f S. Hrg. 98-899
ROLE OF WHISTLEBLOWERS IN ADMINISTRATIVE
PROCEEDINGS
HEARING
BEFORE THE
SUBCOMMITTEE ON
ADMINISTRATIVE PRACTICE AND PROCEDUEE
OF THE
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
NINETY-EIGHTH CONGRESS
FIRST SESSION
ON
EXAMINING THE ROLE OF WHISTLEBLOWERS IN THE ADMINISTRATIVE
PROCESS
NOVEMBER 14, 1983
Serial No. J-98-83
Printed for the use of the Committee on the Judiciary
BosSn; t^lA 02117 J^
U.S. GOVERNMENT PRINTING OFFICE
33-732 O WASHINGTON : 1984
(] ' ;-[-, .J OM- — •■■ J .- ^ ' SHRO. 98-899
ROLE OF WHISTLEBLOWERS IN ADMINISTRATIVE
PROCEEDINGS
HEARING
BEFORE THE
SUBCOMMITTEE ON
ADMINISTRATIVE PRACTICE AND PROCEDURE
OF THE
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
NINETY-EIGHTH CONGRESS
FIRST SESSION
ON
EXAMINING THE ROLE OF WHISTLEBLOWERS IN THE ADMINISTRATIVE
PROCESS
NOVEMBER 14, 1983
Serial No. J-98-83
Printed for the use of the Committee on the Judiciary
1,
U.S. GOVERNMENT PRINTING OFFICE
33-732 O WASHINGTON : 1984
COMMITTEE ON THE JUDICIARY
STROM THURMOND, South Carolina, Chairman
CHARLES McC. MATHIAS, Jr., Maryland JOSEPH R. BIDEN, Jr., Delaware "h
PAUL LAX ALT, Nevada EDWARD M. KENNEDY, Massachusetts •''
ORRIN G. HATCH, Utah ROBERT C. BYRD, West Virginia
ROBERT DOLE, Kansas HOWARD M. METZENBAUM, Ohio
ALAN K. SIMPSON, Wyoming DENNIS DeCONCINL Arizona
JOHN P. EAST, North Carolina PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa MAX BAUCUS, Montana
JEREMIAH DENTON, Alabama HOWELL HEFLIN, Alabama ^
ARLEN SPECTER, Pennsylvania ->
Vinton DeVane Lide, Chief Counsel and Staff Director ^
Deborah K. Owen, General Counsel ^
■ T Shirley J. Fanning, Chief Clerk
Mark H. Gitenstein, Minority Chief Counsel
Subcommittee on Administrative Practice and Procedure
CHARLES E. GRASSLEY, Iowa, Chairman
PAUL LAXALT, Nevada HOWELL HEFLIN, Alabama
ARLEN SPECTER, Pennsylvania MAX BAUCUS, Montana
Lynda L. Nersesian, Chief Counsel and Staff Director
Alice R. Milder, General Counsel
(ID
-jf'
y^f.jr
^^"i ^c:zjii
CONTENTS
STATEMENTS
Page
Grassley, Senator Charles E. (opening) 1
Heflin, Senator Howell 2
CHRONOLOGICAL LIST OF WITNESSES
Spanton, George R., resident auditor, Defense Contract Audit Agency, Pratt &
Whitney Aircraft Group, Department of Defense, West Palm Beach, FL;
and David O. Cooke, Deputy Assistant Secretary, Administration, Depart-
ment of Defense 3
Fitzgerald, A. Ernest, Management Systems Deputy, Office of the Assistant
Secretary for Financial Management, U.S. Air Force 126
O'Connor, K. William, Office of the Special Counsel, U.S. Merit Systems
Protection Board 151
ALPHABETICAL LIST AND SUBMITTED MATERIAL
Cooke, David O.:
Testimony 16
Principles of Civilian Personnel Program, AF Regulation 40-101 20
Memorandums for:
Secretaries of the Military Departments, Chairman of the Joint
Chiefs of Staff, Under Secretaries of Defense, Assistant Secretaries
of Defense, General Counsel, Assistants to the Secretary of De-
fense, Directors of the defense agencies 22, 82
All Department of Defense personnel 23, 83
Department of Defense directive, No. 7050.1, May 14, 1982, with enclo-
sures 24
Department of Navy adverse actions 38
Appendix A: Guidance in effecting disciplinary actions 50
Appendix B: Guideline schedule of disciplinary offenses and recom-
mended remedies for civilian employees in the Department of the
Navy (greater or lesser remedies may be assessed depending upon
OPNAV Instruction 12000.14 change transrnittais''""r.I" 72
Department of Defense directive, policy for civilian personnel 79
Listing: Monetary awards granted to DOD military and civilian personnel
for achieving cost reduction in defense operations 89
Fitzgerald, A. Ernest:
Testimony 126
Code of ethics for Government service 129
Amendment [I] of U.S. Constitution 130
Excerpts, from Federal Register 131
Memo, with attached memorandum, from Barry Shillito, to Secretary of
Defense, David Packard, October 7, 1970 141
Grassley, Senator Charles E., article, " 'Whistleblowers' Hard to Sort Out," by
Tom Diaz, from Washington Times, November 1, 1983 157
O'Connor, K. William: Testimony 151
Spanton, George R.:
Testimony 3
Chronology of events 10
Article, "Pratt & Whitney's Final Offer: More, Not Less for Employees,"
from the Sunday Republican, November 28, 1982 100
(III)
IV
Page
Spanton, George R. — Continued
Memorandum: Unreasonable labor costs, with exhibits 101
Table: Example — Contractor proposed — audit recommended — DOD negoti-
ated salary labor rates 103
Excerpts from the Bulletin, Defense Contract Audit Agency, March 1982.. 105
Audit report on evaluation of proposed 1982-84 forward pricing direct
labor rates 108
ROLE OF WHISTLEBLOWERS IN
ADMINISTRATIVE PROCEEDINGS
MONDAY, NOVEMBER 14, 1983
U.S. Senate,
Subcommittee on Administrative Practice
AND Procedure,
Committee on the Judiciary,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:02 a.m., in room
SD-226, Dirksen Senate Office Building, Hon. Charles E. Grassley
(chairman of the subcommittee) presiding.
Also present: Senator Heflin.
Staff present: Lynda Nersesian, chief counsel and staff director;
Edwin A. Buckham and Veronica N. Gonzales, professional staff;
Arthur B. Briskman, minority chief counsel. Subcommittee on Ad-
ministrative Practice and Procedure; and Kris Kolesnik, legislative
assistant to Senator Grassley.
OPENING STATEMENT OF SENATOR CHARLES E. GRASSLEY
Senator Grassley. I would like to call this hearing of the Sub-
committee on Administrative Practice and Procedure to order.
Our hearing today examines the role of whistleblowers in the ad-
ministrative process. There is no area of government of more fun-
damental importance than the process of administering govern-
ment. The goals of Federal service must be supported. We must
reward those who do well and punish those who are deviant. Con-
gress has determined that one's Federal service must be guided by
the code of ethics for Government service.
