TESTIMONY OF REP. BARBARA BOXER BEFORE THE ARMED SERVICE SUBCOMMITTEES ON SEAPOWER AND STRATEGIC AND CRITICAL MATERIALS AND INVESTIGATIONS HEARING ON POST-EMPLOYMENT CONFLICT OF INTEREST BY GOVERNMENT EMPLOYEES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M01152R000500610021-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 13
• Document Creation Date: December 22, 2016
• Document Release Date: February 24, 2010
• Sequence Number: 21
• Content Type: REPORT

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Testimony of Rep. Barbara Boxer before
the Armed Service Subcommitties on Seapower
and Strategic and Critical Materials and
Investigations Hearing on Post-Employment
Conflict of Interest by government employees
Mister Chairman,
I would like to thank you for offering me the
opportunity to testify today on the serious conflict of
interest problem known as the "revolving door."Simply
described "revolving door" is the practice of government
employees resigning and going to work for a government
contractor he or she directly supervised.
Before World War II, most of our country's military
equipment was produced at government facilities or
armories. When this proved insufficient, private peacetime
industries were adapted for military production. After
World War II, the United States decided to maintain a
defense/industrial base which, in the event of war or
imminent danger, could rapidly escalate military
production. This led to a policy which has insulated the
defense industries from normal impacts of the private
sector free-market industries.
In the free market, most buyer-seller relationships
are, in a sense, adversarial. The seller tries to get the
highest price for his goods, and the buyer tries to obtain
these goods at the lowest possible price. After World War2
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the Department of Defense-the single largest purchaser of
goods and services in the world-and the private
corporations that supply it, developed a relationship of
interdependance. DOD relies on a small number of giant
contractors most of whom contract primarily with the
Pentagon in many cases. The lack of true competition has
led to a sacrifice of efficiency and abuse. "Revolving
door" has occured primarily because of this blurring
between buyer and seller.
Since 1969, when legislation, sponsored by Sen.
Proxmire first required former Department of Defense
personnel to identify their new corporate employers, the
numbers of former Pentagon officials hired by defense
contractors has risen. Between 1969-1973, 1406 DOD
officials and military personnel left the government and
over 2000 retired high ranking officers went to work for
went to work in the defense industry. From 1980-1983,
defense contractors. As the "revolving door" phenomenon
has become more widespread, with the interests of the
Department of Defense and the private corporations
merging, the taxpayer has lost out. Taxpayers have lost
the watchdogging they deserve over qovernment contracts.
The "revolving door" is a classic example of a
conflict of interest situation. The New York City Bar
Association defined conflict of interest for government
officials as, "...anytime when the interests of the
government official (and of the public) in the proper
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administration of his office and the interests in his own
private economic affairs clash." When people who make
decisions affecting the flow of billions of dollars in
public funds are, at the same time, affecting their
personal economic future, a conflict of interest exists.
In all the testimony that this committee will hear
today concerning the "revolving door", one thing is clear;
the integrity of individual procurement officials is not
the issue in this legislation. What is important is that
we change the institutional system which has weakened the
ability to watchdog for the public.
Those who argue against legislation to close the
"revolving door" often cite the fact that formal job
negotiations between a contractor and a federal employee
are forbidden by the rules contained in the "Standards of
Conduct" for government employees. However, during
recent hearings in the Energy and Commerce Committee, it
was discovered that the Chairman of the Board of General
Dynamics, David Lewis, had offered future employment to an
assistant Navy Secretary. At the time, the Secretary was
overseeing General Dynamic's shipbuilding contracts for
the Navy. Within months of these conversations, he left
the Navy and took a job with General Dynamics as a vice
president and director of the company and this is not
unusual
In most cases a conflict of interest may exist even
without a formal job offer from the contractor under
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supervision. The simple knowledge that a contractor can
hire a government employee at a job that pays more than he
gets now, sets up the potential conflict which all too
often becomes real. On the other hand, if an employee
knows that the contractors they deal with cannot offer
them jobs, no matter what policy decisions they make, the
conflict is eliminated and the taxpayers are protected.
Existing law in this area is ineffective. Military
personnel are prohibited from selling to any DOD agency
for 3 years after their retirement and supposedly
prohibited from selling to their former service for life.
In 1978, Congress passed the Ethics In Government Act
(18/USC/207), which was intended to reform and strengthen
conflict of interest rules by prohibiting retired
government employees form personally representing a
contractor before their former agency for 1 year. The
"selling" provisions for former military personnel, the
Proxmire reporting regulations, and the limits established
in the Ethics in Government Act are the only laws
affecting post-employment activities for government
officials.
