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we're in the commercial business and maybe are a little more inclined to be cost conscious-it seems to me that I'm at a great disadvantage trying to describe what goes on at Wye Island because I have never been to Wye Island. I have never seen it. I have never hunted there. So for me to draw any conclusions—I'm telling you what I

Senator PROXMIRE. The problem is, if you spent money, even a modest or limited amount of money, it seems to me there ought to be some kind of justification. If you're going to take the time of your own corporate executives to visit with your customers, there ought to be something in mind. There ought to be some quid pro quo. You're in business.

Mr. ANDERSON. We think good communication is very important within our company. Our efforts in advertising are trying to communicate with the consumer world about the capabilities of our

company.

Senator PROXMIRE. Then I take it that these occasions could be more accurately characterized as a relatively innocent effort to get to know people a little better in an informal setting and perhaps build up a little good will for the company. Is that about right? Mr. ANDERSON. I think you said it very well.

Senator PROXMIRE. Now you state in your remarks that:

Procurement decisions are the result of carefully documented analyses which, by the very nature of the highly regulated procurement procedures, are based on extensive technical, cost and management data.

I agree that this may be true for source selection decisions where

other members of an evaluation board could act as a check on one or two members who showed excessive favoritism toward a certain contractor. But it seems to me that in the case of administrative decisions made after a contract has been awarded, many decisions are made by one or a very small number of people. I'm not saying that Rockwell did get favored treatment from contracting officers, but do you not think that, in such cases, it might be possible?

Mr. ANDERSON. Senator, I really don't believe so. In my experience in this area the adversary relationship is very strong between the contractual people within the contracting agency and our own people.

Senator PROXMIRE. We want to keep it strong, but I'm not sure. this doesn't tend to enfeeble it.

Mr. ANDERSON. It's certainly not our intention.

Senator PROXMIRE. It's much stronger with two commercial firms dealing with each other because then you have the discipline of the balance sheet and I should say the operating statement. You want to hold your costs down and you want to get the quality, but you don't have that same kind of discipline in the Government. In Government you have to rely on the integrity of the people involved and that's a very good reliance except when that integrity tends to be compromised.

Mr. ANDERSON. Well, let me make just two comments, sir. I think ASPR-Armed Services Procurement Regulations-are very strict. The adversary relationship is very strong. The contractual people meet on these things for endless discussion and there's endless review

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up and down the chain of command. As a matter of fact, I find that the procurement process or changes within a program after it's started is much more tightly monitored and much more of an adversary relationship with much stronger penalties if you don't perform in DOD procurement than I ever experienced in my 20 years in automotive procurement. We have negotiated with these people for changes for 4 or 5 months with people who sit in Dayton trying to arrive at an equitable adjustment. I don't have quite that much trouble with General Motors.

Senator PROXMIRE. Isn't it possible that a company could use its connections during the conceptual stages to help influence the criteria on which the decision of the source selection board would be made?

Mr. ANDERSON. I don't believe so. The criteria for most of these major programs are developed over, as I understand it, a period of years by the agency and these same criteria are available to all people that are bidding in the program.

Senator PROXMIRE. Now if adversary relationships are strict, is the entertainment an effort to bend it?

Mr. ANDERSON. No. As a matter of fact, I think, in general, the contractual people have not been involved in any of the entertainment which seems to concern this committee to a large extent. There may have been lunches or occasional hospitality suites, but I doubt if it's gone beyond that.

Senator PROXMIRE. Did any DOD or NASA officials ever express to company officials an expectation that they would receive invitations to hunting lodges, skiing trips, football games, or any other form of entertainment?

Mr. ANDERSON. I have never heard anything like that. I have never heard that they expected anything; no, sir.

Senator PROXMIRE. I'd like to get a clear picture of the type of expenses your company normally paid for guests at hunting lodges. Did you pay transportation to and from the Washington area for any guests coming from outside the area?

Mr. ANDERSON. Our people were coming in by company plane from outside the area and I'm just—this is my opinion because I don't know of any occasions, but if there was space on the plane and they were going to go hunting from Detroit or someplace else and this space was available, I assume we would have offered them

a ride.

