Carl O. Hilgarth

I

Since John Budinski is aware of the contract specifications with USAWAY, he must bring the supplier's bolt problem to the attention of his supervisor, as Clarke Engineering is responsible to meet the requirement that all parts in the product they supply USAWAY are made in the United States. I see the following as alternatives for him to present to management:

1. Do not notify USAWAY about the supplier bolt problem. Accept the parts as manufactured by the supplier. Meet the delivery deadline. Swap the bolts for those of domestic manufacture when they are available and when Clarke Engineering services or repairs the equipment.
2. Notify USAWAY of the supplier problem. Propose to meet the delivery deadline by accepting the parts as manufactured by the supplier and swap the bolts for those of domestic manufacture as a special field retrofit or when Clarke services or repairs the equipment.
3. Notify USAWAY of the supplier problem. Propose delaying delivery until replacement bolts of domestic manufacture are available. Have cost and schedule impact data for discussion with USAWAY.
4. Notify USAWAY of the supplier problem. Propose redesigning the part to avoid using the bolts of foreign manufacture. Have cost and schedule impact data for discussion with USAWAY.
5. Put the heat on the supplier. Tell him to fix the problem or you'll find another supplier of the part who can meet the original schedule using all domestically manufactured components. He knew the specifications. It's his oversight. He has to fix it.
6. Work with the supplier. Obtain the mechanical properties and dimensions of the bolts. Determine if there is an appropriate American made substitute, and use it. If there is any impact on the performance of the part, notify USAWAY and propose the domestic manufacture of the replacement bolts and a special field retrofit. Have cost and schedule impact data for discussion with USAWAY.

Alternative (a) is unethical and violates the negotiated contract. Alternative (b) is politically unfeasible from USAWAY's point of view. Alternatives (c) and (d) will affect Clarke's ability to meet the deadline. (e) means the supplier will tell you to "take a hike", causing you to start the supplier search all over and affect Clarke's ability to meet the delivery deadline.

Alternative (f) seems to be the most practical approach. USAWAY will have a product that meets their business and supplier philosophy--all parts are manufactured in the United States. Clarke can meet the schedule although it might dig into their profit if a retrofit is needed. However, Clarke may be able to do the retrofit as field service under their repair contract. As a quality engineer, John Budinski should be able to make this recommendation to his supervision who should then forward it to USAWAY for review and approval.

II

Well, John kept the problem to himself. Now USAWAY officials, having heard second hand about what Clarke Engineering did, and without examining the products Clarke has supplied, confront Clarke. Were I the Clarke representative, I would ask the USAWAY officials for the basis and evidence of their allegation, citing the need for this to be able to conduct any meaningful investigation. If this is forthcoming, I'll begin a formal inquiry. If not, I'll check informally, just to make sure. Either way, I'll find out what happened. The tough part will be what to do about it.

Any action taken internally with respect to John Budinski will certainly find its way through the grapevine to USAWAY who will then assume a cover-up, and really become suspect of us not having met their contractual requirements. So, whatever I find out, I'll have to check further than just this contract. I'll have to check every contract with USAWAY to verify, hopefully, that this was the first and last incident, assuming that USAWAY will also review all our contracts and inspect our parts. My objective would be to treat all parties fairly and remove any suspicion from USAWAY that Clarke engaged in a cover-up. John Budinski would probably receive a reprimand, USAWAY would be told what happened and offered replacement of all the affected bolts in the parts we delivered at our cost.

III

If John's immediate superior tells him to let the product go out as is, he should at least request a meeting with the two of them and the chief quality engineer to discuss the issue and options at a management level. His leverage is the long term potential of defaulting on this contract if USAWAY finds out about the bolts to make this a decision for more than just an engineer and a supervisor. At the meeting, the options should be reviewed, and a decision made, hopefully alternative (6). While this seems like it is passing the buck, the resulting decision is nonetheless informed and hopefully responsible. And, this decision must be documented in the part supplier's dossier and communicated to USAWAY. If the situation is addressed straight up, and the former employee tells the story, there is at least a record at Clarke and maybe at USAWAY of what happened with respect to the bolts and how Clarke resolved it.