Is the administrative process of our Government driven by the
code of ethics, and is it serving useful goals, or is the process at
variance with the code and supportive of nonuseful service?
Today, we take a brief look at whether Federal employees in the
administrative context who speak out against waste and misman-
agement are adequately protected. We examine a particular in-
stance to see where it falls in this framework; to see if the code of
ethics is being pursued in this instance; to see if there is a break-
down in the process. Law unsupported by ethics can be the tool of
unscrupulous people, and high-minded ethical codes unsupported
by well-thought-out laws is a prescription for administrative disas-
ter.
This particular instance examined today is not an isolated case.
There are precedents. We will hear later in this hearing from one
who has experienced this kind of situation first hand. It is there-
CD
fore useful to examine broader applications of this problem of so-
called whistleblowing. It is unreasonable to assume that how the
system functions in this particular case is somehow unique, since
there is precedence. And in a hypothetical way, there are implica-
tions for others, given the system as it now operates.
Although there is only 1 day of hearings scheduled for this issue
of whistleblowers in the administrative process it is not to be a
flash in the pan. This topic will continue to occupy the attention of
this subcommittee as we, in our areas of responsibility, try to come
to grips with a challenge — a challenge confronted by all free people
in their act of self-government.
I welcome to our subcommittee this morning Mr. George Span-
ton, the resident auditor of the defense contract audit agency's
Pratt & Whitney Plant in West Palm Beach, Fla.; Mr. David
Cooke, Deputy Assistant Secretary for Administration in the De-
partment of Defense; Mr. Ernest Fitzgerald, Management Systems
Deputy in the U.S. Air Force, and Mr. William O'Connor, Special
Counsel for the U.S. Merit Systems Protection Board.
Before I call the first panel, I want to now turn to opening re-
marks by my friend and colleague, the ranking minority member
of this subcommittee. Senator Heflin from the State of Alabama,
and I want to say to everybody here how helpful and considerate
Senator Heflin has been, not only in this particular instance that
we are investigating here, but throughout the 12 months that he
and I have had an opportunity to work together in our respective
capacities on this subcommittee.
I thank you very much, and particularly thank you for taking
time out of your busy schedule to come to this meeting. Senator
Heflin.
STATEMENT OF SENATOR HOWELL HEFLIN
Senator Heflin. Well, thank you, Mr. Chairman.
Today, we hear the testimony relative to whistleblowers. And I
suppose that term, whistleblowers, is a catchy phrase, but it is cer-
tainly something that is needed: civil servants who disclose wrong-
doing or mismanagement in Government agencies. I commend Sen-
ator Grassley for holding hearings on this important and very
timely subject.
Senator Grassley has been the most active chairman of the Sub-
committee on Administrative Practice and Procedure since I have
been in the Senate, and has done a remarkable job dealing with
matters like regulatory reform, legislative veto, and other matters
that are very important today, but I believe this issue of whistle-
blowers especially has a great deal of merit and has a great deal of
potential.
It is my hope that these hearings will reveal whether there is a
problem with current whistleblower protections, and if so, what
can be done to correct that problem. According to a U.S. Merit Sys-
tems Protection Board survey, nearly half the Federal employees
surveyed said they had seen waste or fraud in their agency during
the past year. Government employees also reported seeing more se-
rious crime, such as embezzlement. Less serious, but more common-
ly reported, and often ongoing instances of ineptitude and misman-
agement have also been reported. We have found that this wastes
millions of dollars of taxpayers' money. In this area of budget cut-
backs and increased demand for governmental services, we cannot
afford to overlook our inherent Government resources in honest
Federal employees who will expose waste and fraud if they can be
assured that they will not lose their jobs in return for their candor
in speaking out. Although portions of the Civil Service Reform Act
were designed to protect whistleblowers, we still hear of instances
in which whistleblowers have been sent to do-nothing jobs in unde-
sirable locations, or have been demoted or fired. Rumors of these
reprisals, whether well-founded or otherwise, undoubtedly have the
effect of inhibiting Government employees who would like to see
their offices managed more efficiently from coming forward.
I hope that these oversight hearings will reveal how well the pro-
tections Congress designed are working, and I look forward to re-
ceiving the testimony of our distinguished and knowledgeable wit-
nesses.
Thank you.
Senator Grassley. Thank you, Senator Heflin. I appreciate that
very much.
Let me make a couple of administrative announcements, first.
The record will stay open for 15 days. That gives anybody who was
not invited to testify an opportunity to submit an3rthing in writing,
if they want to. It also gives members of the subcommittee who are
not here, or even those of us who are here who might have addi-
tional questions an opportunity to submit questions in writing. We
would appreciate it if the witnesses would respond to those ques-
tions within the 15-day period of time. And it also gives ample op-
portunity, then, for any correction of the record that needs to be
made as a result of anything said here today or any questions
asked.
I go now to our first panel, consisting of Mr. Spanton, who I have
already introduced, followed by Mr. Cooke. I would ask you, Mr.
Spanton, to please proceed.
STATEMENT OF GEORGE R. SPANTON, RESIDENT AUDITOR, DE-
FENSE CONTRACT AUDIT AGENCY, PRATT & WHITNEY AIR-
CRAFT GROUP, DEPARTMENT OF DEFENSE, WEST PALM
BEACH, FLA.; AND DAVID O. COOKE, DEPUTY ASSISTANT SEC-
RETARY, ADMINISTRATION, DEPARTMENT OF DEFENSE
Mr. Spanton. Good morning, Mr. Chairman and members of the
subcommittee.
My name is George Spanton, and I am pleased to have this op-
portunity to appear before you today.
I have been employed by the Defense Contract Audit Agency
since 1966, and I am presently resident auditor, with a staff of 20,
at the Pratt & Whitney aircraft engine plant in West Palm Beach,
Fla.
Throughout my career as a Government auditor, I have tried to
fulfill my responsibility to represent the Government's and taxpay-
ers' interests by preventing defense contractors from overcharging
for the vital materials and services they provide for our national
defense.
I believe that we must maintain a strong military posture. I also
strongly believe that the only way we can do this is by getting
what we pay for at a reasonable price. Saving money means there
will be more money to invest in the equipment our servicemen will
need to defend themselves in time of war.
I am here to tell you about my attempts to expose not the mil-
lions, not hundreds of millions, but the billions of defense dollars
that should go to our Armed Forces but which are being wasted
through the mismanagement, inefficiency, and greed of our major
defense suppliers.
I want to tell you about the failures of the Defense Contract
Audit Agency to carry out its mission as the watchdog of the de-
fense dollar. The failure of my agency to do its job was most dis-
turbing, because it gave the Congress and the taxpayer a false
sense of security — that a professional audit agency was protecting
the Government's interests.