Senator PROXMIRE. Are you saying in other cases you wouldn't do it? You wouldn't buy tickets on commercial planes or you do buy tickets on commercial planes ?

Mr. ANDERSON. To the best of my knowledge, we do not buy tickets on commercial planes.

Senator PROXMIRE. Do you provide any other transportation other than company planes ! Mr. ANDERSON. Not to my knowledge.

Senator PROXMIRE. But you have provided transportation by company plane for Government officials?

Mr. ANDERSON. Well, we provide transportation by company plane quite frequently in areas where it's vital to our business. For example, we maintain a shuttle company plane between our Los Angeles plants and the facilities in Palmdale where the space shuttle is

being assembled and the B-1 is assembled and the Edwards Air Force Base.

Senator PROXMIRE. We're talking now about entertainment.
Mr. ANDERSON. You asked if we provided transportation, and

we do.

Senator PROXMIRE. How about transportation to and from the hunting lodge ?

Mr. ANDERSON. I haven't been to the hunting lodge, but I understand it's a short drive from Washington and we may have taken them out in the car as far as I know. I would imagine that's true.

Senator PROXMIRE. Do you pay for lodging, meals, and liquor?

Mr. ANDERSON. We pay full expenses for our guests. Some of our guests have expressed a desire to pick up a portion of the expenses. When they do, we will oblige them, or they will pick up tips to the guides or hunting licenses—that sort of thing.

Senator PROXMIRE. Do you pay for hunting and guide service fees?

Mr. ANDERSON. Yes, sir.
Senator PROXMIRE. Bird cleaning and preparation services ?

Mr. ANDERSON. I'm not aware of that, but I would assume we do probably send them home with clean birds.

Senator PROXMIRE. Do you also provide such things as clothing?

Mr. ANDERSON. To the best of my knowledge, we provided no sclothing

Senator PROXMIRE. Guns?

Mr. ANDERSON. If they didn't have a gun we might have loaned them a gun while they were there.

Senator PROXMIRE. How about loans or gifts!
Mr. ANDERSON. No loans or gifts that I'm aware of.
Senator PROXMIRE. Ammunition?
Mr. ANDERSON. Ammunition, yes.
Senator PROXMIRE. Was there any provision for guests to repay

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the company if they felt they should ?

Mr. ANDERSON. Yes. I understand that some have suggested that they would like to pay and in that case a nominal charge has been made.

Senator PROXMIRE. A nominal charge? What does that mean? A full charge, not the full charge ?

Mr. ANDERSON. Well, I'm not really acquainted with the specifics of how much was charged, but I do know that some guests have asked if they could pay for their expenses and we have presented them with a bill.

Senator PROXMIRE. You said a nominal charge.

Mr. ANDERSON. Well, I don't know. I just have no idea. I can't-I will try to find out for you, sir, but I don't know what.

Senator PROXMIRE. If a guest did offer to reimburse the company, was he discouraged by corporate officials?

Mr. "ANDERSON. I don't believe so. I think if they felt that they'd like to pay, I think we accepted it.

Senator PROXMIRE. Did any invitee ever refuse the invitation to go hunting on the grounds that it would be improper to accept such an invitation ?

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Mr. ANDERSON. Not to my knowledge.

Senator PROXMIRE. Did you order your employees not to discuss business with their guests while they were at the hunting lodge?

Mr. ANDERSON. No. We made no admonitions that they could not discuss the things of interest to them and their guests with regard to a program.

Senator PROXMIRE. Now I have gone through the costs. Did you make it a policy from the top that the Government would not be billed for any direct or indirect costs associated with the entertainment of hunting lodges, including the costs of facilities, supplies or the salaries of officials responsible for arranging for such entertainment?

Mr. ANDERSON. That is our company policy; yes, sir; and it's not only company policy; it's a policy of the Government.

Senator PROXMIRE. It's a policy of the Government?

Mr. ANDERSON. That entertainment expenses are not chargeable to Government contracts.

Senator PROXMIRE. I'm talking about charging it to the Government in any sense. Is there documentation of such a policy and would you supply it for the record ?

Mr. ANDERSON. We will supply it. I assume—it's an assumption, but it's a stated policy of the various agencies and Defense Contract Audit Agency (DCAA) and we will provide you with our correspondence on it.

