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Mr. CUMMINGS. No, sir. I think that they have been to date rather forthright with the information that they have given me. I say that because in some instances the information that they have furnished us has tied in quite precisely with information we have gotten from other sources as to dates and places and number of times.

Senator PROXMIRE. Dr. Low, why did NASA forward its preliminary findings to the Justice Department before the NASA investigation was complete? Dr. Low. I'd like our General Counsel to answer that.

Mr. HOSENBALL. Senator, there is a Statute 28 United States Code Section 535(b), that does require us to notify the Attorney General when any allegation is made against a public official alleging wrongdoing relating to Title 18. Frankly, I have been criticized before for not forwarding it fast enough. It was, therefore, required to be forwarded expeditiously. We have a NASA regulation that sets forth that we should forward it even if we have doubts as to whether there might be a criminal violation.

The purpose of that is obvious. They have much more investigative resources than certainly NASA has as far as investigators are concerned. So I was following the statute and our own regulation that required us to forward it.

Senator PROXMIRE. Was there any thought that forwarding an incomplete investigation to the Justice Department would result in a finding that no further action was required?

Mr. HOSENBALL. No, sir.

Senator PROXMIRE. That it might prejudice the effectiveness of the investigation ?

Mr. HOSENBALL. No, sir. Dr. Low. To the contrary, Senator Proxmire, I wanted to get on with the issuance of disciplinary actions with those names we then had as quickly as possible and on advice of counsel did not take that action until after we had the initial readout from the Justice Department, and this is why we sent the incomplete report of the initial investigation to the Justice Department early on. We intend to do this with the next version of the report also.

Senator PROXMIRE. I want to be sure I understand just who you investigated. Was your investigaton confined to NASĂ contracting or procurement officials or did you investigate other agency officials?

Dr. Low. We investigated in NASA headquarters all top level officials whether they were in the procurement office or not, including every staff office and every program office in NASA headquarters.

Second, we investigated every lead, every name that came to us, either in our initial investigation or through other sources, and followed up on those leads in detail. It is a wide ranging investigation.

Senator PROXMIRE. In your investigation did you turn up any evidence that agency officials may have suggested to contractors that they should provide gratuities of any kind ?

Dr. Low. Not to my knowledge. The detailed investigatory reports of the first 75 were turned over to the committee staff and I don't remember in my reading of that any such allegations.

Mr. Cummings reminds me that there is one report from a former contractor employee now with NASA who indicates that while he was working for a contractor he was occasionally approached and asked about tickets to football games and the like by NASA people.

Senator PROXMIRE. What action did you take on that?
Dr. Low. We have not yet completed that investigation.
Senator PROXMIRE. You are following up on it?
Dr. Low. Yes, sir.

Senator PROXMIRE. And these were tickets to a football game-Redskin tickets?

Dr. Low. Redskin tickets and lunches.

Senator PROXMIRE. People will do almost anything to get those Redskin tickets. [Laughter.]

You mentioned verbal reprimands to 11 NASA employees. Do you think that is adequate penalty for infractions of the standards of conduct?

Dr. Low. Senator Proxmire, unfortunately, our previous standard of conduct regulations left some room for doubt on the matter of personal friendship. The verbal reprimands are by and large issued to people who have attended football games and the like. Because our regulations were not as clear as they should have been on when this was acceptable and when it was not, we decided in that instance to issue only verbal reprimands.

Our new regulations make it very clear that that is unacceptable and in the future there will be penalties stiffer than verbal reprimands for those events.

Senator PROXMIRE. In the future you will have what? I didn't follow that.

Dr. Low. In the future we will have stiffer punishments certainly for any violation of our regulations.

Senator PROXMIRE. Could you spell out what those punishments are and are those punishments understood by your personnel ?

Dr. Low. The punishments in civil service range from removal on the one hand, to suspension, to written reprimands, to letters of admonition, to verbal reprimands. What punishment is meted out in any specific case has to be determined in that case. I cannot prescribe rules now as to what will be done in the future.

Senator PROXMIRE. But you do say they will be stiffer because now the regulations are well known and they are in writing and they are clear?

