New York State Ethics Commission
Alfred E. Smith State Office Bldg.
80 South Swan Street, 11th Floor, Suite 1147
Albany, NY 12210

INTRODUCTION

The following advisory opinion is issued in response to a request submitted by [ ], a former employee of the Long Island Rail Road (“LIRR”).¹ He asks whether the lifetime bar of Public Officers Law §73(8)(a)(ii) precludes him from making a proposal to the LIRR seeking to upgrade major components to a fleet of locomotives that were originally purchased by the LIRR in a 1995 transaction in which he personally participated.

Pursuant to the authority vested in the New York State Ethics Commission (“Commission”) by §94(15) of the Executive Law, the Commission concludes that the lifetime bar does not prohibit [the former employee] from assisting a company that is proposing improvements to the locomotives because it is a new transaction.

BACKGROUND

In 1995, [the former employee] was [ ] Manager of [ ] for the LIRR and participated in preparing the specifications which were used in the Request for Proposals (“RFP”) and the subsequent contract for purchase of DE/DM-30 locomotives from the Electro-Motive Division of General Motors (“EMD”). [The former employee] represented the LIRR at meetings with EMD and another supplier under contract with the LIRR. At the meetings, specific technical issues, as well as progress reports on the production of the locomotives, were discussed.

After [the former employee] retired from the LIRR on [date], the vehicles developed structural cracks while in operation. An engineering company under contract with the LIRR asked [the former employee] to assist in the technical evaluation of the mechanical problems, which would require his direct contact with the LIRR and EMD. In an informal opinion, dated [ ], the Commission concluded that the lifetime bar precluded [the former employee] from working for the company because he would be working on the same transaction on which he was directly concerned and personally participated or which was under his active consideration while employed by the LIRR. The Commission determined that the parties to the contract and the essence of the transaction – the acquisition of locomotives for the LIRR – were the same and that the evaluation of the mechanical problems naturally flowed from the procurement itself. Citing as precedent Advisory Opinion No. 95-6, the Commission stated in the informal opinion that, “the fact that the locomotives are now experiencing mechanical difficulties which will require the consultant to assist the LIRR to come up with a long-term fix does not change the nature of the transaction.”

[The former employee] is now performing consulting services for a locomotive manufacturing supplier that was involved as a subcontractor in the original procurement. In June of 2003, this supplier met with the LIRR to discuss a plan to upgrade rather than merely fix the DE/DM-30 locomotives that were acquired in 1995. [The former employee] states that the potential scope of this project might include the replacement of the locomotives’ diesel engine with a higher speed engine that will be lighter, resulting in less wear and tear on the track, and which will have more favorable exhaust emission characteristics. The upgrade might also include a new head end power transformer and central control unit.

The LIRR is interested in the upgrades and the supplier has asked [the former employee] to assist them in the proposal based on his knowledge of the LIRR’s operations. According to the LIRR, the 1995 specifications which [the former employee] helped prepare are available to the public and the LIRR believes that while [the former employee] is quite knowledgeable, he does not possess insider information acquired as a result of his LIRR work on the original procurement that would provide an unfair advantage to his employer over potential competitors on the current proposal.

[The former employee] argues that his proposed work should be considered a new transaction for several reasons. First, he states that the upgrades to the locomotive fleet were not available in the market in 1995, establishing that the improvements now being considered were neither anticipated nor planned at the time of the original acquisition. Second, he argues that there is a ten year period between the original purchase and the new proposal, a significant break in activity. Third, he claims that the parties to this transaction are not the same because EMD is “not likely” to be involved in the new proposal. Fourth, he states that the upgrades will require new specifications, resulting in a new procurement. Lastly, [the former employee] argues that to impose the lifetime bar to these set of facts would be an overly broad application of the term “transaction” rendering it to mean that a former employee could rarely, if ever, work on the same property or equipment in the future.

APPLICABLE STATUTES

The lifetime bar contained in Public Officers Law §73(8)(a)(ii) provides:

No person who has served as a state officer or employee shall after the termination of such service or employment appear, practice, communicate or otherwise render services before any state agency or receive compensation for any such services rendered by such former officer or employee on behalf of any person, firm, corporation or other entity in relation to any case, proceeding, application or transaction with respect to which such person was directly concerned and in which he or she personally participated during the period of his or her service or employment, or which was under his or her active consideration.

DISCUSSION

The above provision, which is generally referred to as the lifetime “revolving door” provision, sets the ground rule for what individuals may do with the knowledge, experience and contacts gained from work on a specific transaction while in public service after they terminate their employment with a State agency. It prohibits a former State employee from appearing, practicing, communicating or otherwise rendering services before any State agency or receiving compensation for services rendered in any case, proceeding, application or transaction with which the former employee was directly concerned and in which he or she personally participated or which was under his or her active consideration while in State service. Lifetime bar cases are determined on a case-by-case basis (see, Advisory Opinion No. 90-22).

[The former employee] was directly concerned with, personally participated in and actively considered the initial procurement of the DE/DM-30 locomotives in 1995. He participated in drafting the specifications for the locomotives and represented the LIRR in meetings with EMD and the supplier to discuss technical issues and the progress of the locomotives’ production. For that reason, when he sought advice in 2000 as to whether he could assist the same supplier on finding a solution to the mechanical difficulties that arose from the initial procurement of the locomotives, Commission staff concluded that the lifetime bar applied.

