Conflict of Interest - Part-time Consultant
Case Citations: [72-9]
The consulting engineering firm of Jones & Smith conducts a design study and prepares sewer system specifications for City A. Engineer Doe heads up the design effort for Jones & Smith, but leaves the firm and is hired by Company Y about six months before construction and installation bids are requested. The city puts the project up for construction and installation bids. Company X's proposal wins and they are awarded the construction and installation contract. Company Y is one of the unsuccessful bidders.
Jones & Smith is under contract by City A to coordinate the implementation, acceptance and evaluation of the system to be supplied by Company X. The city insists that Jones & Smith give a part-time consulting contract to Engineer Doe, who still works for Company Y, citing Doe's familiarity with the design study. Company X expresses concern about the potential conflict of interest in having an employee of a rival bidder associated with the firm (Jones & Smith) which is to evaluate its performance on a fixed price contract. Neverthless, Jones & Smith retain the consulting services of Engineer Doe, and Doe provides engineering services on the sewer system project for City A.
1. Was it ethical for Jones & Smith to retain the services of Engineer Doe?
2. Was it ethical for Engineer Doe to provide professional services for Jones & Smith while still in the employ of Company Y?
The facts presented paint a most unusual picture wherein a client, having awarded a competitive contract to one company insists upon having an employee of a rival company which was not successful in obtaining a construction and installation contract nevertheless serve as a consultant to the design firm which prepared the specifications for the construction and installation. The reason given by the city for this unusual arrangement may appear reasonable on first examination in wanting to have Engineer Doe's expertise and experience on the project. What is questionable, however, is the dubious position of Engineer Doe as a part-time consultant to Jones & Smith in evaluating the work of Company X while still an employee of Company Y, which was an unsuccessful bidder. On the basis of that questionable relationship we have to inquire whether Engineer Doe's basic loyalty in performing his function would be to his present employer, Company Y, to his immediate client, which will be the Jones & Smith firm, or to his ultimate client, City A.
Code 7(a) states that an engineer may not engage in practice in connection with a specific project in which he has gained particular and specialized knowledge without the consent of all parties. However, we believe the intent of Code 7(a) is to protect an employer and parties having an interest in his practice from a former employee utilizing this special knowledge to their detriment and therefore does not apply in this case. As we expounded at some length in Case 72-9, the duty of an engineer under Code 8 is "to prevent the conflict of interest from arising." We recognized in that discussion that the avoidability of a conflict of interest is a subjective judgment related to the time when the conflict becomes or should become apparent.
In the facts before us the victim of the conflict of interest is not the city-at least City A must be presumed to believe it will not suffer from the conflict because it is the party insisting upon the arrangement. Rather the potential victim of the conflict is Company X. Even though Code 8 refers to the interests of employer or client and Company X is in neither category as regards Engineer Doe, we believe it is reasonable and proper under these circumstances to extend the logic of Code 8 to other innocent parties in interest as being consistent with that reference in Code 7(a). Jones & Smith has the responsibility to monitor the installation for the benefit of the city. It should not therefore acquiesce in the demand that it retain a particular individual to perform that responsibility, particularly when the retention of individual in question gives rise to a conflict of interest. Applying the rationale expressed in Case 72-9 we believe that Engineer Doe would also be in conflict with Code 8 in going ahead with the arrangement.
1. It was unethical for Jones & Smith to retain the services of Engineer Doe.
2. It was unethical for Engineer Doe to provide professional services for Jones & Smith while still in the employ of Company Y.
*Note-This opinion is based on data submitted to the Board of Ethical Review and does not necessarily represent all of the pertinent facts when applied to a specific case. This opinion is for educational purposes only and should not be construed as expressing any opinion on the ethics of specific individuals. This opinion may be reprinted without further permission, provided that this statement is included before or after the text of the case.
Board of Ethical Review
William J. Deevy, P.E.; Joseph N. Littlefield, P.E.; James D. Maloney, P.E.; Louis W. Sprandel, P.E.; Robert E. Stiemke, P.E.; William R. Gibbs, P.E., chairman.
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