"Membership in, affiliation with or sympathetic

association with, any organization designated pursuant to this Executive Order is but one of the factors by which a department or agency shall reach its determination and, as provided in Section 8, is one of the matters concerning which information shall be developed as to whether the employment or retention in employment in the Federal service of the person being investigated is clearly consistent with the interests of the national security."

(3) Organizations not designated by the Attorney General may be considered as relevant to security consideration provided that the organizations have been cited by some duly constituted governmental agency, federal, state or municipal, and that the hearing board possesses sufficient information on subversive nature of the organizations to permit evaluation of the significance of the memberships, affiliations or associations.

(4) In evaluating memberships, affiliations, or associations the security hearing board will give consideration to the employee's statement of his reason for joining and his knowledge of the purposes of the organization. In all cases where membership, affiliation, or sympathetic association is an issue, the "Memorandum of Reasons" will set out the conclusion of the board as to these questions.

k. Need for additional information.

(1) If the results of a hearing show that additional information is necessary before the hearing board can reach a decision in the case, the board will return the case to the executive secretary with a request for such additional information. Any such request will be specific as to the additional information required and will be limited to material matters that are essential to reaching a just determination.

I. Violations of law.

All violations of law. as disclosed in the investigations and proceeding under the security program, shall be reported immediately to the Office of the Judge Advocate General of the Navy (Code 15), with an information copy to OIR Code 110, for referral to the Division of Internal Security, Department of Justice. However, such reports will not be made if the violations have already been reported by the activity.

4-14. DETERMINATION AFTER HEARING.

a. Matters to be considered.

(1) The investigation is conducted and the hearing held to determine whether the retention in employment in the Federal service of a particular individual is clearly consistent with the interests of the national security. Each case will be decided upon the facts in that particular case. Each decision will be based upon the merits of the specific case and not

upon unfounded assumptions or distorted viewpoints. A board member's judgment must not be affected by bias or prejudice.

(2) The Attorney General has advised the United States Civil Service Commission that a security hearing board "in making its recommendations should take into consideration whether the employee is a security risk in his particular position in view of all of the derogatory Information relating to him." In other words, the board will consider the nature of the position occupied by the employee and in the light of the derogatory information.

(3) There can be no substitute for good judgment. A fair decision will be reached only after all the facts, favorable and unfavorable, have been analyzed impartially and have been given due weight in their proper perspective.

(4) In reaching its decision, the members of the board must remember that "the interest of the national security require that all persons privileged to be employed in the departments and agencies of the Government shall be reliable, trustworthy, of good conduct and character, and of complete and unswerving loyalty to the United States" (Executive Order 10450). (5) In weighing individual items of derogatory information and in arriving at a decision, the interests of national security require that reasonable doubts be resolved in favor of the Government,

(6) The decision of the security hearing board (in five copies) must be in writing and signed by all members; two copies of the decision must be sent to the Secretary of the Navy (OIR Code 110), one copy to the Director of Naval Intelligence (Op 921D), one copy to the District Intelligence Office, and one copy to the files of the employing activity, each via the head of the employing activity (NCPI 732.2-9f(4)). Under no circumstances will the head of an activity furnish the decision of the security hearing board to the employee, his counsel, or his representative. (NCPI 732.4-1309)). The decision itself will not contain the reasons why the board reached its conclusion. A separate "Memorandum of Reasons" will be prepared for that purpose.

b. The Memorandum of Reasons.

(1) The Memorandum of Reasons will be in writing (in five copies) and all copies signed by all members of the board. Its purpose is to set out the board's reasoning in reaching its advisory decision. A copy of this memorandum will not be made available to the employee (NCPI 732.2-9f(4)).

(2) It is suggested that the Memorandum of Reasons bear that heading, and that for ready indentification the first paragraph identify the subject of the case by his full name, the title of his position, location of employment, name of the activity and any employment history which may be considered desirable or

necessary. It is essential that it be stated whether or not the employee's position is a sensitive position, as defined in NCPI 732.2-31.

(3) The next paragraph might set out when and where the hearing was held, whether the individual was represented by counsel, whether he testified and produced witnesses, whether the Government produced witnesses, and the names of the board members with identifying information as to each member's position and his agency.

(4) Thereafter, the board will clearly state the basis for its determination. Since this document is to be made a part of the file in the case and is for the use of the Secretary of the Navy in making the final decision, it should be prepared with that in mind. The amount of detail necessary will depend upon the facts and the complexity of the case. In most instances it will be necessary or desirable to explain the board's reasoning and conclusion concerning each charge, whether the decision is favorable or unfavor able to the individual,

(5) When there is a dissent from the majority decision, the dissenting member or members will prepare and sign a Memorandum of Reasons showing wherein he or they differ from the majority.

(6) The signature of each member will bear the date of his signing.

c. The decision.

