficient evidence to support disciplinary action. However, the committee members felt strongly that both individuals had failed to honor their canon 4 obligation to serve as faithful agents. Even in the absence of proof that the two members had advanced their personal interests to the detriment of their client's, their actions had at a minimum exposed the client to bad publicity and shaken the public's confidence in the agency's work.
The members of the CPC voted to close the case but sent each of the two members in question a letter noting that "the position in which you placed yourself with respect to your client... was not beneficial to the civil engineering profession nor did it reflect to the credit of civil engineers." The letters concluded by reminding the members that their duty as civil engineers was to avoid situations that could lead to a conflict of interest and advising them to be more mindful of such dangers in the future.
Tara Hoke is ASCE’s general counsel and a contributing editor to Civil Engineering.
© ASCE, ASCE News, September, 2015
