very wholesale basis, so to speak, on which the exemption has been used by your Department in the Northrop Corporation situation thus raises questions. 2. But even if your exemption was deemed to be applicable, the favor or entertainment was not bestowed by a relative or friend but rather by the Northrop Corporation itself, a contractor with the Government. The Department's regulation recognizes "customary exchange of social amenities between personal friends and relatives." Northrop Corporation would not appear to be in either category. While this Commission's responsibilities under E.O. 11222 may not extend to enforcement authority in the specific cases mentioned, nonetheless we do have an interest in this matter because of our Executive Order 11222 role and the potential for conflict in D.O.D. Directive 5500.7 and our regulations. Further, we understand that Secretary Schlesinger has recently taken further steps in the ethics area. Under the circumstances we strongly suggest that these cases be reviewed again. Please let us know as soon as possible of the results of your review. In addition we suggest that DOD Directive 5500.7 be amended to more closely reflect 5 C.F.R. 735.202(b) (1). Please advise us as to what steps in this regard you are taking. Sincerely yours, Mr. CARL F. GOODMAN, CARL F. GOODMAN, GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE, WASHINGTON, D.C., December 1, 1975. General Counsel, U.S. Civil Service Commission, Washington, D.C. DEAR MR. GOODMAN: This letter is in response to yours of October 30, 1975, concerning the acceptance of invitations by certain DoD personnel to attend the hunting facilities maintained by the Northrop Corp. The Department of Defense has continued its inquiry into this matter and has initiated the following actions which may be of interest to you. Individuals who violated DoD directives by accepting gratuities from Northrop are being sent letters of admonition. Exceptions 6 and 9 to the basic prohibition upon the acceptance of gratuities by DoD personnel (Para. VI.B., page 7, DoD Directive 5500.7) relied upon by several individuals to justify their acceptance of Northrop's hospitality, have been deleted from this Directive. (copy attached) I trust that this satisfies your concern. (Page 7 of DOD Directive 5500.7 follows :) L. NIEDERLEHNER, Acting General Counsel. *** or is endeavoring to engage in business transactions of any sort with the department, a report of the circumstances will be made within 48 hours by the individual to the designee of the Secretary of the military department concerned or the designee of the Secretary of Defense in the case of DoD personnel not within one of the military departments. 5. Speciality advertising items of trivial intrinsic value. 6. Customary exchange of social amenities between personal friends and relatives when motivated by such relationship and extended on a personal basis. 7. Things available impersonally to the general public or classes of the general public such as a free exhibition by a defense contractor at a world's fair. 8. Trophies, entertainment, rewards, prizes, given to competitors in contests which are open to the public generally or which are officially approved for participation in by DoD personnel. 9. Transactions between and among relatives which are personal and consistent with the relationship: 10. The acceptance of loans from banks or other financial institutions on customary terms to finance proper and usual activities of employees such as home mortgage loans. 11. Social activities engaged in by officials of the department and officers in command or their representatives with local civilian leaders as part of community relations programs. Senator PROXMIRE. What I'm getting at is the fact that this went on for 10 years, though, without oversight correction? Mr. GOODMAN. That's correct. I'm not familiar with any specific problem that had come to our attention dealing with it during that period of time, and also I think if you look at the directive as it was written, the directive as written didn't necessarily create a problem. I think it was the directive as interpreted in the particular situation which might perhaps be an indication of how it's interpreted in general that did create a problem. Senator PROXMIRE. Now based on your review, could either of you give me your impression of whether either the NASA or the Department of Defense revised regulation is stricter than the other. Mr. GOODMAN. I think the NASA regulations are more restrictive than the Department of Defense regulations. Senator PROXMIRE. Do you have any comments as to whether NASA possibly may have been too restrictive? Mr. GOODMAN. I think when you're dealing in the area of conflict of interest that it's a mistake to view any regulations in that area as too strict. I certainly wouldn't want to put myself on record as thinking they were too strict. Senator PROXMIRE. Well, it's not only a matter of logical, selfprotective bureaucratic attitude; it's also a matter of what is right in your view. Mr. GOODMAN. That's correct. Senator PROXMIRE. If anybody is kind of an ethics umpire, you're in the position of being that. What is your view as to the adequacy of the Department of Defense regulations? Mr. GOODMAN. Well, we have approved the DOD