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When Conflicts Can Help a Town Save Money -- And How to Handle Them
Tuesday, September 30th, 2008
Robert Wechsler
Sometimes a conflict of interest can help a community save money. An
official with a relationship to a company might be able to negotiate a
better deal for his town, as long as his company gets the business and
the credit. But is this legitimate, and even if it is, how should it be
handled?
According to an article in yesterday's Newburyport (MA) Daily News, this issue arose with respect to Newburyport's deal to place a solar array on top of its middle school's roof. The town's mayor depended in his negotiations primarily on a member of the Energy Review Committee, whose members are appointed by the mayor. This ERC member/negotiator happened to have recently consulted for a company to set up a subsidiary, which had been chosen by the solar contractor to help set up the town's solar energy system. In addition, since July the negotiator had been in talks with the subsidiary about a job with it.
The mayor insisted the negotiator had obtained for the town a deal it couldn't refuse. But in doing this, the negotiator had (1) sought and received from the state a waiver of the competitive bidding rules; (2) not disclosed his conflict until after the deal had been made and approved by the mayor (but not yet by the council); (3) even then insisted there was no conflict; and (4) the mayor said that he had done due diligence in getting other offers, but would not show his work to council members or school committee members until the deal was signed.
In other words, there was a failure to disclose and a lack of transparency. If the conflict was such a boon to the town, and the mayor could say this publicly, which means that the bidding company would know it was underpricing the deal (if this were true), then why not disclose the conflict up front and let council and ed committee members know how good the deal was by showing them what others were offering? How else could they fairly represent their constituents' interests?
Insisting that the conflict didn't matter or didn't exist, and that open and honest government and a passion for clean energy were principal in the minds of the mayor and his negotiator, only serves to make the whole affair look more questionable.
What makes the mayor's decision to rush into approval of the contract, arguing that it's a bargain for the town, look even worse is the fact that another town, using the same consultant for a similar contract, receiving the same waiver of competitive bidding rules, is investigating whether the contract is truly best for the town. When things don't look on the up-and-up, and the contract hasn't been fully approved, this seems to be the best way to make it clear to council members as well as the public that officials with a conflict are not necessarily acting in the best interests of the town, although this may turn out to be the case.
Robert Wechsler
Director of Research-Retired, City Ethics
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According to an article in yesterday's Newburyport (MA) Daily News, this issue arose with respect to Newburyport's deal to place a solar array on top of its middle school's roof. The town's mayor depended in his negotiations primarily on a member of the Energy Review Committee, whose members are appointed by the mayor. This ERC member/negotiator happened to have recently consulted for a company to set up a subsidiary, which had been chosen by the solar contractor to help set up the town's solar energy system. In addition, since July the negotiator had been in talks with the subsidiary about a job with it.
The mayor insisted the negotiator had obtained for the town a deal it couldn't refuse. But in doing this, the negotiator had (1) sought and received from the state a waiver of the competitive bidding rules; (2) not disclosed his conflict until after the deal had been made and approved by the mayor (but not yet by the council); (3) even then insisted there was no conflict; and (4) the mayor said that he had done due diligence in getting other offers, but would not show his work to council members or school committee members until the deal was signed.
In other words, there was a failure to disclose and a lack of transparency. If the conflict was such a boon to the town, and the mayor could say this publicly, which means that the bidding company would know it was underpricing the deal (if this were true), then why not disclose the conflict up front and let council and ed committee members know how good the deal was by showing them what others were offering? How else could they fairly represent their constituents' interests?
Insisting that the conflict didn't matter or didn't exist, and that open and honest government and a passion for clean energy were principal in the minds of the mayor and his negotiator, only serves to make the whole affair look more questionable.
What makes the mayor's decision to rush into approval of the contract, arguing that it's a bargain for the town, look even worse is the fact that another town, using the same consultant for a similar contract, receiving the same waiver of competitive bidding rules, is investigating whether the contract is truly best for the town. When things don't look on the up-and-up, and the contract hasn't been fully approved, this seems to be the best way to make it clear to council members as well as the public that officials with a conflict are not necessarily acting in the best interests of the town, although this may turn out to be the case.
Robert Wechsler
Director of Research-Retired, City Ethics
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