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Conflict of Interest: Employee-Vendor Relationships

Learn about UC's Conflict of Interest policy and process for Employee-Vendor Relationships.

The UC Community is committed to the highest ethical standards in furtherance of our mission of teaching, research, and public service. In an effort to uphold the trust of the people of the State of California; our policies, procedures, and standard provide guidance for maintaining our core values of Integrity, Excellence, and Accountability, and Respect. To ensure compliance of all applicable laws and policies, it is the University's policy to keep separate an employee's University and private interests, and to safeguard UC and its employee from charges, or appearance thereof, favoritism in the acquisition of goods and services.

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Laws, Policies, and Regulations

California Political Reform Act (PRA)

Adopted in 1974 as a response to the lack of transparency and trust in the government, the California Political Reform Act is the most foundational conflict of interest law in California governing campaign finance, financial conflicts of interest by public officials, lobbyist registration and reporting, post-governmental employment, political mass mailing at public expense, and gifts and honoraria given to public officials and candidates.

As a public institution, all members of the University must adhere to the law as a public official. With regards to Conflicts of Interests, the Act requires University employees to refrain from making, participating, or influencing a decision in which they have a financial interest.

An individual makes a decision by authorizing a purchase, voting as part of a committee action, or making an appointment.
An individual participates in making a decision by providing advice or making recommendations to the decision-maker.
An individual influences a decision by communicating with the decision-maker. 

A violation of the Act can be pursued in three ways: (i) administrative proceedings by the FPPC Enforcement Division; (ii) criminal prosecution by a local district attorney or the state attorney general; and/or (iii) civil action by the public, certain government agencies, or the FPPC Enforcement Division. 

For more information regarding the California Political Reform Act, visit the Fair Political Practices Commission site.

California Public Contract Code (PCC)

With respect to Conflict of Interests, the legislative intent of the CA Public Contract Code is to eliminate favoritism, fraud, and corruption in the awarding of public contracts. With the approval of Senate Bill 1467, the Public Code Contract was amended to incorporate conflict-of-interest provisions specifically to the Regents of the University of California and its course of business contracting.

Current UC Employees as Independent Contractors

Public Contract Code § 10516 prohibits active UC employees from contracting with the University to provide goods and/or services as an Independent Contractor. However, the University may contract for goods and/or services from an active employee provided that the UC employee has teaching or research responsibilities and the goods and/or services are not available either from commercial sources or from within the University. 

This restriction is not applicable to student employees for payment for additional campus activities or engagements outside of the scope of their primary University employment. 

An employee with teaching or research responsibilities is an academic appointee who is engaged in teaching and/or research activities, and certain staff employees (e.g. Staff Research Associates) who may participate in teaching or research activities. 

University departments that require the services of an active UC employees who does not fit the criteria to do business as an Independent Contractor must work with Human Resources to compensate the employee through the payroll system, if appropriate, in accordance with existing law and University policy.  

Former UC Employees as Independent Contractors 

Public Contract Code § 10517 prohibits former UC employees from contracting with the University to provide goods and/or services as an Independent Contractor for a period of:

  • Two (2) years beginning on the date the person separated from the University, if the individual was engaged, using their official UC capacity, in any of the negotiations, transactions, planning, arrangements, or any part of the decision-making process relevant to the proposed contract; or

  • One (1) year beginning on the date the person separated from the University, if the individual was employed by the same department as that of the requesting department's proposed contract in a policy-making position.

Otherwise, if none of the above situations are applicable, the University may purchase or lease goods from or contract for services with any former employee.

This prohibition shall not apply to any proposed contract requiring the person's services as an expert witness in a civil case or to a contract for continuation of an attorney's services on a matter such individual was involved with prior to leaving the University. 

Penalties for failure to comply with the Public Contract Code § 10516 et seq include charges of felony and/or misdemeanors, contract nullification, and doubled damages to the University. 

For more information regarding the California Public Contract Code, visit the California Legislative Information site.

UC BUS-43: Purchases of Goods and Services (BUS-43)

BUS-43 sets the procurement policies and procedures for the University by incorporating State law, bylaws and policies of the University, and procurement best practices. The aforementioned restrictions by the California Political Reform Act and Public Contract Code are incorporated into BUS-43 to denote the University's responsibility in adhering to State Law. 

Furthermore, as extension of University policy, pursuant to Section III, Part 5(b); the University may purchase or lease goods from, or purchase services with the near relative of any employee, provided that the UC employee did not make, participate in making, or influence the decision for acquisition and the goods and/or services are not available from the University's own facilities. No UC employee shall be in a decision-making position, or reporting relationship, with a near relative contracted by the University. 

A near relative is the spouse, child, parent, brother, sister, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law of a University employee, and step-relatives in the same relationship. Near relative also includes the domestic partner of a University employee and a relative of the domestic partner in one of the foregoing relationships.

For more information regarding BUS-43, visit UCOP Purchases of Goods and Services Policy Manual.

Employee-Vendor Relationship Disclosure (EVRD) Review Process

If an Employee-Vendor Relationship, also referred to as employee-supplier relationship, exists such that:

  • An active UC employee;
  • An active UC employee owning or controlling a financial interest within a vendor;
  • A former UC employee; 
  • A near relative of a UC employee;
  • A near relative of a UC employee owning or controlling a financial interest within a vendor

proposes to contract with the University for the purchase or lease of goods, or purchase of services, then such relationship must be disclosed at the supplier setup process through Payment Compass or within a Marketplace requisition. In the event of a change in a vendor's status such that an Employee-Vendor Relationship becomes applicable, it is the responsibility of the department to notify Procurement and Contracts of such change. 

The Employee-Vendor Relationship Disclosure (EVRD) Review Process requires departments to submit the following to the ASK case for any supplier setup EVRD reviews or within the Marketplace requisition:

 ** The Source Selection and Price Rationale Justification Form is required for any transactions involving active UC employee to justify how the goods and/or services are not available either from commercial sources or from within the University.

Submission of the forms do not constitute approval and departments may not request nor an individual/vendor provide goods and/or services to the University without Procurement and Contract's prior authorization in the form of a purchase order (PO) or Agreement.

After a careful analysis of the request Procurement and Contracts shall provide an impartial review and if deemed appropriate within policy and law an approval shall be provided.

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This section is a summary of Conflict of Interest laws, regulations, and policies. In case of conflict of interpretation, the actual laws, regulations, and policies prevail. For more information, please reach out to Campus Counsel or General Counsel for guidance.