Effective January 1, 2006, Chapter 176 of the Texas Local Government Code requires that any person or entity who contracts or seeks to contract with a government entity for the sale or purchase of property, goods, or services (as well as agents of such persons hereafter referred to as vendors) must submit a Conflict of Interest Questionnaire with the government entity. Each covered person or entity who seeks to contract or who contracts with a government entity is responsible for complying with any applicable disclosure requirements.
Therefore, the River Authority is requiring all vendors and potential vendors to complete the CONFLICT OF INTEREST QUESTIONNAIRE (Form CIQ). These forms were prepared by the Texas Ethics Commission, at the direction of the legislature, who strongly recommends you become familiar with Texas House Bill 914.
The Conflict of Interest Questionnaire must be filed no later than the seventh business day after the date that the vendor begins contract discussions or negotiations with the River Authority or submits to the River Authority an application, response to a request for proposal qualifications or bid, correspondence, or other writing related to a potential agreement. The vendor shall also file an updated questionnaire not later than September 1 of each year in which a covered transaction is pending, and the seventh business day after the date of an event that would make a statement in the questionnaire incomplete or inaccurate.
Q: What is HB 914?
A: Adopted by the 79th Legislature, House Bill 914 (HB 914) added chapter 176 to the Texas Local Government Code. HB 914 requires the disclosure of certain conflicts of interest by local government officers and by vendors who sell goods or services to local government entities.
Q: What does HB 914 require from local government officers?
A: HB 914 requires LGOs to complete forms disclosing their relationships with actual or potential vendors.
Q: What is a “local government officer”?
A: An LGO is a member of the governing body of a “local government entity” (LGE). An LGO is also a director, General Manager, administrator, president, or other person designated an officer of the LGE. For the River Authority, LGOs are members of the Board of Directors and the General Manager.
Q: What are the forms called and where can we find them?
A: The form for LGOs is a “conflict of interest disclosure statement”. The form for vendors is a “Conflict of Interest Questionnaire”. The Texas Ethics Commission was charged with developing these forms, which are posted at www.ethics.state.tx.us/whatsnew/conflict_forms.htm.
Q: When do LGOs have to file CIS forms?
A: An LGO must file a CIS regarding a specific vendor if the LGO has an employment or business relationship with the vendor and the River Authority has contracted with the vendor or is considering doing business with the vendor. The form must be filed within seven days of the date the LGO becomes aware of facts requiring disclosure.
Q: What relationships must be disclosed?
A: An LGO must disclose a relationship with a vendor if the officer or a member of his family (see below) receives taxable income because of an employment or business relationship with the vendor. An LGO must also disclose gifts offered to the LGO or his family members by a vendor within the past 12 months if the value of the gifts was $250 or more.
Q: What family relationships are covered?
A: For purposes of the disclosure requirements, family relationships include first-degree relatives, both by consanguinity (blood) and by affinity (marriage). This includes the LGO’s parents, children, sibling, spouse, the spouses of the LGO’s parents and children, and the parents and children of the LGO’s spouse.
Q: When does an LGO have to disclose gifts?
A: An LGO must disclose a vendor’s offer of gifts worth $250 or more. The CIS form requires an LGO to disclose an offer of a gift even if the officer refused the gift. However, an LGO does not have to disclose food, lodging, transportation, or entertainment accepted as a guest, even if the value exceeded $250.
Q: Does the LGO still have to file the “substantial interest” affidavit under Texas Local Government Code chapter 171?
A: Yes. These are separate and independent requirements. Thus, an LGO who has a substantial interest in a transaction involving the River Authority may need to complete both the CIS and the substantial interest affidavit.
Q: What if an LGO owns a business that is entering into a contract with the River Authority?
A: An LGO who owns a business that contracts with the River Authority must file a CIS, in his capacity as a board member or General Manager, and a CIQ, in his capacity as a vendor.
Q: What if the LGO or vendor has nothing to disclose?
A: Out of an abundance of caution, vendors should complete a CIQ, even if they have nothing to disclose. The word “None” should be written on lines 3, 4 and 6 of the CIQ.
Q: Does HB 914 apply to employees of the River Authority?
A: The only employee to whom the statute directly applies is the General Manager.
Q: Does an LGO have to file a CIS if one of the LGO’s relatives is employed by the River Authority?
A: No. HB 914 does not apply when the River Authority employs a relative of an LGO as a River Authority employee. Such relationships continue to be regulated by the nepotism laws.
Q: What is the penalty for a violation?
A: There is a criminal penalty for failing to file a required disclosure statement. Knowing failure to file the conflicts disclosure statement is a Class C misdemeanor. It is a defense to prosecution if the officer files the statement within seven business days of receiving notice of a violation.
Q: What forms are vendors required to file?
A: An individual or business entity that contracts or seeks to contract for the sale or purchase of property, goods, or services with a district must file a CIQ. An “agent” of a vendor in the vendor’s business with the River Authority must also file a CIQ.
Q: When and where must a vendor file the CIQ?
A: The CIQ must be filed with the General Manager within seven days of beginning contract negotiations, or submitting an application, bid, response to a request for proposal, correspondence, or other writing related to a potential agreement with a district. The forms must be updated annually.
Q: What will the River Authority do with the forms it receives?
A: The River Authority has a responsibility to make public the information received under this statute. The River Authority must post CIS forms received from LGOs and CIQ forms received from vendors on the River Authority’s internet Web site. The River Authority is also responsible for maintaining a list of LGOs and making that list available to the public.
Q: What is the River Authority’s obligation to notify vendors of this requirement?
A: The statute does not require LGEs to inform vendors of the disclosure requirements, nor does the statute impose a penalty on districts for doing business with vendors who fail to file CIQs. However, the vendors face criminal liability.
Q: If the River Authority does business with another LGE or an ESC, does it have to complete a CIQ?
A: No. The State of Texas, a political subdivision of the state, the federal government, and foreign governments are not subject to the disclosure requirements.
