When counties make the headlines, it is sometimes due to actions that result from conflicts of interest in procurement, or the appearance of conflict. It is good practice to review the requirements in the Texas statutes related to conflict of interest and ensure that officials and employees of the county avoid violations of the statutes.
According to Government Code 572.001, a conflict of interest may exist if government officials or employees have a “direct or indirect interest, including financial and other interests, or engage in a business transaction or professional activity, or incur any obligation of any nature that is in substantial conflict with the proper discharge of the officer’s or employee’s duties in the public interest.”
Local Government Code Chapter 176 requires disclosure of certain relationships between local government officials/employees and vendors. Disclosure from both parties to the relationship should be received.
Local government officials must disclose employment and business relationships with a vendor if the vendor enters into a contract with the local governmental entity or the local governmental entity is considering entering into a contract with the vendor, if the vendor falls within the activities described in the section for vendors below. The requirement also applies to the official’s or employee’s family within the first degree of consanguinity (blood) or affinity (marriage) as defined by the state law in Government Code Chapter 573.
Vendors who enter or seek to enter into a contract with a local governmental entity must file a conflict of interest disclosure if:
- they have employed a government officer or family member that involved payment of taxable income of more than $2,500 in the preceding 12 months; or
- they have given an officer or family member one or more gifts, defined as a benefit offered by a person, including food, lodging, transportation, and entertainment accepted as a guest, totaling more than $100 in the preceding 12 months.
A county official or employee shall file the conflicts disclosure statement with the records administrator of the county not later than 5 p.m. on the seventh business day after the date on which the individual becomes aware of the facts that require the filing of the statement. Signature of the official or employee acknowledges that the statement is made under oath under penalty of perjury. Records of disclosure must be maintained by the county.
Employment of an employee may be terminated for not following disclosure requirements. A vendor’s contract sale or purchase of real property, goods, or services may be terminated for non-disclosure. Violations of this section of the law have criminal penalties, as well.
When an entity receives a disclosure required under this section, the entity shall submit a copy of the disclosure to the Texas Ethics Commission, which sets the format of the disclosure form and information that must be disclosed.
If you become aware of a situation that appears to require disclosure, you should carefully review the Texas statutes described above to determine next steps that may be required. You do not want to be in a news story disclosing a conflict of interest!
By Narita Holmes, MBA, CPA, CIA
Government Procurement and Compliance Consultant
Former Ector County Purchasing Agent