Conflicts of Interest

Conflicts of Interest

Policy Statement

It is the policy of the University of Illinois System to review information disclosed by employees under the Report of Non-University Activity process as well as financial information disclosed by vendors in accordance with Sections 50-13 and 50-35 of the Procurement Code to determine if a prohibited or potential conflict of interest exists.

A proposed purchase of services or supplies from a vendor with either a prohibited or a potential conflict of interest must comply with the University of Illinois System’s internal review procedures and the review process defined in the Procurement Code.
The University of Illinois System does not have the final authority to determine whether a conflict of interest exists or whether a proposed purchase that presents a conflict may proceed. The University of Illinois System will cooperate with the review process conducted by the Procurement Policy Board and the Executive Ethics Commission as defined in the Procurement Code & Rules.
Employees also must observe the State Officials and Employee Ethics Act and the Employee Gift Policy, and should consider public perception, when making a purchase.
If you have any questions about a prohibited or potential conflict of interest, contact Urbana Purchasing.

Applicability of the Policy

The policies in this section apply to all purchases, contracts for services, and contracts for supplies made by or for the University of Illinois System under the Illinois Procurement Code (30 ILCS 500). This policy applies regardless of funding source for the purchase.

Gratuities

Employees must avoid accepting gratuities, tips, gifts, merchandise, cash, or services, in exchange for the performance of their duties, either past or future. See 9 Audits, Internal Control, and Business System Security – Employee Gift Policy for additional information.

PROCUREMENT CONFLICT OF INTEREST AND RELATED POLICIES AND PROCEDURES

1. 1. PROHIBITED CONFLICTS OF INTEREST
      Policy Statement
      In general, if an individual, their spouse, or their minor child:
      • holds an elective office in this state,
      • holds a seat in the General Assembly,
      • is appointed or employed in any of the offices or agencies of State government [including appointments or employment at the University of Illinois] and receives compensation for such employment in excess of 60% of the Governor’s salary (currently $106,447),
      • is an officer or employee of the Capital Development Board, or
      • is an officer or employee of the Illinois Toll Highway Authority,

      they are prohibited from contracting with the University of Illinois System (or having any direct pecuniary interest in any contract) if the contract will be wholly or partially paid with funds appropriated by the Illinois General Assembly. An individual has a direct pecuniary interest in a contract when the individual is owed a payment or otherwise receives a direct financial benefit in conjunction with performance of a contract, including finder’s fees and commission payments.
      Business organizations may not enter into purchase transactions with the University of Illinois System if an individual identified above or their spouse or minor child has an ownership interest in, or is entitled to distributed income from, the organization in an amount that meets or exceeds a prescribed threshold.
      Exceptions to the prohibited conflicts of interest include purchases for certain personal services, including contracts for teachers.

      Reason for the Policy

      This policy is intended to implement Section 50-13 of the Illinois Procurement Code by providing for the identification, review and resolution of prohibited conflicts of interest relating to procurements by or for the University of Illinois System.

      Procedure

      The University of Illinois System is prohibited from making a purchase from a vendor or individual if the university knew or should have known that a prohibited conflict of interest exists.
      Prohibited conflicts of interest can be identified in the following three manners.

      • By completion of a Financial Disclosures and Conflicts of Interest form or registration on the Illinois Procurement Gateway, which is required for all purchases of $100,000 or more, and all competitive solicitations;
      • By completion of the University’s Report of Non-University Activities (RNUA) process; or
      • Through common knowledge of a prohibited relationship.

      When a prohibited conflict of interest is identified, or presumed, the proposed vendor must complete a Financial Disclosures and Conflicts of Interest form or register on the Illinois Procurement Gateway. A prohibited conflict of interest exists if:

      • the vendor has submitted the Financial Disclosures and Conflicts of Interest form and checked “yes” for any of the questions in Step 4; or the vendor is registered on the Illinois Procurement Gateway and in Section I – Financial Disclosures & Conflicts of Interest has checked “yes” for any of the questions numbered 5 through 10;
      • the purchase is to be made with funds appropriated by the Illinois General Assembly; and
      • the purchase is not subject to one of the statutory exceptions.

      If a prohibited conflict of interest exists, the University of Illinois System must consider alternative sources for supplying the services or supplies. If the services or supplies are not available from other sources, or it is in the University of Illinois System’s best interest to proceed with the proposed purchase, the university may request a conflict of interest review for approval prior to proceeding with the purchase. See Conflict of Interest Review Process below.

