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a job for a company is just as good a reward whether it's in the defense business or the nondefense aspects of their business, and I would add that to the list of people who should have to report.
A fourth change that I'd like to see is a change in the descriptions of the jobs that retired officers held while they were still in the military. It seems that if a person did not work in procurement full time but did have a part-time involvement in procurement he is not required to report. For instance, if someone served on a Source Selection Advisory Council, that would not presently be clear from the reports. I would like to see that clarified because such advisories can play an important role in determining who gets a contract.
Senator ProxmIRE. Well, now you say that there are about 1,500 minimum. You said that was a minimum estimate, as I understand it, who should have filed who did not file on the basis of your estimates.
Ms. MARLIN. That's right. That's an enforcement problem.
Ms. Marlin. Well, in our first study there were 1,406 from 1969 through 1973, I believe.
Senator PROXMIRE. So you think that about half the number filed who should have if they had complied with the law?
Ms. MARLIN. Just about. At least 1,500 reports that should have been filed for fiscal year 1971, 1972, or 1973 were not filed, compared with 1,406 reports that were filed for fiscal years 1969–73.
Senator PROXMINE. That was a minimum and you say you didn't follow up on the initial filing-you had the second and third year?
Ms. Martin. I think half would be a good, conservative estimate.
Senator ProxmiRr. All right. Now you pointed out in your testimony that a legal definition of a conflict of interest does not mean a specific action but instead means a situation which could lead to an action prejudicial to the government's interest. In other words, you're not saying that somebody has done something wrong. They are just in a position where there's a presumption that they are awfully tempted to do something wrong. Is that a generally accepted legal opinion? Are there adequate legal precedents for such a definition?
Ms. MARLIN. Yes. We used as our source an opinion by the Association of the Bar of New York City in 1960. They defined conflict of interest at that time, as follows:
A conflict of interest does not necessarily presuppose that action by the official favoring one of these interests will be prejudicial to the other, nor that the ofiicial will in fact resolve the conflict to his own personal advantage rather than the government's. If a man is in a position of conflicting interests, he is subject to temptation however he resolves the issue. Regulation of conflicts of interest seeks to prevent situations of temptation from arising.
Senator PROXMIRE. Now what you're saying is that in a case like Admiral Townsend who headed the F-14 Source Selection Advisory Council and then went to work for Grumman, that his defense related employment before would not necessarily indicate his serving on the advisory council yet the conflict would be quite severe; he would are had a great opportunity to aid this company and his acceptance of a job would indicate this was a possibility. Is that so?
Ms. MARLIN. That's a very fine example, Senator.
Senator PROXMIRE. That's the kind of thing that you had in mind.
Now you gave statistics in your report which I have just mentioned which indicated a shockingly high percentage of such officials in what you termed conflict of interest situations. Do you have any evidence of specific wrongdoing by any of these individuals ?
Ms. MARLIN. No. We have made no attempt to establish specific wrongdoing.
Senator PROXMIRE. It would be very difficult to do it.
Nís. MARLIN. Yes, it would. That's one of the problems with enforcement.
Senator PROXMIRE. Do you have any notion on how that might be pursued? How could you determine whether there's actual wrongdoing?
Ms. MARLIN. I don't know how, but I suppose one could do the kind of investigation that I hear from the press was reported on yesterday here.
Senator PROXMIRE. The reason I'm raising this point is that it's so very, very hard to establish an actual act of wrongdoing once you put a person into a position of conflict of interest where he can assist a company and get paid off for doing so. It's awfully hard to establish it and the conflict of interest itself suggests that a great deal of that is going on, but it's awfully hard to tell how much or where or where the damage is.
Ms. MARLIN. That's exactly why we didn't try to establish it ourselves. Almost any decision made by the Department of Defense in determining that one contractor rather than another shall be chosen really can't very easily be questioned by anyone from the outside. There are too many factors that go into those decisions for us to easily and firmly establish whether an incorrect one was made or not. Furthermore, the conflict of interest arises very often from the expectation of a job to be offered in the future, so at the time the decision is made there's no way of establishing it and there may in fact be no actual job offer at the time. It's the possibility that the job offer may be forthcoming several years later that is relevant. Even if you could establish that conflict later it would be years after the decision had been made and it would be of merely historical interest.
