© copyright 2008 nan mckay & associates 1 making ethical decisions patti zatarian menard ©...

© Copyright 2008 Nan McKay & Associates

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Making Ethical Making Ethical DecisionsDecisions

Patti Zatarian MenardPatti Zatarian Menard



Course Objectives

Understand relevant laws Understand how to develop policies that support

ethical decisions Learn how the agency’s leadership and structure

supports ethical decision-making Recognize unethical decisions and conflict of

interest

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Your Ethical Role

As public housing officials, we are stewards of the public trust

HUDs reviews cover procurement, fair housing, PHA policies, occupancy practices

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What Is Ethics?

Knowing what is right and doing it!Sometimes “what’s right” is clear… sometimes it’s not!

Preserving the public trust is extremely important

In you In your housing authority

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Your Challenge

Knowing what is right! Does it break the lawDoes violate policyDoes it hurt another personDoes it hurt the PHA

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Your Challenge

Knowing what is right! Do it right!Do good!Do no harm!

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Your Challenge Doing what is right!

Pressures of daily livingComing in late, leaving early, taking paper

Unusual circumstances Divorce, college tuition, credit problems

TemptationsTaking money to move a family in… Taking a car from a contractor


Ethical Decision MakingDirection is in…

LawFederalState

RegulationsGuidance Can Be Found In…

PHA policies PHA Professional Code Of

Ethics

Ethics 8October 2007


Ethical Decision Making

Support is found in… Corporate culture Open communication Joint decision making Respect for employees

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Ethics in Business

Law, regulation, and policy help guide agency in times of struggle and change Provides strong moral compass Provides clear roadmap for action


Ethics in Business

Most businesses have Code of Ethics Codes of Conduct Ethics Committees Policies and procedures for ethical decisions Procedures to resolve ethical dilemmas Ethics training…like this!


Busting The Myths

Business Ethics Is More A Matter Of Religion Its managing ethical

decisions


Busting The Myths

Our employees are ethical Most situations are

complex People have different

beliefs that are equally ethical


Busting The Myths

Ethics Is for philosophers Its management with Programmatic

choices and Practical tools


Busting The Myths

Ethics Can’t Be Managed Ethics are always

managed…just managed poorly sometimes


Busting The Myths

Our Agency Is Not In Trouble …We Must Be Ethical Its possible to be

unethical AND operate within the law!


Benefits of Ethics In Workplace

Protect workers Protect customersPromotes confidence Saves agency money Clients more willing with ethical agencies

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Case Study # 1 You have 25 reexams to process, because

you are so busy, you fail to obtain third party verification for three files. You decide to use the pay stubs that the resident provided.

Is this an ethical course of action?

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Your Challenge

Knowing what is right! Does it break the lawDoes it violate a regulationDoes violate policyDoes it hurt another personDoes it hurt the PHA

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Your Challenge


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Case Study # 2

You are the waiting list supervisor. While attending a college prep meeting at the high school the principal asks you about her recently divorced daughter who applied for Section 8 assistance.

This principal also needs to write your son a recommendation to college.

Would it be ethical to tell the principal about her daughter’s status?


Your Challenge


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Your Challenge


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PHA Policies

Procurement Policy Personnel Policy Code Of Ethics ACOP and Admin Plan Drug Free Workplace Policy


Applicable Regulations

24 CFR 85.36 (ACC and related regs) HUD Procurement Handbook 7460.8

REV 2 (March 2007) Section 103 of 1989 HUD Reform Act U.S.C. 201 Bribery of Public Officials 24 CFR 964.145 Resident Councils



24 CFR 85.36 HUD Procurement Handbook

7460.8 REV 2 (March 2007)


CFR Part 85

Part 85 known as

“The Common Rule” Admin requirements for

entities (PHAs) receiving federal funds


CFR Part 85

“Common Rule” If Federal standards are stricter than State or

local laws, Federal laws prevail If State/local laws are stricter than Federal

standards, State/local prevails

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CFR Part 85

Procurement policy/system Contract administration

system Requirements for price and

cost analysis Guidance on standard of

conduct


CFR Part 85 Code of Standards

PHA must maintain a written code of standards governing their employees engaged in contracts


CFR Part 85 Conflict Of Interest

Simply stated PHA must avoid conflicts of interest

Real or perceived

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No employee, officer or agent shall participate in selection, award, or administration of a contract if conflict of interest is involved if…



Any of the following has a financial or other interest in a firm selected for contract PHA employee, officer or agent, Any member of his immediate family His or her partner, or Organization which employs, or is about to

employ, any of the above



PHA […] may not enter into a contract in which the following has an interest….

