Mr. GLICKMAN. I think, at least at this stage, your position on the bill is that it is not needed?

Mr. MARTIN. I think that we need to look at how the new reporting requirements under the Defense Authorization Act are going to work and how, you know, this new prohibition that they have, which accomplishes some of the things that this legislation seeks to do, I think we ought to look and see how that does. We are going to watch that closely. We are going to be working, of course, closely with the Department of Defense on it.

Mr. GLICKMAN. Do you view yourself-well, let me ask you. How do you view yourself in terms of being an ethics advocate in government? I almost get the sense that you feel that your office is an informational place and a clearinghouse. But how about a little more of an advocate as well, pushing and prodding? Do you view yourself as that?

Mr. MARTIN. Oh, yes. You look at our Ethics Newsgram. I give about 30 or 40 speeches a year. I will go to Wright-Patterson or I will go to-we are in every region of the country and every agency we visit. We visit and audit and talk to every agency of the Federal Government once every 3 years. And I am trying to even reduce that. We have followups after an audit. We have a 6-month followup. We do a tremendous amount. Thousands of people have gone through our training program. In one defense installation, 900 people we trained at one sitting this year, in 1985. So, we do a tremendous amount of advocacy work.

I send a letter to every Presidential appointee advising him of his responsibility now that he is in the Government, that he is not in private practice anymore, that there are standards of conduct, that there are conflicts of interest. That goes to every Presidential appointee when they are confirmed. I send a letter to the head of every agency annually, telling them of the programs that we can do for them, the training that we can conduct. We are now engaged in a tremendous effort with the Department of Defense based on my offers to do that.

So, I am in touch literally with every general counsel or every ethics official in the executive branch at least quarterly, if not through my newsletter, through training programs and through speeches that I give.

I have been a vigorous proponent of raising the level of awareness not only in the Federal Government, the executive branch, but also in the private sector. I have spoken to private corporations. I have encouraged corporations to establish their own standards of conduct when they are dealing with the Federal Government.

I have been an advocate. But if you look at what my authority is in the ethics act, you will see that I do not have authority to take over an ethics program. I do not have authority to-I mean, I can order corrective

Mr. GLICKMAN. Who are you responsible to in the Government? Mr. MARTIN. That is an interesting question. My budget and my personnel matters are channeled through the Office of Personnel Management. But literally the director, both Director Devine and now Director Horner, have only asked me to keep them advised of

what I am up to, which I think is proper. It is rather an independent office.

Mr. GLICKMAN. Do you have a term, your office?

Mr. MARTIN. I do not have a term, but the director, anyone confirmed after me now, or if I seek this office again, would have a term of 5 years.

Mr. GLICKMAN. Does your term run contemporaneously with-Mr. MARTIN. I serve at the pleasure of the President. While I was in office the act was amended to give the director a 5-year term. Mr. GLICKMAN. What is your background?

Mr. MARTIN. I am a lawyer by training. I was a prosecutor at the Department of Justice for 4 years, chief counsel at the Secret Service for another 3 years, in private practice here in Washington, DC, for 5 years in both civil and criminal litigation, and now in

Mr. GLICKMAN. OK.

Mr. MARTIN. So, I have pretty good experience. And I worked up here for a while, too, as a legislative assistant. So, I have a good feel for Government. I think I know what is going on in the ethics area. I understand how Government works.

I understand your concerns. I say to you that I think it is good that someone-that we should undertake a study to see if there is some reality to the appearance that I know exists and you know exists. But I do not think we should enact laws that will do more damage than perhaps good.

Mr. GLICKMAN. Well, that is our function in this committee, to exercise responsible judgment, and we are going to try to do that. Thank you for testifying. We will probably be seeing you again. Mr. MARTIN. It is my pleasure, Mr. Chairman.

Mr. GLICKMAN. Our next witness is Ann McBride, with Common Cause.

It is a pleasure to have you here today. You may feel free to summarize because your entire statement will be in the record.

TESTIMONY OF ANN MCBRIDE, SENIOR VICE PRESIDENT,
COMMON CAUSE

Ms. MCBRIDE. Thank you very much, Mr. Chairman. I really appreciate the opportunity to testify here today and really appreciate what this committee is doing in looking into this very serious problem of revolving door and conflict of interest in government.

The revolving door problem is well documented by recent news accounts, government studies, and by the voices of people within the defense community, those within the Department of Defense who are increasingly concerned about this problem.

The results of the revolving door problem are three-fold. First, Pentagon employees may not be as tough as they should be in supervising contractors' performance. In other words, future employment may depend on accommodating contractors rather than challenging them. One Air Force contracting officer-and again its important to note this is an Air Force contracting officer-described it this way. He said:

The process begins at least 2 or 3 years prior to separation from government service and the manager becomes increasingly soft on the contractor. He must do things which his future employers like and prove his worthiness for his new job.

