Conflict of Interest

Conflict of interest is a legal matter, not just a university policy. The State of Michigan Conflict of Interest Statute (MCLA 15.322 et seq.) states that the university may not enter into a contract with any of its employees (or a company in which an employee has an interest) without first disclosing certain information and receiving approval by a two-thirds vote of the Board of Regents, before completing the transaction.

Violation of the provisions of the State of Michigan Conflict of Interest Statute is a misdemeanor (see MCL 15.327 at www.legislature.mi.gov).

University employees who purchase goods and services must be knowledgeable about and adhere to conflict of interest policies and procedures found in SPG 201.65-1. Where possible, units and units should avoid conflict of interest transactions.

The University of Michigan’s Office of the Vice President and General Counsel has published on its website several FAQs that define and give examples of conflict of interest. Employees should familiarize themselves with this information to understand the factors involved in doing business with a conflict of interest supplier. 

Conflict of Interest Purchasing Policy

Once a unit becomes aware of or suspects a conflict of interest situation with a supplier, the unit must comply with the statute and follow the review process. While using a conflict of interest supplier is legally permissible if the proper process is followed, the approval process requires significant documentation with substantial detail. The process of receiving regental approval is lengthy, generally taking up to two months to complete. Remember: the review process must be completed before the transaction occurs.

There are five steps in the conflict of interest review process. Each step involves significant documentation, review, and action, so be sure to plan well in advance.

1. Check the M-Pathways supplier information (see below, Conflict of Interest Status) to determine if the supplier is a known conflict of interest supplier.  If the supplier holds that status, think carefully as to whether you truly require the conflict of interest supplier’s product or service.
2. Contact Procurement Services as far in advance as possible to review the purchase requirements. An agent will research the market to determine if any non-conflict of interest suppliers are available. The unit must present a detailed justification for using a conflict of interest supplier over other suppliers. The agent has the discretion to determine whether or not the justification supports the purchase from a conflict of interest supplier.
3. Required documentation from the unit. The unit purchasing the product or service must submit to the Procurement Services agent the conflict of interest disclosure form and any price quotations that may have already been received. The unit must also provide details about the proposed transaction, including:
   • The name of each party to the contract.
   • The terms of the contract including, where applicable:
     • Financial consideration between the parties.
     • The facilities or services of the university that are affected by the contract.
     • Duration of the contract.
     • Description of goods or services provided.
     • The nature and degree to which the University of Michigan employee will be required to devote time to performing the contract.
   • The nature of the financial interest the university employee has in the contract or how s/he is affected by it.
4. Required documentation from the individual. The U-M employee with the conflict of interest must complete the Pecuniary Interest Disclosure form.
5. Action Request. If the Procurement Services agent determines the conflict of interest transaction warrants review by the U-M Regents, Procurement Services will prepare an Action Request based on the disclosure and supporting documentation provided by the unit. The Action Request is reviewed by the Office of the General Counsel, the Director of Procurement Services, the Associate Vice President for Finance, and the Executive Vice President and Chief Financial Officer, before it is placed on the U-M Regents’ meeting agenda.  For research areas and transactions using sponsored funds, the Action Request is also reviewed by the U-M Office of Research and the Office of Research and Sponsored Projects (ORSP). The review of the Action Request by all required parties must be completed before the U-M Regents’ agenda is written.
6. Transaction Approval and Processing. If the Action Request is approved by the U-M Regents, Procurement Services receives notification and the appropriate Procurement Services agent works with the unit to process the transaction.