(1) The board's decision will be in the form of a letter (in five copies) addressed to the Secretary of the Navy (OIR Code 110) via the head of the activity. (NCPI 732.2-9f(4)).

(2) The subject of the case will be clearly identified in the first paragraph, or in a heading. This identification will include name, position, place of employment, and date of suspension.

(3) The authority for the hearing, namely, the act of August 26, 1950 (64 Stat. 476, 5 USC 22-1 et seq.) Executive Order 10450, as amended, and NCPI 732 will be clearly set out in the decision,

(4) The date and place of the hearing will be set out in the decision.

(5) All decisions, favorable or unfavorable, will be in the language of the Security Standard provided by Executive Order 10450. Suggested language for the decision is: "It is the decision of this Security Hearing Board that the employment of (Mr., Miss, or Mrs. -- full name of individual) is (or, is not) clearly consistent with the interests of national security,"

(6) The final paragraph of the decision will state: "A memorandum setting forth the board's reasoning in reaching this conclusion is attached." (See NCPI 732.2-98(4)).

(7) Each board member will sign all copies of the decision. He will also note the date after his signature. The signature of the chainman will be followed by the title "Chairman," and the signature of the other members by the title "Member."

(8) If there is a dissent from the decision, the dissenting member will merely indicate before his signature the phrase "I dissent,"

(9) Under no circumstances will the head of an activity furnish the decision or memorandum of reasons prepared by a security hearing board to the employee, his counsel or his representative. When the complete case file has been forwarded to the Secretary of the Navy (OIR Code 110) as provided in NCPI 732.4-15, the head of the activity shall inform the employee and his counsel or representative that his case has been forwarded to the Secretary. without advising him of either the security hearing board's decision or his own comments thereon. The employee will remain in suspended status pending final decision by the Secretary of the Navy, and all further correspondence relative to his case shall be directed to the Secretary of the Navy (OIR Code 110).

4-15. SECURITY HEARING BOARD FINDINGS AND SUBSEQUENT ACTION THEREON.

a. The findings of the security hearing board will be addressed to the Secretary of the Navy via the head of the employing activity (NCPI 732, 2-98(4)). The complete file will be forwarded to the head of the activity by the executive secretary. The head of the activity will make any comment he considers warranted and forward the case to the Secretary of the Navy (OIR Code 110) in the manner outlined in NCPI 732.4-4c.

b. The head of the activity will continue the suspension of the employee pending decision of the Secretary of the Navy, whether the security hearing board finds favorably or unfavorably in the case,

c. If a decision of the security hearing board or recommendation of the Security Review Board is adverse to the employee, the Security Review Board will advise the employee by letter that he has 20 days (30 days if outside continental United States) in which to submit for Review Board and Secretarial consideration any affidavits he may wish to make in rebuttal thereto. The employee will be further advised that if he does not submit such affidavits within the time limits stated above, the case will be adjudicated on the record as it stands, Material submitted in rebuttal should be addressed to the Secretary of the Navy (OIR 110), via the head of the activity.

4-16. ACTION BY THE NAVY DEPARTMENT SECURITY REVIEW BOARD.

a. When the complete file is received in OIR it will be referred to the Navy Department Security Review Board.

b. The Board will meet at the call of the Chairman and will establish its own internal procedures to facilitate consideration of and recommendations regarding security review matters. The Board may, in its discretion, conduct a personal hearing when the facts essential to a determination cannot be obtained in any other manner. The Board may initiate such further investigation and secure such additional evidence as it deems necessary to provide the Secretary of the Navy with sufficient information upon which to base a decision. The Board is empowered to call upon military or civilian personnel of the Navy Department and its activities to furnish pertinent records, materials and testimony. Upon receipt of a security case, the Board will inform the employee concerned of any adverse advisory decision made by the security hearing board and of his right to submit material or representations in rebuttal thereto for consideration by the Security Review Board. He will also be advised of any contemplated adverse recommendation of the Security Review Board and be given an opportunity to submit a rebuttal thereto for consideration by the Secretary of the Navy. The Board will prepare a brief on each security case requiring decision of the Secretary of the Navy, summarizing the pertinent points in the case. The brief will include formal recommendations signed by each Board Member, supported by individual comments and votes. c. All violations of law, as disclosed in the investigations and proceedings under the security program, shall be reported immediately to the Office of the Judge Advocate General of the Navy (Code 15) unless this has been done by officials previously considering the case.

4-17. ACTION BY SECRETARY OF THE NAVY. The Secretary of the Navy will make a decision in the case, and notify the activity of final action to be taken in the case. The Secretary of the Navy, at the same time, will inform the individual concerned, via the head of the activity, of the final decision in the

case.

4-18. NOTIFICATION TO INDIVIDUAL.

a. Security decision.

