Synopsis: Morro Bay residents have expressed the opinion that Morro Bay's Capital Projects Manager, Dylan Wade, should not have been a member of the evaluation committee that recommended awarding the wastewater treatment plant (WWTP) replacement project design contract to his former employer, Montgomery, Watson, Harza Global (MWH). It has also been suggested that Mayor Janice Peters, whose brother is the Chief Financial Officer of RRM Designs, an MWH subcontractor for the design project, should not have participated in the City Council vote that approved the committee's choice of MWH.
Adding to resident concerns is the fact that Morro Bay's Municipal Code requires that contracts be given to the lowest bidder, but the bid received from MWH was the highest of the five received. As noted in the September 10, 2010 Journal article, "Morro Bay's Disenfranchised Voters," Morro Bay City staff claimed that they were legally obligated to make their choice based on their view of "best value," as opposed to lowest bid. However, a published legal opinion from a large California law firm appears to indicate that argument is invalid. According to Nossaman LLP, "Local agencies in California are generally subject to a requirement to select design professionals based on qualifications (Gov. Code § 4526), and many agencies are required to award construction contracts to the low bidder. It is possible to meld these two requirements—with qualifications of the designer considered in a prequalification phase of the procurement, and with the contract awarded to the low bidder among the prequalified proposers that have submitted a technically acceptable proposal."
Also of concern is the inability of the City Attorney to provide proof that the evaluation process was conducted fairly. When asked to produce the completed evaluation forms used to rate competing vendors against a set of common criteria, he was unable to do so.
These facts have raised concerns of possible conflicts of interest. Morro Bay City officials have stated that Wade and Peters have no financial interest in MWH or RRM Designs and that there is, therefore, no legal conflict of interest. However, some California government entities have ethics policies and ordinances that forbid any action that presents even the appearance of conflict of interest, whether or not any actual financial ties exist.
In their paper Local Government Ethics Ordinances in California, published by the California Research Bureau, Charlene Wear Simmons, Ph.D., Helen Roland, and Jennifer Kelly-DeWitt state that, "Some definitions of official corruption now include appearance of conflict of interest . . . " and that, "Translating that imprecise concept into law and regulation has proven difficult. Behavior may be legal but perhaps not ethical. Gray lines are less amenable to clear interpretation and enforcement than black and white ones, leading to disputes over intent and to public controversy."
The authors provide several examples of government ethics policies and ordinances that address the appearance of conflict of interest, including this excerpt from a City of Lawndale ordinance: "No elected or appointed public official shall engage in any business or transaction or shall have a financial or personal interest, direct or indirect, which is incompatible with the proper discharge of his/her official duties in the public interest, or which would tend to impair independence of judgment or action in the performance of his/her official duties. Personal, as distinguished from financial, interests shall include interests arising from blood or marriage relationships or close business associations."
Such policies and ordinances appear to address the fact that in California courts have found conflict of interest in situations where no specific law has been broken. A pamphlet titled, "Conflicts of Interest," published on the website of the California Attorney General, addresses this issue and states, "This office has cautioned that where no conflict is found according to statutory prohibitions, special situations could still constitute a conflict under the longstanding common law doctrine."
An explanation of conflict of interest based on common law is provided: "The common law is a body of law which has been made by precedential court decisions and can be found in the reported California Supreme Court and Appellate Court cases. This law differs from statutory law which is created by the combined action of the State Legislature and the Governor . . . " It is noted that, "A good expression of the common law doctrine is found in Noble v. City of Palo Alto (1928) ' . . . A public officer is impliedly bound to exercise the powers conferred on him with disinterested skill, zeal, and diligence and primarily for the benefit of the public.' "
The pamphlet, which was prepared by the Division of Civil Law, includes an "Issue Spotter Checklist" that identifies each type of conflict of interest recognized by the State and tips for spotting that kind of conflict of interest in government activities. The types of conflict include several related to financial issues including "Appearance of Financial Conflict of Interest." It is noted that government officials may be required to "disqualify themselves from participating in decisions in which there is an appearance of a financial conflict of interest."
The document includes warnings such as this one: "Though one might urge that the Political Reform Act of 1974 has now preempted the common law doctrine against conflict of interest, and therefore that which is not specifically prohibited is now permitted, we would caution against such a conclusion for the reasons (1) that the courts have traditionally predicated their decisions on the dual basis of the statutes and the common law rule…," and (2) "were a violation of the common law rule found to exist, such could form the basis of an allegation of willful misconduct in office within the meaning of section 3060 et seq."
These statements appear to indicate that whether or not one can prove that a government official actually received money in exchange for favors, that official may still be found to have a conflict of interest. Some residents believe this is sufficient to indicate that City of Morro Bay staff and officials need to exercise more caution and to refrain from participating in decisions that involve the awarding of contracts that benefit former employers and relatives.