If a member of the Georgia Board of Regents owns a company, when (if ever) can that company sell goods or services to a University System institution without violating Georgia's conflict of interest laws?

Plain-English summary

The Chancellor of the University System asked for guidance on four hypothetical situations: a Regent's wholly owned company selling annuity services to faculty under payroll deduction; a Regent-owned computer company selling under a statewide contract; a Regent buying real estate that's already leased to a USG institution; and a company with pre-existing communication contracts whose owner is later appointed to the Board.

AG Thurbert Baker walked through Georgia's three overlapping conflict-of-interest layers as they stood in 2004:

Constitutional fiduciary duty. Public officers are "trustees and servants of the people" under Ga. Const. Art. I, Sec. II, Para. I, and Sistrunk (1982) reads that as a strict loyalty rule. A public officer cannot use the trust to promote private interests, no matter how fair the contract.

Statutory rules in O.C.G.A. §§ 45-10-20 to 45-10-28. These split officials into "statewide powers" (Governor, AG, judges, etc., who cannot transact with any state agency) and "limited powers" (Regents and most board members, who cannot transact with their own agency). Anyone owning more than 25% of a business gets the same restrictions as the official. Statutory exceptions include sealed competitive bids, transactions under $250 per transaction and $9,000 per year, real-property deals approved by the State Properties Commission or DOAS Space Management, sole-source purchases, and emergency-protection transactions. Even when an exception applies, the official must file an annual disclosure with the Secretary of State.

Regents-specific rules in O.C.G.A. § 45-10-40. Beyond the general conflict statutes, this section flatly prohibits a Regent (or a partnership the Regent belongs to) from contracting to sell merchandise or supplies to a USG institution where the Regent profits. Violations are misdemeanors with up to 12 months in jail, a $1,000 fine, automatic removal from office, and ineligibility for reappointment. There is one carve-out: the contract can be made with a corporation in which the Regent is a stockholder, provided the Regent does not vote on or participate in making the contract.

The opinion's most pointed rulings:

1. "Sealed competitive bids" means competitive sealed bidding in the procurement-law sense. It does not include Requests for Proposals (RFPs), which weight technical merit and discretion alongside price. Statewide contracts that produced multiple eligible vendors through a non-bid process likewise do not qualify. The exception requires a single-winner, lowest-responsible-bidder process.

2. The § 45-10-40 corporate-stockholder exception does not cover a sole stockholder. The statute says "a stockholder", the indefinite article implies the Regent is not alone. Sole ownership eliminates the corporate insulation that justifies the exception.

3. "Minimum-standards open enrollment" is not a statutory exception. A program that lets any qualifying vendor sell (the second part of hypothetical 1) is not the same as a sealed competitive bid. There is no exception for that.

4. DOAS or State Properties Commission approval can cure the real-property scenario. A Regent buying property already leased to a USG institution becomes the institution's landlord. Under § 45-10-22(b)(3), DOAS Space Management or the State Properties Commission can approve such a transaction, and the AG recommended documenting that approval on the record.

5. Pre-appointment contracts run out their term unaffected. Under § 45-10-25(a)(13), services provided under a contract entered before appointment continue until the contract ends. After that, any renewal must independently satisfy an exception.

6. "Sole source" is statewide, not regional. The § 45-10-25(a)(11) sole-source exception requires showing the company is the only source in all of Georgia, not just in the Regent's geographic area.

7. Even when statute allows it, common-law conflict can still bar the deal. The opinion repeatedly cites Macon v. Huff (1878) for the principle that no officer can supervise performance of a contract he or his company is performing on the other side. So even a competitively bid contract creates an ongoing common-law conflict in performance and oversight.

Currency note

This opinion was issued in 2004. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

In particular, Georgia's procurement statutes and Board of Regents policies have been amended multiple times since 2004, and the State Ethics Commission (now the Government Transparency and Campaign Finance Commission) has issued enforcement guidance that may sharpen or alter several of these conclusions. The conflict-of-interest framework in Title 45 Chapter 10 has remained substantially in place but specific dollar thresholds and procedural requirements should be verified against the current Code.

Common questions

Q: Why are Regents treated differently from the Governor or the Attorney General when it comes to doing business with the state?
A: At the time, those officials were "statewide powers" officials and were barred from transacting with any state agency. Regents are "limited powers" officials and were only barred from transacting with their own agency, the Board of Regents (which includes all USG institutions). A Regent could in theory transact with the Department of Transportation, for example, as long as the deal didn't indirectly benefit USG.

Q: A Regent's spouse owns 30% of a company. Does the prohibition extend to the spouse?
A: Yes. Under § 45-10-22 and related sections, a public officer's spouse, dependents, and any business in which the officer holds a "substantial interest" (more than 25%) get the same prohibitions as the officer.

