Ethical Dilemmas in Engineering: Legal Perspectives & Ethics

1. İNŞ 239 İNŞAAT MÜHENDİSLİĞİNDE HUKUKSAL YAKLAŞIMLAR VE ETİKDers Notları-5 Doç. Dr.Serkan Kıvrak

2. EXAMPLE (Case No. 99-6) • Engineer A, a member of NSPE, is employed by the FGH Construction Company andworks closely with Engineer B who is an employee of LMN Supplies. LMN Suppliessells construction materials and supplies. Part of Engineer A’s responsibilities are tonegotiate and approve bids by LMN Supplies that are submitted by Engineer B. LMNSupplies offers, and Engineer A accepts, an employment position with LMN Supplies.Engineer A submits his resignation and gives two weeks notice to FGH ConstructionCompany and is not asked and does not mention that he will be employed by LMNSupplies. For the next two weeks before leaving FGH Construction Company,Engineer A continues to negotiate and approve bids submitted by LMN Supplies.

3. EXAMPLE (Case No. 99-6) • Question: • Was it ethical for Engineer A to fail to mention to FGH Construction Company that hewill be employed by its vendor LMN Supplies?

4. EXAMPLE (Case No. 99-6) References: • Section II.3.a. - Code of Ethics: Engineers shall be objective and truthful in professional reports,statements or testimony. They shall include all relevant and pertinentinformation in such reports, statements or testimony, which shouldbear the date indicating when it was current. • Section II.4.a. - Code of Ethics: Engineers shall disclose all known or potential conflicts of interestwhich could influence or appear to influence their judgment or the quality of their services. • Section III.3.a. - Code of Ethics: Engineers shall avoid the use of statements containing a materialmisrepresentation of fact or omitting a material fact.

5. EXAMPLE (Case No. 99-6) The departure of an employee to an allied company can raise ethical concerns as canthe situation when an employee moves over to a competing company. Although onthe surface, the departure of the employee might provide both companies withbenefits by allowing the two companies to strengthen their relationship and enhancecommunications between the two companies, there are also conflicts that can arise inthe arrangement. The facts in this case identify a clear conflict, or at least theappearance of a potential conflict, faced by the employee involved in the transition.

6. EXAMPLE (Case No. 99-6) By not informing FGH Construction, Engineer A’s actions will most probably raisesome doubt in the minds of the supervisors and perhaps owners of FGH Constructionabout whether Engineer A’s continued negotiation and approval of bids submitted byLMN Supplies were somehow tainted and could have resulted in inflated costs to FGHConstruction or other unearned competitive advantages for the benefit of Engineer A’snew employer, LMN Supplies.

7. EXAMPLE (Case No. 99-6) Engineer A’s failure to fully disclose his new position with LMN Supplies, and tocontinue to negotiate and approve LMN Supplies’ bids to his current employer, wasnot in accordance with the spirit or the intent of the NSPE Code. His actions want forthe highest standards of honesty and integrity expected of engineers, and were notcircumspect.

8. Conclusion (Case No. 99-6) It was not ethical for Engineer A to fail to mention to FGH Construction Company thathe will be employed by its vendor LMN Supplies.

9. EXAMPLE (Case No. 99-3) • Engineer A is employed by Company X and as part of her job, Engineer A organizescontinuing education seminars (i.e., contacting speakers, making meetingarrangements, etc.) for Company X. Company Y, a company that competes forbusiness with Company X, is aware of Engineer A’s track record in organizing effectiveand well-received continuing education seminars and requests that Engineer A organizea continuing education seminar for Company Y’s architects, engineers, and surveyors,whereby Company Y would pay Engineer A for such services. Engineer A agrees toprovide the services to Company Y. Engineer A tells her supervisor about establishingthe continuing education business but does not mention that the services will beprovided to Company Y, a competitor of Company X. Her employer, Company X, does not object.

10. EXAMPLE (Case No. 99-3) • Question: • Was it ethical for Engineer A to agree to provide continuing education seminar servicesto Company Y?

11. EXAMPLE (Case No. 99-3) References: • Section II.4. - Code of Ethics: Engineers shall act for each employer or client as faithful agents ortrustees. • Section III.1.c. - Code of Ethics: Engineers shall not accept outside employment to the detriment of theirregular work or interest. Before accepting any outside engineeringemployment, they will notify their employers. • Section III.3.a. - Code of Ethics: Engineers shall avoid the use of statements containing a materialmisrepresentation of fact or omitting a material fact. • Section III.6.b. - Code of Ethics: Engineers in salaried positions shall accept part-time engineering workonly to the extent consistent with policies of the employer and in accordancewith ethical considerations.

