Background

Statutes governing standards of conduct for public officials proscribe certain acts related to contracts and claims. Section 24-18-201, C.R.S., prohibits state legislators, as well as most other state and local government elected officials and employees, from being "interested in any contract made by them in their official capacity or by any body, agency, or board of which they are members or employees."

This statute excludes several things from the definition of a "contract" to which the prohibition applies including:

• A contract awarded to the lowest responsible bidder in a competitive bidding process;
• Merchandise sold to the highest bidder at a public auction; and
• With respect to state legislators, a contract for which a legislator has disclosed a personal interest in accordance with House or Senate rules and upon which the legislator has not voted.

If a transaction involves one of the above circumstances, section 24-18-201, C.R.S., does not prohibit a legislator from being interested in the transaction. Additionally, the statute, specifies that being "interested in" does not include the holding of a minority interest in a corporation.

Contracts made in violation of these laws are voidable, and the transgressor may be subject to criminal penalties and an additional fine.

Hypothetical

Legislative contract in which member may be interested

Using a competitive bidding process, the state of Colorado, acting through the Legislative Council of the General Assembly, will be considering proposals from vendors for a contract to create an innovative new mobile device application (or "app") that will compile and categorize all committee and floor votes cast by Colorado state legislators each session. As a member of legislative leadership, you currently serve on the Legislative Council, which will be reviewing the proposals and making the final selection of a vendor. You are also the 51% owner of a closely held software development corporation, AppMaker, which builds customized apps for a variety of purposes. AppMaker’s other shareholders want to bid on the contract.

Question

Based on section 24-18-201, C.R.S., which one of the following statements is FALSE?

1. Select | Section 24-18-201, C.R.S., may be inapplicable because the contract is being awarded in accordance with established "competitive bidding procedures".
2. Select | AppMaker may submit a bid on the contract, despite your position on the Legislative Council and the fact that you will benefit financially if AppMaker is awarded the contract.
3. Select | As a majority shareholder, you are deemed to "be interested in" the transaction for purposes of section 24-18-201, C.R.S.
4. Select | If AppMaker submits a bid and is awarded the contract, you must disclose your personal interest in, and vote "no" on, the contract.

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The information on this page is presented as an informational service only and should not be relied upon as an official record of action or legal position of the State of Colorado, the Colorado General Assembly, or the Office of Legislative Legal Services.