Consciously or unconsciously, the thought of future security begins to affect him. He begins to think more about his future employer than his current one.

The second problem is that public confidence in the integrity of Government is threatened. I think we see that. I know I travel around the country, and people are very concerned about defense procurement practices, about this revoloving door problem and about conflict of interest.

Finally, I know there has been a lot of discussion in this committee about the Government employees themselves. The third problem with the revolving door is that the morale of Pentagon employees is dampened when they see former colleagues take jobs with the contractors whose work they oversaw or whose product they purchased while serving in Government.

I have to say I am frankly puzzled by Mr. Martin's testimony in which he says he has no evidence that there is a problem, because I cite in my testimony on page 5 a report to the Office of Government Ethics which Mr. Martin directs in which Air Force Contractor Management Division, Col. Jack Finder outlines the seriousness. of the problem. He told OGE that the "large turnover"-and those are Col. Finder's words-the "large turnover" of Air Force personnel who work as plant representatives for the military service and then join the company they supervised "is devastating to the ethics program because of the appearance of conflict of interest alone.' Colonel Finder goes on to say what this large turnover does to Government morale. He says, "after a former Government employee has switched over, employees openly discuss what the former employee has done over the past few years for the contractor to obtain the new job and wonder why they should be so ethical." This is a devastating impact on our system.

I would like to take just a quick moment to give you a real-life experience which I read about recently in the St. Louis Post-Dispatch. I would like to submit the entire article for the record. It is a story about a man named Col. Howard Bodenhamer. He is like many people in this country. You might say on one hand he was just doing his job, but on the other hand he is a real American hero. He was the Air Force plant representative at General Dynamics in Fort Worth. He blew the whistle on those outrageous cost overruns. He is the person who showed that items we were paying for to the tune of $9,000 to $11,000 actually MDNM should have cost the government $2 to $150.

Colonel Bodenhamer goes on in this article to talk about the impact of the revolving door on the whole system that he was working in. Colonel Bodenhamer said when he got into that job, his predecessor as Air Force Plant Representative had gone to work for General Dynamics immediately after leving Government and that it took him 11⁄2 years to get the confidence of his employees, for them to believe he was not going to do the same thing. Let me quote the newspaper.

He (Col. Bodenhamer) said that as a result of the suspicion, some of his staff might have been reluctant to call problems to his attention.

And these are Colonel Bodenhamer's words:

If you think there is an old-boy system, you are not going to go out and risk your career or job. You are just going to avoid the issue. It doees not mean you are dishonest. You just do not cause trouble where it does not need to be caused.

And he concludes with this. He says:

You wear the rank of colonel or commander, and literally the next day you are working for the same contractor at the same plant. And the American people are expected to believe that we are not all in the same bed together?

There can be no direct statistical correlation between overpricing and revolving door. But I really submit that anybody in this country who is concerned about a strong and effective defense has got to be concerned about this revolving door problem.

Mr. Chairman, I can go into this in some detail later if you would like. But simply put, I believe that the existing statutues, sections 208 and 207, of title 18 are inadequate to deal with the problem. There have been-and this is clear-very few prosecutions under either of those laws.

Here I have to again question Mr. Martin's statements. He says that there is lots of monitoring of compliance with revoloving door restrictions by ethics officers'. We did a study in 1984 which we called Bureaucratic Orphans. It was about the ethics program in government. We interviewed these ethics officers. While they all— and I would be pleased to share that report with the committeeMr. GLICKMAN. Yes, why don't you?

[The information follows:]

[The following material was submitted to the subcommittee by Ann McBride, senior vice president, of Common Cause, for inclusion in the record.]

Case History:
Spare Parts
Costs And
The F-16

1983: Col. Howard Lee Bodenhamer, Air Force's plant rep at a General Dynamics plant, complained about the cost of spare parts for the F-16.

The costs were: $8,832 for a pulley-puller; $14,835 for two alignment pins; $9,609 for an Allen wrench.

The costs were resolved as follows:

Air Force bought the drawings for the alignment pins for $44, made two of them for $45.

General Dynamics lowered the price on the pulley-puller to $370 and gave the Air Force a refund of $8,462.

Air Force bought the drawings for the Allen wrench for $44 and made the wrench for $105.

Limp Red Flag

Watchdog's Bark Fails To Rouse Air Force

When Bodenhamer saw the list, in 1983, he was a colonel heading the Air Force's plant representative office at the General Dynamics plant in Fort Worth, Texas. The prices had been drawn up by General Dynamics and the Westinghouse Corp. for parts used to repair the F-16 Falcon fighter.

