Can Tennessee's State Comptroller serve on a state procurement commission that the Comptroller's office also audits?

Plain-English summary

Representative Karen Camper asked the AG two related questions about a 2010 amendment (SA1288 to SB3598/HB3353) that would have created a State Procurement Commission in Tennessee. The bill made the State Comptroller one of seven ex officio commissioners. Two concerns: first, was the Comptroller's service on an executive-branch commission constitutionally permissible given the Comptroller's role outside the executive branch? Second, did the Comptroller's audit duties over the very board he would sit on create a conflict of interest?

AG Robert E. Cooper, Jr. said no to both objections. On separation of powers, the Comptroller's office is "substantially executive or administrative" in nature, so service on a similarly executive commission does not cross a constitutional boundary. The AG cited an earlier opinion (Op. Tenn. Att'y Gen. 83-206) which had reached the same conclusion about the Comptroller's service on the State Building Commission. On the conflict of interest question, Tennessee's general conflict statute (Tenn. Code Ann. § 12-4-101) targets direct financial interests in contracts. Sitting on a board that one's other office audits is not that kind of conflict; it is a structural overlap that the Legislature can and routinely does design into state government, with the political "check" being legislative accountability rather than judicial review.

Currency note

This opinion was issued in 2010. 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.

Common questions

Q: What was the proposed State Procurement Commission?
A: A seven-member ex officio body that would prescribe standards, policies, and procedures for state procurement. The members would be the Governor (chair), Comptroller, Commissioner of General Services, Commissioner of Finance and Administration, both Speakers, and a procurement professional appointed by the Governor on recommendation of the National Institute of Government Purchasing. The chief procurement officer would serve as a non-voting member, and the AG would be legal counsel.

Q: Why does the Comptroller's branch matter?
A: The Comptroller is a constitutional officer chosen by joint vote of both houses of the General Assembly (Tenn. Const. art. VII, § 3) for a two-year term. That selection method gives the office a legislative-branch flavor, but the Comptroller's actual duties (audits, financial oversight, fiscal review) are administrative. The AG concluded the Comptroller is "substantially executive or administrative" in function, which is what matters for separation of powers analysis.

Q: How did the AG handle the audit-conflict question?
A: He pointed out that the Department of Audit, which the Comptroller heads, has statutory authority to audit "all accounts and other financial records of state government, and of any department, institution, office or agency thereof." That includes the Department of Audit itself, the Department audits itself. If self-audit is constitutionally tolerable, then auditing a board you sit on is also tolerable. These overlaps are policy choices the Legislature makes and can revise.

Q: Doesn't this look like the Comptroller approving his own work?
A: It looks that way, but the AG's reasoning was that Tennessee's general conflict statute targets direct pecuniary interests, partnerships, controlling business interests, and not structural role overlaps. He pointed to other examples Tennessee tolerates: legislators voting on their own salaries, local legislative body members serving on boards their bodies oversee. The political accountability comes through the General Assembly's continuing power to alter the Comptroller's role, not through ethics enforcement.

Q: What's the "check" if not ethics rules?
A: The AG quoted his office's 1988 opinion: when the Legislature creates an arrangement that looks like a structural conflict, the safeguard is voter accountability, "If the voters do not like the way the members of the General Assembly alter their compensation, they may voice their displeasure through the election process." Same logic applies to the Comptroller's overlapping roles.

Background and statutory framework

Tennessee's separation of powers doctrine sits in Article II, Sections 1 and 2: the powers of government are divided into three departments, and no person belonging to one department may exercise powers properly belonging to another, except as the Constitution permits. The doctrine is enforceable, but it is also flexible at the margins, particularly for offices like the Comptroller whose constitutional position is hybrid.

The Comptroller is created by Article VII, Section 3, which puts the office under joint legislative election. Statute then makes the Comptroller administrative head of the Department of Audit (Tenn. Code Ann. § 4-3-302) with sweeping audit authority over state government (§ 4-3-304(1)). That mix, legislative selection, executive function, has produced a series of AG opinions over the decades clarifying which boards and commissions the Comptroller can serve on. Op. 83-206 (1983) approved the State Building Commission. Opinion 10-63 extended the same logic to the proposed Procurement Commission.

Tennessee's general conflict of interest statute, Tenn. Code Ann. § 12-4-101, prohibits direct financial interests in contracts the official has duties over. Subsection (b) requires disclosure of indirect interests. The statute does not address structural overlaps where one office audits another, the Legislature designed those overlaps deliberately. Earlier opinions had reached the same conclusion in similar contexts (legislator salary votes, local board cross-memberships), so the Procurement Commission scenario was treated as well-traveled ground.

