NSPE Board of Ethical Review
Report on a Case by the Board of Ethical Review
Case No. 80-4
Participation of Engineer with Competing Firms for Same Contract
Facts:
Engineer Able, on behalf of the firm of which he is a principal, submitted a statement of
qualifications to a governmental agency for a project. In due course he was notified that
his firm was on the "short list" for consideration along with several other firms, but it was
indicated to him that his firm did not appear to have qualifications in some specialized
aspects of the requirements, and that it might be advisable for the firm to consider a joint
venture with another firm with such capabilities. Engineer Able thereupon contacted
Engineer Baker, a principal of a firm with the background required for the specialized
requirements, and inquired if the Baker firm would be interested in a joint venture if Able
was awarded the job. The Baker firm responded in the affirmative.
Thereafter, Engineer Carlson, a principal in a firm which was also on the "short list,"
contacted Engineer Baker and indicated the same requirement for a joint venture for
specialized services, and also asked if the Baker firm would be willing to engage in a joint
venture if the Carlson firm was selected for the assignment. Baker also responded in the
affirmative to Carlson but did not notify Able of his response to Carlson.
Question:
Is it ethical for Engineer Baker to agree to participate in a joint venture arrangement with
more than one of the several since he did not make a full disclosure to all of the firms?
References:
Code of Ethics - Section 1 - "The Engineer will be guided in all his professional relations
by the highest standards of integrity, and will act in professional matters for each client or
employer as a faithful agent or trustee."
Section 8 - "The Engineer shall disclose all known or potential conflicts of interest to his
employer or client by promptly informing them of any business connections, interests, or
other circumstances which could influence his judgment or the quality of his services, or
which might reasonably be construed by others as constituting a conflict of interest."
Discussion:
As is often the case in a particularized set of facts, the code does not specifically address
the question, but we have the latitude to read related sections of the code to apply within
reasonable limits. On that basis, we believe that 8 on conflicts of interest and 1 on
professional integrity are stated broadly enough to provide a basis for an opinion.
Copyright © 1980 National Society of Professional Engineer (NSPE) www.nspe.org . All rights reserved.
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NSPE Board of Ethical Review
The thrust of 8 is to require full and complete disclosure of known or potential conflicts of
interest, but it does not necessarily rule out such conflicts if they exist. If there was
objection by any party, the ethical question would have to be determined under the
pertinent facts of that case.
We do not have to reach that question in this case, however, because there is not a
conflict of interest under the facts before us. The code does not define "conflict of
interest," nor do our previous cases provide a definitive statement of its intent or
meaning. At the very least, however, as stated in Case 67-1, it means that "a
professional person may not take action or make decisions which would divide his
loyalties or interests from those of his employer or client."
In this case there is no potential or actual division of loyalty as to either the Able or
Carlson firm on the part of Baker. Assuming that Baker is willing to work out a joint
venture agreement with either firm which might secure the contract his loyalty would be
centered only with the one selected firm. As a joint venturer, in fact, he would be a party
to a single legal entity (the joint venture) for the one contract.
Technically, the disclosure requirement of 8 would not mandate that Baker advise Able of
the contact from Carlson or advise Carlson that he had talked to Able because at this
point Baker does not have a "client," as such. However, the requirement of 1 for highest
standards of integrity makes it ethically necessary for Baker to contact both of the firms
and advise each that he had indicated his willingness to participate in a joint venture with
either. In this connection we consider the agreement of Baker to work with Able
constitutes a relationship of trust which should not be diluted by establishing a similar and
possibly competitive relationship with Carlson unless disclosure is made to all concerned.
Conclusion:
*It is unethical for Engineer Baker to agree to participate in a joint venture agreement with
more than one of several firms being considered for an engineering engagement since he
did not make a disclosure to all of the firms.
*Note: This opinion is based on data submitted to the Board of Ethical Review and does
not necessarily represent all of the pertinent facts when applied to a specific case. This
opinion is for educational purposes only and should not be construed as expressing any
opinion on the ethics of specific individuals. This opinion may be reprinted without further
permission, provided that this statement is included before or after the text of the case.
Board of Ethical Review: Louis A. Bacon, P.E. F. Wendell Beard, P.E. James G.
Johnstone, P.E. Robert H. Perrine, P.E. Marvin M. Specter, P.E.-L.S. L.W. Sprandel, P.E.
Robert R. Evans, P.E., chairman
Copyright © 1980 National Society of Professional Engineer (NSPE) www.nspe.org . All rights reserved.
To request permission to reproduce this NSPE Board of Ethical Review Case, please contact the NSPE Legal Department ([email protected]).