In every case in which an interview has been held

with the subject of the case or an interrogatory

has been issued, the individual concerned must be informed of the security decision made by the head of the activity. In any case in which an interview has not been held or an interrogatory issued, the head of the activity may, at his

5-1. PROCEDURE IN CASES OF SEPARATION, WITHDRAWAL OF APPLICATION, OR TRANSFER. The complete files of all employees who are separated for any reason from the Federal service before a final decision is reached shall be sent forthwith by registered mail to OIR Code 110, with a copy of the Standard Form 50 effecting the action. This procedure should be followed in cases of separation during continuous service to allow transfer to another agency. A copy of the transmittal letter will be forwarded directly to the Director of Naval Intelligence, Department of the Navy, Washington 25, D. C.. and a copy to the District Intelligence Office, for record purposes.

5-2. REIMBURSEMENT OF EMPLOYEES RESTORED.

In case the Secretary of the Navy orders restoration of an employee who was suspended or removed under Public Law 733, he will cite that law as authority for the restoration. Public Law 733 requires that any employee (permanent or indefinite) having completed a probationary or trial period, who is suspended or removed under the provisions of that Act and subsequently restored to duty shall be allowed compensation for all or any part of the period of such suspension or removal in an amount not to exceed the difference between the amount such person would normally have earned during the period of such suspension or removal, at the rate he was receiving on the datu ur

suspension or removal, and the interim net earnings of such employee. The back-pay provision of Public Law 733 does not deny accumulation of leave during the period of suspension or removal. Therefore, employees restored under this authority will be credited with annual and sick leave for the period for which compensation is allowed (31 CompGen 58; 30 August 1951), subject to the maximum accumulation limitation of the Annual and Sick Leave Act of 1951, as amended, 5 USC 2061-2066 (35 CompGen 121; 31 August 1955).

6-1. GENERAL STATEMENT.

During personnel investigation, Information may be uncovered which reflects adversely upon the general character, conduct, suitability, and reliability of an employee, or which, if known, would have disqualified the employee either for employment or for appointment to the particular position in which he is serving. When, for such reason, the employee cannot be retained in his position, but separation from employment is not considered necessary, he should be reassigned or demoted to a position in which his character deficiencies are not a bar to employment, (Demotion action would require the procedures and protective provisions of NCPI 750, as applicable.) When such action is not possible due to the gravity and nature of the derogatory information or the nature of the work tasks in the employing activity, it may be necessary to separate the employee, The nature of the action will be Separation-Disqualification under the provisions of NCPI 352,4-8.

6-2. PROCEDURE TO BE FOLLOWED.

Except as qualified in subsections 6-3 and 6-4 below, demotion action on the suitability grounds outlined in 6-1 above will be processed under the procedures of NCPI 750, as applicable, and separationdisqualification action for the same reasons will be processed as set forth in NCPI 352.4-8.

b. OIR Code 110, the DIO, and ONI (OP 921D) should be advised

(1) whenever action is taken against any individual for behavior within the purview of NCPI 310.2-7a(1) through (8); and

(2) whenever an activity is furnished information incally by any investigative body that an individual

has committed any act of the character described in the cited regulation. ★

6-3. DISCLOSURE OF REASON FOR ADVERSE ACTION ON SUITABILITY GROUNDS.

In the use of applicable provisions and procedures of NCPI 750 or NCPI 352,4-8 for processing of demotion or separation-disqualification action under this section, the safeguards set forth hereinbelow must be observed, Information of evidentiary value contained in investigative reports may be used as grounds for the adverse action, provided confidential sources of such information are protected, and provided the appropriate District Intelligence Office has authorized the use of the information. Information from investigative reports, which has occasioned the contemplated adverse action but which in itself is not acceptable as evidence, may be made the basis for the independent development of unclassified evidence to serve as grounds for the adverse action, provided there is similar protection of confidential sources and authorization by the appropriate District Intelligence Office. If security considerations preclude the use of the investigative information as evidence, or as the basis for developing evidence that may be used, and the employee is serving in a non-sensitive position, the adverse action cannot be taken. However, if the employee is serving in a sensitive position, action under NCPI 732,6-4 for "failure to be granted a security clearance" may be considered.

6-4. FAILURE TO BE GRANTED A SECURITY CLEARANCE.