Q: What was the dollar threshold under which everyday small transactions were exempt?
A: $250 per transaction and $9,000 in the aggregate per calendar year, under the disclosure-and-amount exception. Above either threshold the disclosure obligation applied; failure to disclose carried a fine up to $10,000 and possible removal from office.

Q: Could a Regent buy lunch at a USG cafeteria without violating the law?
A: Yes. Section 45-10-40 has its own exception for "furnishing supplies to the students or faculty of such institution for their individual use", and as a faculty/student-facing transaction it would not implicate the prohibition.

Q: What happens if a violation is discovered after the contract is signed?
A: Under § 45-10-40, prohibited contracts are "declared to be illegal and void." The Regent can be removed from office on conviction and is ineligible for reappointment. Civil fines up to $10,000 and restitution to the state are also available under § 45-10-28.

Q: Did the AG conclude that any of the four hypotheticals were definitely allowed?
A: Only the real-estate purchase, and only if DOAS Space Management or the State Properties Commission approved the deal with full disclosure of the existing lease arrangement. Every other scenario depended on details not specified in the hypothetical (true sealed competitive bidding, single-winner statewide contract, etc.).

Q: Is there really a difference between "sealed competitive bids" and an RFP?
A: At the time, yes, and the AG drew a sharp line. Sealed competitive bidding awards to the lowest responsible bidder against fixed specifications. An RFP weights technical approach, qualifications, and price together and inherently involves subjective evaluation. The AG read the conflict-of-interest exception narrowly to require the bid form, on the rationale that bidding minimizes the chance of subjective favoritism toward the conflicted vendor.

Background and statutory framework

Georgia's modern conflict-of-interest statutes trace to the Sistrunk decision in 1982. The General Assembly responded by codifying §§ 45-10-20 through 45-10-28, which categorize officials by the breadth of their authority and prescribe transaction prohibitions and exceptions. The framework also recognizes that public service depends on attracting people who already have private business interests, and so it tries to allow legitimate transactions while preventing self-dealing.

For the Board of Regents specifically, § 45-10-40 layers an additional, stricter prohibition. It dates back further than the post-Sistrunk statutes and reflects historical concern about academic-institution self-dealing. The criminal penalty in § 45-10-41, misdemeanor punishable by up to 12 months and $1,000, plus mandatory removal, gives this section more teeth than the general civil-fine framework.

The opinion also imports common-law conflict doctrine from cases like Macon v. Huff (1878), Trainer v. Covington (1937), and Montgomery v. Atlanta (1926). These cases hold that a public officer cannot contract with himself even on fair terms, because the supervision and enforcement role creates inherent divided loyalty. The AG used Huff to caution that even when a transaction passes the statutory bar, a Regent must still avoid being in a position to supervise performance of a contract his own company is performing.

Two structural notes:
- Individual USG colleges and universities have no separate legal existence. They are part of the Board of Regents under McCafferty v. Medical College of Georgia (1982), so a contract with "the school" is functionally a contract with the Board.
- Full-time Regents staff (not the Regents themselves) get a special carve-out under § 45-10-23(a) allowing service on the boards of nonprofit support foundations.

Citations and references

Constitutional:
- Ga. Const. Art. I, Sec. II, Para. I (public officers as trustees of the people)

Statutes:
- O.C.G.A. §§ 45-10-1 through 45-10-4 (Codes of Ethics)
- O.C.G.A. §§ 45-10-20 to 45-10-28 (general conflicts framework)
- O.C.G.A. §§ 45-10-40 and 45-10-41 (Board of Regents-specific prohibitions and penalties)
- O.C.G.A. § 17-10-3(a)(1) (misdemeanor sentencing)
- O.C.G.A. § 1-3-1 (statutory construction)
- O.C.G.A. § 50-5-67(a) (RFPs vs. competitive sealed bids in DOAS context)
- O.C.G.A. § 50-5-7.3 (GTA bidding)
- O.C.G.A. § 45-18-53 (payroll deductions)
- O.C.G.A. § 50-25-1(b) (Regents excluded from GTA)

Cases:
- Georgia Dep't of Human Resources v. Sistrunk, 249 Ga. 543 (1982) (foundational fiduciary-duty case; partially overruled by Harris)
- Georgia Ports Auth. v. Harris, 274 Ga. 146 (2001) (modified Sistrunk; case-by-case analysis)
- Georgia State Bd. of Pharmacy v. Lovvorn, 255 Ga. 259 (1985)
- Ianicelli v. McNeely, 272 Ga. 234 (2000)
- Mayor and Council of Macon v. Huff, 60 Ga. 221 (1878) (mayor cannot lease city park to himself)
- Trainer v. City of Covington, 183 Ga. 759 (1937) (mayor's truck sale to city void)
- Montgomery v. City of Atlanta, 162 Ga. 534 (1926) (no public agent may profit from public business)
- Richmond County Hosp. Auth. v. Richmond County, 255 Ga. 183 (1985)
- McCafferty v. Medical College of Georgia, 249 Ga. 62 (1982) (USG institutions have no independent corporate existence)
- Georgia Forestry Comm'n v. Taylor, 241 Ga. App. 151 (1999)