Dr. Low. Yes; they were well known and in writing. Before they were not as clear as they should have been.

Senator PROXMIRE. What is the practical effect of a letter of censure or a written reprimand ?

Dr. Low. A letter of censure or a letter of admonition, lets the individual know that management is aware of the wrongdoing. It means that when that individual is in the future considered for any other NASA assignment that will be taken into consideration.

A formal written reprimand is in the individual's personnel folder for a period of 2 years. It therefore has not only an effect within NASA, but it would also have an effect if that person would seek other Government employment. That would be part of his official folder, would be considered, would have to be considered by any future employer should that person decide to leave NASA and go to another Government agency.

Senator PROXMIRE. Dr. Low, as you know, I have been critical of NASA's budget at times in the past and disagreed with some of the priorities that provide for our voting money to it, but I have great respect and admiration for the efficiency of this agency. I have reviewed a lot of agencies and it's one of the most efficient in Government. You do an excellent job in that respect and I'm encouraged by the actions that you have taken in this regard too. I think it's exemplary.

However, it does seem that NASA-now correct me if I'm wrong here, I don't want to be unfair-it does seem that NASA only awakened from its slumber and started enforcing the standards of conduct recently. Can you account for the comparative lack of interest in this area before the hunting lodge revelations in the newspaper?

Dr. Low. I don't think there was a lack of interest, Senator Proxmire. We did and we do investigate things that come up each year and every day. However, none of the things like the hunting lodges had come to our attention until we read about them in the newspaper. If there had been allegations in any other way, if I had known of these instances in any other way, we would have taken action immediately.

Senator PROXMIRE. But you just testified that the regulations were vague or at least they weren't as clear as they should have been. There had been apparently no direct, explicit warning of top level personnel of the dangers involved here. If there had been the punishment would have been perhaps greater than it has been.

Dr. Low. We published our standards of conduct regulations for NASA employees in October 1967. It is this yellow book which I am holding up here, and these regulations were handed to each employee at the time he entered on duty with NASA. What we missed doing and we only know this now, after the events of recent months, is reminding employees on an annual basis that these regulations existed. I think that was a failing on our part but we didn't recognize this until we came to current events.

Second, in looking at these regulations today in the light of current events, we have identified areas where they were subject to interpretation and not as strict or as tight as they should have been. Again, it's easy to correct them after the things that have happened in recent weeks have happened. Unfortunately, we did not foresee these things until they were called to our attention.

Senator PROXMIRE. I have one more question before I yield to the chairman. I am informed that the NASA Administrator, Dr. Fletcher, is being asked to coordinate an interagency review of standards of conduct matters. Based on your testimony, that seems a wise choice. Can you confirm this and tell us a little more about this interagency effort, which seems so long overdue ?

Dr. Low. Senator, I believe you're referring specifically to a certification that we want to include in all major NASA contracts. This certification would put responsibility on the contractor not to tender offers on NASA employees which NASA employees are not allowed to receive. We decided that before we would place these certifications unilaterally into NASA contracts we would check it out with the Office of Federal Procurement Policy. The Administrator of that office wrote us a letter, an initial letter dated the 30th of January, indicating that he would ask us to hold off on placing those certifications in NASA contracts because he believes that this should be considered on a Government-wide basis. He also told us that he's sending us a second letter, a letter to Dr. Fletcher, which I have not

yet seen, asking NASA to chair an interagency task force to see what language should be placed in the contracts. We'd be very pleased to do this because we very strongly feel that this is something that should be done.

Senator PROXMIRE. Dr. Low, for the record, I would like to indicate that the chairman of this committee, Chairman Patman, and I directed the committee staff to cooperate fully with NASA in its own investigation. We have provided any information we thought you should have. I would also note that you have been cooperative with this committee and thank you for this cooperation. It has served both of our purposes well. The way you have handled this matter reinforces my confidence in your agency and the job that NASA generally has done, as I said before. Thank you very much for your most helpful testimony.

Dr. Low. Thank you, Senator.

Senator PROXMIRE. Our final witness this morning is Deputy Secretary of Defense, William Clements, Jr. Mr. Clements, will you and your colleagues please stand and raise your right hand ?