Officer, employee, public official and their family members



Employee, officer or agent may not sell supplies, services, or construction to the PHA for one year after separation from PHA



PHA […] may not enter into a contract (employment or otherwise) in which the following has an interest….

Officer, employee, public official and their family members



Family members are... Mother, father, brother, sister, daughter, son,

step, and half... Policy...


Conflict Of Interest, What Is It?

Occurs when PHA employee, officer, or agent, or member of their family, stands to gain financially or otherwise, from PHA decision

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Conflict of Interest

HUD samples of Conflict Of Interest

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Conflict of Interest

HUD samples of Conflict Of Interest PHA hires facilities director who is

the daughter of a Board member PHA employee is a Board member PHA awards a contract to a former

Board member who resigned six months ago

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Case Study #3

Cybil Civic is a Commissioner at the PHA. Cybil is also Vice-president of the Board of

Directors of American Handicapped Citizens of Fort Travis County (AHC).

She does not receive a salary or any other compensation for serving on AHC’s Board.

AHC is receives $25,000 in CDBG grant funds from the County.

Is there conflict of interest problem here?

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Your Challenge


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Your Challenge


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© Copyright 2008 Nan McKay & Associates Case Study # 3 Answer

Is there conflict of interest problem here?NOCybil may continue to serve as a County

Commissioner of the County and also as VP of AHC’s Board.

Cybil has no financial interest in AHC.A conflict of interest occurs only if Cybil receives

a salary or other compensation for her AHC Board service. 24 CFR § 570.611(b)

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Case Study #4You are a foreman in the maintenance

department. You own a two bedroom rental. A mother and two children want to rent it. You determine they would be good tenants.

You agree to rent to them and Mom hands you a HCV Tenancy approval form from your PHA.

What do you do? What are the issues?

October 2007 Ethics 45


Your Challenge


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Your Challenge


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CFR Part 85 Gratuities, Kickbacks

Confidential Information Solicitations and contracts

over “small purchase” must advise of regulations Gifts Kickbacks Use of information


CFR Part 85 Gratuities and Kickbacks

Employees, officers, agents must not accept Gratuities Favors Anything of value

From contractors or parties with contractual agreements


CFR Part 85 Gifts - PHA May Set Rules

Where gift is not substantial

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CFR Part 85 Kickbacks

Not always obvious Rebates Coupons Points Discounts can be considered as an

Anti-Competitive Practice

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Case Study #5 You are a case worker for the PHA. You are

inspecting a client’s unit when she asks you to move an air conditioner from her window to the closet for storage.

She tells you that last year she had to pay $100 to get it done. You feel bad for her and so you move the air conditioner.

The resident is so thankful she insists that you take $25 for your trouble. You don’t want to hurt her feelings so you take the money!

I This O.K.?

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Your Challenge


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Your Challenge


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© Copyright 2008 Nan McKay & AssociatesCFR Part 85 Use of Confidential

Information Cannot give information that provides

unfair advantage Information Like

Cost Estimates Names Of Other Bidders Other Valuable Information


CFR Part 85 Back Door Selling

Avoiding procurement process Green Lawn will

provide services @ $500 Per Month if avoid need to bid


CFR Part 85 Nepotism

Hiring family members or friends Rather than most

qualified ACC prohibits this

practice


Nepotism

Applies to… Members Of Board Employees who make

policy or Employees who

influence decisions While at PHA and one

year after


CFR Part 85Sanctions

PHA must adopt and enforce sanctions for violations of ethical standards Oral and written reprimands Suspension Termination Dismissal from office



24 CFR 85.36 HUD Procurement Handbook

7460.8 REV 2 (March 2007) Section 103 of 1989 HUD Reform

Act U.S.C. 201 Bribery of Public

Officials


HUD Handbook 7460.8

Provides guidance on all phases of procurement and contract management

Revised March 2007


HUD Handbook 7460.8

Includes samples PHAs may use to

support procurement policy


HUD Handbook 7460.8

Incorporates guidance on asset management and project-based management

Applies to PH Development Capital Funds


HUD Handbook 7460.8

Doesn’t apply to… IHAs HCV Fees earned by

COCC


PHA Must Develop Policy

Chapter 4 HUD Handbook 7460.8 rev 2 Deals Directly with

need to set policies for procurement



Procurement Methods And Procedures Contractor Qualifications Types of Contracts Specifications/Statement Of Work Appeals & Remedies Assistance to Small & Other Businesses Statement of Ethics



Ensures public access to procurement information provided only when appropriate Conforms To State Law Freedom Of Information Right To Privacy



