Research Administration Office

University of California

No. 10-78

April 3, 1978

AGREEMENTS WITH STATE AND LOCAL AGENCIES; CONFLICT OF INTEREST PROVISIONS IN SUBCONTRACT WITH NEWPORT-IRVINE WASTE-MANAGEMENT PLANNING AGENCY.

Attachment 1 is a copy of Assistant Counsel Alderman's March 16, 1978 memorandum to Contract and Grant Manager Selufsky, UCI. Ms. Alderman, in reviewing a proposed subcontract with the above-cited local governmental agency, has explained that a portion of the conflict of interest provision therein is unacceptable. A copy of that provision (paragraph 22-b) is provided as attachment 2, for your information.

Ms. Alderman warns that contracts offered the University by other state

and local agencies may include provisions similar to the attached unacceptable paragraph. All such agreements should be referred to the Office of General Counsel for review, as stated in Ms. Alderman's memo.

Refer: Peggy Klenz, 2-2593

Index: California, State

Conflict of Interest

Consultants

Local Governments

Richard D. Wolfe

Manager, Contracts and Grants

and Service Programs

Attachments


March 16, 1978

CONTRACT AND GRANT MANAGER WALTER R. SELUFSKY, Irvine

Re: Subcontract with Newport-Irvine Waste-Management Planning Agency (NIWA)

I have approved the above-referenced, proposed contract as to legal form today and have returned it to Ms. Nancy Shanahan, attorney for NIWA, for further processing and approval by the Environmental Protection Agency and the Southern California Association of Governments. You may expect to hear from Ms. Shanahan when these reviews have been completed and the contract is forwarded for execution.

As you know, the conflict of interest provisions of paragraph 22 (b) of the agreement as originally submitted were unacceptable, in that they would have required the principal investigator and other University employees responsible for performance of the contract to become designated officials under NIWA's Conflict of Interest Code, and to be subject to the disqualification and financial disclosure requirements of that Code. The provision was unacceptable, as I indicated to you earlier, for the following reasons:

1. Under the political Reform Act of 1974, NIWA's Conflict of Interest Code may apply only to employees, officers, members and consultants of NIWA.- Neither the principal investigator nor University employees act as officers, members or employees of NIWA in performing services under this contract. Their status as consultants of NIWA, for purposes of designation under that agency's Conflict of Interest Code, is governed by regulations of the Fair Political Practices Commission which provide as follows:

'Consultant' shall include any natural person who provides, under contract, information, advice, recommendation or counsel to a state or local government agency, provided, however, that 'consultant' shall not include a person who

(A) Conducts research and arrives conclusions with respect to his or her rendition of information, advice, recommendation or counsel independent of the control and direction of the agency or of any agency official other than normal contract monitoring

and

(B) Possesses no authority with respect to any agency decision beyond the rendition of information and advice, recommendation or counsel."

As I read the contract, neither the principal investigator nor any other University employee can be deemed a consultant under the foregoing definition. For this reason, and because the Fair Political Practices Commission, which is responsible for administering and enforcing the Political Reform Act, has expressly stated that agencies may not impose financial disclosure statements in conflicts of interest codes which are stricter than those required under state law, it is my opinion that the conflict of interest provision originally submitted would, if tested in a court of law, be held to be null and void.

Because all state and local agencies are required to promulgate conflict of interest codes under the Political Reform Act of 1974, I anticipate that your office, and other contract and grant offices within the University, may receive other contracts which contain provisions of the type discussed above. Please submit these contracts to this office for legal review.

Also, please let me know if you have any questions if Assistant Counsel Lundberg or I can be of further help in connection with this contract.

cc:

Kate K. Alderman, Assistant Counsel

Executive Vice Chancellor McGaugh

Vice Chancellor Cox

Assistant Chancellor and Conflict of Interest

Coordinator Curiel

Vice President Kleingartner

Conflict of Interest Coordinator Crooks

Manager, Contracts & Grants Wolfe

Principal Administrative Analyst Klenz


21. Assignability. The Contractor shall not assign ,any interest in this contract and shall not transfer any interest in the same without the prior written consent of AGENCY- However, claims for money due or to become due to the Contractor from AGENCY under this contract may be assigned to a bank, trust company or their financial institution without such approval. Notice of any such assignment or transfer shall be furnished promptly by AGENCY.

22. Conflicts of Interest.

a. The contractor agrees that he presently has no interest and shall not acquire any interest, direct or indirect, which could conflict in any manner or degree with the performance of services required to be performed under this contract. The Contractor further agrees that in the performance of this contract, no person having any such interest shall be employed.

b. The Contractor agrees to designate such person or persons who have responsibility for carrying out the services under this contract and that such person or persons as may be designated shall take any and all actions necessary to comply with AGENCY'S Conflict. of Interest Code adopted pursuant to Section 81000 et seq. of the Government Code of the State of California to the extent required thereunder.

23. Gratuities.

a. If it is found,' after notice and hearing by the AGENCY, that gratuities. (in the form of entertainment., gifts, or otherwise) were offered or given by the Contractor, or any agent or representative of the Contractor, to any 'official, employee or agent of the AGENCY or of EPA with a view toward securing a contract or securing favorable treatment with respect to the awarding or amending, or the making of any determinations with respect to the performance of this contract, the AGENCY may, by written notice to the Contractor, terminate the right of the Contractor to proceed under this contract and/or may pursue such other rights and remedies provided by law or under this agreement: Provided, that the existence of the facts upon which the AGENCY makes such findings shall be in issue-and may be reviewed proceeding pursuant to the Remedies clause of this contract.

b. In the event this contract is terminated as provided in paragraph (a) hereof, the AGENCY shall be entitled (1) to pursue the same remedies against the Contractor as it could pursue in the event of a breach of the contract by the Contractor, and (2) as a penalty in addition to any other damages to which it may be entitled by law, to exemplary damages in an amount (as determined by the AGENCY) which shall be not less than three nor more than ten times the costs incurred by the Contractor in providing any such gratuities to any such officer or employee.