Prior AG opinions cited: 1982 Op. Att'y Gen. 82-82, 82-79; 1983 Op. Att'y Gen. 83-56, 83-64, U83-51; 1984 Op. Att'y Gen. 84-82, U84-29; 1988 Op. Att'y Gen. 88-4; 1991 Op. Att'y Gen. U91-13; 1995 Op. Att'y Gen. 95-36, U95-111; 1997 Op. Att'y Gen. 97-29, U97-11; 1998 Op. Att'y Gen. 98-8; 2002 Op. Att'y Gen. 02-4.

Source

• Landing page: https://law.georgia.gov/opinions/2004-7
• Original PDF: not linked from landing page

Original opinion text

Your office has requested advice on behalf of members of the Board of Regents of the University System regarding four questions dealing with issues relating to Board members transacting business with the state or the University System, and whether any such transactions would be impermissible conflicts of interest. In answering those questions, I will outline the general provisions of Georgia law that are relevant to your questions and then discuss their application to the hypothetical situations described in your letter. At the outset, it is important to recognize generally that members of the Board of Regents of the University System of Georgia hold fiduciary positions of trust under Georgia law, and business transactions between any Regent and the University System itself are prohibited absent a statutory exception permitting the transaction. Any decision on the ultimate propriety of a particular transaction, however, will depend on the facts and circumstances of that transaction and would need to be addressed on a case-by-case basis. General Provisions of Georgia Law Any analysis of "conflicts of interest" under Georgia law must begin with the Georgia Constitution and its provisions regarding the origin and structure of state government. The Constitution mandates that "[p]ublic officers are the trustees and servants of the people and are at all times amenable to them." GA. CONST. Art. I, Sec. II, Para. I. The Supreme Court of Georgia has repeatedly recognized that this constitutional provision creates a special fiduciary duty of loyalty on behalf of public officers and employees and that duty should not be compromised by either divided loyalties or other conflicts of interest.1 Georgia Dep't of Human Resources v. Sistrunk, 249 Ga. 543, 546 48 (1982), overruled in part, Georgia Ports Auth. v. Harris, 274 Ga. 146, 147 (2001). See also Georgia State Bd. of Pharmacy v. Lovvorn, 255 Ga. 259, 260 (1985); Ianicelli v. McNeely, 272 Ga. 234, 236 (2000). A public officer may not use this special trust to promote his or her own personal interests, regardless of how fair a contract may be, but must instead affirmatively avoid any conflicts of interest. Sistrunk, 249 Ga. at 547.2 In the wake of the Sistrunk decision, the General Assembly adopted a series of statutes addressing business transactions between state officers and employees and state agencies or entities. O.C.G.A. §§ 45 10 20 through 45 10 28; Harris, 274 Ga. at 146 47. These statutes recognized "not only the need for an impartial and independent government and public confidence in the integrity of government, issues which form the core of [the Supreme Court's] holding in Sistrunk, but recognized that it is also essential to the proper operation of government that those best qualified be encouraged to serve the government." Id. Such legal safeguards against conflicts of interest must also, according to the Supreme Court of Georgia, be designed so as not to unnecessarily or unreasonably impede the recruitment and retention by the government of those men and women who are best qualified to serve. Id. at 147. An essential principle underlying the staffing of our government structure is that its elected officials and employees should not be denied the opportunity, available to all other citizens, to acquire and retain private economic and other interests, except where conflicts with the responsibility of such elected officials and employees to the public cannot be avoided. Id., citing O.C.G.A. § 45 10 21(b). The "conflicts of interest" statutes referred to above specifically address instances where public officers and employees engage in business transactions with state entities. The officers and employees are generally divided into two categories, each of which has its own specific prohibitions. State officers or employees who have "state-wide powers" are prohibited from transacting business with any state agency.3 O.C.G.A. §§ 45 10 22, 45 10 24. "State-wide powers" means that a public officer or employee has the ability to influence or affect all of state government across the board, rather than on the level of a specific agency or entity. O.C.G.A. § 45 10 20(10). Offices that fall into this category include, but are not limited to, the Governor, Lieutenant Governor, members of the General Assembly, judges of the appellate and superior courts, district attorneys, the Secretary of State, the Attorney General, the state auditor, the commissioners of Administrative Service and the Merit System, members of the State Personnel Board, and the director of the Office and Planning and Budget. Id. Officers and employees who have "limited powers" rather than state-wide powers, such as members of the Board of Regents, are otherwise generally prohibited from transacting business with their own agencies. O.C.G.A. §§ 45 10 22(a)(2), 45 10 23, 45 10 24(a)(2).4 They may still conduct business with other state entities, provided that the transaction with the other state entity is not also being undertaken for the direct or indirect benefit of the officer's own agency. See 1983 Op. Att'y Gen. U83-56, 1991 Op. Att'y Gen. U91-13. A public officer's or employee's spouse, dependents, or business entities in which the officer or employee owns more than 25% (which is considered a "substantial interest" under the statutes in question) are subject to the same