Senator PROXMIRE. When did the DOD first contact you to ask for a list of guests at Wye Island ? Mr. ANDERSON. Several months ago. I can get the letter. Senator PROXMIRE. How did you answer this request ?

Mr. ANDERSON. We answered—I think the request was worded, do we have a facility there and would we provide the names of the DOD guests during a specified period. We answered it by saying we have a facility and that we do not have a list of the guests.

Senator PROXMIRE. Yet when NASA contacted you, you did provide a number of names of NASA officials who had been guests at Wve Island ?

Mr. ANDERSON. That's right.

Senator PROXMIRE. That seems to be a difference in treatment. Could you just not remember any DOD guests or did NASA push a little harder to get the names?

Mr. ANDERSON. NASA came back and said: Would you make an effort to see if you could determine the people from NASA that were entertained? We have not heard back from DOD since our letter.

Senator PROXMIRE. DOD did not come back. NASA came back and asked for the names and DOD did not? Is that right?

Mr. ANDERSON. Yes, sir. [Additional information submitted by Mr. Anderson follows:]

This supplement is submitted to help clarify what requests were received concerning Wye Island guests.

DOD's letter in June 1975 requested that the Company provide the names of DOD guests at Wye Island during the preceding three hunting seasons (1972–73, 1973–74 and 1974–75). No Company records could be found identifying any DOD guests during those seasons.

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NASA's request, several months later, was not limited to any time period or periods. It was then found that records showing names of guests for earlier hunting seasons were available, and the names of those with NASA were provided it. NASA subsequently also requested that we try to determine names of NASA personnel who were guests at Wye Island during the 197278, 1973–74 and 1974–75 hunting seasons by interviewing some of our own people. This was done, and as a result we were able to provide NASA with some further names.

Senator PROXMIRE. Did DOD ever ask for names of any other guests at any other corporate facilities or was their request limited to Wye Island ?

Mr. ANDERSON. I believe it was limited to Wye Island.

Senator PROXMIRE. Please provide for the record copies of all
correspondence between your company and either NASA or the
DOD pertaining to their followup investigations of entertainment.
Will you do that?

Mr. ANDERSON. Yes, sir.
[Correspondence submitted by Mr. Anderson follows:]
The only such correspondence was a letter dated June 26, 1975, from Martin R.
Hoffman to William L. Clark and Mr. Clark's reply dated July 11, 1975.
GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE,

Washington, D.C., June 26, 1975.
Mr. WILLIAM L. CLARK,
North American Rockwell Corp.,
Washington, D.O.

DEAR MR. CLARK: The attention of the Department of Defense has recently been invited to allegations that certain officers and employees of the Department have accepted hospitality at the Eastern Shore shooting preserves controlled by a Defense Department contractor. A list of names is currently under review.

Department of Defense regulations, contained in DoD Directive 5500.7, provides that Department of Defense personnel may not accept any gift, gratuity, favor, entertainment, loan, or any other thing of monetary value, either directly or indirectly from any person, firm, corporation, or any other entity which is engaged or is endeavoring to engage in procurement activites or business or financial transactions of any sort with any agency of the Department of Defense.

It has been suggested that North American Rockwell Corporation also may have maintained a shooting preserve in the area. If so, it will be appreciated if you could provide me with the names of Department of Defense personnel, if any, who have been guests at such a facility over the past three seasons-Fall of 1972 into 1973. Fall of 1973 into 1974, and the Fall of 1974 into 1975. Please provide also an indication of the circumstances under which this entertainment was provided and an estimate of the approximate value accorded the Department of Defense employee by a visit to such a facility. Thank you for your cooperation. Sincerely yours,

MARTIN R. HOFFMANN.

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ROCKWELL INTERNATIONAL,

Washington, D.C., July 11, 1975.
Hon. MARTIN R. HOFFMAN,
General Counsel,
Department of Defense,
Washington, D.C.

DEAR MR. HOFFMAN: This is in reply to your letter of June 26, 1975.

Rockwell International (formerly North American Rockwell Corporation) has had, under a lease arrangement, a shooting facility on the Eastern Shore. Although it was not the primary purpose of the facility, on occasion Department of Defense personnel were invited during the seasons referred to in your letter.

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