In the past 2 years, I have attempted to disclose waste and abuse
of tax dollars by major defense contractors so that measures could
be taken to eliminate these conditions. Initially, my attempts were
made by seeking corrective action through the normal channels of
my agency and the defense procurement organization. These at-
tempts proved futile. I then proceeded to follow the other avenues
available to me by communicating my concern to other Govern-
ment agencies that have the responsibility of investigating reports
of waste and abuse of tax dollars.
At this point, I became an official whistleblower. However, it was
only when the media exposed flagrant examples of excessive costs
in the procurement of spare parts that this subject began to attract
the attention of Defense officials.
But the problem with spare parts is only one aspect of a much
larger problem. The causes of that problem touch many other areas
of military procurement. Experience has shown that major suppli-
ers cannot be relied upon to exercise self-restraint in their incur-
rence of costs of defense contracts.
In February of 1982, I submitted a 12-701 report of fraud, waste,
and abuse through my supervisor that Pratt & Whitney had violat-
ed Pentagon standards of conduct by lavishly entertaining high-
ranking Air Force and Navy officials. I also challenged the contrac-
tor's practice of claiming certain travel and entertainment ex-
penses as bona fide Government business. The Defense Criminal
Investigative Service became aware of our 12-701 report during a
visit to my office on another matter. It independently processed
that report, without delay, in July 1982. The DCAA, on the other
hand, did not forward the report for investigation until September
1982. The matter is now being considered by a grand jury in West
Palm Beach, Fla. In July 1982, I also contacted the General Ac-
counting Office hotline, the Inspector General hotline, and the Sec-
retary of the Air Force, Verne Orr. I never heard anj^thing more
about the matter.
Shortly afterward, my story was picked up by several members
of the press, including Clark Mollenhoff of the Washington Times,
who documented almost every new development in what turned
out to be a long and complicated series of events. For brevity's
sake, I will not go into the details of what I have been through in
the past 2 years. Instead, I have submitted for the record a chronol-
ogy of events based on press accounts that have appeared in the
Washington Times, the Federal Times, and the Palm Beach Post.
[Chronological material referred to appears on page 10.]
It is no secret that my tough audits, my demands for information
from the contractor and my outspoken criticism of my agency for
not taking more aggressive action have gotten me into trouble. Let
me be more specific about the retaliation I was subjected to by
DCAA officials:
First, the threat of unwanted transfer to Los Angeles within 18
months of my retirement date.
Second, a criminal investigation of allegations concerning my
performance at Pratt & Whitney to the effect that I was "soft on
the contractor."
Third, a request for criminal investigation by the Department of
Justice alleging release of Pratt & Whitney reports to the media.
Fourth, substantial reduction in my performance ratings.
Fifth, great pressure to retire.
Sixth, refusal to reinstate my annual leave, which was lost due
to DCAA management's instructions.
At one point, I was ready to give up and accept the transfer. I
was just not sure it was worth the fight. What convinced me other-
wise was the strong support I received from my wife and family
and the members of my staff. I knew protection for whistleblowers
was virtually nonexistent, but I decided to do what I knew was
right. It was then I filed a complaint with the Office of the Special
Counsel to the Merit Systems Protection Board.
In addition to the report on travel expenses, I have been respon-
sible for other controversial audits. For instance, in March of 1982,
I issued a report questioning the pay escalation at Pratt & Whit-
ney's Florida plant. Salary levels, particularly those of executives,
greatly exceed the amounts paid by private industry. The report
showed that pay increases to the company's employees were twice
as high as those granted workers in the private sector, triple that
for Federal employees. This was creating an ever-widening salary
gap between the defense contractor and the private sector. The
report was based upon the assumption that the Department of De-
fense should hold their contractors to the same limitations that op-
erate in the competitive environment of private industry. We esti-
mated that Pratt & Whitney's raises would cost the Government
an unnecessary $150 million between 1982 and 1984.
Coincidentally, Verne Orr, Secretary of the Air Force, in April
1982, 1 month later, independently issued his own directive that
contractor labor costs were excessive and ought to be controlled.
These findings were supported by a report issued by the Defense
Logistics Agency. DCAA's only response to my salary report was
that the language be modified because it was too inflammatory.
They also wanted to know why I had not followed a specific routing
procedure. The substance of the report was never addressed.
It is only because of the intervention of the Office of Special
Counsel that I am being permitted to complete my assignment in
West Palm Beach. As you know, the case brought by the Special
Counsel against my superiors is still pending. I am no longer con-
-6
cerned for my own sake. However, I do fear the possibility of retal-
iation against my coworkers when I am gone.
The issue of whistleblowers and what happens to them when
they dare to stand up and tell the truth is the subject of this hear-
ing and the reason I am here today. There are two vitally impor-
tant questions that I hope will be explored this morning.
First, are we willing — and by we, I mean the Department of De-
fense and Congress — to stand up and say "No" to the defense con-
tractor who is diverting funds from our national defense to his own
pocket?
Second, what kinds of protection can be provided for those men
and women who would risk their careers to do an honest job? We
have reached an alarming state of affairs when such individuals
are singled out and labeled as whistleblowers, as I have been, for
merely doing what they are supposed to do.
There are several suggestions I would like to make for your con-
sideration. The first is that information be made available to all
DOD employees as to the procedures they can follow and channels
that are available to them for reporting waste or fraud. Often, vio-
lations go unreported because the DOD employees did not know
such avenues exist. Second, protection must be afforded to those
who support or provide evidence on behalf of the whistleblower. I
say this because several members of my staff are afraid that they
may lose their jobs because of their involvement in my case.
My third suggestion has to do with the disclosure of audit reports
to the public. All audits carry a cover sheet with the following
statement: "Contractor information contained in this audit report
may be confidential. The restrictions of 18 U.S.C. 1905 should be
considered before this information is released to the public."
Defense contractors use this restriction to keep information on
waste and cost overruns from the taxpayer by claiming it is propri-
etary information. How can waste of tax dollars be proprietary in-
formation? I suggest that the intent of 18 U.S.C. 1905 be examined.
The knowledge that disclosures of waste can be publicized could
prove to be an effective cost deterrent.
Finally, all of this would be unnecessary if Government agencies
performed their functions with their true constituents in mind, the
taxpayers. To do otherwise is to legitimize the growing sense of
mistrust that people have of the Government. That mistrust is cer-
tainly warranted if we continue to cast a blind eye toward defense
contractors who line their pockets with the wages of unsuspecting
citizens.
I urge this subcommittee and the Congress to do whatever is in
its power to right this very serious problem.
Thank you for the opportunity to present my views. I am happy
to respond to your questions.
Senator Grassley. I was not going to ask questions at this point,
but Mr. Spanton, if you would wait just a minute. There is some-
thing you said near the tail-end of your testimony that I want to
ask about, because I cannot believe that the situation is filtering
down to people who work on your staff. You said something about
members of your staff are fearful of what will happen to them
after you retire, or after you leave West Palm Beach. Is that what
you said?
Mr. Spanton. Yes, Senator, that is true.
Senator Grassley. Would you elaborate on that, then?
