Conflicts of Interest in State Purchasing

California’s Public Contract Code, in Division 2, Part 2, Chapter 2, Article 8, contains conflict of interest provisions in the state’s acquisition of goods and services when contracting occurs by state agencies.

Section 10410 prohibits any officer or employee in the state civil service or other appointed state official from engaging in any employment, activity, or enterprise from which the officer or employee receives compensation or in which the officer or employee has a financial interest and which is sponsored or funded by any state agency or department through or by a state contract unless the employment, activity, or enterprise is required as a condition of the officer’s or employee’s regular state employment.

In addition, officers and employees the state civil service are prohibited from contracting on his or her own individual behalf as an independent contractor with any state agency to provide services or goods.

Section 10411 prohibits any retired, dismissed, separated, or formerly employed person of any state agency or department employed under the state civil service or otherwise appointed to serve in state government from entering into a contract in which he or she engaged in any of the negotiations, transactions, planning, arrangements, or any part of the decision-making process relevant to the contract while employed in any capacity by any state agency or department. This is a 2-year revolving door limitation from the date the person left state employment.

In addition, for a period of 12 months following the date of his or her retirement, dismissal, or separation from state service, no person employed under state civil service or otherwise appointed to serve in state government may enter into a contract with any state agency, if he or she was employed by that state agency in a policymaking position in the same general subject area as the proposed contract within the 12-month period prior to his or her retirement, dismissal, or separation.

Section 10412 requires each contractor who enters into a state contract with the state for $10,000 or more to be assigned an identification number by the department. Each contractor who has been assigned a number, must list the number on each contract he or she enters into with the state, regardless of the amount of the contract. In the case of a corporation or firm, the president’s assigned number is used exclusively on each contract. The assigned number remains unchanged regardless of future name changes.

Section 10413 allows an employee or state officer, not including a member of the board of directors, of a district agricultural association to receive compensation or have a financial interest for purposes of contracting or employment with another district agricultural association.