Consultant to one of the prime contractors who furnished prefabricated portable buildings, N. P. Ward steel (angle frame), tropical, according to War Department Technical Manual TM5-9611. Developed packaging for all prime contractors.

Designed and tested manually operated winches of 2-, 4-, and 6-ton capacities for the Corps of Engineers.

Designed, detailed, and supervised erection and tests in field of 20- by 48-foot prefabricated Army barracks, insulated, for Corps of Engineers.

Designed and developed a series of industrial standard buildings of the rigid frame type, with clear spans from 20 to 120 foot, in 10-foot increments, varying in height, for several roof and wind loads, to conform with building codes anywhere in the United States. This was for Luria Engineering Co., an organization operating nationally and internationally, which has sold these structures throughout the world.

Designed, detailed, inspected fabrication and wrote erection manual for 23- by 45-foot all-aluminum buildings (125), for the Ministry of Aeronautics, Argentine, South America.

Peter A. Strobel and Joseph Salzman were members of the John W. Harris Associates Committee reporting to the Atomic Energy Commission on economy in planning and construction of new Atomic Energy Commission projects (1951). The CHAIRMAN. Mr. Moody, would you step forward, please? Mr. KEATING. May I inquire of the chairman at this point: Are you going to put in the Comptroller's report?

Mr. ROBB. Mr. Chairman, we still have the two witnesses I spoke of. The CHAIRMAN. Yes. Mr. Moody's testimony will only take a very short time.

Mr. ROBB. Yes.

The CHAIRMAN. The Chair addressed a communication to the Comptroller General of the United States sometime in September. I have sent for the original communication which I sent to the Comptroller, but I will read first the answer I received, in the interests of saving time:

Hon. EMANUEL CELLER,

Chairman, Committee on the Judiciary,

House of Representatives.

SEPTEMBER 27, 1955.

DEAR MR. CHAIRMAN: Reference is made to your letter of September 19, 1955, acknowledged September 20, requesting our opinion as to the propriety, from a public policy standpoint, of certain activities and interests of a Government official.

You state that the official involved is the sole owner of a private engineering firm

At the time I wrote that communication, parenthetically I state, I was under the impression that Mr. Strobel was the sole owner of Strobel & Salzman. Since writing the letter, we have information to the contrary, and that he is not the sole owner, but is owner in part with Mr. Salzman.

You state that the official involved is the sole owner of a private engineering firm which has or had two contracts with an agency of the Government other than the one which employs the owner. One contract apparently had been completed prior to the owner's employment by the Government, but claims against the Government for additional compensation under the contract were still pending and the owner after becoming a Government employee has had a number of meetings with the Government contracting officers for the purpose of pressing these claims. The other contract was signed by the firm in question about 1 month after the owner's Government employment began, although negotiations by the owner to secure the contract had begun over a year before. The owner did not directly supervise work under this contract, but he did receive the firm's profits therefrom.

As you state in your letter, there is no general statutory prohibition which prevents officers or employees in the executive branch from contracting directly 69220-55-16

with the Government in matters entirely separate from their official duties. (See 14 Ops. Atty. Gen. 482; 24 id. 557. Cf. Ingalls v. Perkins (1928), 33 N. M. 269, 263 Pac. 761.)

Those are citations of cases which I cited.

Regardless of statute, however, contracts between the Government and its employees have been considered subject to criticism from a public policy standpoint on grounds of possible favoritism and preferential treatment, and for this reason the General Accounting Office has often expressed the view that such contracts should not be made except for cogent reasons (5 Comp. Gen. 93; 14 id. 403; 21 id. 705; 25 id. 690; 27 id. 735).

In the present case, 1 of the 2 contracts had been executed and the other had been under negotiation for a year, prior to employment of the firm's owner by the Government. These facts appear sufficient to dispel any inference of favoritism or preferential treatment in the award of the contracts. Consequently, on the basis of the facts outlined in your letter, we do not believe the activities of the Government official here in question can be said to be illegal as contrary to public policy.

There are, of course, a number of prohibitory statutes dealing with Government officials and Government contracts which are designed to prevent influence peddling and conflicts between the self-interest of the employee and the interests of the Government. Section 99, title 5, of the United States Code prohibits employees of the Government from acting as agents for or aiding in the prosecution of claims against the Government. Sections 281 and 283, title 18, United States Code, also prohibits such activities under penalty of fine and imprisonment. These statutes, however, are directed against influence peddling or the improper use of knowledge gained in an official capacity. They do not prohibit dealings between the Government and its employees as principals in their own behalf, provided, of course, there is no conflict of interest between the employee's position as contractor and his official position. Section 434, title 18, United States Code, prohibits any Government official or employee from transacting business in his official capacity with any firm if he has a direct or indirect interest in the firm or its contracts. The facts presented here do not indicate that there was any violation of these statutes.

That is not to say that activities of the character described are not subject to regulation or proscription by the department or agency by which the official involved is employed. The head of any executive department or agency within the Government has the power to prescribe such rules and regulations governing the conduct of private business affairs by his subordinates as he may determine (40 Ops. Atty. Gen. 187). Since the employing agency is not identified in your letter of Septeber 19, 1955, our answer to your inquiry is without regard to any departmental regulations which may be applicable to the matter.

