October 26, 2012
Six months after a differing opinion from the Franklin County Commonwealth’s Attorney, Virginia Attorney General Ken Cuccinelli has found no conflict of interest in an elected Carroll County supervisor working for a company providing inspections on the Fancy Gap water and sewer projects.
Cuccinelli’s opinion was sought by Laurel Fork District supervisor Joshua Hendrick in an appeal after Franklin County Commonwealth’s Attorney Timothy Allen found that Hendrick’s involvement with Nehemiah Engineering, Inc. (NEI), the company performing inspections on the Fancy Gap utilities projects, was a conflict of interest. Hendrick resigned from his position as Vice President of NEI two days after Allen’s opinion earlier this year.
An investigation into the matter was conducted by the Virginia State Police after federal funding agency Rural Development wrote the Carroll PSA a letter on April 16 stating that a conflict of interest may exist, and that it would stop disbursing inspection funds for the project until the conflict was resolved. Allen’s opinion was appealed to Cuccinelli, who wrote to Hendrick’s attorney Webster Day on Oct. 19 that it was his opinion that no conflict of interest arises from Hendrick serving as a member of the board of supervisors while employed with a firm that holds a contract with the Carroll County Public Service Authority.
“You ask whether an impermissible conflict of interests arises from serving as a member of the Carroll County Board of Supervisors while employed with a firm that holds a contract with the Carroll County Public Service Authority,” Cuccinelli wrote. “It is my opinion that no impermissible conflict of interests arises under the Act based on the facts presented.”
Virginia’s Conflict of Interests Act precludes local officers and employees from having a personal interest in certain contracts, Cuccinelli said. Specifically, no person elected or appointed as a member of the governing body of a county, city of town shall have a personal interest in any contract other than a contract of employment with any other governmental agency if such person’s governing body appoints a majority of the members of the governing body of the second governmental agency.
A member of the Carroll County Board of Supervisors, Hendrick appointed James Light to serve the Laurel Fork District on the Carroll County Public Service Authority, which awarded the Fancy Gap projects. The opinion points out that the Carroll County PSA awarded the inspection contract to NEI in the months prior to Hendrick’s election to the Carroll County Board of Supervisors in November 2011.
“You state that you forfeited your ownership interest in Nehemiah Enginerring, Inc. prior to taking office. Thus, as an employee, your personal interest is based solely on a salary in excess of $10,000. Also, given the timing of the procurement action and that it was an action of the PSA, you neither participated nor had the authority to participate in the contract procurement as a member of the Board of Supervisors,” Cuccinelli wrote. “You relate that you also did not participate in the contract process on behalf of the company. Assuming this is the case, I conclude that the exception applies to the scenario you present so that no impermissible conflict of interests arises under the Act.”
Cuccinelli went on to say that the contract procurement at issue was a matter considered by the PSA, not the Board of Supervisors, thus the transactional prohibition does not apply to Hendrick’s situation.
“Moreover, the transaction at issue, i.e. the selection of Nehemiah Engineering, Inc. to provide inspections for the PSA, was considered prior to your becoming a member of the Board of Supervisors,” Cuccinelli opined. “A pre-existing contractual relationship does not constitute a ‘transaction’ under the Act.”
The Attorney General also pointed out that supervisors may appoint themselves to the PSA. Should Hendrick appoint himself to the PSA in the future, he would then also be an officer of the agency holding and/or procuring the inspection services for that agency.
“In the event you also resume your employment with Nehemiah Engineering, Inc., I encourage you to consult with your Commonwealth’s Attorney again if the company submits additional proposals in the future,” Cuccinelli wrote.
Hendrick’s brother, Jeremiah Hendrick, is owner and president of Nehemiah Engineering, Inc. He said the opinion from Cuccinelli was more than welcome news.
“We’re glad it’s finally resolved. We expected it to be overturned, but it drug out for a while and we’re glad it’s finally finished,” Hendrick said. “We were in a little bit of jeopardy if it didn’t come back like that. With economic times the way they are, not having much work and losing that much money, it wasn’t a good combination. So that’s good news we can keep people working and get back to business as normal.”
Hendrick said NEI went back to work providing inspection services on the Fancy Gap project in August after his brother resigned from the company and Carroll County declared there was no conflict moving forward. NEI did lose about four months of work in between those times, however. Additionally, the company had to make payments back to the Carroll County PSA for reimbursement to Rural Development for the time period Joshua Hendrick worked on the projects. Jeremiah Hendrick expects the company to get those payments back now that Cuccinelli has weighed in on the subject.
“The intent is that we would get those payments back. What was originally stated to me was as long as the Fancy Gap projects had not closed out and the conflict was overturned by the Attorney General, then the PSA would request those funds back from Rural Development and they would in turn pay us back,” Hendrick said.
Jeremiah said it’s his understanding that Joshua may now return to work for NEI. The company will need to be cautious and seek legal counsel before performing any more work for the PSA if Joshua returns, his brother said.
Jeremiah said he believed the Attorney General’s ruling would also clear the company’s name in the public eye.
“I think anybody that knew us knew it was bogus anyway. But for people that don’t know us personally, they read it in the paper, and that is what they see, the county said it was a conflict,” he said. “I am glad on behalf of Josh that this is cleared up and it takes that negative spotlight that was on us off.”