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DEFENSE PROCUREMENT CONFLICT OF

INTEREST ACT

WEDNESDAY, JANUARY 29, 1986

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON ADMINISTRATIVE LAW AND

GOVERNMENTAL RELATIONS,
COMMITTEE ON THE JUDICIARY,

Washington, DC. The subcommittee met, pursuant to call, in room 2237, Rayburn House Office Building, Hon. Dan Glickman (chairman of the subcommittee) presiding.

Present: Representatives Glickman and Brown.

Staff present: William P. Shattuck, chief counsel; Janet Potts, counsel; Florence McGrady, legal assistant; and Kevin C. Richardson, associate counsel.

Mr. GLICKMAN. Mr. Bennett is coming, he was right behind me so we will go ahead and start. I apologize for the slight delay. We had a Democratic Caucus this morning talking about the effect of Gramm-Rudman on the budgets of Members of Congress. [Laughter.]

I have an opening statement which I would like to read.

Today the subcommittee is holding the first of two hearings on H.R. 2554, the Defense Procurement Conflict of Interest Act.

Over the last several years there has been a growing feeling that this country is faced with serious corruption in the procurement process of the Department of Defense.

This concern about corruption has intensified under the tremendous defense buildup that has taken place since 1981, during which billions of dollars have been poured into both old and new weapons development and purchases. In fact, the Department of Defense now accounts for 75 percent of all Government purchases of goods and services.

At the same time, this defense buildup has been taking place, there have been several highly publicized incidents where Federal officers and employees have left Government service to take jobswith the very contractors they had supervised immediately before leaving the Government.

These incidents, the so-called revolving door, have raised questions about whether these Government employees used their offices while still in the Government to favor their future employers.

At the very least, it has been charged, these incidents have created the appearance of a conflict of interest, even if they did not result in actual conflicts.

(1)

The issue of ethics in Government is a difficult one to address through statutory mandates. It requires an emphasis on preventing both the existence and appearance of conflicts of interest. At the same time, however, Government efforts to reduce real and potential conflict of interest must be tempered and balanced by the need to attract skilled, qualified individuals to Government service, both at the career level and at the level of political and short-term appointees.

Because of the need to achieve balance between these interests, it is particularly important that any statutory solutions be based solidly on evidence that there is a very real problem that will be remedied by the specific solution that is proposed.

The bill before the subcommittee today, H.R. 2554, has already been favorably reported by the Armed Services Committee. This bill prohibits a DOD employee with significant procurement responsibilities as to a contractor from going to work for that contractor for 2 years after leaving the Government.

The bill imposes criminal and civil penalties, as well as contract lamages, or any violations of this prohibition. In addition, this bill requires such personnel to report any contact made at any time by a contractor regarding future employment.

In the hearings on this bill, the Judiciary Committee will examine the current postemployment conflict of interest laws, of which there are several. We will do this in order to determine whether these laws are sufficient to address any conflict of interest problem that exists and in order to determine whether these laws are adequately enforced by the appropriate executive branch personnel.

We will also examine whether evidence supports the conclusion that any changes need to be made in these laws. Finally, if such changes need to be made, we will look at precisely how such changes should be drafted.

Now I call on Mr. Brown for any statement he may wish to make.

[The bill, H.R. 2554, follows:)

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May 21, 1985
Mr. BENNETT (for himself, Mr. NICHOLS, Mrs. BOXER, Mr. WHITLEY, Mr.

COUGHLIN, Mr. GIBBONS, Mr. PANETTA, Mr. FRANK, Mr. MINETA, Mr.
DORGAN of North Dakota, Mr. LEVINE of California, Mr. GEJDENSON, Ms.
SNOWE, Mr. PORTER, Mr. DENNY SMITH, Mr. FAUNTROY, Mr. BEILENSON,
Mr. HUGHES, Mr. KOLTER, Mr. TORRICELLI, Mr. EDGAR, Mr. COELHO,
Mr. MITCHELL, Mr. JACOBS, Ms. KAPTUR, Mr. Solomon, Mr. BOUCHER,
Mr. STOKES, Mr. EVANS of Ilinois, Mrs. BURTON of California, Mr.
Bevill, Mr. AuCoin, Mr. DOWNEY of New York, Mr. Weiss, Mr. STARK,
and Mr. Vento) introduced the following bill; which was referred to the
Committee on Armed Services

NOVEMBER 21, 1985
Additional sponsors: Mr. COURTER, Mr. HERTEL of Michigan, Mr. EDWARDS of

California, Mr. Russo, Mr. WOLPE, Mr. FEIGHAN, Mr. HARTNETT, Mr.
SABO, Mr. TALLON, Mr. KRAMER, Mr. DELLUMS, Mr. NEAL, Mr. BORSKI,
Mr. VALENTINE, and Mr. BOEHLERT

NOVEMBER 21, 1985 Reported with an amendment, and referred to the Committee on the Judiciary

and the Committee on Post Office and Civil Service for a period ending not
later than March 15, 1986, for consideration of such provisions of the bill
and amendment as fall within the jurisdictions of those committees pursuant
to clause 1 (m) and (o), rule X, respectively, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic)
(For the text of introduced bill, see copy of bill as introduced on May 21, 1985)

2

A BILL
To limit conflicts of interest in defense procurement.

1

Be it enacted by the Senate and House of Representa

2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the Defense Procurement 5 Conflict of Interest Act.

6 SEC. 2. CONFLICT-OF-INTEREST IN DEFENSE PROCUREMENT.

7

(a) LIMITATIONS ON ACCEPTANCE OF COMPENSA

8 tion.—(1) An individual who is a former officer or employee 9 of the Department of Defense or a former or retired member 10 of the Armed Forces who during the two-year period preced11 ing the individual's separation from service in the Depart12 ment of Defense had significant responsibilities for a pro13 curement function with respect to a contractor while serving 14 in a position identified by the Secretary of Defense under

15 subsection (g)(1) may not accept compensation from that con16 tractor for a period of two years following the individual's 17 separation from service in the Department of Defense if that 18 contractor is included in the notice provided that individual

19 under subsection (d).

20 (2) Whoever knowingly violates paragraph (1) shall be 21 fined not more than $10,000 or imprisoned for not more than

22 one year, or both.

HR 2554 RH

3

1 (3) An individual who knowingly offers or provides any 2 compensation to an individual the acceptance of which is or 3 would be in violation of paragraph (1) shall be fined not more

4 than $10,000 or imprisoned for not more than one year, or

5 both.

6

(6) LIMITATIONS ON CONTRACTORS.-(1) Each con

7 tract for procurement of goods or services entered into by the

8 Department of Defense shall include a provision under which 9 the contractor agrees not to provide compensation to an indi10 vidual if the acceptance of such compensation by such indi

11 vidual would violate subsection (a)(1).

12

(2) Such a contract shall also provide that if the con

13 tractor knowingly violates a contract provision required by

14 paragraph (1) the contractor shall pay to the United States,

15 as liquidated damages under the contract, an amount equal to 16 the greater of

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18

(B) three times the compensation paid by the con

19

tractor to the individual in violation of such contract

20

provision.
(c) REPORTING OF EMPLOYMENT CONTACTS.-(1) If

21

22 an officer or employee of the Department of Defense, or a

23 member of the Armed Forces, having responsibilities for a

24 procurement function with respect to a contractor contacts, or

25 is contacted by, the contractor regarding future compensation

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