None of these post-employment restrictions have done
much to close the revolving door. The "selling"
prohibitions are ineffective for three reasons: They are
easy to circumvent, difficult to interpret or enforce and
don't really address the revolving door problem. Most of
the positions that are offered to former military officc
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are such that they may never have to formally appear
before any agency or actively sell to their former
service. Moreover, these provisions are so narrowly
drawn, and open to such wide interpretation, that in
1979,the General Accounting office issued a report citing
at least 19 clear cut violations of the selling provisions
and the Justice Department declined to pursue them.
Finally, the selling provisions have little to do with the
central problem of the "revolving door", since the
prospect of a future job and continued economic stability
is enough to create an environment in which some officials
could be tempted or corrupted.
One of the most frequent comments made about the
"revolving door"and the influence of defense contractors
on the procurement process is that these are not real
problems, but rather problems of public perception. There
is a perception problem created by the "revolving door"
that persuades the American people that the procurement
system is corrupt and that contractors have too much
influence. However, this perception has its roots in
reality. "Revolving door" corrupts the procurement
system.
In October 1982, the Office of Governement Ethics
visited Kirtland Air Force Base in Albuquerque, New
Mexico, to review their ethics program. During the course
of an interview with Col. Jack Finder, a member of the
staff Judge Advocate's office, Col. Finder stated,
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"...the head of the Air Force Plant representative's
Office at Northrup on Friday could become the Northrup
Vice President for Ouality Assurance on Monday and
immediately AFPRO employee morale is destroyed. AFPRO
employees must deal with their former employee daily on
many matters and feel betrayed that the contractor now has
all the inside knowledge of how the AFPRO operates." Col.
Finder continued by saying, "one of the major problems
that he is faced with is post-employment practices of
government personnel. The Ethics in Government Act does
not deter the types of post-employment problems typical of
the Department of Defense." He also commented that
"...Employees openly discuss what the former employee has
done over the past few years for the contractor in order
to obtain the new job, and wonder why they themselves
should be so ethical."
,Col. finder is not the only military official to call
attention to the problem of the "revolving door." In
1982, Capt. Jeffery Rohm, a member of the staff judge
Advocate's office at the Pratt & Whitney Jet Engine Plant
in West Palm Reach, Florida filed a formal suggesiton with
the Air Force to the effect that key Air Force personnel
with cognizance over a contractor should be barred from
employment with that contractor for 2 years, after their
government service terminates, from employment with that
contractor. Capt. Rohm stated that "...key government
employees and military members, in sensitive positions
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in relation to DOD contractors, often go right to work for
a contractor over which they had cognizance in their
government capacity. Recent history is replete with
instances of Air Force Plant representatives going
directly to work for the contractor over which they had
contract administration cognizance." The Captain
concludes by saying, "It is incongruous to disallow Air
Force Plant Representative Office employees from having
free donuts at a contractor conference because of
influence and appearances, yet to allow an Air Force Plant
Representative to take a job with a contractor over which
he has just had administrative cognizance."
The federal government procures goods and services
worth hundreds of billions of dollars each year. We now
have, for the first time, evidence to show that the
"revolving door" practice causes government employees to
question their own ethics. Col. Finder's remarks suggest
a tension-filled work atmosphere with goverment employees
questioning their own and other employee's motives. It
is reasonable to assume that experience has taught them
that the way to get a lucrative job is to go along with
the contractor's wishes. Capt. Rohm's statement suggests
a ,direct path that employees can take from government
service to contractor employment. He also exposes a
system of rules which are more concerned with donuts than
with post-government employment and is not very effective
in either situation.
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To pass legislation outlawing revolving door is a
positive step that frees the employees from unnecessary
pressure and allows them to do their jobs without having
to face conflicts every time they turn around.
Post-employment restrictions have often been interpreted
to have a negative effect on government workers. I
believe that just the opposite is true. If we pass
thoughtful legislation that is focused and enforceable, we
will ease the pressure on government workers and lift
morale.
Now that I have outlined the problem let me propose a
solution. I have introduced legislation, HR 1201, that
has strong bi-partisan support, and is designed to close
the "revolving door." This legislation currently has 42
cosponsors including Reps. Porter, Ridge, Kolbe as well as
Reps. Levine, Bedell, Owens and Mitchell. It has been'
introduced in the Senate by Sens. Pryor, Grassley, Harkin,
Gore and Simon.
HR 1201 is unique. My bill simply says that any
contractor that does business with the government agrees
not to hire former government employees or retired
military officers who had direct contact with that
contractor. The prohibition would be for five years. A
number of attempts have been made to place restrictions or
criminal sanctions on employees. This approach has many
problems and has not generated the support needed for
passage.
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I have exchanged communication with the Inspector
General of the Department of Defense on this subject. His
comments confirm how difficult criminal sanctions are to
enforce. He wrote,"...the record shows that the use of
criminal statutes is not appropriate for solving most
post-employment conflict of interest problems...a total of-
one conviction of a DOD employee has been obtained under
the post-employment provisons of the Ethics in Government
Act. It is our general opinion that such cases do not
often receive serious consideration by Federal
prosecutors."
