DEPARTMENT OF DEFENSE/STRATEGIC

DEFENSE INITIATIVE ORGANIZATION COMPLIANCE WITH FEDERAL ADVISORY COMMITTEE ACT

TUESDAY, APRIL 19, 1988

U.S. SENATE,

COMMITTEE ON GOVERNMENTAL AFFAIRS,

Washington, DC.

The Committee met, pursuant to notice, at 2:15 p.m., in room SD-342, Dirksen Senate Office Building, Hon. John Glenn (Chairman of the Committee) presiding.

Present: Senators Glenn and Levin.

OPENING STATEMENT OF SENATOR GLENN

Chairman GLENN. The hearing will be in order.

I know it is usually not good to start off any meeting with an apology, but I will apologize anyway. We have the Republican and Democratic caucuses at noon on every Tuesday and they are supposed to be over in time for us to get our hearings started by 2 o'clock if we wish to do so. Unfortunately, the caucus ran over today and so we were not able to start on time. I got here just as fast as I could, and I apologize to those who have been waiting.

This is the Committee's second hearing on the Federal Advisory Committee Act. FACA was enacted to create a public system to account for and manage the thousands of formal and informal groups providing advice to the executive branch. The Committee's review of FACA's system reveals that much of it has worked well for the past 15 years.

However, questions do linger about Congressional intent with regard to the scope of the Act's coverage and the exact nature of fundamental requirements it imposes on Federal officials. This Committee has had a long history of dealing with FACA. I remember very well when I first came on the Committee we looked into FACA and found some 1,600 boards, commissions, committees, councils, advisory groups in existence. By going back through them and applying some of the existing regulations, we were able to eliminate 400. Some of them that had been hanging on as anachronisms that did not really do much good but were still in existence, were still costing us money. We saved several million dollars, we estimated at that time, by making sure that those were terminated. Since that time, of course, we have depended upon FACA to do some of that job for us with occasional reviews by Congress. And so

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today the Committee will be examining advisory committees located in the Department of Defense and in the Strategic Defense Initiative Organization, SDIO.

In particular, we will explore the extent to which these agencies have complied with FACA and related DOD regulations, including those on standards of conduct. I also wanted to start off today by commending Senator Levin and his staff for the excellent work they have done for this hearing. They have been working on some of these issues for over a year, sifting through all of the evidence and all the documents, and doing interviews, and their efforts have certainly paid off with what looks to be a very interesting discussion this afternoon.

As part of this hearing we will once again consider how the Act's balanced membership requirement is implemented. In 1983, the DOD Inspector General and the House Government Operations Committee recommended that DOD delineate criteria for achieving balance on advisory committees and document the reasons why individuals were selected for advisory committees. The General Accounting Office will testify today that this has basically not been done.

As a result, the Department's compliance with this requirement remains open to question. I note that since our last hearing on this subject one more Federal District Court judge called on to interpret this provision has commented that the requirement of FACA that advisory committees be fairly balanced "embodies inherent conceptual and practical difficulties."

So, this very clearly puts the burden on Congress as well as on GSA to resolve any such difficulties inherent in the Act, GSA being the organization within Government charged to administer this Governmentwide.

Another area of confusion involves the scope of the Act's coverage. Today we will focus on SDI's use of advisory groups, many of which are created under contract with third parties such as schools or universities or think tanks. GSA will testify that where an agency contracts for the creation of an advisory group and the group reports directly to a Federal official and the contractor provides only administrative support to the group, then the group is subject to FACA. This testimony should send a clear signal to all agencies that such advisory committees must be chartered and must comply with FACA's open Government requirements.

Finally, we will be looking at the ethics rules which govern DOD and SDIO advisory committees. Although FACA requires that the work of an advisory committee not be "inappropriately influenced by any special interest," FACA is silent on how this goal is to be achieved.

Now, there are occasions when it will be necessary to have members of an advisory committee who may have a conflict of interest in order to obtain a balance of viewpoints on the Committee. Agencies must recognize that those members are being given an inside track to important decisions and decisionmakers which creates the appearance of allowing them to have an unfair advantage over their competition.

DOD has recently addressed this problem by issuing an improved directive on standards of conduct which requires each member of

an advisory committee to file a financial disclosure form. What we are concerned with today is how well DOD and its components are enforcing its own ethics rules. We need to be sure that the advice being given to the Government benefits the Government and not the advisor.

I said, Carl, before you arrived, that we appreciated the work that you in particular have done personally-you and your Subcommittee-have done on this. You have worked on this for over a year and have taken a leading role in seeing that the requirements of FACA are carried out, and that is what this series of hearings is aiming to do, to see that FACA's requirements are carried out, and you have played a very key role on that.