regulations. We have approved the NASA regulations. Now that doesn't mean that those regulations should be the regulations in existence from this time and for all time forward. We have had a number of suggestions arising from the conference of ethics counselors which we will look at which may very well affect NASA and DoD regulations in general, as well as other agency regulations; but at this moment they have been the approved regulations. Senator PROXMIRE. Mr. Hampton, there's been a great deal of publicity in the press recently about your attendance at a hunting lodge as a guest of Rockwell International. While I realize this may be a matter of personal embarrassment to you, it is a fact that you will be the only witness at this round of the hearings who was a corporate guest on a hunting trip. Therefore, your views should be of assistance to this committee. 'As the chairman of the agency which approves standards of conduct regulations, don't you think your presence at this hunting lodge would convey to military officers the impression that this is a perfectly permissible activity? Mr. HAMPTON. I don't think so, sir, because I think that, as you say, a lot depends on how the individual perceives why he is there and certainly the two things I mean-and this is looking back in hindsight but was something that was in my mind in the first placewe're not a contracting agency. We had no procurement responsibilities there. Second, the invitation for me to hunt came from a personal friend, not a casual acquaintance but someone of many years standing that was not just somebody that I had met in connection with any Government duties. At the time that I was there I didn't meet to the best of my recollection any of these high ranking military officers that I have read about in the paper. I don't know whether they would know me or not. I certainly wouldn't perceive in the time that I was there that they could look and say, well, this abrogates all of my responsibilities under the Executive Order. They know what the rules and the regulations are and they know in their own mind. I don't know that there could be any excuse for them. Senator PROXмMIRE. But now we have a perspective on this. As I say, you're the head of the agency that approves standards of conduct regulations. If you had it to do over again, would you accept an invitation to hunt? Mr. HAMPTON. No; I wouldn't, because when this publicity came out in the way that it was perceived, it put me in the position of having to defend against a theoretical or a hypothetical assumption that while I could do it, it isn't worth the effort and I certainly don't want to create appearances of condoning anything that other people may read into the situation. Senator PROXMIRE. Personally, I couldn't agree with you more. I think you're absolutely correct, that you're not a contracting official, that you have no direct explicit conflict of interest with any particular defense contractor; you're not in the defense business. At the same time, you do have, indirectly of course, a relation to it because you're head of the agency that determines the regulations. Mr. HAMPTON. I'm the head of the agency but to my knowledge, Mr. Chairman, in the 15 years going on 16 years I have been at the Commission, I don't think that I have ever approved or disapproved or suggested changes in any regulations because specifically in the regulations they go to the General Counsel. I never see them. So I think my level of awareness was probably somewhat lowered by not seeing and not dealing with this on a more regular basis. Senator PROXMIRE. Did you accept the hospitality from any other defense contractor? Mr. HAMPTON. No, sir. Senator PROXMIRE. The fact is that you are the head of the agency, however. Mr. HAMPTON. That's correct. Senator PROXMIRE. There's no way you can get away from that. Mr. HAMPTON. No. Senator PROXMIRE. I beg your pardon, Mr. Goodman, go ahead. Mr. GOODMAN. I was going to say approval of the regulations is a function of the General Counsel's office under the regulations. It's specifically sent to the General Counsel's office. Senator PROXMIRE. When you were at the hunting lodge, did you hear anybody discussing business, aircraft, space shots, or congressional action? Mr. HAMPTON. No, sir. Senator PROXMIRE. Civil Service regulations prohibit any Commission employee from accepting gifts from any company whose interests might be affected by the official actions of the employee. Could your failure to report Rockwell International's massive entertainment of Government officials be a violation of this Civil Service regulation since it affected Rockwell's interest by allowing them to continue this hospitality program? Mr. HAMPTON. I don't think so. Mr. GOODMAN. I don't think that comes within what the regulation is dealing with. I think the regulation is dealing with direct relationships with the agency involved. I think that interpretation would go beyond the regulation. Senator PROXMIRE. Well, the Civil Service regulations provide— and I'll quote. It's very short and it's very simple. It says, "that no employee may accept a gift from any person or company which has interests that might be substantially affected by the performance or nonperformance of his official duty." You see, at least there's