      If a proposed vendor would present a prohibited conflict other than the purchase would not be made with funds appropriated by the Illinois General Assembly, then the conflict is considered a potential conflict of interest. See Potential Conflicts of Interest below.

   2. POTENTIAL CONFLICTS OF INTEREST
      Policy Statement
      In general, a potential conflict of interest exists if an individual, their spouse, father, mother, son or daughter:
      • is, or within the previous three* years was, a State of Illinois employee [including an employee of the University of Illinois System],
      • holds, or within the previous three* years held, an elected government (federal, state or local) office,
      • is, or within the previous three* years was, held an appointed government (federal, state or local) office,
      • is, or within the previous three* years was, a registered State of Illinois lobbyist, or
      • is, or within the past three* years was, compensated by a registered election, re-election or political action committee,

      *Two years in the case of a spouse, father, mother, son or daughter.

      and has an ownership interest in, or is entitled to receive distributive income from, the potential vendor in an amount that exceeds a threshold prescribed by law. Individuals are under a continuing obligation to disclose the existence of these relationships for three years (two years in the case of a spouse, father, mother, son or daughter) from the last date of employment, appointment, term, or registration.

      Reason for the Policy

      This policy is intended to implement Section 50-35 of the Illinois Procurement Code by providing for the identification, review, and resolution of potential conflicts of interest relating to procurements by or for the University of Illinois System.

      Procedure

      The University of Illinois System may not make a purchase from a vendor without prior review and approval if the university either knows or should know that a potential conflict of interest exists.

      Potential conflicts of interest can be identified in the following three manners.

      • By completion of a Financial Disclosures and Conflicts of Interest form or registration on the Illinois Procurement Gateway, which is required for all purchases of $50,000 or more, and all competitive solicitations;
      • By completion of the University of Illinois System’s Report of Non-University Activities (RNUA) process; or
      • Through common knowledge of a relationship with an individual who has a potential conflict of interest.

      When a potential conflict of interest is identified, or presumed, the potential vendor must complete a Financial Disclosures and Conflicts of Interest form or register on the Illinois Procurement Gateway. A potential conflict of interest exists if:

      • the potential vendor has submitted the Financial Disclosures and Conflicts of Interest form and checked “yes” for any of the questions in Step 4; or the vendor is registered on the Illinois Procurement Gateway, and in Section I – Financial Disclosures & Conflicts of Interest has checked “yes” for any of the questions numbered 5 through 10 and the purchase would not be paid for wholly or in part with funds appropriated by the Illinois General Assembly;
      • the potential vendor has submitted the Financial Disclosures and Conflicts of Interest(link to form) form and checked “yes” for any of the questions in Step 5 or the potential vendor is registered on the Illinois Procurement Gateway, and in Section I – Financial Disclosures & Conflicts of Interest and has checked “yes” for any of the questions numbered 11 through 20; or
      • University personnel, through common knowledge, discover or reasonably suspect a potential conflict exists.

      If a potential conflict of interest exists, the University of Illinois System should consider alternative sources for supplying the services or supplies. If the services or supplies are not available from other sources, or it is in the University of Illinois System’s best interest to proceed with the proposed purchase, the University may request a conflict of interest review for approval prior to proceeding with the purchase. See Conflict of Interest Review Process below.

CONFLICT OF INTEREST REVIEW PROCESS

Prior to entering into a purchase contract with (or making a purchase from) a vendor with a prohibited or potential conflict of interest, the University of Illinois System must complete the following conflict of interest review process to determine whether the purchase is allowed under the Procurement Code.

Purchases from a vendor with a prohibited or potential conflict are prohibited on university Purchasing Cards (P-Cards) and Travel Cards (T-Cards).

All proposed procurements subject to the Illinois Procurement Code (30 ILCS 500) that present prohibited conflicts or potential conflicts of interest are thoughtfully considered by the University of Illinois System and reviewed by independent state authorities as required by the Illinois Procurement Code. (30 ILCS 500/50-35(d))

The University of Illinois System does not have the final authority to determine whether a conflict of interest exists or whether a proposed purchase that presents a conflict may proceed. When a potential conflict of interest is identified, OBFS – Procurement Services must complete a Conflict of Interest Review and Determination Form that describes the circumstances of the potential conflict along with the University’s justification for proceeding with the purchase.

