Public contracts: University of California executives: conflicts of interest: prohibition., the official text

An act to add Section 10516.1 to the Public Contract Code, relating to public contracts.

LEGISLATIVE COUNSEL'S DIGEST

The California Constitution provides that the University of California constitutes a public trust administered by the Regents of the University of California, a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including, among others, as may be necessary to ensure the security of its funds.
Existing law prohibits officers or employees of the University of California from engaging in any employment, activity, or enterprise from which the officer or employee receives compensation or has a financial interest if that employment, activity, or enterprise is sponsored or funded by a university department or contract, except as provided.
This bill would require a University of California executive, within 60 days of accepting a board of director position with a business entity, to post on a University of California internet website a written recusal from involvement with any future university contract decisions where the business entity is a party, as provided. The bill would prohibit a University of California executive from making, participating in making, or in any way attempting to influence a contractual decision where the executive is on the board of directors of a business entity that is a party to the contract or receives compensation for consulting or advisory services from a business entity that is a party to the contract. The bill would authorize the Attorney General to bring a civil action to enforce these provisions and to recover attorney’s fees if the civil action prevails. If a court finds in such a civil action that an executive has violated these provisions, the bill would require the court to void the affected contract. The bill would define “business entity,” “contract,” and “University of California executive” for its purposes.

The people of the State of California do enact as follows:

SECTION 1.
(a) The Legislature finds and declares both of the following:
(1) The University of California, as a public institution, is charged with responsible stewardship of public funds and it is appropriate that its leaders are held to the same high standards of integrity and transparency as state public officials. Avoiding conflicts of interest in public procurement and public service, and transparency of public decisionmaking, are important to build and maintain the public trust.
(2) Article IX, Section 9 of the California Constitution provides that the Regents of the University of California are subject to such legislative control as may be necessary to ensure compliance with such competitive bidding procedures as may be made applicable to the university by statute for the letting of construction contracts, sales of real property, and purchasing of materials, goods, and services.
(b) It is the intent of the Legislature that conflicts of interest from outside professional activities for senior University of California executives are handled appropriately through recusals, disclosures, and transparency, avoiding even the perception of undue influence.

SEC. 2.
Section 10516.1 is added to the Public Contract Code, to read:
10516.1.
(a) For purposes of this section, the following definitions apply:
(1) “Business entity” means any private sector organization, regardless of its corporate form, other than a nonprofit organization organized pursuant to Section 501(c)(3) of the United States Internal Revenue Code.
(2) “Contract” means any legally enforceable agreement that establishes the rights and obligations of two or more parties, one of which is the Regents of the University of California, any University of California campus, medical center, health system, hospital, clinic, or laboratory and is for the sale or lease of real property, the sale or lease of materials, or the provision of personal or professional services.
(3) “Executive” or “University of California executive” means a University of California employee who serves as a Chancellor of a University of California campus, a Chief Executive Officer of a University of California hospital or hospital system, or a President of a University of California health system.
(b) (1) A University of California executive shall, within 60 days of accepting a board of director position with a business entity, post on a university internet website a written recusal from involvement with any future university contract decisions where the business entity is a party.
(2) A recusal notification posted pursuant to this subdivision shall contain all of the following requirements:
(A) The executive’s name, address of employment, and date they accepted a board of director position.
(B) The name of the business entity for which the executive serves as a member of the board of directors.
(C) A declaration that the executive recuses themself from and will avoid any participation of any kind in a university contract decision in which the business identified under subparagraph (B) is a party, that the executive will avoid communicating with any university officers or employees about a contract decision, and will not review any privileged or confidential documents that may relate to the contract decision.
(D) The type and amount of compensation, if any, provided or promised to the executive by the business entity.
(E) The name, address, and contact information of the office where a member of the public can request copies of any contracts with the business entity under subparagraph (B) that are disclosable pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code) or other existing law. A contract with the business entity shall be provided to the requester as soon as practicable, but no later than 30 days after the request is made.
(c) A University of California executive shall not make, participate in making, or in any way attempt to influence a contractual decision where the executive is on the board of directors of a business entity that is a party to the contract or receives compensation for consulting or advisory services from a business entity that is a party to the contract.
(d) If a court finds, in a civil action brought pursuant to subdivision (e), that an executive has violated this section, the court shall void the affected contract.
(e) The Attorney General may bring a civil action to enforce this section and, upon prevailing, shall recover attorney’s fees and costs.