Senator PROXMIRE. Do you think the Department of Defense could adequately police the defense related reporting requirement if the will were there to do so?
Ms. Marlin. Yes. Policing it is a very easy matter. We have already demonstrated what we could find as an outside public interest group with small resources. We were able to establish the names of 1,500 who could have filed and didn't. That's quite an easy list comparison. It would probably take one person a couple of months to do. It's not very much of a job but the Department of Defense has access to much more useful reports than the Council on Economic Priorities or any other member of the public does. What they could do still more effectively is look at reports that are made on a confidential basis to the Department of Defense by every officer who retires. Those reports were not available to the public, and they don't give as much detail about job descriptions as the public reports that you have required,
but they require that every retiring officer report whether or not he is working for a contractor with the Department of Defense. Now if those reports are filed as they should be, that seems to me a fail-proof way of finding out not only those people who failed to file a second and third time, but also those who never filed the first time. The Council has no access to these reports and we have no idea how many people have never filed but should have.
Senator PROXMIRE. Now you're being followed by a witness from the National Aeronautics and Space Administration (NASA) and then followed by Secretary Clements of the Defense Department. Did you have any evidence at all of any violations on the part of NASA personnel ?
Ms. MARLIN. We didn't look into that.
Senator PROXMIRE. You say you didn't look into it. Would you have encountered that had there been?
Ms. MARLIN. I don't think so, but I would have to check into it more precisely and get back to you. I'm fairly sure we would not have.
Senator PROXMIRE. One final question. You mentioned the Department of Defense had tried to weaken one of the current conflict of interest laws. How was that done?
Ms. Marlin. That's very interesting because it's been done by proposing legislation before this Congress drawn from the Fitzhugh Commission which has been put forward as positive legislation that would improve the very kinds of problems we have encountered with conflict of interest; but, unfortunately, the most significant change that they have proposed is one that would weaken the present unconditional prohibition of selling by retired officers. You have already established in earlier discussions, Senator, that it would be very difficult right now to establish whether or not a conflict of interest situation had been resolved against the public interest and in favor of private economic interest instead. This new legislation would not only require establishing that, but would extend it to demonstrate that the person had exercised undue influence on the Department of Defense decision.
Now, in my opinion, that would take a regulation that is already difficult at best to enforce and make it entirely unenforceable.
Senator PROXMIRE. We thank you very, very much, Ms. Marlin. As I say, we very much appreciate your testimony. It's most useful.
Ms. MARLIN. Thank you, Senator.
Senator PROXMIRE. Our next witness is Dr. George Low, Deputy Administrator, National Aeronautics and Space Administration. Dr. Low, would you please stand, and the gentlemen with you?
Dr. Low. Mr. Neil Hosenball, our General Counsel.
Senator PROXMIRE. Fine. Do you swear to tell the truth, the whole truth, and nothing but the truth, so help you God?
Dr. Low. I do.
Senator PROXMIRE. We have your statement and you may present it in any way you wish. If you'd like to summarize it, the entire statement will be printed in full in the record.
Dr. Low. I would like to summarize it, Mr. Chairman.
STATEMENT OF DR. GEORGE M. LOW, DEPUTY ADMINISTRATOR,
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION; ACCOMPANIED BY S. NEIL HOSENBALL, GENERAL COUNSEL, NASA; AND JAMES J. CUMMINGS, DIRECTOR OF INSPECTIONS AND SECURITY, NASA
Dr. Low. Mr. Chairman, Senator Proxmire, the material in my prepared statement supplements the information already given to the committee on NASA's actions in relation to the senior Government officials visiting hunting facilities as guests of aerospace contractors. My statement today and my report to the committee should be considered only as a progress report because our investigation is still underway.
When this matter first came to our attention we immediately took the following actions:
First: We asked the Department of Defense to inform us if in their investigation it was found that any NASA employee was involved. In other words, we wanted to get the names of NASA employees as quickly and expeditiously as possible.