a suggestion that under these circumstances the attitude that you might have toward the regulations could be affected. You state in your testimony, Mr. Hampton, that when a suspected case of violation of the standards of conduct is brought to your attention you refer this case to the department or agency concerned and suggest that they investigate the matter. Didn't it occur to you that Rockwell might well be entertaining active duty military or NASA officials, that it might be a good idea to report this practice or at least the possibility? Mr. HAMPTON. It did not occur to me, no. Senator PROXMIRE. Wouldn't it have been wise to mention this regulation to the Rockwell people? Mr. HAMPTON. I'm sure they probably knew about the regulation. It never occurred to me to say to anyone that I was with and the people that were down there that those people might have a conflict of interest. Senator PROXMIRE. All right; I have one or two more questions. Let me just ask one more question and then I'll yield to other members of the committee. Does the Civil Service Commission review or know of any conflict-of-interest regulations relating to executive interchange programs? Mr. HAMPTON. Well, on the personnel interchange program when that was initially established, one of the key things that had to be worked out in the first year was to assure that individuals who came into the program from industry were not placed in positions where they would be dealing with affairs that would be affected by their― well, dealing with affairs in the Government that were somewhat related to the affairs of their employer whom they would be going back to after leaving their Government assignment. Senator PROXMIRE. One more question before I yield to Congressman Johnson. There have been recent newspaper reports quite critical of the Civil Service investigation of allegations regarding favoritism in hiring toward former Rockwell employees. This investigation was undertaken at roughly the same time as your trips to the Rockwell hunting lodge. Did you personally intervene in this report in any way to soften its conclusions or recommendations? Mr. HAMPTON. No, sir. I gave no directions. I had nothing to do with the investigation, no input into it. I transmitted the report to the Congress as we were requested to do. I have all of that correspondence. If you would like to have it, I will be glad to supply it to you. [See Appendix I. p. 133.] Senator PROXMIRE. Fine. We would like to have that for the committee's information. Before I yield to Congressman Johnson, we are very happy to have Congressman Coughlin join us. He isn't a member of the committee, but he is a member of the Congress and he's been very interested in this subject. I understand you would like to make a brief statement. Mr. COUGHLIN. Thank you, Mr. Chairman. I appreciate your invitation to attend the hearings. As the chairman knows, I have been critical of this committee in the past, as has the vice-chairman, and I'm very pleased it is holding these hearings because I think there is an important function to be performed. We daily hear of the increase, for example, in Soviet military production and certainly it's very important that the American taxpayers get every single penny's worth out of the defense expenditures in this country. I'm glad to see the committee holding these hearings and I will be having my staff monitor them. I will be here as much as I can, but I also have conflicting committee meetings and I appreciate your invitation. Senator PROXMIRE. Thank you very much, Congressman. I think your criticism is very useful and appropriate and it will help us do a better job here and I'm very happy that you're going to have your staff watch us. That will help keep us on the ball. Congressman Johnson? Mr. JOHNSON. Thank you. Mr. Chairman, I think probably the purpose of these hearings is to find out what is wrong with our system of finding out and reporting and disciplining conflict-ofinterest violations and I think that's quite significant. You have very frankly stated in your statement, Mr. Hampton, that neither the Executive Order nor regulations expressly give you any authority, investigative or disciplinary or otherwise to enforce the standards set out in Executive Order 11299. Now if we're going to let's say, put some teeth into this type of investigation and reporting and so forth, don't you think it would be a good idea to take it away from the agencies that are charged with the internal disciplinary action and give it to an overall nonpartisan, disinterested, objective agency that would really do the job and wouldn't be hampered by friendly relations within an agency like one person to another? Have you given any thought to strengthening the whole procedure? Mr. HAMPTON. Well, Congressman Johnson, one of the things that I have found in enforcement is that there are over 70 agencies of Government spread out through the United States. There are certain generic statutes for those agencies which vest with the agency head authorities to discipline. Since I have been a member of the Civil Service Commission I have tripled our investigative staff and our evaluation capacity and I have run into the buzz saw of trying to enforce centrally in agencies that have their own independent au |