The July Ethical Dilemma: Conflict of Interest – Feasibility Study

This is the July 2023 edition of our monthly series of Ethics case studies titled What Do You Think? This series is comprised of case studies from NSPE archives, involving both real and hypothetical matters submitted by engineers, public officials and members of the public.

Your peers and the NSPE Board of Ethical Review have reviewed the facts of the case as shown below. And, here are the results.

Applicable NSPE Code References:

II.4.a
Engineers shall disclose all known or potential conflicts of interest that could influence or appear to influence their judgment or the quality of their services.

III.1.b
Engineers shall advise their clients or employers when they believe a project will not be successful.

The issue of conflict of interest is one of the most widely discussed and debated in engineering ethics. As a customary proposition, it is generally recognized as good practice for engineers to endeavor to avoid conflicts of interest. However, the language in the NSPE Code of Ethics relating to conflicts of interest has been significantly modified over the years. For many years, the NSPE Code contained strict proscriptions against engineers engaging in conflicts of interest and admonished engineers, in strong language, to avoid such conflicts. While the current language still maintains a strong tone, it is more general than in the past, requiring the disclosure of conflicts rather than complete avoidance.

The Board has had various occasions to interpret the language of the Code of Ethics addressing the subject of conflict of interest. In one such instance, Case 85-6, an engineer was retained by the state to perform certain feasibility studies relating to a possible highway spur. The state was considering the possibility of constructing the highway spur through an area that was adjacent to a residential community in which the engineer’s residence was located. After learning of the proposed location of the spur, the engineer disclosed to the state the fact that his residential property might be affected and fully disclosed the potential conflict with the state. The state did not object to the engineer performing the work. Engineer A proceeded with his feasibility study and ultimately recommended that the spur be constructed.

In ruling that it was not unethical for the engineer to perform the feasibility study despite the fact that his land might be affected thereby, the Board noted that the ethical obligations contained in Code II.4.a. do not require the engineer to “avoid” any and all situations that may or may not raise the specter of a conflict of interest. Such an interpretation of the Code of Ethics, said the Board, would leave engineers without any real understanding of the ethical issues nor any guidance as to how to deal with the problem. We noted that the basic purpose of a code of ethics is to provide the engineering profession with a better awareness and understanding of the ethical issues that impact upon the public. The Board concluded that only through interacting with the public and clients will engineers be able to comprehend the true dimensions of ethical issues.

While one can read Case 85-6 and possibly draw the conclusion that in the present case Brad’s conduct was ethically proper, we do not reach that conclusion. It is our view that the two cases should be distinguished. In Case 85-6, the benefit to be derived by the engineer from the construction of the spur in question was far more remote than the benefit in the case at hand. The construction of the highway spur presumably would add to the value of the engineer’s residential property, but it would not impact upon his ownership of the property.

In the present case, Brad is being placed in a position whereby he is making a recommendation that could directly affect his and his neighbor’s ownership in property. It is one thing for an engineer to participate in decisions that will have a tangential impact upon his interests as was the case in 85-6. It is quite another matter for the engineer to act in his professional capacity to advise a governmental entity on policy matters where his economic interests are directly at issue.

We are reminded that Brad’s professional opinion was supported by two important public policy considerations. First, it was noted by Brad that the undeveloped parcel was a better location for a power facility from an engineering standpoint. Second, it was indicated that the cost to the county of acquiring the developed property would be higher than the cost of acquiring the undeveloped tract of land.

While these two considerations are important ones from a public policy standpoint, and may even be rationalized by a perfunctory reading of Code III.1.b. of the Code of Ethics, they are not sufficient to justify Brad’s decision to perform the feasibility study for the county. Public perceptions play an important role in engineering ethics. The facts and circumstances of Brad’s study may appear to suggest a benefit to the “common good” if his recommended course of action is followed. That notwithstanding, a loss of public confidence may cause a damage that cannot be easily repaired due to the appearance of impropriety.

The far simpler and more ethical approach which we believe should have been followed by Brad, under the circumstances in this case, would be to avoid such a conflict by disposing of his land holdings prior to undertaking the commission or by declining to perform the services if it is not feasible or desirable for him to dispose of his land at the particular time.

BOARD OF ETHICAL REVIEW

Eugene N. Bechamps, P.E.; Robert J. Haefeli, P.E.; Robert W. Jarvis, P.E.; Lindley Manning, P.E.; Paul E. Pritzker, P.E.; Harrison Streeter, P.E.; Herbert G. Koogle, P.E.-L.S., chairman

Note – In regard to the question of application of the Code to corporations vis-a-vis real persons, business form or type should not negate nor influence conformance of individuals to the Code. The Code deals with professional services, which services must be performed by real persons. Real persons in turn establish and implement policies within business structures. The Code is clearly written to apply to the Engineer and it is incumbent on a member of NSPE to endeavor to live up to its provisions. This applies to all pertinent sections of the Code. 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.