Do you swear to tell the truth, the whole truth, and nothing but the truth, so help you God?

Mr. CLEMENTS. I do.
Mr. Lynn. I do.
Mr. WILEY. Yes.

Senator PROXMIRE. Mr. Clements, we are anxious to hear your testimony. We have a copy of

your statement if you would like to abbreviate it in any way the entire statement will be printed in full in the record and you may proceed.

Mr. CLEMENTS. 'Senator Proxmire, Mr. Chairman, with your permission, I'd like to read the statement.

Senator PROXMIRE. Yes, sir. Go right ahead.

STATEMENT OF WILLIAM P. CLEMENTS, JR., DEPUTY SECRETARY

OF DEFENSE; ACCOMPANIED BY RICHARD A. WILEY, GENERAL COUNSEL, DEPARTMENT OF DEFENSE, AND BERNARD B. LYNN, DIRECTOR, DEFENSE CONTRACT AUDIT AGENCY

Mr. CLEMENTS. Mr. Chairman, I appreciate the opportunity to testify before this committee concerning the efforts of the Department of Defense to reaffirm and enforce the Department's standards of conduct, to implement existing legislation requiring the reporting of defense related employment and the exchange of such information with Congress, and to insure appropriate reimbursement of contractors' costs.

Although all of these subjects are of great importance to the Department of Defense, I would like to devote the majority of my prepared remarks to the subject of standards of conduct, because I particularly want this committee to understand just how strongly we in the Department feel about maintaining the highest possible standards in this area.

The Department of Defense standards of conduct directive and component regulations are implementations of and in fact preceded Executive Order 11222 of 1965, which prescribes standards of ethical conduct of government officers and employees.

These documents go beyond the statutes that restrict criminal activity by providing strong ethical guidance to all of the Department of Defense's 1 million civilian and 2 million military personnel.

As ethical guidance they provide the parameters of official and personal activity which all Department personnel must meet in order to perform the national defense mission in a manner that protects the interests of the taxpayers while insuring the national security.

The taking of a position within the Department of Defense either as a member of the Armed Forces or as a civilian employee involves the acceptance of a standard of conduct which embodies the highest level of responsibility and personal integrity.

When on rare occasions some individuals have forgotten their ethical duty we, as a Department, have reacted to these deviations by strongly reaffirming the unique responsibilities associated with the government service.

It is with this premise that I would like to discuss recent developments in the area of standards of conduct. ·

Upon discovering that certain Department of Defense officials had attended a Northrop Corp. hunting facility on the Eastern Shore of Maryland, the Department initiated a vigorous effort to inquire into this matter.

The General Counsel of the Department requested from that company the names of the Department of Defense personnel involved. Personal interviews were then conducted to determine the facts and verbal admonitions were delivered along with warnings against any such activity in the future.

Later, as pointed out in my letter of January 22, admonition letters were sent to 38 military and civilian officials who had attended Northrop's facility. A copy of my letter is submitted for the record. [See Appendix IV (A), p. 232.]

In order to focus the highest possible attention on this subject I conrened a triservice committee composed of the under secretaries of the military departments in October 1975 to review the Department of Defense standards of conduct directive and look closely at possible conflicts of interest within the services. The final report and recommendations will be forthcoming soon. [See Appendix IV (B), p. 242.]

In addition, a special task force headed by Mr. Terence E. McClary, Assistant Secretary of Defense [Comptroller] was set up to review audit surveillance and contract procedures in order to enhance the effectiveness of DOD sa feguards against reimbursing defense contractors for improper expenditures.

The final report of that task force has been completed and approved by me. A copy of this report is submitted for the record. One aspect of that report—the obtaining of a certification from contractors that they did not claim reimbursement for costs of entertaining government emplovees-will be implemented after other inquiries, which I will refer to later, are completed.

At that time a determination will be made as to when and in what format such a certification will be obtained.

In an effort to close any potential loopholes involving conflicts of interest, the Department of Defense directive on standards of conduct has been changed to eliminate the exception regarding close friends and relatives.

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