12. EXAMPLE (Case No. 99-3) There is clearly merit in having engineers work to promote and expand engineeringeducation opportunities for engineers and other design professionals. With theincreasing interest in continuing professional competency, life-long learning, and othereducational programs, there will undoubtedly be a great need for knowledgeable andexperienced engineers and others to provide services for the benefit of the engineeringprofession. Certainly the efforts of engineers such as Engineer A should generally beencouraged in order to meet the needs of all elements of the engineering profession.

13. EXAMPLE (Case No. 99-3) At the same time, the Board is somewhat concerned about aspects of and the mannerin which Engineer A pursued her activities in this area. The NSPE Code makes clearthat before accepting outside employment, an engineer has an obligation to notify theengineer’s employer.While it is true that under the facts, Engineer A did notify her employer that fact that shewas establishing a continuing education business, Engineer A failed to fully disclose thatshe would be working for the benefit of a competitor of her employer.

14. EXAMPLE (Case No. 99-3) Her failure toprovide this critical information did not permit her employer with the opportunity to makean informed decision concerning her outside employment. In passing, the Board wouldnote that Engineer A’s firm, Company X, will most probably learn that Engineer A isproviding services to Company Y and in view of her failure to inform Company X, of thisfact when informing the company of her decision to establish a continuing educationbusiness, the consequences to Engineer A may be severe.

15. EXAMPLE (Case No. 99-3) The Board was not certain of all of the facts and details involved in Engineer A’sdecision not to inform her employer of her relationship with Company Y. It may havebeen as simple as the fact that Engineer A believed that Company X would haveobjected to this relationship and Engineer A, therefore, decided not to fully disclose thisfact to Company X since she wanted to pursue the opportunity. Or, Engineer A mighthave had plans to depart from Company X and establish her own business and decidedto let her ties to Company X gradually diminish. Whatever her motivation, the Boardbelieves that her actions were not consistent with the NSPE Code.

16. Conclusion (Case No. 99-3) It was not ethical for Engineer A to agree to provide continuing education seminarservices to the competing Company Y without the knowledge and consent of heremployer.

17. EXAMPLE (Case No. 99-1) • Engineer A is employed by Company X. Several of the partners from Company X leaveCompany X to create Company Y. Each of the departing partners had executed anindividual non-solicitation provision in contracts they had executed with Company X atthe time they began employment with Company X -- which is still in force. The provisionis drafted to apply only to the partners but does not mention the activities of their futureemployees. Engineer A is contacted by one of the new Company Y partners, EngineerB, who originally hired Engineer A for Company X. Engineer A agrees to a request tojoin Company Y to serve as director of business development.

18. EXAMPLE (Case No. 99-1) • One of the reasonsEngineer B is interested in hiring Engineer A is that Engineer A has excellent businessrelationships with a number of Company X's public and private clients. In addition,Engineer B is aware that Engineer A never signed a non-solicitation provision (işten ayrılma durumunda mevcut müşterilerle temasa geçmeme sözleşmesi). Afterbecoming an employee of Company Y, Engineer A, who was not required to sign a nonsolicitationagreement when employed by Company X, begins soliciting clients ofCompany X.

19. EXAMPLE (Case No. 99-1) • Question: • 1. Was it ethical for Engineer A to solicit clients of Company X? • 2. Was it ethical for Engineer B to hire Engineer A to serve as director of businessdevelopment for Company Y?

20. EXAMPLE (Case No. 99-1) References: • Section III.4.a. - Code of Ethics: Engineers shall not, without the consent of all interested parties, promote orarrange for new employment or practice in connection with a specific projectfor which the Engineer has gained particular and specialized knowledge. • Section III.8.b. - Code of Ethics: Engineers shall not use association with a nonengineer, a corporation, orpartnership as a "cloak" for unethical acts.

21. EXAMPLE (Case No. 99-1) It is clear that while there is no reason to suspect thatEngineer A is anything but a competent professional engineer who performs hisservices in a professional manner, the facts and circumstances in this case appear toindicate that Engineer B's primary motivation in contacting Engineer A to join the newCompany Y is to solicit Company X's clients without Engineer B and the other engineersthat were formerly employed by Company X violating the terms of the non-solicitationagreement. While at first glance the actions by Engineer B in seeking to "raid" EngineerA from Company X appear to be in conflict with the language and the spirit of the NSPECode of Ethics, a review of the NSPE Code language appears to indicate that the issueis not entirely clear.

22. EXAMPLE (Case No. 99-1) There does not appear to be anything under the facts to indicate that Engineer A gainedparticular or specialized knowledge in connection with a particular project in connectionwith his former employment or clients that would suggest an NSPE Code violation. Thefacts suggest only that Engineer A is especially talented and has had excellent clientrelations with Company X's clients. Having good interpersonal and public relations skillsare personal and do not suggest particular or specialized knowledge under the NSPECode.