Alternatively, if there is no meeting and the product goes out as is, hopefully John's supervisor took the appropriate action (alternative (2)), documented it, and communicated it to USAWAY). In any event, John must document the use of the foreign bolts during the part's receiving inspection as conformance to the supplier's design. Should there be an investigation regarding Clarke's fulfillment of USAWAY's contract, the inspection report may not be nice reading if the product was sent out as is without USAWAY's knowledge. Better to do this than falsify the record. Better yet, be straight-up with the customer and be a proactive problem solver for him.

I

Prof. Nice, in deciding how to respond to Jason Smart's request, should have the following questions:

• Why is he requesting a copy of the final research report after losing interest in and leaving the project?
• Does his contribution to the research project merit his receiving a complete copy of the research report?
• How was my research project associated to the related area he is now working in?
• How will seeing the report and how things worked out help him?

Without further information about Jason's graduate work, these considerations and the fact that the research was essentially done by Nelson Nice suggest the professor write Jason and express an interest in his current graduate work, inquire who his graduate research advisor is, and how the results of his research project will help. He should include an abstract of the report and summary of the results. If Jason is serious about his work, he will respond.

II

Even though Prof. Nice was not anxious to share the report with Jason Smart, was disappointed with the results of the research, and unhappy with Jason's performance on the project, he responded as many of us probably would. He sent Jason a letter pointing out that although the research was now complete, it did not turn out as he had hoped, that he had no plans to do further work in the area, enclosed a copy of the report, and wished him well. Several years later Prof. Nice finds out that Jason used the report as his Master's Thesis -- adding some a couple of introductory paragraphs, a concluding section, and an updated bibliography, but not acknowledging or citing his work.

Were I Nelson Nice, my first reaction would be to assume academic misconduct -- plagiarism. However, before acting, it's important to check things out. Since Jason's project was in a related area it might have been based on my research and used what he did as my undergraduate assistant as the starting point. I would contact Jason, cite my report, the fact that it appeared without any reference in his thesis, and ask him how this happened. Perhaps he duplicated my laboratory work with different results, especially since he added new introductory paragraphs, a conclusion and an updated bibliography. It would be interesting to hear what he would say. A call and a "little shop talk" with his graduate faculty advisor is also appropriate to confirm Jason's explanation. I may find his impropriety in not citing my research to be an oversight on his part, perhaps due to my reluctance to share my research report because of the "disappointing results." On the other hand, I might find that his research was legitimate and might provide a new perspective to my research causing me to reconsider my decision not to de further work in this area. Under either of these conditions, my resolution would be to request that he amend his thesis to cite my prior work, even if that work led to a different conclusion.

Or, I might find that he is still immature and impatient with laboratory work and write-ups and used my report as a short-cut. At worst, academic misconduct -- plagiarism -- could be the case. If this is what happened, my action would be to discuss this with the faculty at the institution that granted Jason his master's degree, citing as the reason to investigate his alleged academic misconduct the fact that his master's thesis contained my research report of work done at the institution where the student was an undergraduate laboratory assistant. I would have to present the documents, correspondence, events, and circumstances through which the student received a copy of the report. The institution granting Jason his graduate degree would be responsible for the investigation under their student code of conduct, and I would have to abide by their finding.

To decrease the chances this situation occurring, whenever someone requests a copy of your research, only send copies of published papers, or refer them to the appropriate journal. In other instances, to protect work you haven't published, send an abstract and a summary of the results.

I

In my decision to serve or not serve on the review panel for the summer faculty fellowship program I would have to consider the following:

• Since I am nationally known for my research, any new research I do will almost certainly enhance both my status and that of Western Tech as a research institution.
• Because of my reputation, my participation on the review panel that will determine the fellowships projects receive funding will also contribute to the desire of Western Tech to upgrade its status as a first-rate research institution.