Sincerely yours,

(Signed) FRANK H. WEITZEL, Acting Comptroller General of the United States. Mr. KEATING. Now, have you got your letter of inquiry? The CHAIRMAN. My letter of inquiry is as follows:

Mr. FRANK H. WEITZEL,

Assistant Comptroller General of the United States, General Accounting Office, Washington 25, D. C. (Attention: Mr. Owen Kane.)

SEPTEMBER 19, 1955.

DEAR MR. WEITZEL: The House Judiciary Antitrust Subcommittee understands that your Office has ruled in several cases that it is generally inappropriate as a matter of public policy for the Government to do business with its employees although there are no legal prohibitions specifically applicable. With these considerations in mind the attention of our subcommittee has been directed to the following situation:

A full-time Government official is the sole owner of a private engineering firm over which he has continued to exercise overall supervision and direction. About a year before assuming his Government position, this person started negotiating on behalf of his firm with a Government agency to perform engineering services on a construction project which that agency contemplated undertaking. This agency is not the one which employs this individual although both agencies are engaged in construction, procurement work.

The contract for engineering services was signed by the person's firm about 1 month after he became connected with the Government. Although this person did not directly supervise the engineering work on the Government contract, he did receive the firm's profits from the contract. Furthermore, while a Government official he has had a number of meetings with Government contracting officers for the purpose of obtaining additional compensation under a previous contract held by this firm with the same contracting agency.

I would appreciate very much receiving an opinion from you as to the propriety of these activities of the Government official involved from a public policy standpoint. It would be of considerable assistance to our subcommittee if your opinion could be furnished to us on or before Tuesday, September 27.

Sincerely yours,

EMANUEL CELLER, Chairman. Now, I want to repeat that whole suppositious case was predicated on the fact that the individual mentioned was the sole owner of the firm mentioned.

Mr. FINE. Just from the point of view of a law statement, Mr. Chairman, I do not think you draw a distinction between a partnership and a sole ownership as you might between a partnership or a sole ownership and a corporation. I think that the opinion will probably hold just as much if there were a partnership, but it probably would not hold if there were a corporation.

The CHAIMAN. I may respectfully differ with the gentleman, but these two communications will be placed in the record.

(The letters referred to are as follows:)

Hon. EMANUEL CELLER,

COMPTROLLER GENERAL OF THE UNITED STATES,
Washington 25, September 27, 1955.

Chairman, Committee on the Judiciary,

House of Representatives.

DEAR MR. CHAIRMAN: Reference is made to your letter of September 19, 1955, acknowledged September 20, requesting our opinion as to the propriety, from a public-policy standpoint, of certain activities and interests of a Government official.

You state that the official involved is the sole owner of a private engineering firm which has or had two contracts with an agency of the Government other than the one which employs the owner. One contract apparently had been completed prior to the owner's employment by the Government, but claims against the Government for additional compensation under the contract were still pending and the owner after becoming a Government employee has had a number of meetings with the Government contracting officers for the purpose of pressing these claims. The other contract was signed by the firm in question about 1 month after the owner's Government employment began, although negotiations by the owner to secure the contract had begun over a year before. The owner did not directly supervise work under this contract, but he did receive the firm's profits therefrom.

As you state in your letter, there is no general statutory prohibition which prevents officers or employees in the executive branch from contracting directly with the Government in matters entirely separate from their official duties. (See 14 Ops. Atty. Gen. 482; 24 id. 557. Cf. Ingalls v. Perkins (1928), 33 N. M. 269, 263 Pac. 761). Regardless of statute, however, contracts between the Government and its employees have been considered subject to criticism from a public policy standpoint on grounds of possible favoritism and preferential treatment, and for this reason the General Accounting Office has often expressed the view that such contracts should not be made except for cogent reasons (5 Comp. Gen. 93; 14 id. 403; 21 id. 705; 25 id. 690; 27 id. 735).

In the present case, one of the two contracts had been executed and the other had been under negotiation for a year prior to employment of the firm's owner by the Government. These facts appear sufficient to dispel any inference of favoritism or preferential treatment in the award of the contracts. Consequently, on the basis of the facts outlined in your letter, we do not believe the activities of the Government official here in question can be said to be illegal as contrary to public policy.

There are, of course, a number of prohibitory statutes dealing with Government officials and Government contracts which are designed to prevent influence peddling and conflicts between the self-interest of the employee and the interests of the Government. Section 99, title 5, of the United States Code prohibits employees of the Government from acting as agents for or aiding in the prosecution of claims against the Government. Sections 281 and 283, title 18, United States Code, also prohibits such activities under penalty of fine and imprisonment. These statutes, however, are directed against influence peddling or the improper use of knowledge gained in an official capacity. They do not prohibit dealings between the Government and its employees as principals in their own behalf, provided, of course, there is no conflict of interest between the employee's position as contractor and his official position. Section 434, title 18, United States Code, prohibits any Government official or employee from transacting business in his official capacity with any firm if he has a direct or indirect interest in the firm or its contracts. The facts presented here do not indicate that there was any violation of these statutes.