prohibitions as the officer or employee. O.C.G.A. §§ 45 10 22, 45 10 23, 45 10 24. The General Assembly has also provided a number of exceptions to these prohibitions, so that transactions that fall within these exclusions are not barred by the state's "conflicts of interest" statutes. O.C.G.A. §§ 45 10 22(b), 45 10 24(b), 45 10 25. Prominent in these exceptions are provisions that otherwise prohibited transactions are permitted if they are "undertaken pursuant to sealed competitive bids," if they fall below $250 per transaction and $9,000 in the aggregate for a single calendar year, or, if relating to the sale or lease of real property, the transaction is approved by the State Properties Commission or the Department of Administrative Services. Id. Additional exceptions to the statutory prohibitions include transactions under the state's use of eminent domain; the granting of employment benefits; Medicaid reimbursements; approved part-time work for other agencies; sole source purchases; and transactions necessary to protect the public health, safety, or welfare. O.C.G.A. § 45 10 25(a)(1), (2), (4), (5), (8), (10), (11), (15). Even if a transaction is not prohibited under these statutes or is otherwise permitted by virtue of a statutory exception, all transactions by a state official or employee with any state agency must be reported to the Secretary of State in January covering the period of the previous calendar year. O.C.G.A. § 45 10 26. The failure to disclose any of those transactions is a separate violation of the law unless the amount of the transaction does not exceed $250 and the aggregate transactions do not exceed $9,000 in a single calendar year. Id. Additionally, a failure to disclose such transactions can result in a person's removal from office, a civil fine of up to $10,000, and a requirement that any pecuniary benefit be repaid to the state. O.C.G.A. §§ 45 10 26(c), 45 10 28. A business that violates the disclosure requirements is also subject to a civil fine of up to $10,000 and restitution to the state for any pecuniary benefit received as a result of the violation. O.C.G.A. § 45 10 28(a)(3). These statutes do not represent the sole provisions within Title 45 addressing the issue of "conflicts of interest." The General Assembly has also established a "Code of Ethics for Government Service" which lists a number of aspirational goals for all state officers and employees. O.C.G.A. § 45 10 1. These tenets include the admonishment that a government official or employee should not engage in any business with the government which is inconsistent with the conscientious performance of his governmental duties, and that such person should never use any information coming to him confidentially as a means for making a private profit. O.C.G.A. § 45 10 1, VII, VIII. Additionally, boards, commissions, or authorities created by general law, such as the Board of Regents, are subject to another specific Code of Ethics, violations of which may lead to removal from office. O.C.G.A. § 45 10 3. This Code reiterates the two aforementioned prohibitions requiring an officer to perform his duties conscientiously and to refrain from using confidential information for a private profit. It also specifically prohibits such person from taking any official action on any matter where he knows or should know that he has a direct or indirect monetary interest in the subject matter of the transaction. O.C.G.A. § 45 10 3(3), (4), and (9). Complaints regarding alleged violations of this Code of Ethics are reviewed and adjudicated by the Governor or his designee and can also lead to a person's removal from office. O.C.G.A. § 45 10 4. Finally, in addition to the specific prohibitions under these state statutes, judicial decisions and the common law may identify and prohibit other conflicts of interest. See, e.g., 1997 Op. Att'y Gen. U97 11. One example is the common law prohibition against a public officer or employee holding two incompatible positions. Another example is a person engaging in a transaction where his personal interests are so intertwined that, even without some actual and personal pecuniary gain, the transaction should still be prohibited. Id. See also Mayor and Council of Macon v. Huff, 60 Ga. 221 (1878) (mayor could not lease a city park to himself despite lease's admittedly fair terms since he would be required to enforce contract on behalf of city); Trainer v. City of Covington, 183 Ga. 759 (1937) (sale of truck to city by its mayor was void, no matter how fair). In this regard, the Attorney General, quoting Montgomery v. City of Atlanta, 162 Ga. 534, 546 (1926), has previously opined: One who is entrusted with the business of others will not be allowed to make out of the same a pecuniary profit to himself. This doctrine is based upon principles of reason, morality, and public policy. No public agent shall have the opportunity or be led into the temptation to make profit out of the public business entrusted to his care, by contracting with himself, directly or indirectly, in respect to such business 1997 Op. Att'y Gen. 97 29, at 89. Compliance with the aforementioned statutes and constitutional principles will usually safeguard a public officer or employee from engaging in impermissible conflicts of interest. See Richmond County Hosp. Auth. v. Richmond County, 255 Ga. 183, 188-89 (1985); 1995 Op. Att'y Gen. U95 111. Prohibitions Specifically Directed to the Board of Regents Although all of the previous provisions of law apply to the members of the Board of Regents, the General Assembly has enacted even more specific proscriptions directed to members of the Board of Regents itself in O.C.G.A. § 45 10 40. That section may be divided into the following three prohibitions: 1. No member of the Board of Regents of the University System of Georgia or of the Board of Human Resources, no trustee or other officer of any institution which is wholly or in part supported by state funds, and no partnership of which such person is a member shall make any contract with the governing board or trustees of such institution or any officer of such institution for the sale and purchase of merchandise or supplies for such institution whereby profit shall accrue to such board member or trustee or such partnership of which such person is a member. 