Since I have had little opportunity to do research due to my teaching load, my response to David Jackson, Vice-President for Research at Western Tech, is to decline the invitation to serve on the review panel and submit my proposal for review. I explain this to the vice-president.

II

On hearing my decision, Vice-President Jackson explains that while he hasn't worked out all the wrinkles, it doesn't seem fair that the best people at Western Tech--the ones they want on the review panel--should not have a chance at the fellowships. He tells me that I can apply for the fellowship, and also serve on the review panel as long I am not involved in the review of my own proposal inferring that this will preserve the integrity of the research fellowship award process.

I realize that if I were on the panel, my stature and opinions will certainly influence the award process and leave it suspect in the eyes of my peers on the faculty, especially if my proposal receives a fellowship award and another's doesn't. Participation by other faculty could lead to the same result. So to me, this suggestion does not really solve the problem.

I reiterate my interest in the research opportunity and decline to participate on the panel. Any level of my participation on a panel involved in reviewing my proposal and competing proposals could be viewed as a conflict of interest that could cloud the objectivity and integrity of the process to upgrade the research status of the institution. I would suggest to the vice-president that the review panel might be better, more objective, and more credible if none of the reviewers were from Western Tech or faculty. And since he said that he hasn't worked out all of the wrinkles yet, this is still a very attractive and viable option.

After reading about the casual manner Christine Carsten proposed a material substitution in a part ABC was to begin manufacturing for XYZ, my first inclination is to take Christine to the engineering reference bookshelf, reach for the engineering standard practices and have her read them. Especially the section on preparing engineering change proposals. She should have prepared a value engineering change proposal (VECP) for the proposed material substitution. The VECP would describe the proposed substitution of the less expensive metal alloy to make the part, the projected impact on the performance and life of the part, and the projected manufacturing cost savings. After review and approval of the VECP by engineering, it would be forwarded to Vernon Waller to review with XYZ. If XYZ accepts the VECP, Vernon would negotiate a revised pricing agreement. The VECP is critical since the price per part the XYZ is paying to ABC is based in part on the cost of materials.

Vernon's acceptance of Christine's casual presentation and his decision not to tell XYZ is as irresponsible as Christine's engineering. Further, by signing the report, John Richards knowingly falsified product information compounding the problem. What if the material change is discovered by XYZ's receiving inspection? (A simple Rockwell hardness test may be all that is needed to tell the difference.) What if the parts fail under warranty, and XYZ is forced to absorb the cost of repair or replacement? Don't Vernon, Christine, or John foresee that if some of the parts fail earlier than anticipated, XYZ might decide to investigate the cause of failure, do some testing on their own, and find out about the material substitution? What are they going to say or do when XYZ calls regarding the counterfeit parts supplied by ABC? Pull out the report signed by John Richards and claim that XYZ is doesn't know what they are talking about? Is the $90,000 that Vernon will make for ABC enough to pay for the lawyers or make up for the business ABC is going to lose? Ethically, Vernon has not just done "good business." He has proposed to steal $18 per part from XYZ by delivering counterfeit parts. Since Christine is responsible for proposing the material substitution, she must continue to press Vernon further on the issue.

Well, Christine backs off deciding there is nothing further she can do and the counterfeit part is produced. At this point, I'd like to know who authorized production of the counterfeit part? Did engineering? Did Vernon? Who prepared the report verifying that the specifications for the part have been met? Was it engineering or was it Vernon? Noticing the original alloy composition is listed in the specification causes me to think that Vernon made the alloy change unilaterally, and didn't bother to change the original part specification because Christine told him that no one would notice the substitution "unless they were looking for a difference and did a fair amount of testing."

