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...