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Home My WebLink AboutCOM 0600.003 2012-2014 Co"'Jli. !'a R.,-7M RUDELE IS DE LIMA FTa Y 1A`r ) 201q , h(? 8 All 7: 50 ATTORNEYS AT LAW March 18, 2014 Chairman Yoshimoto, Finance Chair Poindexter, and Members of the Council Hawaii County Council County Building Hilo, Hawaii 96720 Finance Committee : Opposition to Bill 181 Dear Chairman Yoshimoto, Finance Chair Poindexter, and Members of the Council, I am Brian De Lima and I am an attorney representing Kamaaina Pumping, Inc. I previously provided testimony in opposition to Bill 181 for your hearing held on February 18, 2014. I am again submitting testimony in opposition to the existing provisions of Bill 181. The ethics laws of the County of Hawaii was first adopted in 1975 as part of our Hawaii County Code. The existing law has served the County of Hawaii for nearly 40 years and states as follows: Section 2-85. Contracts. (a) A County agency shall not enter into any contract involving services or property of a value in excess of $10,000 to procure or dispose of goods or services, or for construction, with an officer, an employee, or a business in which an officer or an employee has a controlling interest unless: (1) The contract is awarded by competitive sealed bidding pursuant to the state public procurement code; (2) The contract is awarded by competitive sealed proposal pursuant to the state public procurement code; or (3) The agency posts a notice of its intent to award the contract and files a copy of the notice with the County board of ethics at least ten days before the contract is awarded. (b) A County agency shall not enter into a contract with any person or business which represented or assisted personally in the matter by a person who has been an employee of the agency within the preceding two years and who participated while in County office or employment in the matter with which the contract is directly concerned. (1975 C.C., c. 2, art. 8, sec. 7; Am. 2002, Ord. No. 02-109, secs. 3 and 4.) The existing law only prohibits employees that have a controlling interest in the company that is contracting with the County. It should be noted that the draft before this council retains the language of controlling interest which is consistent with the requirements of the existing law. Existing law definitions section also defines financial interest as requiring a controlling interest. Comm. No. •/ Ref. To: V 7 U Ref. Date MAR 8Z614— 101 AUPUNI STREET - SUITE 133 • HILO,HAWAII 96720 - (808)969-7707 • FAX.(808)969-6606 Chairman Yoshimoto, Finance Chair Poindexter, and Members of the Council March 18, 2014 Page Two We would oppose any effort to expand the definition beyond that of a controlling interest. However, even with the strong existing language of the County Code,the additional requirement of the County Code ethics provisions for the fair treatment by all employees of the public in discharging their responsibilities and the provisions of the conflict of interest section that prohibits employees from using their position in any capacity for their own financial gain, is all sufficient to prohibit and punish self dealing. Therefore,what is the reason for the proposed change? What is the extent of the problem? What is the specific example that is targeted to be stopped, for which this new language is being proposed to stop? If it is Kamaaina Pumping Inc., it should be noted that no county employee has a controlling interest for even before the 2012 proposed county ordinance was proposed. Furthermore, the contract awarded to Kamaaina Pumping, Inc.,was awarded after compentitive sealed bids, and no employee of Kamaaina Pumping Inc., was involved in any capacity in preparing the bid specifications nor is any employee involved in the division for which Kamaaina Pumping Inc.,performs services. So what companies would be affected by this proposed new law, what employees who presently have a controlling interest would be prohibited from bidding on existing contracts? Would there be any unintended consequences. It has been suggested that County Employees should be County Employees, however, many police officers do special duty to supplement their income. This is done to prevent moon-lighting by our police force. However, if we are to adhere to the maxim of county employees have to choose whether they are to be a county employee or not, then are not our police officers prevented from doing private contract work wearing the Hawaii County Police Department uniform. It has been suggested that the private contractors pay the police officers,however, a Hawaii County employee is contacted to arrange for the special duty at county expense. This bill had been proposed and was previously considered by the Hawaii County Council in May 2010. In 2010, then Bill 230 was examined by the Hawaii County Board of Ethics. The Board of Ethics, made recommendations that would amend Bill 230. We had no objections to the recommendations of the Board of Ethics. The Board of Ethics is the body that will determine whether there are any violations of the Code. The members of the Board believed that the recommended changes of Bill 230 were not in the interest of the public. The Board of Ethics recommended several amendments to Bill 230 that would ensure that special duty police officers would continue to operate in the manner that they are currently employed. If an exception is made for special duty police officers then we are not providing equal protection to similarly situated employees. Chairman Yoshimoto, Finance Chair Poindexter, and Members of the Council March 18, 2014 Page Three Also prohibited would be any stipend or contributions to County Employees who may provide services to senior citizen and youth groups as part of on-going programs, such as swimming lessons,ukulele lessons or hula lessons. The Board of Ethics addressed those concerns by proposing amendments to Bill 230 in 2010. Frankly, what problem is being addressed by the passage of Bill 181? Under existing ethics rules contracts may be awarded only upon a sealed competitive bid process. The passage of Bill 181 would delete that provision, in essence the unintended consequence is that there will be less competition penalizing the tax payers from benefitting from competitive bid process. My client Kamaaina Pumping, Inc.,will not be affected by Bill 181 because no employee shall have any controlling interest in Kamaaina Pumping, Inc. However, Bill 181 if it is enforced by the Board of Ethics as it should be if it becomes the law, it will expose the County to lawsuits that will cost the taxpayers more money because any law passed by this Council must provide for equal protection of all citizens and must be strictly construed particularly when it prohibits a citizen from applying for a public contract. The existing code specifically prohibits any officer and employee from seeking employment or contract for services for oneself by the use or attempted use of the officer's or employee's office or position. This is the conduct that should be prohibited. This absolute prohibition based on mere employment status has no utility and will expose the county to significant liability. The Council should ask the proponents of this legislation to deal with specifics of what is the exact problem that is being prohibited? If Bill 181 is adopted, what existing contracts that were issued under the competitive bid process would be prohibited in the future? Finally, there are thousands of county employees, and thousands of family members, under the terms of the bill, any spouse of a county employee would owned a business or controlling interest would be prohibited from doing business with the County even under a competitive bid process. It is important to note our economic system is based on free enterprise and competition. Government should promote laws that are fair to all citizens and support our free enterprise system. When the existing ethic laws were written it was drafted to serve the public interest. The taxpayers benefit when more companies are able to bid on contracts. Particularly in tough economic times,the more competitive bidders the better. The competitive bidding process saves the County and taxpayers millions of dollars. Existing law prohibits self dealing and conflicts of interests so the inclusion of this new language and prohibition in Bill 181 cannot be viewed as solving any specific problem particularly when bids are sealed. II i I Chairman Yoshimoto, Finance Chair Poindexter, and Members of the Council March 18, 2014 Page Four I apologize for not being able to be present in person to answer any questions,however, I presently serve on a volunteer board that meets on the first and third Tuesdays of the month which corresponds to your meeting dates. However, should you have any questions,please do not hesitate to contact my office and I shall endeavor to answer your questions or concerns. 6 PAIJ. LIMA i i I i j