Sales to Public Agencies
To reassure the public that there are not hidden self-interests in public purchases, public officials and employees are generally prohibited from having financial interests in public contracts with their own agencies.
Even if a public official or employee plays no role in approving the final contract, his/her privately owned business should not be considered a potential vendor since the public official or employee would have an interest in the contract and is connected to the public agency making the purchasing decision.
This means that businesses or companies in which a public official or employee has an interest generally can’t be contractors or vendors with the public agency, except under controlled and limited exceptions.
Obviously, many public officials and employees have authority to spend public money or make or influence decisions at their public jobs. Because those decisions can sometimes directly affect their own personal, family, or private business interests, the Ohio Ethics Law offers a protection to the general public.
The law prohibits public officials or employees from participating, in any way, in actions or decisions that directly involve their own financial interests, or those of their families or business associates. Specifically, a public official or employee can’t authorize or, in any other way, use her authority or influence to secure a public contract where the official, her family member, or business associate has the interest.
Yes. In general, public servants who own or co-own businesses in their private lives should assume that they will not sell goods or services to their own public agencies. However, there is an exception. Public officials and employees cannot obtain public contracts with their own public entities unless all of the following exceptions apply:
- The supplies or services must be necessary;
- The supplies or services must be unobtainable elsewhere for the same or lower cost;
- The public servant’s private business can provide to the public agency the same or preferential treatment as they would other clients; and
- The entire transaction can be conducted at arm’s length and the agency has full knowledge of the public servant’s interest. This means that if the public servant submits a bid to his or her public agency, the public servant must stay completely out of all the discussion, decision-making, deliberating, etc. regarding which company the public agency retains.
Public agencies, including those in state government, routinely purchase goods or services to ensure the efficient operation of the agencies’ missions. The only way public officials and employees can sell goods and services to their own agencies is to meet a four part exception. One of those exceptions is when the agency cannot obtain the goods or services from any other source for the same or lower cost.
For local governments, the agency must use some objective price comparison and must provide adequate notice to other suppliers of the same goods or services in a fair and impartial purchasing process. For state agencies, however, the only acceptable method to determine whether or not the public employee can provide the best price is a competitive bidding process.
The law does provide a notable exception. A state employee may sell goods and services to state agencies if the employee sells to a state agency other than the one she works for. In addition, the employee must disclose the sales to her own agency, to the agency where she sells the goods or services, and to the Ohio Ethics Commission.
The state employee must also disqualify and remove herself from any participation involving matters or public servants at the agency where she has made the sales.
This disqualification helps protect against a public official using her influence from one position to affect or sway business dealings with another public office.