CONTENTS Page I. Background of the WOC program_ II. Functions and operations of the Business and Defense Services III. Policies applicable to WOC's in the Business and Defense Services WOC's and applications for tax-amortization certificates-a study in industrial discrimination_ VI. Business and Defense Services Administration advisory groups. BDSA advisory group regulations. Eligibility of trade association executives and officials. VII. Cooperation of the Department of Commerce with the subcom- Table III. Statutes other than the Defense Production Act which V INTERIM REPORT ON WOC'S AND GOVERNMENT ADVISORY GROUPS Introduction There is always present in the Federal Government, because of its size and complexity, the problem of undue influence exercised by groups or individual factions from strategic vantage points within the various departments or agencies. Such abuse of official office is, of course, more likely in the absence of adequate vigilance by responsible executive officials or of adequate legislative restrictions. A potential instance of such abuse of governmental operations occurs when there are employed for temporary periods, without compensation, representatives from business and industry or other segments of the economy. The danger of such abuse is increased because the Government relies upon this type of service primarily at a time when it is preoccupied with problems attending a war or other emergency. Utilization of such representatives brings into the Government special business and industrial knowledge and technology not generally available otherwise. Formerly known as dollar-a-year men, currently known as WOC's or without compensation personnel, the greater majority of these representatives continue to be paid regular salaries by their private employers during their governmental tour of duty. The dangers to be avoided in utilization of men with economic allegiance outside the Government are obvious. Officials with divided loyalties are in a position to influence improperly or unduly the operating policies of a governmental agency in a manner favorable to their particular company or the segment of industry to which they belong. The official positions which they hold, ones of public trust, can be used as springboards within Government for the furtherance of private interests. Impropriety need not result from deliberate intentions or bad faith but, more likely, could result from an individual's orientation as a career member of the business or industrial world. The problem is one of impartiality and objectivity as well as favoritism, bias, or outright corruption. Problems attending the use of unpaid personnel are also present in the utilization by the Government of experts and consultants on a temporary or intermittent basis. These persons may be compensated by the Government when actually employed (hence the designation WAE) or they may serve without compensation. In either case, during the course of their employment, experts and consultants continue. to receive income from other sources. The inherent problem of dual loyalty is the same as in the case of WOC's. Further, experts may, under current regulations, be appointed to full-time operating positions in the Government for temporary periods not exceeding 1 year. Statutory and administrative policies applicable to experts and consultants, while generally less stringent, in many respects are comparable to those applicable to WOC's. 1 It is appropriate to note at the outset that congressional interest in this problem of dual allegiance is not new. The use of dollar-ayear men in World War I was subject to frequent discussion and criticism. In World War II, the Truman investigating committee held hearings on the use of businessmen in Federal war agencies and concluded that dollar-a-year men were "persons with axes to grind" and "lobbyists." This subcommittee in the 82d Congress recommended that the use of WOC's in the Korean emergency be kept to a minimum. Recent congressional attention to the problem occurred with the legislative consideration of the 1955 Amendments to the Defense Production Act of 1950. In view of the need for continued utilization by the Government of unpaid personnel during a cold war of indefinite duration the subcommittee undertook an extensive investigation and study to evaluate the adequacy and effectiveness of statutory and administrative safeguards in the light of actual agency operations. Statutory and regulatory requirements are the fundamentals for WOC safeguards. Policies and practices of the agencies utilizing WOC's, however, are in the final analysis crucial. Therefore, the effectiveness and consequences of utilization of WOC's, authorized and proscribed by statute, must be judged on the basis of administration in the agency. The investigation has been limited for the most part to the years. from 1951 to date. It has included not only the without compensation employees but also advisory groups used by the Government. A wide variety of advisory groups consisting of unpaid experts and consultants is utilized by Federal agencies for the purpose of obtaining specialized advice in almost every significant aspect of economic activity. Advisory groups range from small task groups organized to consider a single specialized problem to the wide ranging, elite Business Advisory Council for the Department of Commerce.1 A program of investigation and study of the utilization of WOC's was started, accordingly, early in the first session. Initially, questionnaires were sent to every Government agency requesting relevant information concerning WOC's, WAE's, and advisory groups. Additional documentary information was obtained from the files of several agencies including the Department of Defense, the Department of Justice, the Office of Defense Mobilization, and the Tariff Commission. In some instances the staff assisted these agencies in the selection of needed material by examining the agencies' files. During the investigation, information and data also were obtained from such nongovernmental sources as trade associations and private corporations. A number of industry trade associations were contacted and conferences were had with their officials to ascertain relationships between trade association activities and Government programs administered by WOC's. Some 40 major corporations representing many different industrial activities were contacted by staff attorneys and conferences were held with their officials to ascertain the problems and practices of private employers in respect to WOC's. Corporate files pertaining to WOC's from approximately half of these corpora 1 A separate interim report has been prepared on the Business Advisory Council; Interim Report on the Business Advisory Council for the Department of Commerce, Antitrust Subcommittee, Committee on the Judiciary, House of Representatives, 84th Cong., 1st sess. tions were examined by the subcommittee staff for the purpose of determining the degree and nature of nongovernmental activities of WOC's while in Government service. Officials of nongovernmental organizations contacted during the investigation almost without exception were fully cooperative with the subcommittee. The assistance rendered to the subcommittee by these private organizations has been of the utmost value in our study. Hearings were held on July 25, 26, 27, and 29; August 4, 5, and 10; October 25; November 2, 3, 4; and December 7, 8, and 9, 1955. Particular attention was directed toward the Business and Defense Services Administration (herafter referred to as BDSA) of the Department of Commerce. BDSA is a primary action agency discharging the residual defense and mobilization functions authorized by the Defense Production Act. As such, it has made extensive use of WOC's in the administration of its programs. Moreover, statements of responsible Department of Commerce officials indicated that organizational arrangements involving the use of WOC's and advisory groups had been instituted in BDSA in order to combine a new business service function with the agency's defense responsibilities. These unique organizational devices indicated misuse of WOC's by BDSA and departures from the policies established by Congress and the executive branch. This interim report is confined to an examination into the practices of BDSA and its predecessor NPA in the use of WOC's and advisory groups. It should be noted that the statute authorizing the employment of WOC's in BDSA, the Defense Production Act of 1950, was amended in August 1955 while the subcommittee study was in progress. The effect of the amendments, in substance, was to incorporate into the act the administrative policies and standards governing WOC's previously established by the President by Executive orders. The particular effects of the amendments on the use of WOC's employed under the authority of the act will be discussed herein. It is emphasized that the subcommittee at no time has questioned the desirability of employing the highly skilled abilities of industry men on a voluntary, without compensation, basis. The Government would be guilty of neglecting an important resource were it to ignore the readily available talents of unselfish and patriotic citizens of outstanding experience willing to make substantial personal sacrifices for the benefit of the Nation's welfare. Chairman Celler, emphasizing the subcommittee's attitude in this respect in his opening statement, said: the skill of trained men in industry may be of inestimable value to the Government in carrying out its proper and legitimate functions, whether in peacetime or at war. The use of WOC's is an issue transcending political considerations. WOC's were employed on a large scale by the Democratic administrations in World War II. WOC's also have been in constant use since the Korean emergency. Standards must be established and adhered to by all administrations. It is the standards, their sufficiency, and their implementation, in both this and previous administrations. in which the subcommittee is interested. |