Mr. Spanton. Well, approximately 2 weeks ago, there was a
news story in the West Palm Beach paper which made reference to
an auditor and an administrative clerk who had provided state-
ments attesting to certain facts to the Office of Special Counsel.
And for the first time since I became involved, I truly had second
thoughts as to whether I should have embarked on this venture,
because this lady walked into my office, her voice was trembling,
there were tears in her eyes. She had seen her name in the paper
and first realized that the attention would be focused on her. She
said, "Mr. Spanton, I just cannot afford to lose my house." She is
supporting her husband, who is not in good health. And she said, "I
am afraid that after you leave, they will terminate me or down-
grade me, but somehow I am fearful that they will take action for
my having spoken what I felt to be the truth."
And I repeat, that was really the first time and the only time
that I had regrets that to the extent that I drew other people in to
be supportive, voluntarily and by their own action, nevertheless, I
came to realize their own fears where they have future careers and
how they believe these careers are in jeopardy.
I have heard similar comments to a lesser degree from other pro-
fessional auditors on my staff, and that is my concern.
Senator Grassley. Well, you referred to a newspaper article that
this lady staff member of yours read. Did she refer to specific in-
stances during her daily routine on the job where she felt threat-
ened?
Mr. Spanton. In this newspaper story, it concerned one of my su-
pervisors who had been in the office recently, within the last 30
days, making comments to the effect that I should essentially drop
my participation as a witness for Office of Special Counsel's case
against certain officials in the DCAA.
Senator Grassley. In other words, you should forego the protec-
tion of the laws protecting whistleblowers. Is that what they were
saying?
Mr. Spanton. Well, it went beyond that because I am presently
under the protection of certain legal protections, as obtained by the
Office of Special Counsel. But it went beyond that. It was to pursue
what wrongs took place within my agency and how can they be
corrected, and this individual suggested that I might, since I plan
on retiring, that I might as well drop the whole thing and enjoy a
leisurely life of retirement — words to that effect.
Senator Grassley. Was it more than just casual conversation?
Did it border on intimidation?
Mr. Spanton. Well, frankly, I have passed the point of being in-
timidated, but nevertheless, that was more than a casual sugges-
tion.
Senator Grassley. Is there any other sort of retaliation against
you that you can elaborate on, other than what you gave in your
testimony?
Mr. Spanton. Well, the retaliation takes many forms. Some of it
is passive, where the fears of other members of my agency in like
positions, other managers, in attendance at, let us say, conferences,
find that there are possibly better places to be seen than in my
8
company. And so individuals that you have come to know over the
years, 15 years, let us say, suddenly feel unsure of themselves and
unsafe to be seen, let us say, in my presence. This is just a small
item, but it shows to me, at least, the concerns and the fears that
other people within the agency have for their own security and
that perhaps if they do not toe the line, they too can be subjected
to some of the harassment which I have faced.
Senator Grassley. Has there been any sort of retaliation or in-
timidation against your lawyer?
Mr. Spanton. Capt. John Morris is representing me. I obtained
his services initially when I received a request — it was more of a
request, but it was an order — that I appear and furnish depositions
for the respondents in this Office of Special Counsel's case. My ini-
tial attempt was to get some legal guidance from my own agency,
and I was told by my agency that the four members of the legal
staff were unable to provide guidance to me because they were
committed to the officials of the agency. This is in addition to the
four attorneys that are representing them.
I then went to the Office of General Counsel of the Department
of Defense and talked to Mr. Neilander, and he provided the serv-
ices of Captain Morris. Initially, I suggested to Captain Morris that
he should consider his future, being a military man, and not know-
ing how far-reaching the case might go, and what levels of military
involvement there might be. And Captain Morris said he had a
commitment to his profession, and he was not concerned about
that.
Recently — without getting into the details — Captain Morris ex-
pressed some concern, as a result of his involvement, and these
concerns relate to his career within the military.
Senator Grassley. Thank you.
Before I go to Mr. Cooke, I would invite Senator Heflin to join in
at this point, if he wants to ask Mr. Spanton any questions, before
we go to Mr. Cooke.
Senator Heflin. Mr. Spanton, you are a resident auditor for the
Defense Contract Auditing Agency; is that correct?
Mr. Spanton. Yes, sir.
Senator Heflin. That is, in effect, a policing unit to determine
whether or not the law has been complied with and whether inac-
curacies or fraud or abuse exists between defense contractors and
the Department of Defense. In other words, if you do not have inde-
pendence in your agency, how, then, can you really perform the
task that it is charged with carrying out? •
Mr. Spanton. You cannot, Senator, and that was one of the focal
points of my complaint. Not only did I find fault with the expendi-
tures of the major defense contractors and the inability of defense
procurement officials to control them, but I found fault particular-
ly with my own agency, that seemed committed more to the inter-
ests of procurement and furnishing procurement reports which
they would find acceptable to them, and simply getting along with
the major defense contractors, than being totally independent,
turning out a product which would be the best product that a pro-
fessional could put together and saying, "Here, Procurement. Here
is what we think. Now it is your job to carry these recommenda-
tions through." This was not the atmosphere that existed — it is not
9
the atmosphere that exists— in the DCAA. They refer to Procure-
ment as DCAA's cHents, and that connotation alone is enough to
make one uncomfortable. Beyond that, the agency in its attempts
to get along with major defense contractors does not pursue the
subject of access to records, and I defy any auditor to be able to do
a professional audit without the records, no matter how minimal
the limitations. The one record he does not see could be the one
that would make the entire audit worthless. And so, it was my
commitment to the agency and the members of my staff to assure
them that I would get them the tools— in this case, the records— to
do a job. It was their responsibility to do the best audit, profession-
ally, that they were capable of. In turn, it was my responsibility to
sell what they reported, and as a consequence, in the selling at-
tempt, I ran into the resistance of my own agency, not because the
product was deficient technically, but it was just too tough.
Senator Heflin. Is the Defense Contract Audit Agency a part of
the Inspector General's Department of the Department of Defense?
Mr. Sp ANTON. No, sir, it is separate, and reports to the Assistant
Secretary of Defense Comptroller.
Senator Heflin. You have no connection, then, with the Inspec-
tor General's Department of the Department of Defense?
Mr. Spanton. No, Senator.
Senator Heflin. Thank you, Mr. Chairman.
Senator Grassley. I want to thank you, but would you remain
there, because after Mr. Cooke's testimony, I will have some ques-
tions of each of you.
I want to thank you, Mr. Spanton, for describing your experi-
ences for us.
[Material submitted for the record follows:]
10
Chronology of Events*
The following is a chronology of events concerning the
case of George Spanton, Defense Contract Audit Agency chief in West
Palm Beach, Florida. Mr. Spanton has been a military contract auditor
for thirty years. Last year, he began investigating and demanding
access to records of wage rates at Pratt 6 Whitney in West Palm
Beach, as well as questionable travel and entertainment expenses
incurred by Pratt & Whitney executives and charged to the government.
