Administrative Policies and Procedures Manual - Policy 3720: Conflicts of Interest
Date Originally Issued: 07-30-1982
Revised: 03-10-2006, 08-01-2006, 07-01-2010
Authorized by RPM 6.4 ("Employee Code of Conduct and Conflicts of Interest")
Process Owner: University Counsel
Employees of the University shall maintain the highest standards of business ethics in transactions with the University, with state, federal, and local governments, and with the public. Employees are expected to perform their duties faithfully and efficiently and never to give rise to suspicion of improper conflict with interests of the University. Subject to specific University administrative policies, employees must avoid any conflict of interest that may affect their independent judgment in the impartial performance of their duties and may not use their positions to enhance their direct or indirect financial interest or use confidential information learned as employees for anyone's private gain. University employees as well as individuals and firms proposing business transactions with the University shall disclose in advance and in writing any direct or indirect financial interest employees may have in a transaction with the University. Normally employees with a direct or indirect financial interest in a transaction may not participate in any University decisions related to such transaction, except as specified in this policy. Transactions in which the University President has any financial interest must be approved by the Board of Regents. This policy applies to all employees (faculty and staff) of the University, to public and student members of University advisory boards and committees, and other volunteers serving in an official capacity. For the purposes of this policy, the term "employee" shall include all of these individuals. Members of the Board of Regents are governed by RPM 1.8 ("Regent Code of Conduct and Conflicts of Interest Policy").
All employees shall comply with state conflict of interest laws (including primarily the Governmental Conduct Act, Section 10-16-1. et seq., NMSA 1978, and the Procurement Code, Sections 13-1-25, et seq., NMSA 1978), the requirements of which are incorporated in this policy, as well as other applicable University policies. No employee shall have any direct or indirect financial interest in any contract for building or improving or for furnishing of supplies or services to the University except as permitted pursuant to the University Research Park Act or unless such contract complies with the provisions of the New Mexico Governmental Conduct Act and the Procurement Code. Any employee who violates this policy or related administrative policies shall be subject to disciplinary action, up to and including dismissal. The purpose of this policy is to set principles for identifying potential conflicts and required procedures for reviewing and addressing those potential conflicts that occur to assure that they do not improperly affect the University's educational, research and public service missions, or violate state and federal laws.
2. Favors and Gratuities
Employees shall not directly or indirectly accept favors or gratuities from any firm, person, or corporation that is engaged in, or attempting to engage in, business transactions with the University. On occasion companies doing business with the University will send employees small items of appreciation, e.g., coffee mugs with a company logo. Such gifts may be accepted if they do not have any significant economic value. If an employee has any question regarding the acceptance of a favor or gratuity, he or she should discuss the matter with a supervisor or other appropriate University official for a determination of the proper course of action. Deans, directors, or department heads may adopt more restrictive policies if appropriate for the department.
3. Disclosure of any Financial Interest
At the beginning of each fiscal year the University President, the executive vice presidents, and all other vice presidents must file a Financial Disclosure Statement with University Counsel and the Executive Vice President for Administration on the form promulgated by the Secretary of State under the Financial Disclosure Act, 10-16A-1, NMSA 1978. The form can be found at http://www.sos.state.nm.us/Public_Records_And_Publications/Financial_Disclosures_Overview.aspx . The Financial Disclosure Statement form shall be supplemented to the extent necessary to set forth financial interests as defined in this policy.
All employees and all vendors or other contractors with the University must disclose any financial interest a University employee may have in a proposed contract or other business transaction with the University in advance and in writing to the employee's dean or director and the applicable office listed in Section 3.1. below. University units proposing a contract or other business transaction in which they know or reasonably believe that a University employee has a financial interest must also disclose that fact to the dean or director to whom the unit reports and to the applicable office listed in Section 3.1. below. In addition, any contractor proposing a contract or other business transaction with the University involving $20,000 or more must fill out and sign the form attached to this policy as Exhibit A. and submit it to the office specified in Section 3.1. below, regardless of whether or not a University employee has a financial interest.
For the purposes of this policy, "financial interest" includes 1) any direct or indirect financial interest; 2) any transaction between the University and the employee or a member of the employee's immediate family (immediate family includes the employee's spouse, domestic partner, brother, sister, parent, child, or in-law); or 3) any transaction between the University and a business entity (business entity means corporation, sole proprietorship, partnership, LLC, or similar entity) if the employee or a member of the employee's immediate family meets one or more of the five criteria listed below:
(1) has an ownership interest (other than as owner of less than one percent (1%) of the stock of a publicly traded corporation) in the business entity of a University vendor or contractor;
(2) is an employee, partner, officer, director, trustee, or paid consultant to such business entity;
(3) has received grant support or benefited from a donation from such business entity (when a procurement is being proposed refer to Section 5.3. herein for additional information);
(4) has received support for travel expenses, honoraria, or similar forms of remuneration from such business entity; or
(5) has a right to receive royalties from such business entity.
3.1. Approving Offices
Based on the nature of the transaction, full disclosure of the circumstances of the employee's financial interest should be sent to the applicable office listed below. That office will determine whether the transaction is one at "arm's length," as defined in Section 4. herein, whether there are other reasons the transaction should not go forward, and whether other reviews and approvals are necessary.
3.1.1. Purchasing Goods by or for the University
All proposed transactions in which the University would be purchasing goods and in which a University employee appears to have a financial interest must be approved by the University Purchasing Department or the University Hospital Purchasing Office.
