Conflicts of Interests: Contracts

Summary of the Rule

Do not enter into a state contract which might financially benefit you.

Noteworthy Changes - Effective July 1, 2015

A written statement disclosing a financial interest in a state contract must be filed with the Office of the Inspector General before entering into the contract.  Fines can be imposed by the State Ethics Commission for late or incomplete disclosure statements.

Examples of the Rule

• You work for the Family & Social Services Administration (FSSA) and also co-own a maintenance company which is operated on a day-to-day basis by your brother. Observing all the appropriate notice and bidding formalities, the Department of Administration selects your company to complete work on the South Government Building. So long as you disclose your financial interest in the contract to the Ethics Commission before signing the contract and can perform on the contract without compromising your official state duties, your company may accept the contract.
• You are in charge of the marketing campaign for the Hoosier Lottery’s new scratch-off game and own a small business that specializes in manufacturing buttons and t-shirts for these types of activities. Your business may not contract with Lottery to provide buttons and t-shirts for the Lottery’s upcoming promotional events.
• You are an employee with the Office of Management and Budget and would like to apply for a grant being offered by the Department of Agriculture. Since the grant is considered to be a contract, you would still be subject to the requirements set forth in the Conflict of Interests rule.
• You are an employee of the Department of Administration (DOA). You may not also contract with the DOA to provide cleaning services to agency buildings.
• You are an employee of the Indiana Department of Environmental Management. You may not contract with the Indiana Department of Transportation to provide environmental services for a road project.

Past Advisory Opinions on the Rule

• All Opinions regarding Conflict of Interest in Contracts

The Rule: 42 IAC 1-5-7 Conflict of Interests; Contracts

Contracting restrictions are set forth in IC 4-2-6-10.5.

1. Subject to subsection (b), a state officer, an employee, or a special state appointee may not knowingly have a financial interest in a contract made by an agency.
2. The prohibition in subsection (a) does not apply to a state officer, an employee, or a special state appointee who:
   1. does not participate in or have contracting responsibility for the contracting agency; and
   2. files a written statement with the inspector general before the state officer, employee, or special state appointee executes the contract with the state agency.
3. A statement filed under subsection (b)(2) must include the following for each contract:
   1. An affirmation that the state officer, employee, or special state appointee does not participate in or have contracting responsibility for the contracting agency.
   2. An affirmation that the contract:
      1. Was made after public notice and, if applicable, through competitive bidding; or
      2. Was not subject to notice and bidding requirements and the basis for that conclusion.
   3. A statement making full disclosure of all related financial interests in the contract.
   4. A statement indicating that the contract can be performed without compromising the performance of the official duties and responsibilities of the state officer, employee, or special state appointee.
   5. In the case of a contract for professional services, an affirmation by the appointing authority of the contracting agency that no other state officer, employee, or special state appointee of that agency is available to perform those services as part of the regular duties of the state officer, employee, or special state appointee.

A state officer, employee, or special state appointee may file an amended statement upon discovery of additional information required to be reported.

4. A state officer, employee, or special state appointee who:
   1. fails to file a statement required by rule or this section; or
   2. files a deficient statement;

before the contract start date is, upon a majority vote of the commission, subject to a civil penalty of not more than ten dollars ($10) for each day the statement remains delinquent or deficient.  The maximum penalty under this subsection is one thousand dollars. ($1,000).