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CHAPTER VIII

10. PROVISIONS RELATED TO EMPLOYEES ENGAGED IN PROCUREMENT OF GOODS AND SERVICES

10.1 Expansion of Code of Ethics.

This Paragraph 10 expands and supplements the Code of Ethics contained in Paragraphs 1-9 of this Chapter, for Components' officials and employees, including those officials and employees authorized to execute contracts for a Component or to exercise discretion in awarding contracts.

10.2 Adherence to Policies Relating to Procurement.

All officials and employees authorized to execute contracts for a Component or to exercise discretion in awarding contracts shall adhere to all System and Component policies, handbooks, guidelines and protocols designed to promote ethical and lawful behavior in the procurement process.

10.3 Disclosure of Conflicts of Interest.

Employees and officials involved in procurement or contract management for a Component shall promptly disclose to the Component any potential conflict of interest specified by state law or System or Component policy that is known by the employee or official with respect to any contract with a private vendor or bid for the purchase of goods or services from a private vendor.

10.4 Prohibited Contracts.

A Component may not enter into a contract for the purchase of goods or services with a private vendor with whom any of the following Component employees or officials have a financial interest:

(1) A member of the Board of Regents, unless, pursuant to Education Code, Section 51.923(e), the member does not have a "substantial interest" in the business entity or vendor;

(2) The Chancellor, President, Vice Chancellor and General Counsel, Chief Procurement Officer, or Procurement Director of the Component; or,

(3) A family member related to an employee or official described by Subparagraph (2) within the second degree of affinity or consanguinity.

10.41    A Regent, employee or official has a prohibited financial interest in a procurement if the Regent, employee or official:

(1) Owns or controls, directly or indirectly, or otherwise has an ownership interest of at least one percent in the entity seeking the contract or procurement, including the right to share in profits, proceeds, or capital gains; or

(2) Could reasonably foresee that a contract with such an entity might result in a financial benefit to the employee or official or to a third party or parties in whose welfare the employee or officer is interested.

10.42    A financial interest prohibited by this Subparagraph does not include a retirement plan, a blind trust, insurance coverage, or an ownership interest of less than one percent in a corporation.

10.5 Notice to Employees and Officials of Expected Standards of Conduct.

Employees and officials, including those engaged in procurement of goods and services, are hereby put on notice that their primary responsibility is to accomplish the duties and responsibilities assigned to the positions they hold. All employees and officials shall comply with the standards of conduct found in these System Rules and Regulations.

10.6 Compliance with Law Required.

Each official or employee of a Component is expected to obey all federal, state, local laws, and these System Rules and Regulations regarding ethics and shall be subject to disciplinary action for violation of those laws, rules and regulations.

10.7 Conflict of Interest Prohibited.

Each employee or official of a Component is prohibited from having a direct or indirect financial or other interest; engaging in a business transaction or professional activity; or incurring any obligation that conflicts with the proper discharge of the employee's or official's duties related to the public interest.

10.8 Conflict of Commitment Prohibited.

Each employee or official of a Component is prohibited from participating in activities outside the Component which interfere with the employee’s or official’s duties and responsibilities to the Component.

10.9 Outside Employment or Activities.

Engaging in outside employment or activities, including board service, is not a right or entitlement and may be permitted when, in the sole judgment of the President or his/her designee, the employment or activity does not:

(1) Interfere with the employee or official's ability to perform his/her public responsibilities and duties because of demands upon the individual's time;

(2) Impair the employee or official's independence of judgment in fulfilling his/her public responsibilities and duties;

(3) Reasonably expect or require the employee or official to disclose confidential information acquired in or because of his/her public responsibilities and duties; or

(4) Reasonably expect or require the employee or official to advance a position or course of action that conflicts with his/her public responsibilities and duties or the best interests of the Component as determined by the President.

An employee or official, desiring to engage in outside employment or activities, shall, through his or her supervisor(s), make a written request to the President in which he/she addresses the above four factors with specificity, providing copies of pertinent documents and such other information as the President may require in order to make a decision.

10.10 Reporting of Conflicts of Interest.

As soon as an employee or official discovers or learns that he/she may have a conflict of interest regarding a procurement or contract management, he/she shall:

(1) Promptly disclose the same to the President through his/her supervisors, providing the specifics of the conflict, including but not limited to, disclosure of the name(s) of the person(s) or entity(ies) involved; the exact nature of the relationship; and such other information or documents as the President may require;

(2) Discontinue work on the procurement or contract management in question and recuse him/herself from involvement in the same; and

(3) Expect that his/her supervisors will deny physical or electronic access to files and documents related to the procurement.

10.11 Acting as Agent Not Permitted.

An official or employee of a Component may not act as an agent for another person in the negotiation of the terms of an agreement relating to the provision of money, services, or property to the Component.

10.12 Use of Component Resources.

Component funds, personnel, facilities, property (real or personal) shall not be used for the personal use, benefit, or profit of any individual employee or official or for a third party in whose welfare the employee or official is interested. A more detailed policy governing use of Component resources shall be created.

10.13 Training Required.

Training shall be mandated for officers and employees authorized to execute contracts for a Component or to exercise discretion in awarding contracts, including training in ethics, selection of appropriate procurement methods and information resources purchasing technologies.

10.14 Publication of Policies.

The provisions of this Chapter VIII, Paragraphs 4. 8, 9 and 10, shall be included in the policies of all Components; published on their web pages; included in procurement contract manuals; and generally be made known to vendors seeking to provide goods and services.

10.15 Reporting to Board of Regents or Designee.

A Component’s contract management office or procurement director shall immediately report to the Chancellor, in his or her role as Secretary to the Board of Regents, any serious issue or risk that is identified with respect to a contract monitored under these Rules and Regulations.