Pratt & Whitney denied Mr. Spanton much of the data he requested.
He was subjected to months of harassment by his superiors at
DCAA. He was threatened with transfer and termination.
MARCH, 1982
— George Spanton writes a report on "excessive labor escalation"
in defense firms. He finds companies with government contracts
negotiating with labor unions to give pay hikes to their
employees which are far higher than the increases granted to
federal government employees. He says defense firm pay raises
are 178% higher than those federal employees received and
108% higher than for employees in private industry. The cost to
the taxpayers: $150 million over three years.
Mr. Spanton also reports on laxity on the part of the Defense
Contract Audit Agency (DCAA) to force defense contractors to turn
over complete financial records.
AUGUST, 1982
— Mr. Spanton is pressured by his DCAA superiors to transfer
to Los Angeles or resign in the wake of disagreements over his
audits of labor union contracts. He files an appeal with the
special counsel of the U.S. Merit Systems Protection Board
(MSPB) saying that the transfer is "illegal retaliation" for his
candid audits.
— Defense Secretary Caspar Weinberger accepts the explanation of
DCAA Director, Charles Starrett, that Mr. Spanton' s transfer is
part of DCAA's normal 5-year rotational process. He says no
DoD employee who suggests cutting waste and saving money "would
be penalized."
DOD says it plans to initiate an agency wide investigation into
"excessive labor costs" in military weapons contracts as per
Spanton 's suggestion. It also says Mr. Weinberger will intervene
with the DCAA to prevent Mr. Spanton 's transfer to Los Angeles by
September 15. Reportedly, Mr. Weinberger has decided that Mr.
Spanton "should not be removed until next March - the normal
rotational period - if then."
*The enclosed chronology of events about the case of George Spanton
was compiled from articles in the following newspapers:
TOE WASHINGTON TIMES Clark Mollenhoff
TBE FEDERAL TIMES Greg Rushford
THE PALM BEACH POST Carolyn Sussman
They span the period from August, 1982 to November, 1983.
11
— The DCAA reverses itself and notifies Mr. Spanton that he will
not have to transfer to California by September 15 or be fired.
SEPTEMBER, 1982
Xhe Air Force begins an investigation into unnecessary costs tacked
on to military contracts and passed on to the taxpayer. These
"overhead costs" include unrestrained travel and relocation
expenses and research into producing engines and other products
with little government, but great commercial value.
NOVEMBER, 1982
— In an interview with the Federal Times, Mr. Spanton says that
the Air Force has not done anything to follow up on intentions
to crack down on excessive defense contract wages.
JANUARY, 1983
— Mr. Spanton tells the FBI that DCAA's pressure on him to resign
by February 1 is on-going. The FBI informs the Merit Systems
Protection Board that removal of Mr. Spanton will interfere with
their criminal investigation of allegations of fraud at Pratt &
Whitney. The alleged fraud involves lavish entertainment and
travel expenses by Pratt & Whitney employees which were charged
to military contracts and is the subject of a Justice Department
investigation.
MARCH, 1983
— The Washington Times reports that government investigators
have obtained audio tapes that support Mr. Spanton 's contention
that he is being pressured to retire. Conversations taped in
February involve Mr. Spanton, DCAA Atlanta Bureau Head ,.Paul
Evans, and other DCAA officials. The proposal is made that if
Mr. Spanton will retire by February 28, Mr. Evans will approve
23 days of overtime. Mr. Spanton suggests March 31 which will
. give him time to complete the FBI investigation. Mr, .Evans is
heard to reply that "March 31 won't be worth a tinker's damn"
because the Pratt & Whitney investigation won't be completed
for two years. Mr. Spanton decides to reitre December 1.
— Mr. Spanton is interviewed on ABC's "20/20." On March 11, the
day after the broadcast, DCAA director, Charles Starrett, orders
Mr. Spanton transferred within 60 days or be fired. In his
letter to Mr. Spanton, Starrett says that one of the reasons
for the transfer is that "the contractor (Pratt & Whitney) has
voiced an intention not to provide certain (financial) data to
you, although they would provide the data to your supervisor."
— Senator Orrin Hatch calls for an investigation by Mr. Weinberger
into the Spanton case. Hatch's request comes after Representative
Jack Brooks writes to Mr. Starrett expressing fear that Mr. Spanton' s
transfer will "inhibit other auditors from being too aggressive..."
Both :Senators Brooks and Hatch say it appears the efforts to transfer
Mr. Spanton are punitive.
— A March 18 letter from Mr. Weinberger to Rep. Charles Bennett
states that Mr. Spanton is only being transferred because he has
been at Pratt & Whitney for the maximum number of years. In that
12
letter, Mr. Weinberger also says that the Air Force is witholding
$25 million in payments to Pratt & Whitney which otherwise
would reimburse the company for "extraordinary" expenses.
The Merit Systems Protection Board orders the Defense Department
not to transfer George Spanton for at least 15 days. The
Board's attorney, William O'Connor, says he had "reason to
believe the reassignment was proposed in reprisal for Mr. Spanton's
protected disclosures of information (to the press)." A
spokesman for the Board says the request was a "radical action"
taken only where there "is a possibility of an egregious wrong,
like a termination or transfer."
APRIL, 1983
— Senator Charles Grassley writes a letter to Air Force Secretary
Verne Orr warning that the Defense Department's treatment of
George Spanton is "counter productive" in the Pentagon's
campaign to cut waste and fraud. He says Mr. Spanton has been
getting shabby treatment from the DCAA. Sen. Grassley tells the
Washington Times that the Reagan administration "must do some-
thing affirmatively to demonstrate support for Spanton" and
must take "some kind of action against his superiors to show
that abuse of honest whistleblowers will not be tolerated. .. .The
reward should go to the honest whistleblowers who are trying to
expose the waste and fraud. Those bureaucrats who take retaliatory
action or otherwise stand in the way of the fight against waste
must see that they cannot get away with it."
— In conversation with Senator Grassley and Secretary Weinberger,
President Reagan reveals that he has seen the "20/20" program
on George Spanton. According to Senator Grassley, the President
was "pretty disgusted" when he saw the examples of Pratt &
Whitney's huge increases in spare parts prices and on entertainment
expenses charged to the government. The President tells Senator
Grassley that he had called the Pentagon and was satisfied with
their respone, including the claim that ABC had "sensationalized"
the situation to make it appear worse than it was. The
President assures Senator Grassley that his administration was
doing an effective job of eliminating waste and fraud in military
contracts. Secretary Weinberger assures Senator Grassley that
Mr. Spanton's transfer order from the DCAA is "routine rotation
and not a cover-up for Pratt & Whitney." Senator Grassley tells
the Washington Times that he is "disappointed" with the reaction
of both President Reagan and Secretary Weinberger, that both men
are "badly misinformed" on the seriousness of the problems at
DCAA. He says the President must show leadership and iniative
against "waste and theft of defense dollars" if he expects Congress
and the public to support his defense budget."
