Mr. COOKE. Mr. Chairman, I would suggest this is not limited only to the Department of Defense or, for that matter, to only the executive branch of the Government; beside the need for expertise is a two-way street.

We need people who are experienced in industry; we actively seek to recruit them for some of our senior positions. It would be, I think, damaging overall if—unless it were properly channeled-to lose the expertise both ways. But we need to do a good job. Senator COHEN. I don't disagree with that, certainly.

Members of Congress are not immune from leaving public service and taking up jobs in the private sector at double, triple, or quadruple the financial rewards of public service. It's a well-known fact in this town as well. The real challenge is how do you balance that? How do you structure something that is reasonably fair so you can reassure people that the public interest is being served without having that individual making decisions which really benefit him and the individual contract? That's what we've got to do. Is there any concern on your part about the Justice Department's interpretation of the lack of the need to file confidential disclosures?

Mr. COOKE. I can assure you that our requirement for filing our confidential disclosures is alive and well, and we are still requiring our employees below the level that have to file public disclosures to file the confidential disclosure form.

Senator COHEN. So what we've got is a great anomaly in our system where the chief law enforcement agency in the country has advocated the discontinuation of financial disclosure and other agencies who are subject to the law are trying to comply with it. Mr. COOKE. Mr. Chairman, that opinion of legal counsel in Justice was rendered to Mr. Martin, and we have received no direction from Mr. Martin to cease the confidential disclosure that we are requiring under the Department of Defense directive in implementation of the Executive order.

Senator COHEN. It's every agency on its own, then.

Well, thank you very much. You've all been very helpful. [Mr. Tucker's prepared statement follows:]

PREPARED STATEMENT OF ALVIN TUCKER

Mr. Chairman and members of the Committee, I am pleased to testify today on the work the Inspector General, Department of Defense has done on the ethics program in the Department of Defense. My statement will cover our audit Report No. 85-058, "Procedures and Controls for Filing Financial Disclosure Statements," December 24, 1984. I will also describe the work we did for Senator Percy on the implementation of post employment conflict of interest provisions of 18 U.S.C. 207 and related DoD regulations governing employment of former DoD personnel.

AUDIT REPORT

My organization, the Office of the Assistant Inspector General for Auditing, audited the procedures and controls for filing financial disclosure statements within the Department of Defense to determine whether DoD Agencies, Departments, and activities were complying with the financial disclosure provisions of the Ethics in Government Act, and with Departmental guidance on this same subject. Specifically, the audit focused on whether adequate Defense-wide guidance had been issued to ensure consistent implementation; whether procedures and controls had been established to ensure the timely and complete filing of financial disclosure statements; and whether management controls had been developed to preclude potential or apparent conflicts of interest.

The Ethics in Government Act of 1978 requires systematic reviews of the financial interests of current and prospective Government employees. The purpose of these reviews is to determine the ability of Government employees to perform their duties without compromising the public trust. Within the Department, the General Counsel, DoD, is the focal point for administering the Act. In this regard, the General Counsel had prepared and issued DoD Directive 5500.7, "Standards of Conduct," January 15, 1977, that incorporated policies, procedures and responsibilities within DoD for receiving and filing financial disclosure statements of DoD employees. In part, the directive states that the following personnel are required to submit an initial and annual "Confidential Statement of Affiliations and Financial Interests" (DD Form 1555) unless expressly exempted:

A. All civilian DoD personnel paid at a rate

equal to or in excess of the minimum rate prescribed for employees holding the grade of GS-16, including the Executive Schedule.

B. Officers of flag or general rank.

C. Commanders and Deputy Commanders of major

installations, activities, and operations, as determined by

the heads of the DoD components.

D. Board members of the Armed Service Board

of Contract Appeals.

E. DoD personnel classified at GS-13 or

above, or at a comparable pay level under other authority,
and members of the military in the rank of Lieutenant
Colonel, Commander, or above, when the responsibilities of
such personnel require the exercise of judgment in making a
Government decision or in taking Government action in regard
to activities in which the final decision or action may have
a significant economic impact on the interests of any
non-Federal entity.

F. Special Government employees.

G. Other DoD personnel who are required, with

Civil Service Commission approval, to file such Statements.

The directive also assigns Standards of Conduct Counselors (ethics counselors) at DoD's Agencies, Departments and activities the responsibility for reviewing these financial disclosure statements. The requirements to file a disclosure statement must be incorporated into the employee's position description. In addition, all position descriptions must be reviewed at least annually to identify those positions that require statements. When a disclosure statement is required, both an initial and an annual statement must be submitted. The ethics counselor should

review initial disclosure statements prior to commencement of employee service.

During 1983, about 36,000 DoD civilians and military personnel filed financial disclosure statements. Our audit was

made at 22 locations within the DoD and included a review of requirements for the statements of 1,256 personnel assigned to procurement and project management office positions in FY 1983. We also reviewed position descriptions of personnel who had not filed statements and who were also assigned to such functions. While we did not find any conflicts of interest, our audit disclosed weaknesses in internal controls over the above cited

requirements.

We concluded that the administration and control of financial disclosure statements by DoD components did not always ensure that the required statements were completed, reviewed or monitored in accordance with financial disclosure regulations. In the main, these problems were related to disclosure statements filed on DD Form 1555 by employees in the grades GS-13 to GS-15. We found few problems with statements filed on Standard Form 278 by senior executives and appointed officials within the Department. We found that sufficient controls were not in effect to identify all personnel who should have been required to file annual financial disclosure statements. At 15 of the 22 locations we visited, we reviewed position descriptions of

nonfiling personnel working in procurement and project management