When an employee occupies a sensitive position and cannot be granted a security clearance or his security clearance cannot be continued, it may be necessary to reassign, demote, or separate him from employment. The U. S. Civil Service Commission has determined that Public Law 733 and Executive Order 10450 constitute the appropriate authority for adverse actions against employees for failure to be granted security clearance. Consequently, when either demotion or removal action is required because an employee cannot be granted a security clearance, the procedures of NCPI 732,4-10 through 4-18 will be applicable, as appropriate,

⚫. The provisions and procedures of this section should be limited to demotion and removal actions based specifically on denial of security clearance, Denial of security clearance and demotion or removal action under the provisions of this section should not be used in lieu of demotion or separation action that is warranted and appropriate under normal Civil Service regulations, as implemented by NCPI 750 a NCPI 352, Furthermore, in cases of demotion or separation action under the provisions of NCPI 750 or NCPI 352, reference to any clearance issue that may exist shall not be made a part of the reasons for the action or of the proceedings,

b. In all cases of removal for failure to be granted a security clearance, the letter of charges shall include, in addition to the charges, a statement advising the employee that the removal action is necessary because he can not be granted a security clearance and there is no vacancy which will permit reassignment to a nonsensitive position of equal rank and pay or of lower rank and pay within the employing activity for which the employee has the requisite qualifications.

c. In all cases of demotion for failure to be granted a security clearance, the letter of charges shall include, in addition to the charges, a statement advising the employee that the change to lower grade is necessary because he cannot be granted a security clearance and there is no vacancy which will permit reassignment to a continuing nonsensitive position of equal rank and pay within the employing activity for which the employee has the requisite qualifications.

d. In all cases of demotion for failure to be granted a security clearance, the date for effecting the employee's suspension shall be set at the close of business the third day following the date of the letter of charges,

⚫. In some instances, the decision of the Secretary of the Navy in a security case looking towards removal may require that the employee suspended from a sensitive position under Public Law 733 be restored to a continuing nonsensitive position equal in rank and pay to the sensitive position from which he was suspended, However, if a continuing nonsensitive position of equal rank and pay for which the employee has the requisite qualifications does not exist at the employing activity, reassignment may necessitate a change to lower grade. In such cases, new proceedings under Public Law 733 to effect the demotion will not be required. This is in keeping with the conclusion of the Civil Service Commission in Departmental Circular No. 848 "that the power and authority to terminate employment under Public Law 733 would necessarily include by implication the lesser power to transfer the employee to another position of lesser rank and pay."

6-5. ARREST RECORDS (FBI FORM 1-4) FROM THE CIVIL SERVICE COMMISSION.

a. Sources and categories of arrest records. The Federal Bureau of Investigation furnishes the Civil Service Commission with arrest records on employees in the Federal service. The Civil Service Commission furnishes the arrest records to the appropriate agency or department of the Federal govemment for information and consideration in accordance with Section 5 of Executive Order 10450 (NCPI 732.8Encl. 1). The Office of Industrial Relations transmits reports of arrest records, Form 1-4, on employees of the Naval Establishment to naval activities concerned for information, consideration, and appropriate action. The arrest records fall into three general categories: FBI Form 1-4 in a pending investi

gation by the Commission under Executive Order
10450; FBI Form 1-4 bearing a name which is the
same as or similar to, that of a person employed
by a naval activity but in whose case the Commission
is not conducting an investigation; and, FBI Form 1-4
stemming from either of the above two categories
but considered separately because the arrest record
contains charges implying sexual perversion.

b. Authority under which action is to be taken on arrest records.

NCPI 732.2-4e states that maximum use will be made of normal civil service removal procedures where national security is not a consideration and such procedures are adequate and appropriate. Action on arrest records is particularly subject to this policy in that adequate disciplinary and removal procedures exist under normal civil service procedures to act on arrest records. Activities should make maximum use of the procedures of NCPI 750 and 352 in taking action on arrest records. The security procedures of NCPI 732.4 shall be used only in those instances where normal civil service procedures are inadequate and inappropriate and the individual's arrest record contains charges indicating character defects which may cause him, of his own volition or by coercion, to act contrary to the interest of the national security. c. Action to be taken on arrest records on employees transferred to other naval activities or Federal agencies.

In the event that the employee concerned has transferred to another naval activity or Federal agency prior to receipt of the arrest record, the activity shall forward the arrest record directly to the gaining activity for appropriate action. Advice of such forwarding of arrest records is not required by the Civil Service Commission. A copy of the forwarding letter should be furnished to the Chief of Industrial Relations (Code 110) only if the arrest record involves sexual perversion (NCPI 732.6-5g).

d. Consideration of arrest records and appropriate

action.

The Office of Industrial Relations will forward arrest records to the activity by stamped endorsement on CSC transmittal Forms DI 205 and DI 206, except those involving sexual perversion, and other circumstances considered to require special handling which are forwarded by OIR form letter. Upon receipt of the arrest record the activity shall inquire into the circumstances involved. Information as to the disposition of the charges. if not indicated in the arrest record, or other clarifying data should be requested from the appropriate Civil Service Regional Office or District Intelligence Office. Request for such information or data in cases of applicants or appointees who are the subject of pending investigation under Executive Order 10450 (NCPI 732, 6-5e) will be made to the appropriate