Conflict review requests involving vendors that have not undergone a review within the fiscal year must be considered by the respective state purchasing officer (SPO) and the Illinois Procurement Policy Board (PPB). The SPO also may refer the review request to the Chief Procurement Officer (CPO) prior to submission to the PPB for final review. The SPO may complete the review request without PPB approval if it involves a vendor that has undergone a review within the fiscal year or if the purchase is less than $50,000.

The University of Illinois System will cooperate with the review process conducted by the PPB and the Executive Ethics Commission as defined in the Procurement Code & Rules.

The University of Illinois System may not proceed with a procurement until:

1. 1. • the PPB has completed a review of the potential conflict of interest review and authorizes the System to proceed;
      • the SPO has completed a review of the potential conflict of interest review (when a review has previously been completed within the same fiscal year) and authorizes the System to proceed; or
      • after the PPB has sent communication indicating that they find the potential conflict to be an actual conflict, the EEC has held a hearing, and the EEC authorizes the System to proceed.

Purchase Order Hold Process

Unless the University of Illinois System can demonstrate that a conflict of interest does not exist, a purchase order hold should be placed on the vendor’s record in Banner when:

• the vendor has had a previously identified prohibited or potential conflict of interest;
• it is determined at the time of vendor setup that the vendor has a relationship with a University of Illinois System employee;
• the vendor is identified in a conflict of interest/commitment management and oversight plan; or
• the vendor is disclosed in a Report of Non-University Activities (RNUA).

The University of Illinois System might not place a purchase order hold on a vendor record in certain situations that suggest no potential conflict exists, such as when:

• the vendor has not conducted business with the University of Illinois System within the last three years;
• the vendor is a not-for-profit organization or a governmental entity;
• the RNUA does not contain a legally accurate or complete vendor name; or
• the vendor is a publicly traded company subject to federal 10K reporting requirements established by the U.S. Securities and Exchange Commission.

Prior to completion of the purchase, the potential vendor will be required to complete a Financial Disclosures and Conflicts of Interest form. This form will be used to determine whether a prohibited or potential conflict exists at the time of the purchase. If a prohibited or potential conflict of interest exists, the Conflict of Interest Review Process must be completed to determine if the University may proceed with the purchase. The purchase order hold will remain in place until the prohibited or potential conflict of interest no longer exists. Procurement Services will annually review approved RNUAs to identify reported relationships that may implicate the Procurement Code conflicts of interest provisions.

Effects of a Purchase Order Hold

• Banner Purchase Orders
  When a purchase order hold is placed on a vendor profile, a Banner purchase requisition can be created, submitted, approved and routed to the Purchasing Division. The Purchasing Division, however, may not complete the transaction until the purchase order hold is removed from the vendor’s Banner profile or the purchase order is otherwise approved by the Office of Procurement Services after completion of the Conflict of Interest Review Process without finding of an actual conflict of interest.
• iBuy Purchase Orders
  If a unit is creating an iBuy purchase requisition for a vendor with a known purchase order hold, the unit must submit the requisition on the “Route to Purchasing” form. This requisition can still be created, submitted, approved and routed to the Purchasing Division. However, the Purchasing Division will not complete the transaction until the purchase order hold is removed from the vendor’s Banner record or the purchase order is otherwise approved by the Office of Procurement Services after the Conflict of Interest Review Process has been completed without finding of an actual conflict of interest.
  Procurement Services will run a monthly report to find purchase orders created in iBuy with vendors subject to a purchase order hold. Procurement Services will use the report to verify that a Conflict of Interest Review Process was completed on the purchase order in question. If a Conflict of Interest Review Process was not completed, the Office of Procurement Services may suspend any services not performed and delivery of any supplies not received in order to conduct the Conflict of Interest Review Process. If all services have been performed and all supplies have been delivered, Procurement Services will notify the unit of the vendor’s purchase order hold and instruct the unit to use the “Route to Purchasing” form for all future purchases from the vendor. The report also will be used to identify any iBuy purchases for which a Purchasing Division did not identify a purchase order hold on a vendor profile prior to completion of the transaction.

Additional Resources

Procurement Code Article 50
State Officials and Employees Ethics Act