Were I Christine, I would insist that the report be corrected to list the cheaper alloy. If this couldn't be done, she should correct the report so it states the proper alloy used in the part, and sign it. She should be responsible for her engineering. In refusing to sign the report, Christine probably thinks she is doing the ethical thing. However, by backing off the issue when she felt there was nothing more that she could do and not insisting on maintaining the integrity of the product specification either as originally written or by a VECP, she abrogated her responsibility as an engineer to participate in none but honest enterprises (Order of the Engineer). Her proposal was instrumental in Vernon's decision to substitute the lower quality alloy in the part. The counterfeit part is as much her responsibility as it is Vernon's even though she didn't sign the report. Vernon's lack of business ethics and concern for the quality of the product, and Christine's undocumented engineering contribute equally to this situation.

Assuming XYZ relies on supplier quality certification to minimize receiving inspection costs, transmitting the report misrepresenting the part opens ABC disqualification as a supplier when they find out about the cheaper alloy. They may also demand a retroactive price adjustment. When this happens, how will Vernon's doing "good business" stand up? Since Vernon's ethics are situational, will he say that he didn't know anything about the change and that engineering made the substitution and then covered it up by signed a report specifying the original alloy? Will Christine and John be the scapegoats since there is no documentation to the contrary?

Aviation is inherently safe, but it is totally unforgiving of any carelessness. What if the part manufactured by ABC goes into an aircraft manufactured by XYZ and in one case its performance is not virtually the same, causing an accident? There will be a public investigation. Imagine the consequences to Vernon, Christine, John, and ABC.

Vernon, Christine, John, and probably ABC better clean up their operation. Contracts needs to get out of engineering decision making, and engineering needs to get more disciplined and documented in its interface with contracts, especially since ABC as a custom part manufacturing firm relies on engineering to design the parts they contract to manufacture. They must recognize that in the long run it is better to do what is right rather than what is expedient, be honest and trustworthy in their relationships, and truthful and accurate in what they say and write.

I

Under no circumstances should notification of a layoff be delayed or withheld. Layoffs are never pleasant. There is no gentle way to announce them. The timing their announcement is never right. While the layoff will dampen the holiday, waiting until the day after Christmas to call the affected employees so not to ruin their holiday is absolutely stupid. Consider the impact if they learn about the layoff second hand. It's better to have a tempered holiday with the knowledge of the layoff having been received first hand.

Tony should contact the affected employees as the vice-president instructed and give the bad news personally. While he has the whole afternoon to contact them, he should do it as quickly as possible since some employees may be leaving town and for others the layoff can alter holiday or post-holiday plans. Thus, he must make every reasonable effort to notify the affected employees, even to the point of tracking them down and keeping a log of his contacts. The credibility and integrity of the company is at stake. Deliberately witholding the information for any reason can violate a collective bargaining agreement, cause an unfair labor practice complaint to be filed, or result in legal action against the company.

II

Well, Tony decides not to be a Scrooge and spoil Christmas. So, he plans to wait until the day after to tell the affected employees. Assuming that Tony notified the employees, Mr. Raskin the vice-president, makes a special point of expressing his regrets to Ralph, one of the laid-off workers at the Christmas Eve church service they both attend. The shocked look on Ralph's face makes it obvious to Mr. Raskin that Tony has said nothing to Ralph. Later in the evening, a very angry vice-president calls Tony.

At this point, Tony has no excuse for not doing as he was instructed. He must tell Arnold Raskin why he did not inform his unit of the layoff as he was directed. While this conversation is going on, Ralph may be calling his co-workers asking them what they know about the layoff, exacerbating the situation. Now it is even more imperative for Tony to notify his unit of the layoff immediately. In delaying the news, Tony hasn't made it a happy holiday for anyone.