The issue presented here is whether the combination of upgrades and the replacement of major components to the locomotives, as well as the passage of time and the fact that a new public procurement will ensue, makes [the former employee’s] proposed activities part of a continuing transaction or a new one. To make this determination, the Commission is guided by previous advisory opinions interpreting the term “transaction”.

In Advisory Opinion No. 91-12, the Commission held that a change in scope and nature of the Pennsylvania Station Improvement Project (“Penn Station Project”) after a former employee left State service does not render it a different transaction from the one in which he personally participated, as the essential nature of the transaction, the agencies involved, the property to be reconstructed and the basic concept of reconstruction did not change, and there was no significant break in project activity.

The Commission stated:

The fact that the design had been modified since the former employee’s departure does not change this transaction into a new one; it is like an amendment to the existing contract which does not change the nature of the transaction but merely modifies its terms. Had the reconstruction project terminated after completing a specific phase and a new effort been initiated, the Commission may have determined that there was no continuing transaction.

The Commission found that the former State employee had more than just passing knowledge concerning the Penn Station Project, and prohibited him from assisting a new employer, not previously involved in any aspect of the Penn Station Project, from preparing a bid.

This case is distinguishable from Advisory Opinion No. 97-23 in which the Commission found that the lifetime bar prohibited a former employee with the New York State Office of Mental Retardation and Developmental Disabilities (“OMRDD”) from selling computer upgrades for computers that were originally purchased in a transaction in which he personally participated. The former employee had served on a committee that evaluated a number of computer brands whose recommendation was ultimately purchased by the agency. The computers could initially have been purchased with more memory and larger hard drives, but because the cost would have been much higher, the agency decided to upgrade the systems, if and when needed. Therefore, unlike [the former employee’s] case, at the time of the initial procurement, upgrades were contemplated and would have been purchased but for the budgetary constraints.

Advisory Opinion No. 97-9 in which the Commission held that a former employee who worked on Phase I of a construction project could not work on later phases of the project that had been tabled for more than ten years due to budgetary constraints and which had to be redesigned due to the passage of time, is likewise distinguishable from the instant matter. The Commission held that, despite the intervening changes, the different phases of the project were all part of the same transaction as Phase II was clearly contemplated at the time of Phase I, but would have been built but for the budgetary constraints. Unlike the facts in Advisory Opinion Nos. 97-23 and 97-9, the LIRR was not considering the proposed upgrades at the time of the 1995 procurement.

Additionally, the Commission has held that a project may progress because of technological advances and become so altered that the transaction, itself, is no longer the same. For example, in Advisory Opinion No. 96-06 a former employee of the New York State Department of Transportation (“DOT”) sought to work on a contract to provide later generation road weather information systems to DOT. Three years earlier the former employee had worked on the draft RFP. DOT staff believed that the project had been materially altered by technological advances and the establishment of federal standards such that whatever insider information the former employee may have acquired as a result of his DOT work on the draft RFP was no longer useful for a bidder on the current RFP (see also Advisory Opinion No. 02-01 where a former employee of the Metropolitan Transportation Authority (“MTA”) responsible for the implementation of the “Metro-Card” system was permitted to work for a different government agency on the agency’s development of a smart card because the technology had advanced to the next generation of automated fare cards).

Turning to the facts presented here, there are substantial changes from the original 1995 procurement of the locomotives and the current proposal to upgrade components of the trains. The parties to the transaction are not entirely the same; that is, EMD, the manufacturer, is not likely to become involved in the trains’ rehabilitation. After ten years of operation, technological improvements have been made to components that were not available in the marketplace at the time of the original 1995 purchase.

While it is not dispositive, the Commission notes that the LIRR does not believe that [the former employee] possesses inside information acquired from the 1995 transaction that would provide an unfair advantage today. Should the LIRR decide to make the improvements and/or upgrades to the locomotives, the specifications will be original, not derivative of the 1995 transaction, and result in a new RFP (see, Advisory Opinion No. 99-10  where a former employee of the Division of Lottery could work on a new procurement that would not be dependent upon, or a continuation of, the system that was put in place during his tenure which was no longer used by Lottery, having been replaced in its entirety).

Considering all of these factors, the Commission concludes that the current proposal for improvements and upgrades to the locomotives is a new transaction.

CONCLUSION

The Commission concludes that Public Officers Law §73(8)(a)(ii) does not prohibit [the former employee] from making a proposal to the LIRR seeking to upgrade major components to a fleet of locomotives purchased in 1995 because it is a new transaction.

This opinion, until and unless amended or revoked, is binding on the Commission in any subsequent proceeding concerning the person who requested it and who acted in good faith, unless material facts were omitted or misstated by the person in the request for opinion or related supporting documentation.

All concur:

Paul Shechtman, Chair
Robert J. Giuffra, Jr.
Carl H. Loewenson, Jr.
Lynn Millane
Susan E. Shepard, Members

Dated: May 19, 2004

1. [ ], an attorney representing [the former employee], also submitted a letter to the Commission dated February 9, 2004 setting forth his reasoning why previous Commission precedent should not apply. Those points are incorporated into [the former employee’s] request and are discussed herein.