Ensures public an equal opportunity for all to participate in business with PHA

Incorporates standards for ethical behavior



Setting limits Determining who is

authorized Draw distinctions

between goods and services

Construction


Contracting Officer Acquires supplies, services

and construction Signs contracts, PO’s,

agreements Analyzes bids/proposals Detects contract irregularities Approves unauthorized

commitments with justification


Contracting Officer Duties

Exercises good judgment Ensures contractors

receive fair treatment Requests/considers advice

of specialists Provides assistance to

other divisions on procurement


Contracting Officer Signature establishes PHA

legal commitment Contracts must comply

with… HUD regulations Procurement Policy of PHA State or local laws


PHA Must Develop Policy Sample Procurement

Policy


PHA Must Comply with Regulations

Under “Small Purchases” limit Petty Cash Purchase Orders

Over “Small Purchases” limit Sealed Bidding Competitive Bids Non-Competitive Bids


Connection Between Procurement & Ethics

Decisions to purchase goods and services for PHA must be in best interest of PHA

Each decision must be Made without outside influence Made in accordance with law, regulation, and

policy Transparent, defendable, ethical

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Decisions to purchase goods and services for PHA must be in best interest of PHA

Each decision must be Made without outside influence Made in accordance with law, regulation, and

policy Transparent, defendable, ethical

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Influence When Purchasing Goods & Services Members Of The Board Government Officials Supervisors Self Promotion Those With A Vested Interest

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© Copyright 2008 Nan McKay & AssociatesConnection Between Procurement & Ethics

How The Influence Game Works

You will be rewarded Money Things of Value Promotion Raise Travel Discounts Freebee’s

You will be punished Loss of Money Loss of Job Demotion Poor Assignments Loss of Promotion Increased Scrutiny Humiliation


Case Study #6

The Chief Operating Officer of your PHA asks you to sell tickets for Council Woman Apple’s upcoming campaign event.

You are the procurement officer for the PHA and are most familiar with the vendors for the PHA and those most likely to buy tickets to the event.

Is their an ethical issue? What is it and what could be done?

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Your Challenge


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Your Challenge


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The Envelop Please! Common Mistakes

Opening Envelop too early Accepting bid after opening

date Commenting on the

“Winner”! Allowing changes in bid

documents Providing info to one bidder

only



Unethical Actions Revealing proprietary

information Changing bid after opening Attempting to influence

selection of bidder based on known false information


Avoid Unethical Practices

General Comply with all regulations Have good policies Train staff on policies Keep open communication



Key Points to Combat Influence Agency Structure

Well Defined Structure Shared Decisions

Public Awareness



Important Points Separation of duties/functions

Person who places purchase orders does not also “receive” the items purchased

Person who receives order does not also sign invoice

Person posting is different than both



Important Points Records on each procurement must be

maintained for at least three years



Disclose Potential Conflicts PHA management State Board Of Ethics HUD OIG


Detecting and Preventing Fraud

OIG Posted Updated Fraud Guide 3-5-04 HUD strongly suggests Fraud Policy

Creates aggressive environment Sets internal controls Clarifies consequences and procedures

Crimes Such As Bribery, Kickbacks, Bid Rigging, Embezzlement, And False Claims


Detecting and Preventing Fraud

Fraud is… Intentional, false representation or

concealment of a material fact In order to get someone to act on that to

their injury


Conditions That Foster Fraud

Working ConditionsEmployees Unfairly

Treated Lack Of

Recognition Financial Appreciation

Lack Of Respect

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How Can We Combat The Fraud?

Commitment by Management Set the tone! Improve hiring practices Train and reward employees Prevent rather than detect Be aggressive Improve policies and procedures…



Institute internal controls Random audits Purchase Order System – Who signs, receives,

posts Rent Collection - Who collects and who posts Inventory Control - well defined system



Institute internal controls Alter predictable systems Notice employees who never miss a day Atmosphere of accountability

Time Sheets Sick Time Claims Patterns Of Absences


Employees Must Not Fear Reprisals

Anonymous reporting

Whistle Blower protection

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© Copyright 2008 Nan McKay & AssociatesInternal Controls GAO Suggests

GAO 01-1008G Create a culture Set policy and organization structure Allow open review Quickly follow up on violations Set goals and objectives Measure and reward progress Assess risks Develop info systems Communicate


Important! Management Must Set The Tone

Foster A Spirit Of Excellence Do the “Right Thing” Inspire Staff

October 2007 Ethics 99


Upcoming Lunch ‘n’ Learns

HCV Homeownership – July 25, 2008 Factors of Eligibility for Public Housing &

Housing Choice Voucher – Aug. 1, 2008 EIV for Public Housing & Housing Choice

Voucher – Aug. 15, 2008

© copyright 2008 nan mckay & associates 1 making ethical decisions patti zatarian menard ©...

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