— The Merit System Protection Board grants George Spanton a 30"
day stay on his transfer, ruling that there is cause for believing
Mr. Spanton is the victim of illegal retaliation by the DCAA.
— A spokesman for Secretary Weinberger's office tells the Palm
Beach Post that is "immaterial" to Mr. Weinberger whether Mr.
Spanton stays on the job. The comment is in response to a
letter from Senator Grassley asking that the Secretary back
up remarks he reportedly made at a Senate Budget Committee
meeting. The Secretary said that if keeping Mr. Spanton on the
job was all it would take to satisfy Senator Grassley, Mr. Spanton
would be retained.
13
Special counsel for the Merit System Protection Board, William
O'Connor, declares that Mr. Spanton has been the victim of
illegal harassment, discrimination and retaliation by his
superiors, including Mr. Starrett. O'Connor says Starrett has
relied on "half-truths." He requests Secretary Weinberger to
overrule DCAA Director Starrett and cancel Mr. Spanton's
transfer. Mr. O'Connor's letter mentions Mr. Spanton's excellent
30 year record as a military contract auditor with excellent
relations with past directors. The DCAA office in Atlanta
had lowered Mr. Spanton's performance rating.
In response to the Merit System Protection Board, the Department
of Defense orders Mr. Spanton to remain in his post until
December.
Defense Department Comptroller Vincent Puritano, who supervises
DCAA, writes a memo to Mr. Starrett saying that the controversy
surrounding Mr. Spanton's transfer is "not in the best interest
of the Department of Defense." He instructs Mr. Starrett to
remind his managers that they are prohibited from taking
"personnel action in reprisal for an employee's protected
activity." Despite the MSPB's findings, Mr. Puritano goes on
to praise Mr. Starrett, saying: "You may be assured that I
have the highest regard for the quality of the work performed
by the Defense Contract Audit Agency and am confident that,
under your leadership, the auditors will continue as they
have in the past to look at all claims (filed against the
government) and question any they feel should be questioned."
Mr. Starrett writes a brief memo to Mr. Spanton urging him to
"make every possible effort to work with the regional management
to assure that the government's best interests are served."
The Merit System Protection Board tells the DOD it plans to
continue investigating the case to determine whether the special
counsel should take disciplinary action against any of the
DCAA officials involved. The matter is also referred to DOD's
Inspector General, Joseph Sherick.
MAY, 1983
The Justice Department, on instructions from Mr. Starrett, begins
investigating allegations that Mr. Spanton divulged corporate
secrets in going to the press with his complaints. Mr. Starrett s
action is initated by a complaint from Pratt & \-7hitney.
JULY, 1983
— Mr. Spanton recommends and the Department of Defense acts to
withold $28 million in contract payments from Pratt & Whitney
until it makes financial records available to the DCAA in
West Palm Beach.
— Pratt & Whitney appeals to the Air Force to have the DOD ruling
overturned. Pratt & Whitney claims they have turned over the
financial records on executives salaries requested by Mr.
Spanton. but Air Force spokesmen say they can find no record
of the data. Pratt & Whitney says it would turn over
to Mr. Spanton employee salaries with employee ID numbers
but no names, for fear that Mr. Spanton would turn those
33-732 0—84-
14
names over to the press and violate the "privacy" of
its top executives.
Secretary Weinberger announces a 10-point program directed
at officials throughout the Department of Defense, to combat
spare parts pricing abuses.
The first point proposes rewards for those who look for ways
to reduce costs.
The second threatens disciplinary action, including "reprimand,
demotion and dismissal" against those who are "negligent in
implementing (DOD's) procedures."
Finally, DOD would "expose and take appropriate corrective
action against those contractors and employees who are either
negligent in performing their duties or are engaging in excessive
pricing practices."
Secretary Weinberger addresses employees of Pratt & Whitney in
Hartford, Connecticut. His remf.rks include the following:
"Where industry is at fault, I fully intend to be just as tough
with irresponsible firms as we are with our own employees. That
means we will use every method to obtain refunds where we have been
overcharged, including suing contractors."
"The job of auditor is inherently a difficult, and often thankless,
job. It is for that reason that I have required all DOD managers
to give our auditors full cooperation and access. And, within
our legal right, I demand the same from the industries that serve
us."
AUGUST, 1983
The Washington Times carries a story about a report Drepared by
Mr. Spanton which finds that executive salaries paid by Pratt &
Whitney "exceeded the norm for other defense contractors by 40%."
The Washington Times reports on another Spanton audit which shows
the mark-up and profit on an unidentified product that cost DoD
$28,579 to be $27,579.
Senator Alfonse D'Amato of New York calls for the firing of
DCAA director Charles Starrett because of his involvement in
"illegal actions" in the harassment and retaliation directed
against Mr. Spanton.
Secretary Weinberger rejects Congressional suggestions that Mr.
Starrett be fired or disciplined for illegally retaliating against
Mr. Spanton. He characterizes the findings of the special counsel
of the Merit System Protection Board as "unverified stories or
rumors."
Senator Grassley is disappointed with Secretary Weinberger's
response. He advises Mr. Weinberger to "take another look
at the record" and not rely on the conclusions of his subordinates.
Pratt & Whitney agrees to turn over salary records to DoD auditors
as Mr. Spanton has requested.
15
SEPTEMBER, 1983
The special counsel recommends to the Merit Systems Protection
Board that disciplinary action be taken against four employees of
the DCAA, including chief Charles Starrett, for the illegal
harassment and intimidation of George Spanton. Investigator
William O'Connor concludes that "the job of the auditor is to root
out problems within government. Mr. Spanton did his job and for
that he was punished."
The recommendation is the result of a year long investigation.
Disciplinary action could mean removal from office and a $1,000
fine for each charge.
OCTOBER, 1983
The special counsel seeks a protective order to prevent Charles
Starrett and other DCAA officials from threatening or intimidating
Mr. Spanton. Investigator O'Connor found that Mr. Spanton 's new
supervisor, Mr. Joseph Call, criticized Mr. Spanton for damaging
DCAA and told him that DCAA was working hard to fight the special
counsel's charges. He advised Mr. Spanton to withdraw the
complaint from the Merit System Protection Board and stop talking
to Washington Times reporter, Clark Mollenhoff .
Senator Grassley calls Mr. Call's actions an exercise of "inexcusable
abusive authority."
NOVEMBER, 1983
Reporter Bob Shaw of Knight Ridder newspapers publishes an
account of a Spanton audit which shows Pratt & Whitney
earning a $900,000 profit on maintenance tools sold to the
Air Force, nearly triple what the items were worth. As a
result the Air Force paid $221 for a pair of needlenose
pliers and $269 for a socket wrench extension.
Administrative Law Judge Edward Reidy turns down the request of
the special counsel for an order to protect the witnesses in the
Spanton case.
Judge Reidy is to hear testimony beginning on December 6 on the
special counsel's recommendation that DCAA officers be
disciplined for illegally retaliating against Mr. Spanton.
