A state officer or employee may properly receive a gratuity or gift under the Ethics in Public Service Act provided that such gratuity or gift conforms to the provisions of the act, and the state officer or employee does not have a beneficial interest in a contract under his or her supervision.

2. For the purpose of RCW 42.52.030(1), when does a person become beneficially interested in a contract or grant such that it would be a violation of RCW 42.52.030(1) for a state officer or employee to receive compensation from that person?

2. For the purpose of RCW 42.52.030(1), a person becomes beneficially interested in a contract when the person bids on the contract.

No state officer or state employee, except as provided in subsections (2) and (3) of this section, may be beneficially interested, directly or indirectly, in a contract, sale, lease, purchase, or grant that may be made by, through, or is under the supervision of the officer or employee, in whole or in part, or accept, directly or indirectly, any compensation, gratuity, or reward from any other person beneficially interested in the contract, sale, lease, purchase, or grant.
With regard to Question 1, RCW 42.52.030(1) prohibits an officer or employee from receiving a gratuity or reward from a person beneficially interested in a contract or grant made under the officer's or employee's supervision. Officers and employees involved in contractual matters are also subject to strict limitations of the gifts they may receive. RCW 42.52.150(4) provides that officers and employees who participate in contractual matters may only receive certain listed items from a person who seeks to provide goods or services to the agency. For example, such officers and employees may receive food and beverage at a hosted reception related to their official duties. RCW 42.52.150(4)(e). Advisory Opinion 96-06.

Question 1 asks whether it would be a violation of RCW 420.52.030(1) for officers and employees to accept proper gifts under RCW 42.52.150(4), such as attendance at a hosted reception, from a person beneficially interested in a contract made under their supervision. In our judgement the acceptance of such gifts does not result in a violation of RCW 42.52.030(1).

RCW 42.52.030 refers to "compensation, gratuity or reward." RCW 42.52.030(1) does not use the term gift. The dictionary defines gratuity as: "A favor or gift, usually in the form of money, given in return for service." Webster's II New Riverside University Dictionary (1988) at 545-46. Reward is defined to mean: "Something, as money, given or offered esp. for a special service, as the return of a lost article or the capture of a criminal." Id., at 1007. All three terms "compensation, gratuity or reward" refer to getting something in return for doing something. This does not fall within the definition of gift set out in RCW 42.52.010(10) which provides that a gift is "anything of economic value for which no consideration is given." Thus, if one receives a valid gift under RCW 42.52.150(4), it does not violate RCW 42.52.030(1).

Question 2 involves the issue of timing. RCW 42.52.030(1) prohibits state officers and employees from accepting compensation, gratuity or reward from a person beneficially interested in a contract made by or under the supervision of the officer or employee. The question is when does a person become beneficially interested in a contract? For example, suppose a state officer received compensation from an private employer prior to state service and then went to work for the state. Five years later the former private employer becomes beneficially interested in the contract upon which the officer will vote. Since the officer received compensation from the employer five years earlier, will the officer violate RCW 42.52.030(1) if he or she votes on that contract?

The term "beneficial interest" is defined in RCW 42.52.010(4) as follows:

"Beneficial interest" has the meaning ascribed to it under the Washington case law. However, an ownership interest in a mutual fund or similar investment pooling fund in which the owner has no management powers does not constitute a beneficial interest in the entities in which the fund or pool invests.
In Advisory Opinion 97-07, we applied Washington case law that defined beneficial interest as the profit, benefit, or advantage resulting from a contract, or the ownership of an estate as distinct from legal ownership or control. As applied to RCW 42.52.030(1), we believe that a person seeking a contact with the state has a beneficial interest in the contract from the time the person bids on it. At that point they do not have an ownership interest in the contract since the person's bid may not be successful. However, the act of bidding gives each bidder some limited rights with regard to the award of the contract. For example, RCW 42.52.1911(1) provides that the contract must be awarded to the "responsible bidder who submitted the lowest responsive bid . . . unless there is a compelling reason to reject all bids and cancel the solicitation."

As applied to our example, an officer who received compensation from a former private employer prior to the employer's bid on a contract would not violate RCW 42.52.030(1) because the former employer was not beneficially interested in the contract when the officer received the compensation. On the other hand, if an officer received compensation from a person after the person bid on a contract that was made by the office or was under the officer's control, there would be a violation of RCW 42.52.030(1).

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