October 2014

ON ETHICS: YOU BE THE JUDGE
Can Serving as Rep Damage Your Rep?

An engineering firm agrees to be a manufacturing representative. Was it a good idea?

What Do You Think?
Would it be ethical for O’Tek and Atterberg Engineering to accept Spec-This-Out’s offer to become its manufacturing representative in a specific territory in which Spec-This-Out does business?

What the Board of Ethical Review Said
The issue of an engineer serving as a manufacturing representative is not a new one and has been examined by the NSPE Board of Ethical Review on an earlier occasion. Serving as a manufacturing representative raises basic conflict of interest issues, and unless appropriate precautions are taken, can lead to violations of the NSPE Code of Ethics for Engineers.

Unlike earlier cases where the Board found a violation of the NSPE Code of Ethics, in this case O’Tek and Atterberg Engineering Inc. would be performing engineering services (site investigation work for developer) in a field different from the new business venture (building materials and products) and so the likelihood of a conflict of interest would be lessened. In an earlier case, the engineer, almost without exception, specified the equipment and products developed by the manufacturer that the engineer represented—a clear and unmitigated violation of the Code of Ethics provisions relating to conflicts of interest and the duty to one’s clients.

At the same time, since professional practice and firm activities evolve over time, it is the Board’s view that O’Tek and Atterberg Engineering Inc. must proceed with caution. If Atterberg Engineering’s work expands into building design and construction-related activities, O’Tek and Atterberg must take appropriate steps, including full disclosure and divestiture if necessary of its business interests as a representative of Spec-This-Out—or risk confronting some of the ethical issues addressed in BER No. Case 94-3.

Conclusion
It would be ethical for O’Tek and Atterberg Engineering Inc. to accept Spec-This-Out’s offer to become its manufacturing representative in a specific territory in which Spec-This-Out does business. However, if the firm’s work expands into building design and construction-related activities, O’Tek and Atterberg Engineering should take appropriate steps, including full disclosure and divestiture if necessary of its business interests as a representative of Spec-This-Out.

NSPE Code References
Section II.2.a.: Engineers shall undertake assignments only when qualified by education or experience in the specific technical fields involved.
Section II.4.: Engineers shall act for each employer or client as faithful agents or trustees.
Section 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.
Section III.5.a.: Engineers shall not accept financial or other considerations, including free engineering designs, from material or equipment suppliers for specifying their product.
Section III.5.b.: Engineers shall not accept commissions or allowances, directly or indirectly, from contractors or other parties dealing with clients or employers of the engineer in connection with work for which the engineer is responsible.

For more information, see BER Case No. 11-5.