3.1.2. Purchasing Services by or for the University
All proposed transactions in which the University would be purchasing services and in which a University employee appears to have a financial interest must be approved by the applicable accounting office before final approval by the Purchasing Department or Hospital Purchasing Office. In appropriate cases a Service Provider Questionnaire (SPQ) must be submitted in accordance with UAP 4325 ("Purchasing Services from Independent Contractors").
3.1.3. Agreement for the Use of University Resources or Purchase of University Services
All proposed agreements for the use of University space, equipment, or personnel, or for the purchase of services from University personnel by an entity in which a University employee appears to have a financial interest must be approved by the dean or director responsible for the space, equipment, or personnel.
4. "Arm's Length" Transactions
The University may enter into a contract in which an employee has a financial interest if the transaction is one at "arm's length." Full disclosure as required by Section 3. herein, must have been made in advance of any such transaction. To qualify as an "arm's length" transaction, the employee with a financial interest must not be in a position to exert influence over the transaction because of his or her employment with the University. Moreover, the employee must not have participated directly nor indirectly in the University's decision with respect to the transaction (such as by influencing the decision to enter into the transaction, helping to prepare the specifications, or having input or influence in deciding to whom the contract is awarded). An example of an "arm's length" transaction might be a contract in which an employee has a week-end catering business and caters a reception for a college in which the employee is not employed.
As a matter of policy, transactions will not be considered "arm's length" where a University employee has a financial interest in the proposed transaction and that employee reports to the same dean or director as the University unit proposing the transaction. In addition, transactions involving technology created or developed at UNM will not be considered "arm's length."
5. Transaction not Qualifying as "Arm's Length"
Transactions in which employees have any financial interest that do not meet the narrow definition of "arm's length" transactions in Section 4. above are not normally permissible. However, New Mexico law permits such transactions to be approved by the President in limited circumstances if all the factors listed below are considered. (These requirements are specified by the Research Park Act, Section 21-28-25, NMSA 1978, the Governmental Conduct Act, Section 10-16-4, NMSA 1978, and the Procurement Code, Section 13-1-196, NMSA 1978.)
5.1. Procedure for Reviewing Transactions not Qualifying as "Arm's Length"
Prior to entering into such a "non-arm's length" transaction with the University, the employee must send written documentation of compliance with all the following requirements to the employee's dean or director and the applicable office listed in Section 3.1. above, and receive written recommendations from the chair or unit manager, the dean or director, the applicable office listed in Section 3.1. above, the Provost/Executive Vice President for Academic Affairs, the Executive Vice President for Health Sciences or cognizant vice president, and final written approval by the President. To request approval the employee must:
- disclose any financial interest he or she may have in a proposed contract or other business transaction with the University;
- provide a detailed description of his or her financial interest in the proposed business transaction;
- describe fully the nature of the proposed undertaking;
- demonstrate to the satisfaction of the reviewing offices and the President that the proposed undertaking will be in the University's best interest and, in the case of a proposed transfer of University technology for economic development, may benefit the economy of this state;
- demonstrate to the satisfaction of the reviewing offices and the President that the proposed undertaking will not adversely affect research, public service, or instructional activities at the University;
- demonstrate that the employee's interest in the proposed contracting entity, or the employee's benefit from the interest, will not adversely affect any substantial state interest and that any procurement function of the employee can be carried out without favoritism or bias; and
- demonstrate that the employee has not and will not engage in any official act directly affecting the employee's financial interest.
5.2. Transactions not Qualifying as "Arm's Length" Related to a Sponsored Project
All proposed transactions involving an entity in which a University employee has a financial interest that do not qualify as "arm's length" and that are related to sponsored projects, must be approved by the Vice President for Research & Economic Development, who shall review for compliance with federal conflict of interest regulations, in addition to the reviews and approvals specified above. Transactions related to sponsored projects include, but are not limited to, sponsored project agreements, including contracts and grants; contracts for the use of UNM research facilities; and contracts involving the expenditure of sponsored project funds such as procurements and leases. Pursuant to the "Policy on Conflicts of Interest in Research," researchers must disclose certain significant financial interests prior to submitting a proposal for sponsored research and prior to applying for either internally allocated research funding or human and animal subject research approval. If required by University policy or requested by the Vice President for Research & Economic Development, the UNM Conflict of Interest Committee shall review and make a recommendation concerning the proposed transaction.
5.3. Transactions in which the Financial Interest is Gift or Grant Support
For transactions in which the financial interest is a donation or grant support, and the transaction is a procurement, pursuant to Section 3. above, this policy shall not be construed as preventing a competitive procurement in which the donor or grantor is entitled to participate on even terms with other potential vendors. The reviewing officials and the President shall review the transaction in order to structure an appropriate conflict of interest management plan, when necessary, in order to ensure the integrity of the procurement. The goal of the management plan shall be to ensure that the existing relationship between the University and the donor or grantor does not impact the procurement or the likelihood that the donor or grantor will be selected as the vendor.
6. University Employees Within the Preceding Twelve (12) Months
Contracts with firms or individuals, including sole proprietorships, in which individuals who were University employees within the preceding twelve (12) months have a financial interest are prohibited unless they are approved under the rules set forth in this policy, as if the individual were still employed by the University.
Exhibit A. - Disclosure of Direct or Indirect Financial Interest