23. EXAMPLE (Case No. 99-1) In view of the manner in which the non-solicitation provisions were drafted and applied,the Board concludes that Engineer B violated provisions of the NSPE Code by seekingthe services of Engineer A. Presumably Engineer B and the other former partners willhonor the terms of the non-solicitation agreement and not personally solicit formerclients of Company X. At the same time, having an employee not subject to the nonsolicitationagreement engage in solicitation activities appears to be inconsistent withthe NSPE Code. Engineer B appears to have used the hiring of Engineer A as a cloakor subterfuge in order to avoid the effect of the non-solicitation agreement withCompany X. Engineer A is acting as an agent of Company Y, all partners of which havea non-solicitation agreement, and should have informed Engineer A.

24. Conclusion (Case No. 99-1) • It was ethical for Engineer A to solicit clients of Company X. • It was not ethical for Engineer B to hire Engineer A to serve as director ofbusiness development for Company Y.

25. EXAMPLE (Case No. 98-1) • Engineer A, a principal in a local consulting engineering firm practicing as a Professionalcorporation, who also is a principal owner in a construction contracting firm, preparedplans and specifications for the design and construction of a conventional/nonproprietaryroof structure for a municipal wastewater treatment facility. The scope of hisservices were limited to this project only. The municipality engaged a second firm,Engineer B, to administer the bidding and construction, using the plans andspecifications prepared by Engineer A. The project was advertised for public bidding,and bids were received and opened. One of the bidders was Engineer A’s constructioncontractor firm.

26. EXAMPLE (Case No. 98-1) • Question: • Was it ethical for Engineer A to bid as the general contractor on a project Engineer Adesigned?

27. EXAMPLE (Case No. 98-1) References: • Section III.4.a. - Code of Ethics: Engineers shall not, without the consent of all interested parties,promote or arrange for new employment or practice in connection with aspecific project for which the Engineer has gained particular andspecialized knowledge. • Section III.8.a. - Code of Ethics: Engineers shall conform with state licensure laws in the practice ofengineering.

28. EXAMPLE (Case No. 98-1) From the facts of this case, it is clear that Engineer A, by being involved in the design of theroof structure for the municipal utility system has become thoroughly knowledgeable aboutthe plans, specifications, drawings, and financing of the project and will have a material andarguably unfair competitive advantage over other contractors who submit bids on theproject. Also, although there is nothing in the facts to suggest this possibility, Engineer Acould potentially be exposed to criticism that his firm designed a roof structure system thateither specified or contained performance criteria that was coordinated with a potentialproposal by Engineer A’s construction contracting firm.

29. EXAMPLE (Case No. 98-1) Finally, while not stated in the facts, there appears to be a possible implication based upona reading of the facts that among the reasons why Engineer A may have been engaged fordesign services only was the fact that the laws of the jurisdiction in which the work is beingperformed precluded Engineer A from performing the work under a “design/build”arrangement and that Engineer A’s “limited engagement” effectively permitted Engineer Ato bid the work as the contractor through a de facto design/build arrangement.

30. EXAMPLE (Case No. 98-1) If the purpose of this arrangement was merely to serve as a subterfuge toallow Engineer A the opportunity to evade a legal restriction on design/build and provideEngineer A with a competitive advantage, the Board of Ethical Review would have seriousconcerns about this arrangement, since it is clear that such an arrangement wouldundermine procedures at least arguably intended for the protection of the public.

31. EXAMPLE (Case No. 98-1) On the other hand, the Board would not be less concerned if the laws of the jurisdictionpermitted a design/build contracting arrangement. While design/build has become anaccepted and established project delivery system that identifies single-point responsibilityfor design and construction services, and most of the ethical objections to design/buildconcerning the engineer’s obligation to the client have been clarified, strict adherence tofederal, state and local design/build procedures are critical to assure the protection of thepublic and the administration of fair and reasonable practices for designers and contractors.

32. EXAMPLE (Case No. 98-1) Moreover, engaging the services of an separate engineer, Engineer B, to administer thebidding and construction phase, will presumably establish a degree of objectivity andimpartiality over the process and result in a ongoing independent review of the plansand specifications for the benefit of the client. Gaining the benefit of the designengineer's thorough knowledge and understanding of the plans and specifications aspart of the construction team is an option a client should be able to consider.

33. Conclusion (Case No. 98-1) It is ethical for Engineer A to bid as the general contractor on a project Engineer Adesigned under the facts presented, as long as the process followed was not asubterfuge to evade the requirements of state and local procurement, licensure laws,and disclosures or consent of all interested parties contained.