16
Senator Grassley. Mr. Cooke, before you testify, I believe I ought
to note for the record that this subcommittee extended an invita-
tion to Mr. Charles Starret, the Director of the DCAA who, more
than anyone else, is familiar with the details of this particular
case. Nonetheless, we are pleased that you could come before the
subcommittee to present the official views of the Department of De-
fense, and I would hope, Mr. Cooke, before your testimony, that
you could indicate for the record the appropriateness or the rel-
evance to your position of your being here in relationship to the
topic of whistleblowers, and particularly this case before us.
I would ask you to proceed.
STATEMENT OF DAVID O. COOKE
Mr. Cooke. Thank you very much, Mr. Chairman.
In answer to your question, may I refer to your letter of Novem-
ber 2, 1983, and I quote:
The subcommittee will generally examine the protections afforded to Federal em-
ployees who perform watchdog functions that often tend to engender criticism from
immediate supervisors. The subcommittee will examine whether the current system
affords adequate protection to these employees. In your written testimony, please
comment on the above issues, with particular emphasis on the protections granted
by the Civil Service Reform Act.
I would note that if the purpose of the hearing is as stated in
your letter of request which I just quoted, Mr. Starret has no pro-
grammatic responsibilities in this area. If the purpose of the hear-
ing was to discuss the so-called Spanton case, as you know, Mr.
Starrett is a party respondent before the Merit Systems Protection
Board, and it would be highly inappropriate for him to appear. As
a matter of fact, I consider it inappropriate to discuss in any
manner the details of a case currently before the Merit Systems
Protection Board.
Some of the statements you have heard are matters of issue
before that Board. They are not resolved until the Board hears the
case. We will, of course, continue to monitor this case, as all others,
and if the end results indicate need for systems reform, we will
take action.
Senator Grassley. Mr. Cooke, for the record, I will state that I
appreciate what you just said. We are aware of that, and any of
our questions will be framed with that environment in mind.
Mr. Cooke. But I just wanted to call it to your attention that
that is my role, and it is completely inappropriate to discuss any of
the details raised on the factual situation involving the Spanton
matter.
Senator Grassley. Fine.
Mr. Cooke. May I proceed with my statement, Mr. Chairman?
Senator Grassley. Yes.
Mr. Cooke. The Civil Service Reform Act of 1978, CSRA, provides
the statutory basis for policies and procedures on the treatment of
whistleblowers. In general, the CSRA prohibits reprisals against
employees who report incidents of fraud, waste, and mismanage-
ment. In addition, the act established the Merit Systems Protection
Board and its Special Counsel to exercise jurisdiction in cases
where reprisals are alleged. Of course, employees who believe they
are victims of actions taken in reprisal for lawful disclosure of
17
fraud, waste, or mismanagement may also seek redress through the
agency grievance system or appeals procedure for adverse actions.
Two distinct types of disclosures are protected under the act.
First, all disclosures to the Special Counsel, MSPB, or to an agency
Inspector General are protected if the employee reasonably be-
lieves his or her information reveals illegal or improper Govern-
ment action..
Second, all other disclosures, including public disclosures, are
protected if the employee reasonably believes the information dis-
closes illegal or improper action by the Government and such dis-
closure is not specifically prohibited by law or specifically required
to be kept secret by Executive order.
Although the Inspector General Act does not have any signifi-
cant impact on the whistleblower rules of the CSRA, Inspectors
General are authorized to receive complaints and investigate alle-
gations of illegal or improper Government actions. The IG act does
prohibit reprisals for making a complaint or disclosing information
to an Inspector General unless the complaint was made or the in-
formation disclosed with knowledge that it was false or with willful
disregard for its truth.
Neither act provides protections from otherwise justified agency
action merely because a disclosure is made. The acts, for example,
do not provide immunity from appropriate disciplinary action to an
employee who is otherwise engaged in misconduct. Neither do they
afford immunity from action based on less than satisfactory per-
formance. Whether disciplinary action or other personnel action is
taken as a reprisal or for permissible reasons is initially deter-
mined by the agency, and ultimately by the Special Counsel, the
Merit Systems Protection Board, and the courts.
The Department of Defense has accepted and implemented the
Civil Service Reform Act and the Inspector General Act. In this
regard, the following actions have been taken:
On June 5, 1981, the Secretary of Defense established by memo-
randum the Defense hotline, under the auspices of the now DOD
Inspector General, and directed that all substantive calls be inves-
tigated thoroughly, and that appropriate criminal and administra-
tive remedies be pursued where warranted. Further, the Secretary
of Defense directed that the identity of any caller be protected.
On May 14, 1982, the Deputy Secretary of Defense issued DOD
directive 7050.1, which formalized the DOD hotline program, as-
signing responsibilities and prescribing managing and operating
procedures. The directive states:
Necessary controls shall be established to protect, to the maximum extent possi-
ble, the identity of users of the DOD hotline program. Informants shall be assured
that they can report instances of fraud and mismanagement without fear of reprisal
or unauthorized disclosure of their identity. Informants reporting alleged fraud and
mismanagement should be encouraged to identify themselves so that additional
facts can be obtained, if necessary.
On October 17, 1983, the Secretary of Defense again endorsed the
Defense hotline in a memorandum to all DOD employees, remind-
ing them that protecting the confidentiality of hotline users who
prefer not to be identified remains a cornerstone of the program.
18
To add additional impetus to our program, a DOD directive is
being developed which will establish a program to grant cash
awards to DOD employees whose disclosures to the DOD Inspector
General of fraud, waste, and mismanagement result in cost savings
to the Department. The directive will provide anonymity to the re-
cipient of the award at the employee's request.
The military departments have published their own implement-
ing regulations based on the DOD directive, and Secretary of De-
fense policy statements. These provide procedural protections for
whistleblowers who are the subject of adverse action and believe
they are victims of reprisal. The military departments have also
issued policy statements emphasizing the right of employees to file
a disclosure without fear of reprisal, protecting the identity of the
callers, if they so desire, and identifying appropriate methods for
reporting alleged acts of reprisal. For example, Air Force regula-
tion 40-101 states:
Taking reprisals. Do not take (or fail to take) a personnel action, as a reprisal
against an applicant or employee, because the person: (1) lawfully discloses viola-
tions of a law, rule, or regulation; or instances of mismanagement, gross waste of
funds, abuse of authority, or substantial and specific danger to the public health or
safety; (2) refused to engage in political activity, including making political contribu-
tions or performing services; (3) exercised an appeal right granted by law, rule, or
regulation.
Navy civilian personnel instruction 752 on the subject of adverse
actions includes prohibited personnel practices as offenses punish-
able by a range of penalties from reprimand to removal. Moreover,
the military departments have hotlines of their own which supple-
ment the DOD hotline. And I have here someplace, if you will bear
with me, our latest Department of Defense directive and DOD
policy for civilian personnel, which states that "All DOD Managers
shall also be familiar with prohibited personnel practices in 5 U.S.