III

At the last minute on Christmas Eve, Shirley Vandermere makes a non-refundable $500 deposit to secure reservations for a surprise European trip with her husband. Had Tony notified his unit of the layoff as directed, he probably would have called Shirley before 4:30PM. I doubt if she would have then secured the reservations since she was very concerned about the non-refundable deposit, if her husband would even be pleased with the idea, and with the surprise. Now she'll be (to put it mildly) very upset after making the non-refundable deposit for a trip to learn that Tony deliberately delayed notifying her about the layoff. And, she has a triple surprise for her husband: her layoff, the non-refundable $500 deposit, and a trip they may not be able to take because of the loss of her income.

I

Now that T&D's internal tool and die department can bid on new tooling by offering a price to produce it internally, they will have to abide by the procedures established by the Purchasing Department so the integrity of the bidding and contract award process is not compromised. They should be placed on the approved bidder list, receive a copy of the approved tooling part prints and specifications, and the sealed bid envelope in which to respond with their quote. The department head of the internal tool and die is totally out of order when he asks the Purchasing Department for the prices obtained from the outside vendors before he submits his quote. With this inside information, he can become the low bidder.

Purchasing should refuse the internal tool and die department request as unethical--give him a set of the prints and specifications, the sealed bid envelope, the bid closing date, and tell him to submit quote. After contact award, he can review the source selection evaluations and bids in the same manner as the other bidders.

II

Well, T&D's Purchasing Department shares the quotes with T&D's tool and die department head. T&D's outside vendors complain that T&D has acted in bad faith. They're right! By being able to see the competing bids, the tool and die department head had inside information. If I was an outside supplier to T&D Manufacturing, I would decline to bid any of the jobs under these ground rules.

III

The logic of the tool and die department head in trying to persuade the Purchasing Department that it is making a mistake in not providing him the quotes of the other vendors in advance is ludicrous. If he thinks he can be competitive with the outside vendors, let him submit a bid like everyone else.

An interesting point here is the bid rate that internal tool and die uses in preparing their quotations. If their direct labor rate and material costs are not properly burdened, they'll use only the base rates and inherently underbid anyone. Management should have the cost accounting department prepare appropriate burdens for the internal tool and die to apply to their base labor rates and material costs so their bids are truly competitive with those of the outside vendors. If this is not done, the outside vendors will have another complaint in that T&D is only obtaining pro-forma outside bids and awarding the contract to internal tool and die on the basis of unrealistically low pricing.

Don Hayward is correct in his concern when several workers develop respiratory problems and complain about "those bad smelling fumes from the hot metals". When he checks this out with his superior Cal Brundage, he's told that the workplace is in full compliance with OSHA guidelines. But Don learns that only a small percentage of the chemicals in the workplace have been tested, and that OSHA guidelines do not apply to materials that have not been tested. What can he do? A lot!

To quote from Anton (1989) "In view of the increased emphasis on toxicity, it is strongly recommended that when chemicals are being purchased for plant use, processes, and manufacturing, the manufacturer should supply a "Material Safety Data Sheet" (OSHA Form 20).

The primary information shown in the data sheet for any chemical will include trade and chemical names and synonyms; chemical family, and possibly the formula; a list of hazardous ingredients; physical data; data on fire and explosion hazards; data on reactivity; proper procedures for cleaning up spills or leaks; special protection needed; special precautions that should be followed when using it; and first aid procedures in the event of an accident.

Under the Toxic Substances Control Act, purchasers should get this information from the supplier upon request. It is in the best interest of employees to ask the supplier for the Material Safety Data Sheet (MSDS) before the materials are actually delivered into your plant.

The company or plant itself must have personnel (or at least one person) who can understand and interpret the data and be able to recognize any gaps where additional information or technical expertise is required."

OSHA has a Hazard Communication Standard. Again citing Anton (1989) "this is a 'performance standard,' which means that it describes objectives that must be met, but without specifying the method for accomplishing those objectives. The method is up to the individual organization to choose. The standard requires chemical manufacturers and importers to assess the chemicals which they produce or import, and all employers to use hazard communication programs to provide information - to their employees - concerning hazardous chemicals."