Citations and references

Tennessee Constitution:

• Tenn. Const. art. II, §§ 1, 2 (separation of powers)
• Tenn. Const. art. VII, § 3 (Comptroller)

Statutes:

• Tenn. Code Ann. § 4-3-301 (Department of Audit)
• Tenn. Code Ann. § 4-3-302 (Comptroller as head)
• Tenn. Code Ann. § 4-3-304(1) (audit authority)
• Tenn. Code Ann. § 12-4-101 (conflict of interest)

Prior opinions referenced:

• Op. Tenn. Att'y Gen. 83-206 (April 22, 1983) (Comptroller on State Building Commission)
• Op. Tenn. Att'y Gen. 88-122 (July 13, 1988) (legislator salary votes)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2010/op10-063.pdf

Original opinion text

May 5, 2010

Opinion No. 10-63

Comptroller's Service on Proposed State Procurement Commission

QUESTIONS

1. Is it constitutionally permissible for the comptroller to act as a part of the Executive Branch, the branch of government that carries out laws, by serving on a proposed State Procurement Commission.

2. The State Comptroller has been appointed to a number of boards, commissions, councils, and other entities of state government. One of the principal duties and responsibilities of the State Comptroller is to audit governmental entities to ensure they are responsibly carrying out their functions. Is there a conflict of interest for the Comptroller to serve on boards and commissions that are subject to review by the Office of the Comptroller? Is this constitutionally permissible?

OPINIONS

1. Yes.

2. The scenario created by the proposed legislation does not give rise to a conflict of interest that violates Tennessee law. Nor does the Tennessee Constitution prohibit the service of the Comptroller on boards and commission that are subject to review by the Office of the Comptroller.

ANALYSIS

Your questions concern an amendment (SA1288) to SB3598/HB3353, which would, among other things, create a procurement commission, a procurement office, and an advisory council on state procurement. These new state entities would be assigned the responsibility for the oversight of many of the procurement and contracting activities of the state, including prescribing standards, policies and procedures for state procurement and promulgation of rules and regulations governing procurement matters. Your inquiries focus upon the role of the Comptroller under the procurement system to be created by the proposed legislation.

[Bill summary preserved as in original]

PROCUREMENT COMMISSION

This bill creates a procurement commission. The commission will consist of seven ex officio members as follows: the governor, comptroller, commissioner of general services, commissioner of finance and administration, speakers of the senate and house, and a procurement professional member appointed by the governor upon the recommendation of the National Institute of Government Purchasing. The chief procurement officer will serve as a non-voting member.

The governor will serve as chair and the commission will elect from its membership a vice chair and secretary. The attorney general and reporter will serve as legal counsel to the commission. All members will serve as their official role provides, except the procurement professional member will serve a five-year term. The members of the commission shall serve without additional compensation, but shall be entitled to reimbursement for their necessary expenses.

This bill authorizes the commission to prescribe standards, policies and procedures, and to promulgate rules and regulations to be followed consistent with this bill, governing the procurement, contracting, management, control, and disposal of any and all goods and services by the state. The commission will not exercise authority over the award or administration of any particular contract, but will have authority to hear protests related to the procurement process for adherence to procurement standards, policies, rules, regulations, procedures and guidelines.

PROCUREMENT OFFICE

This bill creates a procurement office headed by the chief procurement officer. The office will be administratively attached to the department of general services, but responsible to the state procurement commission. The commission will appoint the chief procurement officer, who will be a person qualified by training and relevant and recent experience in public procurement and in the large-scale procurement of goods and services, contract administration and control, and demonstrated executive and organizational ability to perform the duties of this office. The chief procurement officer may adopt operational procedures governing the internal functions of the procurement office.

ADVISORY COUNCIL ON STATE PROCUREMENT

This bill creates an advisory council on state procurement. There will be five voting members of the council and seven non-voting members of the council representing the bidder and vendor community and other procurement professionals. All members must have a demonstrable working knowledge of the state procurement process. The five voting members of the council will consist of two representatives of state agencies appointed by the commissioner of general services, one representative from the department of finance and administration, one representative from the office of the comptroller, and the chief procurement officer who will serve as chair.

When requested by the chief procurement officer, the council may conduct studies, research, analyses, and make reports and recommendations with respect to subjects or matters within the authority and duties of the chief procurement officer. The chief procurement officer may appoint advisory groups to assist in specific areas, and with respect to any other matters within the authority of the chief procurement officer.

In performing its responsibilities, the council's role will be strictly advisory, but this bill authorizes the council to perform certain functions, such as monitoring the performance of the chief procurement office in the implementation of legislative directives.

OTHER PROVISIONS

This bill authorizes the comptroller of the treasury to examine and approve all procurements, contracts, grants and other documents that serve to incur financial obligations against state government. This authority to examine and approve will be developed in consultation with the chief procurement officer and set forth in procurement and contract policies, standards, rules, regulations, procedures and guidelines approved by the commission.

