Managing Conflicts of Interest in Purchasing

Minnesota State Statute 15.43 provides:


Subdivision 1.Financial interest of agents.

No employee of the state or of the University of Minnesota in direct contact with suppliers or potential suppliers to the state or the university, or who may directly or indirectly influence a purchasing decision or contract by establishing specification, testing purchased products, evaluating contracted services, or otherwise has official involvement in the purchasing or contracting process may:

  1. have any financial interest or have any personal beneficial interest directly or indirectly in contracts or purchase orders for goods or services used by, or purchased for resale or furnished to a department or agency of the state or the university; or
  2. accept directly or indirectly from a person, firm, or corporation to which a contract or purchase order has been or may be, awarded, a rebate, gift, money, or anything of value other than items of nominal value. No such employee may further accept any promise, obligation or contract for future reward.

The University of Minnesota interprets this statute broadly and does not permit any faculty or staff member with a financial or business interest in a business entity to participate in contracting with the business entity while acting on behalf of the University.

Below are examples of purchasing conflicts:

Example 1: Lab Coordinator wants to involve wife as a consultant for University research project.

A University Lab coordinator (“coordinator”) builds relationships with outside organizations in order to cultivate sponsored research projects. The lab conducts analysis, prepares printed products, and does some training.

Coordinator and his wife own a company (“EnviroCo”) that specializes in environmental work and makes more than $10,000 per year. He serves on the board of directors, while his wife handles the company’s operations.

The Coordinator serves on an informal advisory board that was investigating a solution to a sustainable University project. Because the matter involved environmental solutions, he suggested the assistance of his wife due to her expertise. The University then used grant money to purchase a $300 product from EnviroCo.

There is a conflict of interest in this advisory board situation because the coordinator (1) made a professional referral to EnviroCo in the context of his University duties and (2) had a direct or indirect influence over a purchasing decision from EnviroCo. The conflict can be eliminated if the coordinator does not make professional referrals to EnviroCo, or participate in University purchasing or contracting decisions concerning, EnviroCo.

Example 2: Significant Financial Interest in a Business Entity that University wishes to contract with.

A University employee is hosting a lunch event for students and faculty within a Department. The employee and the employee’s spouse own a local restaurant. The employee wishes to order catered food from the restaurant.

There is a conflict of interest in this situation because the employee is making contracting decisions on behalf of the University with a business entity that the employee has a financial interest in. The conflict of interest can be eliminated if the employee does not participate in the University purchasing or contracting decisions involving the restaurant.

For a sample conflict management plan in the purchasing context, click HERE.

For additional help, contact the Conflict of Interest Program at 612-626-1462 or