All the information that Don needs is available from the chemical manufacturers under the Toxic Substances Control Act. He should not drop the matter. Under this act, the manufacturers must provide him the information he needs. He doesn't need to waste his time trying to have the reference librarian find this information. It's available free from the manufacturers. He can also call the OSHA regional office, or call his local congressman. Either can provide any information about the about the OSHA Hazard Communication Standard and Toxic Substances Control Act.

What Don has encountered is a typical management stonewall of a fundamental industrial hygiene requirement resulting from the fact that the supervisor obviously isn't knowledgeable of OSHA requirements regarding chemicals in the workplace, and doesn't want to take the time to find out about them.

Successful safety programs depend on leadership by the employer, safe and healthful working conditions, and safe work practices by employees. By ignoring the first two, ABC Manufacturing is ignoring the purpose of OSHA "to assure so far as possible every working man and woman in the nation a safe and healthful working conditions and to preserve our human resources." The OSHA inspection, when it comes, will find and cite this violation. Solve it now and avoid the potential fine and reinspection.

The best reference I have found for occupational health and safety matters, and have cited in my commentary, is:

Occupational Safety and Health Management, 2nd edition. Anton, Thomas J., McGraw-Hill, 1989

I

XYZ returned a failed piece of equipment to R&M Machinery, the manufacturer. At a meeting with Archie Hunter, the XYZ representative following the return of the failed piece of equipment, Norm Nash represented R&M's "official position": the piece of equipment is all right. It was during this meeting that Walt Winters, an R&M engineer who was intimately acquainted with the kind of equipment XYZ returned, suspected that it was not properly tested out by R&M and that it failed because of an internal problem.

Without data to substantiate his suspicions and since he is not R&M's "official" representative at the meeting, Walt could not conjecture in the presence of the customer. But, he can suggest to both Norm and Archie that since there are two positions regarding the returned equipment, that Norm arrange for engineering to examine it and schedule a follow-up meeting to present and discuss the findings. Archie will probably agree to this. Hopefully Norm's "official position" has enough leeway for him agree, too. After the meeting Walt should discuss his suspicions with Norm and arrange to examine the equipment.

II

After the meeting, Walt talks to Norm about his diagnosis suggesting R&M tell XYZ that the problem is R&M's and that they will replace the equipment. Norm replies that he doesn't think it wise to acknowledge the failure is R&M's fault, hang out our wash (that our failure to properly test out the equipment resulted in an internal failure), and lessen XYZ's confidence in the quality of our work when "a 'good will' gesture to replace the equipment at out own expense should suffice." This is strange logic as it implies there was something wrong with the equipment R&M originally supplied.

Subsequently, R&M management decides to adjust the problem by replacing the equipment because XYZ "have been such a good customer all these years" but not tell them the real nature of the problem. Again, the implication is that there was something wrong with the equipment R&M originally supplied.

Is R&M's fear of losing its reputation for quality and reliability the root cause of Norm's "official position" in representing management regardless of any fact-finding - to protect our reputation at all costs? Or is it the converse. In either case, why didn't management ask for engineering's analysis? Don't they want to know what, if anything, is wrong with the equipment? Don't they realize that engineering can analyze equipment failures and improve quality and reliability? Don't they recognize the value of longstanding business relationships and the years invested in establishing them? Aren't they aware of or concerned about what Norm Nash is saying or doing on their behalf? And by whose authority does he represent the company's "official position"? Are they aware this failure could be repeated in the replacement equipment provided to XYZ? What will Norm Nash's "official position" be then? What will XYZ think about R&M? And, what will R&M's equipment replacement policy be when a company who hasn't been such a good customer all these years encounters a problem with equipment of its manufacture?