That is not to say that activities of the character described are not subject to regulation or proscription by the department or agency by which the official involved is employed. The head of any executive department or agency within the Government has the power to prescribe such rules and regulations governing the conduct of private business affairs by his subordinates as he may determine (40 Ops. Atty. Gen. 187). Since the employing agency is not identified in your letter of September 19, 1955, our answer to your inquiry is without regard to any departmental regulations which may be applicable to the matter.

Sincerely yours,

FRANK H. WEITZEL,

Acting Comptroller General of the United States.

SEPTEMBER 19, 1955..

Mr. FRANK H. WEITZEL,

Assistant Comptroller General of the United States,
General Accounting Office, Washington 25, D. C.
(Attention: Mr. Owen Kane.)

DEAR MR. WEITZEL: The House Judiciary Antitrust Subcommittee understands that your office has ruled in several cases that it is generally inappropriate as a matter of public policy for the Government to do business with its employees although there are no legal prohibitions specifically applicable. With these considerations in mind the attention of our subcommittee has been directed to the following situation:

A full-time Government official is the sole owner of a private engineering firm over which he has continued to exercise overall supervision and direction. About a year before assuming his Government position, this person started negotiating on behalf of his firm with a Government agency to perform engineering services. on a construction project which that agency contemplated undertaking. This agency is not the one which employs this individual although both agencies are engaged in construction, procurement work.

The contract for engineering services was signed by the person's firm about 1 month after he became connected with the Government. Although this person did not directly supervise the engineering work on the Government contract, he did receive the firm's profits from the contract. Furthermore, while a Government official he has had a number of meetings with Government contracting officers for the purpose of obtaining additional compensation under a previous contract held by this firm with the same contracting agency.

I would appreciate very much receiving an opinion from you as to the propriety of these activities of the Government official involved from a public policy standpoint. It would be of considerable assistance to our subcommittee if your opinion could be furnished to us on or before Tuesday, September 27.

Sincerely yours,

EMANUEL CELLER, Chairman.

The CHAIRMAN. Mr. Moody, will you raise your right hand, please? Do you solemnly swear to tell the truth, the whole truth and nothing but the truth, so help you God?

Mr. MOODY. I do.

TESTIMONY OF JOE E. MOODY, ASSISTANT GENERAL COUNSEL, GENERAL SERVICES ADMINISTRATION

The CHAIRMAN. Just state to the stenographer your name and your Government position.

Mr. MOODY. My name is Joe E. Moody. I am an Assistant General Counsel of General Services Administration.

Mr. MALETZ. Mr. Moody, you occupy a position with the Public Buildings Service?

Mr. MOODY. No, sir. I am an Assistant General Counsel of General Services Administration.

Mr. MALETZ. Are you assigned to

Mr. MOODY. I furnish legal services to the Public Buildings Service. Mr. MALETZ. Could your position be characterized as that of counsel to the Public Buildings Service?

Mr. MOODY. I think it could be, sir.

Mr. MALETZ. Now, Mr. Moody, there came a time, did there not, when Administrator Mansure instructed you to review the GSA Compliance file of Mr. Strobel together with his personnel file?

Mr. MOODY. Yes, sir.

Mr. MALETZ. And can you tell us approximately when you got this request?

Mr. MOODY. I got it on August 26, 1955.

Mr. MALETZ. Do you know the reason for this request?

Mr. MOODY. I was advised by the General Counsel and later by the Administrator that he had received information that there was to be some press publication regarding Mr. Strobel.

Mr. MALETZ. Did you carry out Mr. Mansure's instructions, and review the files in the Office of Compliance and in the Office of Management relating to Mr. Strobel?

Mr. MOODY. I did.

Mr. MALETZ. I show you a document dated December 20, 1954, and ask you if you can identify it?

Mr. MOODY. Yes, sir.

Mr. MALETZ. Would you tell us what that document is?

Mr. MOODY. It appears to me to be a copy of a memorandum contained in the Compliance Division files stating certain facts received by special agent from a representative of the Public Buildings Service. Mr. MALETZ. Did you see the original of that document in the Compliance files?

Mr. MOODY. I did, sir.

Mr. MALETZ. Would you read that memorandum?

Mr. MOODY. This is a memorandum addressed to Baron I. Shacklette, dated December 20, 1954.

Mr. KEATING. Addressed to whom?

Mr. MOODY. B. I. Shacklette-excuse me-Director of Compliance. Mr. KEATING. And signed by whom?

Mr. MOODY. Ralph Given, special agent. The subject is, "Standards of Conduct, Peter Strobel, Commissioner, PBS."

I will read the memo:

Mr. John E. Strawser, Administrative Officer, PBS, called the writer on the phone today and advised that Mr. Peter Strobel, Commissioner, PBS, had stated that he would not sign Standard Form 1179: Standards of Conduct.