2. No such trustee or officer of such institution shall make any profit or receive any money for the sale, handling, or disposal of any crop or crops or property of such institution. 3. No such member, trustee, or other officer of such institution shall make or be interested in any contract for supplies or merchandise for such institution when such contract or the making of the same is wholly or in part made or influenced by the action of the board governing such institution or the trustees thereof or is controlled by any officer of such institution; and any and all such contracts are declared to be illegal and void, provided that any such contracts as are described in this Code section may be made with a corporation of which any such board member or trustee is a stockholder if such member or trustee does not vote on or participate in the making of such contract. O.C.G.A. § 45 10 40 (emphasis added). A violation of these prohibitions is a misdemeanor and, upon conviction, a violator is subject to imprisonment of up to 12 months and a fine of up to $1,000. O.C.G.A. 45 10 41, O.C.G.A. § 17 10 3(a)(1). Additionally a violator is automatically removed from office by operation of law on conviction and is not eligible to be reappointed to his or her office. O.C.G.A. § 45 10 41. On the other hand, O.C.G.A. § 45 10 40 also provides as an exception that "[n]o board member or trustee of such institution shall be prohibited from making contracts for furnishing supplies to the students or faculty of such institution for their individual use." (Emphasis added.) Hypothetical Scenarios The request for advice outlines four hypothetical scenarios which present "conflict of interest" issues. The use of hypotheticals is helpful in illustrating general principles. Of course, as noted above, the facts and circumstances of a particular business transaction may make a difference in the analysis of its propriety under Georgia law, and that analysis must be done on a case by case basis. Georgia Ports Auth. v. Harris, 274 Ga. at 147-48; Ianicelli v. McNeely, 272 Ga. at 236. In an actual transaction following the general outlines of the hypothetical situations described, additional levels of detail may well change the analysis. With that caveat, I will now address your hypotheticals in light of Georgia's legal framework. 1. A Regent's wholly owned company wishes to provide services under a cafeteria plan that markets to faculty and employees of an institution. The institution will coordinate with the company for monthly pre-tax payroll deduction of the annuity fees. The institution requires all interested companies to adhere to a competitive bid process and pursuant to bid the Regent's company is chosen by the institution to be a provider of insurance benefits. Does this arrangement violate either section 45 10 22 or section 45 10 40? Assume the same fact pattern as above, however, in lieu of a bid process the institution promulgates minimal guidelines that allow all companies that meet the minimum standards to have pre-tax payroll payment of the annuity fee. 5 The basic premise of the first part of your question is that the company in question is 100% owned by the Regent and is therefore subject to the same restrictions on doing business with the Board as is the Regent, i.e., both are prohibited from transacting any business with the Board itself absent a statutory exception permitting the transaction.6 O.C.G.A. § 45 10 22(a)(2). The statutory exception proposed initially is "transaction made pursuant to sealed competitive bids." O.C.G.A. § 45 10 22(b)(1). The principal issue for interpretation here is the phrase "sealed competitive bids," which the Attorney General has not previously construed by official opinion, particularly in regard to whether it refers generally to any sealed, competitive process. The phrase should be given the meaning it has for the subject matter, which here is state government procurement law. O.C.G.A. § 1 3 1(b) ("words of art or words connected with a particular trade or subject matter … shall have the signification attached to them by experts in such trade or with reference to such subject matter"); Georgia Forestry Comm'n v. Taylor, 241 Ga. App. 151, 153 (1999) (statutes on the same subject are construed together and harmonized). In public procurement, "competitive bidding" in the technical sense refers to a process by which an award is made on the basis of lowest price, offered by a responsible bidder against a set of specifications. The process contrasts with more discretionary or subjective procurements, such as "requests for proposals" (RFPs) that are evaluated on the basis of technical merit as well as cost. For illustrations of the distinction, see O.C.G.A. §§ 50 5 67(a) (allowing DOAS to conduct an RFP when "use of competitive sealed bidding is either not practicable or not advantageous"); Department of Administrative Services Georgia Procurement Manual, Ch. 3, "Source Selection," 3.1, 3.2, 5.2, 5.5, 5.6 (distinguishing "Request for Quotes" from "Request for Proposals," with latter being a "formal solicitation method that seeks to leverage the creativity and knowledge of business organizations to solve a unique problem." Id. 3.2); compare O.C.G.A. § 50 5 7.3 (Georgia Technology Authority "contracts shall be awarded by soliciting