And before we get to our witnesses for the day, I would add one other thing. This is not a Subcommittee meeting. It is a meeting of the full Committee because we felt the issues are that important. And while Senator Levin has addressed this on his Subcommittee, today's meeting is a meeting of the full Committee. I have to leave for another appointment shortly and Senator Levin will be chairing this.

Carl, we appreciate the great work you have done on this over the past year.

OPENING STATEMENT OF SENATOR LEVIN

Senator LEVIN. Thank you, Mr. Chairman. I am grateful not only for the kind remarks but for your leadership in this area and in a whole host of related areas relative to the ethics laws, to the way in which Government works. You are determined in this series of hearings on the Federal Advisory Committee Act to see how one aspect of our Government is functioning and you are determined, as you always are, to see that our laws are obeyed. I commend you for your determination.

Today's hearing, as you have mentioned, Mr. Chairman, focuses on the advisory committees of the Department of Defense and SDIO. Under the Federal Advisory Committee Act, advisory committees, regardless of which agency creates them, must be balanced, fair, open and free from inappropriate influence.

Advisory committees play an important role in shaping Federal policy, including policies on the national defense. To utilize these committees, DOD and SDIO must comply with basically two sets of rules. The first is the Federal Advisory Committee Act, or FACA, which imposes such management controls such as balanced membership selection, recordkeeping and salary limits. The second set of rules is the Federal ethics rules, including DOD's standards of ethical conduct.

Five years ago, in 1983, Congress took a hard look at how DOD was managing its advisory committees and did not like what it found. One key Navy advisory committee was ignoring FACA altogether. Others engaged in poor ethics procedures, questionable procedures for selecting members, and inadequate recordkeeping. Many had members with apparent conflicts of interest.

The DOD Inspector General, the GAO and the House Government Operations Committee all issued critical reports on the situation. DOD promised to improve. Part of that promise was a pledge

to review in a 3-year period every DOD advisory committee for compliance with FACA.

Today we are going to examine whether in fact DOD has improved. While some of the testimony we are going to receive will document better practices, other testimony is not so comforting. GAO will testify about a disturbing trend in the committee review program which DOD promised to implement in 1983. That effort has declined from 25 committee reviews in 1984, to 17 in 1985, to 8 in 1986, to 6 in 1987, and to 0 so far in 1988.

That means that 31 of DOD's 60 or so advisory committees have been reviewed in the last 3 years, about half of the number promised. In other words, the oversight of advisory committees promised by DOD in 1983 has not taken place.

Today's hearing is also going to examine SDIO's advisory committees. SDIO was not in existence when Congress took that look at DOD in 1983. It was created soon after. In fact, it was created so soon afterward and has since utilized so many advisory committees that it should be a model in its familiarity with and its implementation of rules governing advisory committees. Unfortunately, the opposite is the case.

SDIO has repeatedly violated FACA by using advisory committees without chartering them as required by the law. These unchartered advisory committees have left incomplete or missing records of their deliberations and recommendations. They have had no cost controls or termination procedures. Their members have failed to file the financial disclosure forms required of DOD advisory committee members. We believe some members have been paid up to four times the amount allowed under FACA.

We will look in particular at one unchartered committee called the Eastport Group, which advises SDIO on computer and battle management issues. This outfit which talks, walks and looks like a Federal advisory committee, does not comply with FACA or DOD's standards of conduct. It has no charter, does not keep minutes, and does not require members to file financial disclosure forms or disqualification statements. We believe some of its members are paid $1,000 per day-about four times what FACA allows.

In addition, there has been a questionable award by DOD of a contract to carry out certain Eastport Group recommendations. Here is the factual foundation for why I am concerned.

Two of the Group's eight members, Dr. Danny Cohen, the Group's chairman, and Dr. David Mizell, are employees of the Information Sciences Institute, or ISI, an institute affiliated with the University of Southern California.

In 1986 and 1987, ISI was selected to receive multimillion dollar contracts to perform SDI research related to recommendations made by the Eastport Group. The 1986 contract award was based on an unsolicited proposal submitted by Dr. Cohen on behalf of ISI. The proposal was submitted in December of 1985, within 2 weeks of the public release of the Eastport Group's report containing the recommendations which were the basis for the proposal.

ISI sent this unsolicited proposal to the Office of Naval Research, ONR, directed to the attention of Dr. Richard Lau, an ONR employee who also just happens to be a member of the Eastport Group. ONR accepted the proposal under a program for research