Van De Kamp, 042883 CAAGO, AGO 82-1104

Docket Nº:AGO 82-1104
Case Date:April 28, 1983
JOHN K. VAN DE KAMP Attorney General
RONALD M. WEISKOPF Deputy Attorney General
AGO 82-1104
No. 82-1104
California Attorney General Opinion
Office of the Attorney General State of California
April 28, 1983
         THE HONORABLE GERALD J. GEERLINGS, COUNTY COUNSEL OF RIVERSIDE COUNTY, has requested an opinion on the following question:          Under circumstances described herein, may employees of a county contract with the County Board of Supervisors to provide the county, as independent contractors in the future, those public services they are presently performing as county employees?          CONCLUSION          Under circumstances described herein—which disclose an initial contract proposal being made by county employees and thereafter participation by them in the making of the contract itself—employees of a county may not contract with their County Board of Supervisors to provide the county, as independent contractors in the future, those public services they are presently performing as county employees.          ANALYSIS          The County of Riverside currently administers its HUD Community Development Block Grant Program and related services through a county Office of Community Development, headed by a director. That director, the office's deputy director and the majority of the office's staff have initiated a proposal for the county to enter into a sole-source contract with them through which they would administer the Program in the future as a private corporation independent contractor rather than as county employees. The office's current director will be the president of the corporation, and the current deputy director its vice president. The proposed Agreement for Consultant Services contract also provides for the transfer of the office's current staff to the corporation, which would be located in space that is currently under lease by the county.          We are informed that the county employees have proposed the new arrangement for the purpose, based on their calculations, of saving the county a substantial sum of money, but that the fact of such a savings has not been independently verified by the county. We are also told that in addition to their initially proposing the contract and much of its detail, the county employees initially discussed the matter with, and made comments and suggestions to appropriate county persons charged with investigating its feasibility and desirability and that they did so not as other parties to a contract but as county employees. However we are also told that in subsequent negotiations and discussions their participation was (and is) as private individuals and not as county employees. The chief negotiator for the county is the immediate supervisor of the office's director and president to be of the future corporation. Asked about the propriety of a contract made under the circumstances described, in light of Government Code sections 1090 and 87100, we conclude that it would be unlawful.1          Section 1090 of the Government Code codifies the common law prohibition and the general policy of this state against public officials having a personal interest in contracts they make in their official capacities. (Terry v. Bender (1956) 143 Cal.App.2d 198, 206; Schaefer v. Berinstein (1956) 140 Cal.App.2d 278, 289; Stockton P. & S. Co. v. Wheeler (1924) 68 Cal.App. 592, 597; cf. Oakland v. California Construction Co. (1940) 15 Cal.2d 573, 576.) Mindful of the ancient adage, that "no man can serve two masters" (Matthew 6:24; cf. People v. Darby (1952) 114 Cal.App.2d 412, 426), "a self-evident truth, as trite and impregnable as the law of gravity" (Stockton P & S Co. v. Wheeler, supra, at 601), the section was enacted to insure that public officials "making" official contracts not be distracted by personal financial gain from exercising absolute loyalty and undivided allegiance to the best interest of the entity which they serve, and at least with respect to those contracts, it does so by removing or limiting the possibility of their being able to bring any direct or indirect personal influence to bear on an official decision regarding them. (Stigall v. City of Taft (1962) 58 Cal.2d 565, 569; City of Imperial Beach v. Bailey (1980) 103 Cal.App.3d 191, 196, 197; City Council v. McKinley (1978) 80 Cal.App.3d 204, 212; Fraser-Yamor Agency, Inc. v. County of Del Norte (1977) 68 Cal.App.3d 201, 215.) The mechanism of the section is one of prohibiting public officials from being personally financially interested as private individuals in any such contract. In relevant part it provides as follows:
         "Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members." (Emphasis added.)
         On its face, for the proscription of the section to apply either the public officer or employee must make a contract in his official capacity in which he is financially interested or such a contract must be made by a board or body of which he is a member. (64 Ops.Cal.Atty.Gen. 767 (1981).)2 However inasmuch as the purpose of section 1090 is to prohibit self-dealing, its concern is with an officer or employee making a contract in his official capacity which...

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