HR 1201 places no restrictions or sanctions on
government employees. Rather, the burden of this
legislation falls on the contractors who I believe are the
source of the conflict of interest. My bill would require
all contractors who do government work to agree not to=
hire any former government employee who had direct,
substantive contact with them. If there is a.violation of
the statute, financial sanction's would be imposed on the
contractor not the employee. The remedies in this bill
are civil rather than criminal. Damages to be collected
would be contract damages, which would be collected by
existing mechanisms. This bill creates no new bureacracy
or paper work.
?HR 1201 is drawn with a very narrow focus. It only
applies to government employees who have had "significant"
responsibilities for a government procurement function
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with specific contractors. It is aimed only at those who
make significant decisions about a contract or weapons
system's performance and sign off on contract provisions.
HR 1201 is also unique in another way: it requires
all government contractors to issue a disclosure statement
identifying any former government employee, or retired or
separated military officer, hired within the last five
years. They must also identify the responsibililties of
the employee in their former government job and in their
company.
This provision is vital to closing the "revolving
door." We know about the "revolving door" in the
Department of Defense only because of the Proxmire
reporting requirement. There is no such requirement for
any other agency of the federal government. This
disclosure provision would bring the light of day to all
government agencies and would enable Congress to find out
how much influence contractors have throughout the
government.
HR 1201 is enforceable. In a letter to me, the
Inspector General of the Department of Defense, Joseph
Sherick, stated that this bill"...treats conflict of
interest issue as a contractual matter and applies the
contractual remedy of liquidated damages. In my opinion,
this approach is more likely to be effective in
discouraging switching sides since it hits the contractor
where it hurts--his pocketbook. This can be far more
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effective weapon than the criminal sanctions in current
law which are rarely employed."
Some critics of "revolving door" legislation suggest
that this type of bill could discourage people in the
private sector from moving into government, making
top-level government positions harder to fill.
Nothing could be farther from the truth. There are
approximately 600 major contractors and over 150,000
subcontractors in the Department of Defense alone and any
one of those excluding the one the employee supervised,
could hire a former officer or employee. If military
officers have developed skills and expertise in the
aerospace industry while supervising a contract on the
B-1 bomber for Rockwell, these officers could not be hired
by Rockwell. However, Boeing, MacDonald Douglas,
Lockheed, General Dynamics, United Technologies or any
other company would be perfectly free to offer them a job.
The Chief Executive Officer of Martin Marietta,
Thomas Pownell stated in testimony in March of this year
before a Senate Armed Services subcommittee that, "The
person that we are seeking has infinite opportunity. He
or she can go to work for a wide range of companies across
the whole country, not only in defense but in a lot of
places. They are very talented people. They are not
desparate for jobs."
Preventing specific contractors from hiring specific
individuals is neither unreasonable nor draconian.
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It is eminently fair. What would not be fair would be to
continue a practice which allows employees to come into
government, develop skills and expertise and then use
their position to find themselves lucrative jobs with a
minimum of inconvienience. It is not fair to the American
taxpayers who must subsidize inept management, lax
oversight, production delays or slippage and procurement
errors, all of which have direct connections to the
revolving door problem.
This legislative approach has been criticized by the
Department of Defense for a' presumed negative impact on
low level government employees. Not only does HR 1201
leave low-level employees alone, it has been endorsed by
the American Federation of Government Employees, the
International Association' of Machinists and Aerospace
Workers, and the Federal Managers Association, the very-
unions that represent the workers DOD refers to. These
''unions believe the revolving door practice is bad for
their employees and for the nation. Their endorsement is
a clear signal that this legislation is acceptable and
workable and I would like to thank them for their support
and encouragement.
The time has come to restore an arms-length distance
between government and government contractors. The ease
with which the "revolving door" operates has created an
incestuous situation in which the line between buyer and
seller has been blurred. We do not have the right,nor is
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it necessary or acceptable, to try and ban government
employees from working in the private sector. That is
unreasonable and is not my intent. But we do have the
right and the obligation to excersize constitutionally
mandated oversight and correct possible abuses of
taxpayers money whereever possible.
My legislation is narrow in its scope and strikes a
middle ground on this issue. It is not an outright.ban
nor is it simply an amplification of existing
non-effective reporting requirements. It is enforceable
and its approach enjoys bi-partisan support.
I thank both committee chairmen, my colleagues
Congressman Nichols and Congressman Bennett for their
interest and concern in this matter. I am sure that by
the end of this hearing you will be as convinced as I am
that this is a problem that can be solved in a manner that
is fair to all concerned.
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