How is Arizona’s COI law applied to Research and Startup Companies?

What is Arizona’s COI Law?

In addition to federal conflict regulations, the University of Arizona must also comply with Arizona’s conflict of interest (COI) law.

A Substantial Interest is any nonspeculative pecuniary or proprietary interest, either direct or indirect, other than a remote interest. Remote interest is defined in A.R.S. § 38-502(10).

To mitigate the possibility that a personal influence might bear upon a University employee’s decision in his or her capacity as a public employee, a University employee who has, or whose Relative has, a "Substantial Interest" in

1. any contract, sale, purchase, or service by or to the Arizona Board of Regents (“ABOR”) or UArizona, or
2. any decision of ABOR or UArizona,

the University employee shall refrain from voting upon or otherwise participating in any manner as a University employee regarding such contract, sale, purchase, service or decision.

What do I need to do?

University employees must disclose all substantial interest in the official records of ABOR.  UArizona’s Conflicts of Interest & Commitment Policy complies with this law by requiring disclosure in eDisclosure.

What is considered when making Substantial Interest determinations?

1. Will the contract, sale, purchase, service, or decision have an impact, either positive or negative, on an interest of a University employee or their Relative?
2. Is the interest pecuniary (involves money) or proprietary (involves ownership)?
3. Is the interest a remote interest?

How is this state law applicable to Research and Startup Companies?

A University employee who has, or whose Relative has, a Substantial Interest in an entity cannot (1) participate as a University employee in contracting and purchasing decisions related to the entity or (2) subaward research to the entity. This includes the process leading up to the decision (e.g., making recommendations, giving advice, communicating with anyone involved in the purchasing process).

Who is a Relative?

Like we do with federal conflict regulations, the University relies on the state law to define Relative.  Thus, Relative has the meaning set forth in A.R.S. 38-503 (i.e., one's spouse or domestic partner, child grandchild, grandparent, sibling and their spouse or domestic partner, half-sibling and their spouse or domestic partner, and the parent, sibling or child of a spouse or domestic partner).

Even if the University employee does not have a substantial interest in a decision in which they are about to participate, if one of their Relatives has a substantial interest in the decision, they must disclose the interest and refrain from participating in the decision.

Noncompliance with this law cannot be justified by stating you are not unaware of your Relative’s interest. Public officers and employees have an affirmative obligation to become aware of any interests their relatives may have that may create a Substantial Interest.

Who is the Conflict Official for Arizona’s COI law?

While Arizona’s COI law is codified in the Conflicts of Interest & Commitment Policy and Substantial Interest disclosures are made through eDisclosure, Ted Nasser, Chief Procurement Officer, is the Conflict Official for Substantial Interests.

What if I have a question about Substantial Interests?

Please contact the Office for Responsible Outside Interests at coi@arizona.edu for questions related to Substantial Interests.  This law is broadly construed in favor of the public and substantial civil and criminal penalties are provided for failure to comply with the statutory requirements.  It is imperative that your questions are answered.

“Remote interest” means:

1. That of a nonsalaried officer of a nonprofit corporation.
2. That of a landlord or tenant of the contracting party.
3. That of an attorney of a contracting party.
4. That of a member of a nonprofit cooperative marketing association.
5. The ownership of less than three percent of the shares of a corporation for profit, provided the total annual income from dividends, including the value of stock dividends, from the corporation does not exceed five percent of the total annual income of such officer or employee and any other payments made to him by the corporation do not exceed five percent of his total annual income.
6. That of a public officer or employee in being reimbursed for his actual and necessary expenses incurred in the performance of official duty.
7. That of a recipient of public services generally provided by the incorporated city or town, political subdivision or state department, commission, agency, body or board of which he is a public officer or employee, on the same terms and conditions as if he were not an officer or employee.
8. That of a public school board member when the relative involved is not a dependent, as defined in section 43-1001, or a spouse.
9. That of a public officer or employee, or that of a relative of a public officer or employee, unless the contract or decision involved would confer a direct economic benefit or detriment on the officer, the employee or his relative, of any of the following:
   1. Another political subdivision.
   2. A public agency of another political subdivision.
   3. A public agency except if it is the same governmental entity.
10. That of a member of a trade, business, occupation, profession or class of persons consisting of at least ten members which is no greater than the interest of the other members of that trade, business, occupation, profession or class of persons.
11. That of a relative who is an employee of any business entity or governmental entity that employs at least twenty-five employees within this state and who, in the capacity as an employee, does not assert control or decision-making authority over the entity's management or budget decisions.

The ownership of any publicly traded investments that are held in an account or fund, including a mutual fund, that is managed by one or more qualified investment professionals who are not employed or controlled by the officer or employee and that the officer or employee owns shares or interest together with other investors.