Since R&M's business and reputation is based on supplying sophisticated equipment and reliable repair service, its management should be concerned enough about any product failure. This concern should be demonstrated by the returned goods area representative who should use engineering to examine any returned equipment and report on its condition. Since R&M's policy seems to be to replace defective equipment in any event, there is nothing to lose and everything to gain by being "straight up" with XYZ and other customers in telling them the nature of an equipment problem. R&M also benefits by being able to improve their equipment designs.

This episode should concern Walt because if the resolution of this problem is not handled as a cover-up, it comes very close. If you have a good supplier relationship as R&M does with XYZ, why jeopardize it. You can acknowledge the failure, and that the failure resulted from not testing the machine properly. Engineers learn from failures. Maybe the failure occurred because R&M did not fully understand a some aspect of the equipment's use at XYZ.

Also in deciding to replace the equipment because XYZ has been a such a good customer all these years borders on hypocrisy. To XYZ, R&M is a supplier. And, XYZ can go elsewhere with its business. In representing R&M's "official position", Norm creates a problem that makes an honest resolution difficult.

III

What was really an engineering problem at R&M became a management problem because of the "official position" taken by Norm and management's decision to see it Norm's way. They have placed the firm's reputation with XYZ at risk. The lessons for Walt as he moves into management are:

• The integrity of business and customer relationships must be preserved through honest communications.
• Prepare a position description that includes the typical duties, responsibilities, and qualifications of the returned goods area representative.
• Institute a policy of having all equipment returned because of a failure, unsatisfactory performance, or any other reason examined by a team comprising the returned goods area representative and the engineer most knowledgeable about the equipment.
• After examining returned equipment, meet with the customer to review the findings and present the proposed remedy based on the findings. Thus a failure that is an engineering problem should be handled and acknowledged as such.

If XYZ has been such a good customer, then R&M must be a good and honest supplier. In this case, by agreeing to replace the equipment, R&M did not use good judgement or honestly solve the problem.

I

Beware of any lurking sales representatives, especially when you encounter them outside of normal business related matters. They seem to belong to many of the clubs and sports leagues, chapters or sections of professional societies, or social organizations as their customers. They sponsor attendance prizes and hospitality suites at professional events. They offer to buy you lunch. They offer tickets for sports events and free passes to trade shows. Many send gifts at holidays, leave you coffee mugs, baseball caps, ties, etc. Their spouses try to establish social relationships with your spouse. They're always looking for an opening. It goes on and on.

After 25 years as an engineer with purchasing authority, I've become very cautious in my encounters with sales representatives outside of normal business. Larry Newman fits my paradigm, and I must assume that he is in the golf league for business as much as for leisure reasons. That Scott mentioned his upcoming vacation in Florida is natural conversation. That Larry offered to check the availability of his uncle's condo for Scott at a quite moderate rental cost is too much of a coincidence. If I'm in Scott's position, I'll decline the offer even though it's presented in a friendly, offhand manner by explaining to Larry that I don't want do anything that has the potential to cloud the objectivity of our supplier relationship or provide any cause to raise any question regarding a potential conflict of interest.

II

Well, the offer was too good for Scott to decline. So he accepted it and began planning his vacation. Now Scott's company sends out a new policy that says among other things: "Accepting incentives from vendors is strictly prohibited." I'll bet that Scott's first reaction will be that since the use of the condo was offered outside of the business relationship, it does not count as an incentive. But what does the company define as an incentive? Usually it is anything having a value of $25 or more. Does the rental cost price break fall into this category? Perhaps.

If I were Scott, I wouldn't want to find out the hard way. So at this point I would tell Larry that due to the new company policy, my stay at the condo could be construed as an incentive, explaining that I don't want do anything that has the potential to cloud the objectivity of our supplier relationship or provide any cause to raise any question regarding a potential conflict of interest. With the loosely worded policy that doesn't define incentives, it's important to avoid even any appearance of impropriety. Make it your own rule not to accept anything from a vendor that costs more than $25 on the open market.