CONTENTS Letter of transmittal_. REPORT OF THE SUBCOMMITTEE 1974 efforts to preserve CONDOR in the Defense budget_--_. CONDOR action memorandum, October-November 1975-- DoD general counsel memorandum of March 16, 1976_. Secretary of Defense letter of March 16, 1976__ Deputy Secretary of Defense memorandum of January 15, 1975. Statement by Deputy Secretary of Defense William P. Clements, Jr., before the National Security Industrial Association, October 9, 1975 DoD directive 5000.26 (Defense Systems Acquisition Review Council)_ DoD directive 5000.1 (acquisition of major Defense systems) ___ Deputy Secretary of Defense memorandum of May 17, 1976 (subject: (V) I. INTRODUCTION BACKGROUND OF INQUIRY In March 1976, Secretary of Defense Donald Rumsfeld reprimanded Dr. Malcolm Currie, Director of Defense Research and Engineering, for violation of the Department of Defense Directive 5500.7 relating to standards of conduct as a result of a visit Dr. Currie made to a residence owned by a defense contractor, Rockwell International, at Bimini in the Bahamas, over Labor Day weekend in 1975. (See Appendix 1) In a letter to Dr. Currie dated March 16th, however, Secretary Rumsfeld stated, "I understand that there is no evidence of any improper influence as a result of your activities on the weekend in question." (See Appendix 2) Subsequently, allegations wer were made that Dr. Currie had compromised the integrity of his position and that a conflict of interest situation did exist in consequence of his participation in the production decision on the Navy's CONDOR air-to-surface missile system following his visit at Bimini with Mr. Robert N. Anderson, President and Chief Executive Officer of Rockwell International, the prime contractor on the CONDOR system. Later, in a letter to Senator Thomas Eagleton addressing these allegations, Secretary Rumsfeld wrote: Dr. Currie was, in fact, the architect of On April 6, 1976, in remarks on the floor of the Senate, Senator Eagleton cited the allegations and requested Senator William Proxmire, Vice Chairman of the Joint Committee on Defense Production and Chairman of its Subcommittee on Investigations, to examine the allegations to determine whether a conflict of interest was involved. Senator Proxmire responded that an inquiry seemed warranted and that, if undertaken, it would be "conducted in a highly professional, unbiased manner." A week later, Senator Proxmire directed the Joint Committee staff to initiate the inquiry and expressed his intention that it should be a "thorough, fair, and impartial review of the matter." (1) CONFLICT OF INTEREST A conflict of interest arises when a government employee is placed in a position where he must balance his official government duties with his outside interests. In a 1960 study which is still the landmark for interpretation of conflict of interest principles, the Association of the Bar of the City of New York stated: The government contracting officer who accepts money from a contractor in exchange for granting him a contract puts himself in an extreme position of conflict between his official duty and personal economic interest. [But] we have a specialized name for this offense, and...it is beyond the scope of this book. This offense is bribery... It assumes a quid pro quo; the official is to do something in his official character in return for the payment. But now assume that the same contracting officer simply receives a large gift from the contractor. There is no agreement or discussion about any contract, and the officer in fact does not give the contract to the donor. If this act is to be forbidden, it cannot be on a theory of theft or bribery. It must be on the theory that the conflict of interest set up by the gift is likely to lead to a warping of the official's judgment, or is likely to create the appearance of improper influence. If the official were not an official, the gift would be unexceptionable under federal law. The wrong arises entirely out of the undesirably inconsistent position of the official, first in his relationship to the outside party, and second in his relationship to his federal employer. The offense is an offense arising out of special status. The whole is greater than the sum of the parts: a subjectively innocent official performing an innocent act can combine to constitute an offense against conflict of interest principles. Regulation of conflicts of interest is regulation of evil before the event; it is regulation against potential harm. These regulations are in essence derived, or secondary one remove away from the ultimate misconduct feared. The bribe is forbidden because it subverts the official's judgment; the gift is forbidden because it may have this effect, and because it looks to others as though it does have this effect. This potential or projective quality of conflict of interest rules is peculiar and important. We are not accustomed to dealing with law of this kind. It is as Perhaps most importantly, the Bar Association found that: of conflicts of interest seeks to prevent situations of The Bar Association gave an example of what it meant by this: An Internal Revenue agent auditing his own Conflict of interest law, as opposed to conflict of interest principles, has concentrated on three substantive limitations on persons currently employed by the federal government: assisting outsiders in dealings with the government, self-dealing, and compensation by outsiders for government service. In addition, there is a wide body of agency regulations which specify minimum standards of conduct expected of all agency employees. In regard to employees of the Department of Defense, regulations require adherence to the highest standards of ethical conduct and prohibit preferential treatment for any person or behavior which might result in the appearance of losing complete impartiality of independence. (See Appendix 4 ) This report considers whether there have been any activities that might create such an appearance. |