"I would say," Bodenhamer remarked in a recent interview, "that it was probably one of the more flagrant instances of overpricing I had seen."

What happened next, as pieced together by federal investigators, shows how things go wrong even when the prime watchdog. the plant representative, barks.

On April 22, 1983, Bodenhamer wrote a pungent letter to General Dynamics. He said the single-piece items on the list, priced at $9,000 to $11,000, should cost somewhere between $2 and $150.

The more complicated assemblles, priced from $13,000 to $28,000, should cost from $200 to $500, his letter said.

AS THE STORY was later pieced together by the General Accounting Office, the investigative arm of Congress, here's what happened next:

General Dynamics told Westinghouse its subcontractor to reduce the prices. Westinghouse told General Dynamics to change its specifications. The Defense Contract Audit Agency suggested a total price reduction of 11 percent.

Bodenhamer passed his concern on to the head of the Falcon program at Wright-Patterson Air Force Base in Ohio. But Budenhamer was due for retirement in June, and he left the Air Force.

In November 1983, congressional Investigators started making noises. Some of the prices were brought down. Four items were broken out and made by the Air Force itself

for a fraction of the asking price.

But in the end, the GAO found, 24 parts were either overpriced, unnecessary, or both. In some cases, Westinghouse already was using similar or identical tools to repair the Falcon. New parts simply weren't needed.

The Air Force had labeled the parts as urgently required; hence it wound up negotiating the price after the products were already being manufactured.

EVENTUALLY, the Air Force bought the drawings for the alignment plns for $44 and made two of them for $45. General Dynamics lowered the price on the pulley-puller to $370 and gave the Air Force a refund of $8,462.

On the famous $9,609 Allen wrench, the Air Force bought the drawings for $44 and made the wrench for $105.

"Why the F-16 procurement officials did not follow (Bodenhamer's) recommendations is not clear," the GAO said in a report to Congress ast September, "but the fact that substantial costs had been incurred by the contractor apparently was an overriding reason."

The case shows that even the most conscientious plant representatives can be overridden by contractors on the one side and, on the other, program managers with a damn-the-torpedoes Impulse to stamp ev.erything "urgent."

Rep. Gerry Sikorski, D-Minn., said the GAO's study showed "how two glant defense contractors defrauded the taxpayers - and how negligent Air Force personnel helped them do it."

THE COMPANIES denied wrongdoing, as did the Air Force higher-ups. Brig. Gen. Ronald W. Yates, who defended the purchases at a congressional hearing in September, was recently promoted to major general.

Bodenhamer now works for a real estate firm in Louisiana; he speaks wryly of his efforts to save the taxpayers some money.j "You kind of felt like the little Dutch boy with his finger in the dike," Bodenhamer said in a telephone Interview.

Theoretically, a plant representative can withhold "progress payments" from a contractor until the contractor shapes up. In reality, Bodenhamer said, a plant represen

tative needs approval from higher up for al! except small amounts.

"We couldn't even withhold enough to f their attention," he said.

He said he tried to get the U.S. attorney in Fort Worth to investigate what looked like a rip-off. The U.S. attorney wasn't interested.

He also spoke of the arrogance of contrac tor executives - although he praised the Falcon as a top-notch fighter.

"I once had a vice president of Genera! Dynamics tell me it didn't make a dators bit of difference what I said that I we'd probably go away in a year or two," Fodenhamer recalled.

BEYOND THAT, the company can pay higher salaries than the government. Hence, the company has an incentive to buy away crack engineers or auditors for salaries $15,00 or $20,000 a year above government scale.

Bodenhamer called the decision of his predecessor, Dorsey J. Talley, to jump ship and become an executive at General Dyn mics particularly disturbing.

"It took me at least a year and a la overcome the suspicion that I was goeg is do the same damned thing." Bodenhame said. "I think it had a major Impact o morale."

He said that as a result of that suspicion. some of his staff might have been reluctant to call problems to his attention.

"If you think there's an old-boy system, you're not going to go out and risk your career or job," he observed. "You're just going to avoid the issue. It doesn't mean you're dishonest. You just don't cause trou ble where it doesn't need to be caused."

FOR HIS PART, Talley notes that he fr lowed existing law to the letter.

"One reason General Dynamics hired was that I was a strong manager," Talley said. "The other was that I had integrity. I' actually saving the government more not right now than when I was on the govern ment side."

Bodenhamer sees it differently:

"You wear the rank of colonel or cormander, and literally the next day, you're working for the same contractor at the same plant and they expect the American people to believe that we're not all in the same bed together?"