Second: I directed NASA's Office of Inspections and Security to conduct an immediate investigation to determine the extent to which NASA employees were entertained by NASA contractors by way of gifts, gratuities, entertainment, tickets, vacation trips, or invitations to hunting lodges. I gave Mr. Cummings, who is the head of our Office of Inspections and Security, complete freedom in the extent and in the conduct of that investigation.
The initial results of our investigation were first forwarded to the Justice Department to determine whether there were any Title 18 violations and then to the staff of this committee for their information. The investigation, as I mentioned, is continuing.
Third: We have taken disciplinary action against those NASA employees who were in violation of our then existing standards of conduct regulations. Specifically, we issued formal letters of reprimand to seven NASA employees found to have visited hunting facilities; letters of admonishment to two; and verbal reprimands to two.
Fourth: We have clarified and further defined NASA's regulation concerning acceptance of anything of value by our employees from private concerns doing or seeking business with NASA.
Fifth: And finally, we intend to amend our procurement regulations to place on our contractors a firm requirement to avoid situations like the ones we are discussing here today. Because the Office of Federal Procurement Policy wants to coordinate this on a Government-wide basis, it may take some time before the new regulations can be issued by NASA. In the meantime, we are advising each of our major contractors of our new standards of conduct regulations.
Now, let me turn to specific questions raised in Senator Proxmire's letter of January 14. First, on the subject of standards of conduct regulations, our new and revised regulations have been published in the Federal Register and were sent with a forwarding letter by me to each NASA employee. These regulations make it very clear that no NASA employee nor his spouse or minor child may accept any gifts,
gratuities, entertainment, including food, refreshments, tickets or invitations to performances and other events, favors, loans, transportation, accommodations, or any other thing of monetary value from an aerospace contractor.
The new regulations also severely limit and clearly define any exceptions. They leave no room for doubt as to interpretation.
Alleged violations will immediately be investigated by the Office of Inspections and Security. In addition, employees will be required to certify on an annual basis that they have reread those regulations.
Next, let me turn to the results of NASA's investigation to date. In our initial investigation, after the matter of hunting lodges was first brought to my attention, our inspectors interviewed 75 people. This included top management officials at NASA headquarters and those individuals named by various sources as having hunted as guests of aerospace contractors. In these interviews, 13 current NASA employees acknowledged that they had hunted as guests at either Northrop or Rockwell International. Of these 13, seven received formal letters of reprimand. The letters constitute official personnel actions under the civil service system. Two received letters of censure; two received verbal reprimands; and two are under further investigation.
In addition, the investigation identified 14 employees who accepted tickets to sporting events and the like. Eleven of these received verbal reprimands, while the remaining three were not in violation of our then existing standards of conduct regulations.
You asked about the possible impact of these events on NASA contract awards. In connection with NASA procurement of goods and services from aerospace contractors, I would like to make two observations. First, there have been no allegations from any source that the employees involved in our investigation improperly influenced any NASA procurement decision. Second, the checks and balances and safeguards built into NASA's source evaluation board procedures make that process virtually fail-safe. There are so many people involved in the evaluation process and so many levels of review, including quite often GAO reviews, that no individual nor even a small number of individuals could improperly bias results.
Mr. Chairman, I, of course, consider the violations of our standards of conduct regulations an extremely serious matter. At the same time, I'm pleased that to date at least we have found no improprieties with respect to the awarding of NASA contracts.
Let me turn to the costs resulting from contractor entertainment. The NASA audits of aerospace contractors are performed by the Defense Contract Audit Agency [DCAA), which is the Government's “one face to industry” and therefore the Defense Contract Audit Agency performs NASA audits as well. That agency is now auditing the activities of 10 contractors, including Northrop and Rockwell, for the possible occurrence of gratuities and entertainment expenses. We must await the results of those audits before we can determine whether any of these expenses were charged improperly to NASA. If they were, we will, of course, take appropriate action to disallow the costs.
Next let me turn to the interchange of personnel between NASA and aerospace companies. Our records indicate that a surprisingly