competitive sealed proposals or competitive sealed bids") with Rules of Georgia Technology Authority 665 2 4 .02, "Methods of Source Selection"; Federal Acquisition Regulations, § 6.4 ("Sealed bidding and competitive proposals, as described in Parts 14 and 15, are both acceptable procedures"), Part 14 ("Sealed Bidding") & Part 15 ("Contracting by Negotiation").7 Notwithstanding the technical distinction, it is not unusual to see the words "bid" and "proposal" used colloquially to mean approximately the same thing. See, e.g., Allstate Transp. Co. v. SEPTA, 2000 U.S. Dist. LEXIS 3831, at 5 (E.D. Pa. 2000) ("In 1996, SEPTA issued a Request for Proposals ("1996 RFP") in which it invited carriers to submit proposals on three different bid items.") However, it is also a cardinal rule of construction that "[i]n all interpretations of statutes, the courts shall look diligently for the intention of the General Assembly, keeping in view at all times the old law, the evil, and the remedy." O.C.G.A. § 1 3 1(a). Here, the interpretation concerns legislative intent in allowing an exception to a rule prohibiting conflicts of interest. When the phrase is "sealed, competitive bidding," the apparent intent is to allow an exception where the process eliminates or minimizes the possibility of subjective favoritism. In an RFP, [t]he evaluation of the vendor's experience, qualifications and solution often takes precedence over price. To determine the final award, both the proposed solution and the price offered will be weighted through evaluations according to the appropriateness of their value. Department of Administrative Services Georgia Procurement Manual Ch. 3, 5.6(2). For the foregoing reasons, I conclude that when the "conflicts of interest" statutes allow an exception for a "transaction made pursuant to sealed competitive bids," the intent is the technical meaning, not inclusive of the more general and subjective processes like "requests for proposals." This might also preclude purchasing from a "statewide contract" in some cases, for example, where multiple vendors are eligible for state awards by state agencies, following a procurement not done by sealed competitive bid leading to one vendor. See, e.g., Department of Administrative Services Georgia Procurement Manual, Ch. 3, 3.4 (requests for qualifications), 5.1, 5.2 & 6.7 (statewide contracts). You then ask whether it would make any difference if the sealed, competitive bid process is not used to select the company with which the Board was transacting business, but, instead, any company, including the Regent's company, which meets certain minimum standards is permitted to engage in the sale of the goods or services. As indicated above, under these assumptions the answer is yes, it would make a difference. There is no statutory exception that would permit this otherwise prohibited transaction with a Regent's wholly owned company just because other companies with similar products are also selling the goods or services. As outlined above, the Regent and his company are not similarly situated to those other companies, but instead are operating from a special fiduciary position of trust and loyalty. Because of that special trust, they are held to a higher standard of behavior to prevent conflicts of interest or even the appearance of impropriety or improper influence in such a business transaction. Finally, you ask whether, even if the transaction is permissible under O.C.G.A. § 45 10 22, it would be prohibited under O.C.G.A. § 45 10 40, the statute barring a Regent from contracting with the Board or its institutions. Again, from your description of the company the nature of the Regent's ownership is unclear. If it is a corporation in which the Regent is merely a stockholder or a board member, then the transaction between the corporation and the Board of Regents would be permissible under O.C.G.A. § 45 10 40, provided that the Regent "does not vote on or participate in the making of such contract." However, all statutory exceptions must be satisfied, not just one. The exception in O.C.G.A. § 45 10 40 does not allow for the situation where the Regent is the sole stockholder. It allows the exception where the Regent is "a stockholder if such member or trustee does not vote on or participate in the making of such contract." (Emphasis supplied.) The use of the word "a," here emphasized, implies that the Regent is not alone. This is consistent with the policy of avoiding favoritism. Code section 45 10 40 recognizes that corporations are independent legal entities, separate from their stockholders or officers. That independence and separation insulates the transaction to some extent from a Regent's personal disqualification, provided that the Regent does not vote on or participate in the making of the contract. Others must carry out those functions on behalf of the corporation. However, when the Regent is the sole stockholder or board member the element of insulation created by the corporate structure is eliminated, thus undermining the statutory safeguard. Given the fiduciary and trust duties and loyalties imposed upon the Regent in the statute, it would be hard to contemplate that a Regent under such circumstances would be able to reach the necessary level of disinterest to avoid a potential violation of O.C.G.A. §§ 45 10 40 and 45 10 41 and the common law conflicts recognized under the case law outlined above. When difficulties arise in the performance of the contract, as they often do, the Regent will confront divided loyalties and likely be required to take a position that will violate duties owed to either the Board or the corporation. Such a scenario may well rise to the level of a common law conflict of interest, notwithstanding the language of O.C.G.A. § 45 10 40. The same may be