The following hypothetical examples are designed to help you better understand Arizona's Conflict-of-Interest laws. Examples take place at Acme Community College (ACC), a public educational institution in Arizona.
EXAMPLE 1
Joan, a contract employee in ACC's Information Technology Department, works as the lead person on the implementation of an ACC-wide IT system. Joan quits her job to take a position with IBM, the contractor installing the system, to serve as its liaison with ACC on the contract.
Is this permissible?
No! As a former employee of ACC responsible for making key project decisions, Joan cannot immediately go to work for an ACC contractor working on the same project she was directly and personally involved with as an ACC employee.
Two factors disqualify her. (1) Working on a matter in which she was directly concerned with and personally participated in as an employee. And (2), working on a matter in which, as an employee, she was responsible for making decisions that were material and substantial--that is, important to the project. (A.R.S. Section 38-504-A)
It does not matter whether Joan was a full-time, part-time, or contract employee. The prohibition applies across the board.
NOTE: Another prohibition may arise out of this situation.The law says that during employment--and for two years after it--Joan may not disclose or use for personal profit, without authorization, information acquired during her ACC employment that is designated as confidential or is declared confidential by law. In other words, Joan can't take information that is designated as "confidential" by ACC or by law, and use it to her benefit. (ARS Section 38-504-B)
So, the law doesn't stop Joan from taking a job with IBM. She just can't take one working on the same project that she did for ACC and she can't reveal confidential information for certain periods of time.
EXAMPLE 2
Penny is the Director of Business Services for ACC, responsible for approving requisitions, among other things. She receives a requisition to approve for the purchase of some consulting services from PowerBuilders, a partnership in which her half-brother, John, is a one-third owner.
May Penny approve the requisition? What must she do?
No, Penny may not approve the requisition. Because her half-brother owns an interest in a company whose name is on the requisition, she cannot approve it. By law, Penny's interest in the contract with PowerBuilders is a "substantial interest," as defined by law.
Penny must completely remove herself from making any decision relating to the requisition or the contract that results. She must also declare her interest in the "official record" of ACC before the contract for the services is signed. That basically means disclosing the interest in writing and placing it in a central file maintained as a repository for conflict-of-interest disclosures. Penny must refer the requisition to someone else to approve. (ARS Section 38-503-A and B)
Mandatory Training and Disclosures
EXAMPLE 3
Ron is Director of Student Activities at ACC. He often needs catering services or musical groups for various student events. Rarely do the expenses for these events exceed $2,000. Ron's sister-in-law runs a catering business out of her house, and his brother plays guitar in a band.
Can Ron ask them to provide services at student events?
No. Despite the fact that the dollar amount of the expenditures is small, Ron's sister-in-law and brother are "relatives" within the law's definition. Any commitment to pay those relatives results in Ron having a "substantial interest" in the matter due to his relationship to the people.
Ron must let someone else make the decision to hire either of those people for student activities. He must also disclose his conflict of interest and that disclosure must be placed in a central file and retained. (ARS Section 38-503-A and B)
EXAMPLE 4
Marla, a faculty member at ACC, writes a text that she wishes to use in her biology courses.
Can she make that decision to use her own text?
No. Since Marla has a financial interest in that decision, she must complete online the disclosure found on the Mandatory Training and Disclosures web site and let someone else (like the department chair or a dean) make that decision. (ARS Section 38-503-B) Additionally, with MCCCD, the Vice President for Academic Affairs should approve instances in which a faculty member uses his or her own text.
EXAMPLE 5
Henry is on the faculty of one of ACC's colleges. He writes books on academic matters and has a contract with Bozo Publishers, Inc., to publish those books. Bozo has offered to pay Henry a small fee monthly to alert his students to texts and other books that Bozo publishes.
Can Henry accept the fee?
No. Payment of the fee to Henry would create a conflict of interest prohibited by law. Any ACC employee may not receive compensation, either directly of indirectly, from someone other than ACC for any services that he or she is personally responsible for providing as an employee. Here, Henry is responsible for selecting texts for his students as part of his job as a faculty member. He may not accept any outside compensation connected to those decisions or activities. (ARS Section 38-505)
EXAMPLE 6
Alice is responsible for arranging foreign travel and accommodations for ACC's international studies program. She often travels to provide staff support on these study-abroad programs. Alice negotiates regularly with the Starlight Hotel chain in Europe. For the next trip, Alice decides that, based on the amount of business ACC has provided to the hotel, she will ask for a free room for her and her husband and their two children to stay in while she is staffing a program in Rome.
May she do this?
No. Alice may not use her position to gain a valuable benefit that isn't normally available to her in her job, particularly where the benefit would improperly influence her in selecting hotels for her programs. (ARS Section 38-504-C)
EXAMPLE 7
Joe, a ACC-employed architect, negotiates a contract with an outside architectural firm, DBA Associates, to design a new classroom building. Shortly thereafter, Joe goes to work as an employee of DBA Associates in Tucson, on a large, commercial construction job unrelated to ACC project.
Can ACC cancel the contract with DBA, based on the fact that Joe now works for them?
Yes. By law, ACC can cancel the contract without any penalty or further obligation. That's because Joe was significantly involved in negotiating the contract on behalf of ACC, but turned around during the contract and became an employee of the other party to it--DBA. Basically, the law authorizes ACC to cancel the contract when an ACC employee switches employers like Joe did. It applies to any employee who was materially involved in initiating, negotiating, securing, drafting or creating the contract on ACC's behalf. (ARS Section 38-511-A)
If Joe became a consultant for DBA--not an employee--the result would be different. The law does not apply if the former ACC employee--one who was materially involved as described above--becomes a consultant of the ACC contractor on some matter other than the contract between that contractor and ACC.