This bill imposes restrictions on public officers and employees who are involved in making or administering a contract on behalf of a public agency deriving a direct benefit from the contract. This bill prohibits a public officer or employee from soliciting or receiving any gift, reward, or promise of reward in exchange for recommending, influencing, or attempting to influence the award of a contract by the public agency he or she serves. This bill details other conflict of interest provisions regarding state contracts and provisions governing kickbacks and other prohibited activities in regard to state contracts. Anyone violating specified prohibitions would be guilty of a Class 1 misdemeanor and a contract entered into in violation of this bill would be void. A contract that is void under these provisions may continue in effect until an alternative can be arranged in certain circumstances.

1. With regard to whether it is constitutionally permissible for the Comptroller to act as a part of the Executive branch by serving on the proposed State Procurement Commission, this Office has previously addressed a closely analogous issue in a different context. In Op. Tenn. Att'y Gen. 83-206 (Apr. 22, 1983) (copy attached), this Office was asked whether, in light of the doctrine of separation of powers, the Comptroller, the Treasurer and the Secretary of State may serve on the State Building Commission. This Office opined that the Comptroller's service on the State Building Commission is permissible under the both the Tennessee Constitution and Tennessee law. After examining the duties and powers of the Comptroller we concluded that the office of the Comptroller is "substantially executive or administrative" in nature. The duties and responsibilities of the State Building Commission were also found to be "essentially executive." Consequently, this Office was of the opinion that service by the Comptroller on the State Building Commission was not a violation of the separation of powers doctrine, as set forth in Article II, Sections 1 and 2 of the Tennessee Constitution.

The powers and duties of the proposed Procurement Commission, like those of the State Building Commission, are to be predominantly executive and administrative in nature. Accordingly, service by the Comptroller on the proposed Procurement Commission appears to be another example of service by an executive or administrative official on a state commission whose duties and functions are chiefly executive and administrative.

2. Turning to the issue of whether the Comptroller's service on the proposed State Procurement Commission creates an impermissible conflict of interest under either Tennessee law or the Tennessee Constitution, we answer both questions in the negative.

The Office of Comptroller is provided for in Article VII, Section 3 of the Tennessee Constitution, which states: "There shall be a Treasurer or Treasurers and a Comptroller of the Treasury appointed for the State, by the joint vote of both houses of the General Assembly, who shall hold their offices for two years." Tenn. Code Ann. § 4-3-301 creates the Department of Audit, and Tenn. Code Ann. § 4-3-302 makes the Comptroller of the Treasury the administrative head of the Department of Audit. The Comptroller and the Department of Audit are empowered by Tenn. Code Ann. § 4-3-304(1) to perform audits of "all accounts and other financial records of state government, and of any department, institution, office or agency thereof."

Tennessee's general conflict of interest law appears at Tenn. Code Ann. § 12-4-101. This statute, however, addresses conflicts of interest created when state officials have a "direct interest" (i.e., the official is the sole proprietor, is a partner, or is the person having the controlling interest) in any business that has a contract with a governmental entity. A conflict exists where an official has a direct interest in a contract he or she has a duty to vote for, let out, overlook, or to superintend.

In the current scenario, however, Tenn. Code Ann. § 12-4-101 is inapplicable. Your question suggests that a conflict of interest exists due to the Comptroller's simultaneous service as the head of the State Audit Department and as a member of the proposed State Procurement Board, which will be audited by the Department of Audit. The duties of the Comptroller are primarily determined by legislative enactments. The General Assembly has determined that the Comptroller should act as head of the State Audit Department, as well as serving on boards such as the State Building Commission and, if SB3598/HB3353 is enacted in its current form, the State Procurement Commission.

Service by public officials on boards and commissions with overlapping interests and responsibilities is not unusual and is often unavoidable. For example, as discussed above, the Comptroller is head of the Department of Audit, which is responsible for auditing all "accounts and financial records of state government, and of any department, institution, office or agency thereof." The Department of Audit is therefore empowered to audit itself. Similarly, we have previously issued opinions discussing the legality of legislators and members of local legislative bodies voting upon their own salaries or serving on boards whose responsibilities might be interpreted as conflicting. These matters represent fundamental policy choices that are determined by the General Assembly and are always subject to revision, amendment, or repeal. As we observed in Op. Tenn. Att'y Gen. 88-122:

Thus, the fundamental state law requires members of the General Assembly to set their own compensation. The "check" on the conflict of interest in this situation is found in the electorate. If the voters do not like the way the members of the General Assembly alter their compensation, they may voice their displeasure through the election process.

Accordingly, we are of the opinion that the Comptroller's service on boards and commissions that are subject to review by the Office of the Comptroller presents no impermissible conflict of interest under Tennessee law or the Tennessee Constitution.

ROBERT E. COOPER, JR.
Attorney General and Reporter

BARRY TURNER
Deputy Attorney General

KEVIN STEILING
Deputy Attorney General

Requested by:
The Honorable Karen Camper
State Representative
20 Legislative Plaza
Nashville, TN 37243-0192