said with regard to the statutory exception for competitive bidding. Even when a contract is procured competitively, it must be performed, and Regents and Regents staff must evaluate performance. The common law recognizes the conflict inherent in supervising one's own performance: [N]o officer or agent, public or private, whose duty it is to supervise a contract in behalf of his employers or principal, can himself undertake to do that thing which his office or agency makes it his duty to supervise for others, and to see to it for them that it is well and faithfully done. The reason is too plain and palpable for serious dispute. Mayor & Council of Macon v. Huff, 60 Ga. 221, 224 (1878). This observation from the Huff decision applies as well to hypotheticals 2 and 3 below as well. 2. A Regent has a substantial interest in a company that sells computers. He sells to the state through a statewide contract procured through a competitive bidding process. May the Regent's company sell computers to the University System institutions pursuant to this statewide contract? May the Regents institutions take their computers for repair to the Regent's company, which does not have a statewide maintenance agreement? Given that the Regent in your hypothetical has a "substantial interest," i.e., over 25% ownership, in the computer company in question, the company would normally be prohibited from transacting business with the Board of Regents. O.C.G.A. § 45-10-22 (a)(2). However, because the transaction is made pursuant to a sealed competitive bid process accomplished through a statewide contract entered into by the Department of Administrative Services (DOAS) and obtained through a competitive bidding process, the transaction could be permissible. O.C.G.A. § 45 10 22(b)(1). If the company were a corporation and the dictates of O.C.G.A. § 45 10 40 were followed, then it would also appear the transaction could be permissible under O.C.G.A. § 45 10 41. I have assumed that the procurement for the statewide contract resulted in a single vendor, but that may not necessarily be the case. It is possible that the procurement resulted in multiple vendors of satisfactory qualifications, with or without fixed or common prices. The statutory exception requires a "transaction made pursuant to sealed competitive bids." O.C.G.A. § 45 10 22(b)(1). Unless the statewide contract results in a single vendor, neither the letter nor the spirit of the exception will be satisfied. Whether servicing the computers is a separate business transaction or is adjunct to the purchase of the computers, the transactions would be prohibited under O.C.G.A. § 45 10 22(a)(2) absent a statutory exception permitting them. If that exception is not provided through the competitive bidding process, it is possible another exception might be applicable in accordance with the law outlined above. However, the burden is on the company to identify that exception and to assure compliance with the aforementioned laws before engaging in the service transactions. 3. A Regent wishes to purchase from X real estate, which X currently rents to a University System institution. If the Regent purchases the real estate, he will become the institution's landlord instead of X. Is approval of the purchase from X by DOAS Space Management Division sufficient to cure any potential conflict of interest? Your hypothetical recognizes that renting real property to the Board of Regents by one of its members falls within the definition of "transacting business" and is normally prohibited under O.C.G.A. § 45-10-22 (a)(2). However, O.C.G.A. § 45-10-22 (b)(3) contemplates that such a lease arrangement is permissible if the "transaction" is approved either by the State Properties Commission or the Space Management Division of DOAS. If DOAS reviews and approves the sale of the real estate, with full disclosure that the sale is made subject to the rental agreement and that the Regent will become the landlord, that would appear to satisfy the requirements of the law to permit the transaction. It would also be a good practice to assure that any approval of the sale and the subsequent lease relationship is acknowledged by DOAS on the record of its review and approval so as to assure that there is no question in the future of compliance with the law. 4. A company wholly owned by a Regent provides communication services to a Regents institution prior to the Regent's appointment. Shortly after his appointment the Regent bids on a contract to provide additional and expanded services. At what point, if any, does the company's provision of services conflict with the conflict of interest statute? Does it make a difference if he is a "sole provider" in his geographical area? The sale of the services to the Board through one of its institutions by a company in which a Regent owns a substantial interest falls within the prohibition of O.C.G.A. § 45 10 22(a)(2). Therefore, as recognized in your inquiry, the question becomes whether there is any statutory exception which permits the transaction to go forward. You have raised facts that suggest three separate possibilities, depending on the time-frame that is used in reviewing the transaction. A transaction that was entered into between the company and the school prior to the Regent's appointment is not affected by that appointment. Under O.C.G.A. § 45-10-25 (a)(13), transactions that occurred prior to the Regent accepting appointment to public office are not subject to the statutory prohibitions if they represent a legal obligation and duty to provide the services in question. The company would be able to complete its legal obligations under the contract. However, once that initial contractual obligation has concluded, the question becomes whether the company and school may continue their business relationship. You have indicated that there is a bidding process for the award of the contract. If that process is a sealed, competitive bidding process as discussed above, then the award of the contract would appear to fall within the exception of O.C.G.A. § 45-10-22 (b)(1) and be permissible under Georgia law. You have also asked whether it makes any difference in the analysis if the Regent's company is the "sole provider" in his geographic area. Under the conflicts of interest statute, there is a "sole source" exception that permits [a]ny transaction involving property or a service for which the only source of supply in the State of Georgia is from the public official or employee or a business in which such public official or employee or member of his family has a substantial interest. O.C.G.A. § 45-10-25 (a)(11) (emphasis added). This "sole source" analysis is not limited to a geographic region within the state, but instead the company and the school carry the heavier burden of demonstrating that the company is the only one in the entire state that can provide the services in question. The transaction would be permissible under this exception only after such a showing. Finally, although it is not clear exactly what kind of services would be provided, the Regent and his company would have to remain cognizant of the requirements of O.C.G.A. § 45 10 40. A business transaction for the sale of merchandise or supplies, for example, would be prohibited to the Regent personally. The company, if it is a corporation, could engage in the transaction under the guidelines outlined in that statute. Conclusion Therefore, because members of the Board of Regents of the University System of Georgia hold fiduciary positions of trust under Georgia law, it is my official opinion that business transactions between any Regent and the University System are prohibited absent a statutory exception permitting the transaction, and then only if there is no common law conflict creating a breach of their constitutional fiduciary duty. Those transactions must be reviewed on a case by case basis to determine whether any prohibited conflicts of interest exist as defined under Georgia's Constitution, statutes, judicial decisions, or under the applicable principles of common law. Prepared by: DENNIS R. DUNN Deputy Attorney General JOHN B. BALLARD, Jr. Senior Assistant Attorney General 1 " All public officers, within whatever branch and at whatever level of our government, and whatever be their private vocations, are trustees of the people, and do accordingly labor under every disability and prohibition imposed by law upon trustees relative to the making of personal financial gain from the discharge of their trusts." Sistrunk, 249 Ga. at 547 2 The Sistrunk decision has been extensively discussed in a variety of settings in previous opinions of the Attorney General. Some of those opinions, outside of the specific realm of lawyer-legislator conflicts issues, include 1982 Op. Att'y Gen 82 82 (general discussion of conflicts of interest issues), 1983 Op. Att'y Gen. 83 64 (conflicts related to recipients of public grant funds), 1983 Op. Att'y Gen. U83 51 (member of authority has a conflict and cannot provide banking or medical services to his agency); 1984 Op. Att'y Gen. 84 82 (conflicts in hospital equipment financing), 1984 Op. Att'y Gen. U84 29 (court officers and driver improvement schools), 1988 Op. Att'y Gen. 88 4 (purchase of former state property by Board of Natural Resources member), 1997 Op. Att'y Gen. 97 29 (school board members as subcontractors on school projects), 1998 Op. Att'y Gen. 98 8 (contracts between a community service board and legislator) and 2002 Op. Att'y Gen. 02 4 (conflicts issues related to members of the State Ethics Commission). 3 "Transacting business" includes the selling or leasing of any real or personal property or any services to the state, regardless if it is done by the officer or employee or through a third-party, and the purchase of surplus real or personal property either by the official or employee, again regardless of whether it's done by the official or employee or by a third-party on behalf of the public official or employee. O.C.G.A. § 45 10 20(12). 4 Full-time employees of the Board of Regents are permitted, however, to serve as members of governing boards of private, nonprofit, educational, athletic, or research related foundations and associations which are organized to support institutions of higher education and which otherwise transact business with the Board. O.C.G.A. § 45 10 23(a); 1995 Op. Att'y Gen. 95 36. 5 It is unclear from the description of this business arrangement whether the companies in question are transacting business with the Board itself or whether the companies would actually be dealing directly with the employees of the Board. In the usual instance, both would occur. It is also unclear whether the statutory requirements of O.C.G.A. § 45 18 53 regarding the authorizing of payroll deductions have been met. See also 1982 Op. Att'y Gen. 82 79. For purposes of this response, it is assumed from your description that there would be a contractual agreement between the entities involved and the Board itself and that any payroll deductions would otherwise be permissible under the law. 6 Individual colleges and universities in Georgia have no independent corporate existence, but are all considered a part of the Board of Regents, which is then the ultimate party with which an entity transacts business. See McCafferty v. Medical College of Georgia, 249 Ga. 62, 69 (1982). 7 Neither FAR, which applies to federal procurement, nor GTA law and rules, which exclude Regents, O.C.G.A. § 50 25 1(b), applies to Regents, but they are illustrative. Procurement law itself is beyond the scope of this opinion.