Code 2302(b)." This, by the way, is DOD directive 1400.5. It further
states that "In presenting a grievance or complaint, an employee
shall be free from interference, restraint, or reprisal and may be
accompanied and assisted by a representative."
Mr. Chairman, these issuances have been widely distributed
throughout the Department of Defense to Department of Defense
employees. There are also in place a number of policies, regula-
tions, and systems which encourage employees to report fraud,
waste, and mismanagement without fear of reprisal or unauthor-
ized disclosure of their identity. The Office of the DOD Inspector
General receives complaints and investigates allegations of illegal
or improper Government action.
It should be pointed out, however, that more often than not, alle-
gations of reprisal are made directly to the Office of the Special
Counsel. Nevertheless, we are prepared to look into the possibility
of issuing additional DOD guidance to preclude reprisals against
those who make complaints about operations and policies of the
Department if there is any evidence of inadequacies in the current
regulations.
Let me conclude by expressing the view that in general, the De-
partment of Defense is increasing its efforts to protect whistle-
19
blowers. We will do everything we can to insure that managers and
employees are aware of the prohibited activities. We intend to con-
tinue strengthening systems which provide for registering and in-
vestigating the complaints of such activities.
Mr. Chairman, this concludes my formal statement. I will be
pleased to respond to your questions.
[Submissions of Mr. Cooke follow:]
20
DEPARTMENT OF THE AIR FORCE
Headquarters US Air Force
Washington DC 20330
AF REGULATION 40-101
30 January 1980
Civilian Personnel
PRINCIPLES OF THE CIVILIAN PERSONNEL PROGRAM
This regulation gives information needed by all commanders, staff and central civilian personnel offices, other
staff offices, and all supervisors of civilian employees. It states the principles of the merit system that niust be
observed, and the personnel practices that are prohibited, in administering and managing civilian employees
This regulation applies to all employees in the Competitive. Excepted, and Senior E.xecutive Services. It also
applies to other civilian employees when modified to meet special requirements, laws or regulations, local prac-
tices, and international agreements. This regulation implements DOD Directive 1400. .5, 16 January 1970 and 5
U.S.C, chapter 23.
1. Objective of the Civilian Personnel Program.
The objective of the civilian personnel program is to
recruit, develop, motivate, utilize, and sustain a bal-
anced, structured, and high quality work force to
carry out the Air Force's mission efficiently and effec-
tively. In achieving this objective, the principles of
the merit system and certain prohibited personnel
practices must be observed strictly.
2. Principles of the Merit System. All staff officials,
managers, and supervisors with civilian personnel
program responsibilities must pre.serve the following
merit principles:
a. Treat Employees Fairly:
(1) Base all personnel decisions and actions on
merit factors — not on an employee's race, color, reli-
gion, sex, national origin, age, handicapping condi-
tion, marital status, political affiliation, or member-
ship in any organization, including a labor organiza-
tion.
(2) Treat employees with full regard for their
dignity as individuals, including individual privacy
and constitutional rights. Judge employees' trustwor-
thiness on their action.s — not from their pay or grade
levels.
b. Recruit and Place Employees Effectively:
(1) Within mission, manning, and funding re-
quirements, recruit persons to create and maintain a
civilian work force that represents all segments of so-
ciety.
(2) Place employees in the jobs they are best
qualified for, and give them opportunities for ad-
vancement. Select and advance employees solely on
their relative ability, knowledges, and skills under
fair and open competition.
c. Motivate and Retain Employees:
(1) Respect the right of employees, without in-
terference, coercion, restraint, or reprisal, to join or
Supersedes AFR 40-101, 8 August 1973. (See signa-
ture page for summary of changes.)
No of Printed Pages: 3
OPR: MPKX (Mr. E.D. Spivey)
Approved by: Mr. J. Craig Cumbey
Writer-Editor: Dr. William Wokoun
Distribution: F: X (Special Non-Air Force List Kept
by Publications Distribution Center)
refrain from joining labor organizations or employee
associations. When a recognized labor organization
represents employees, try to build a relationship of
mutual respect and trust with that organization.
(2) Inform employees and their recognized labor
organizations, when possible, of plans and policies
that affect them.
(3) Allow employees to discuss their problems
with staff members of their servicing central civilian
personnel office, social actions office counsi 'or, equal
employment opportunity officer or counselor, labor
organization representative, someone named to give
guidance about conflict of interest, or a supervisory
or management official of higher rank or level than
the immediate supervisor.
(4) Evaluate each employee's work performance
fairly and objectively by comparing it to established
reasonable job requirements, discuss the results of an
evaluation with the employee, and recognize all sig-
nificant employee achievements and contributions.
(5) Use the civilian work force efficiently and ef-
fectively. Help employees improve when their work is
inadequate, and remove employees from their posi-
tions when they cannot or will not meet required
standards.
(6) Give employees equal pay for work of equal
value, as provided by the compensation schedule ap-
plicable to their employment. Also, give them incen-
tives, recognition, and pay adjustments for excellence
in performance.
(7) Make working conditions as safe and healthful
as practicable.
(8) Encourage employees to suggest ways to im-
prove work methods and working conditions.
(9) Let employees decide whether or not to par-
ticipate in voluntary fundraising campaigns, and in
purchasing US Savings Bonds, without compulsion,
coercion, or reprisal.
(10) Recognize that employees have statutory
rights against arbitrary action, personal favoritism,
or coercion for partisan political purposes,
(11) Allow employees, individually and collec-
tively, to petition and furnish lawful information to
Congress or a member of Congress.
(12) Recognize that employees have statutory
rights against reprisal for lawfully disclosing informa-
21
lion which shows a violation of law, rule, or regula-
tion; or .shows mismanapement, gross waste of funds,
abuse of authority, or substantial and specific danger
to public health or safety.
(13) Offer an employee with a grievance or com-
plaint of disci-imination a fair and prompt informal
resolution and, if the employee is not satisfied, let the
employee pursue the matter under the Air Force
grievance system, a negotiated grievance procedure,
or the discrimination-complaint procedure, as appro-
priate. Let an employee present a grievance or com-
plaint without interference, restraint, or reprisal.
Unless a negotiated agreement provides otherwise,
allow the employee to be accompanied and assisted by
the representative he or she chooses.
d. Develop Employees:
(1) Provide education and training when neces-
sary for more effective individual-employee and or-
ganizational performance.
(2) Consider all eligible employees when making
selections for training which may lead to promotion.
(3) Encourage employee self-development by
making information about training opportunities and
self-study materials available to employees, and rec-
ognize self-initiated improvement in performance.
3. Prohibited Personnel Practices, All persons with
authority to take, direct others to take, recommend,
or approve any personnel action are prohibited from:
a. Discriminating Because of Non-Merit Factors:
(1) Do not discriminate for or against an em-
ployee or applicant because of race, color, religion,
sex, national origin, age, handicapping condition,
marital status, political affiliation, membership in any
organization, or lawful conduct which does not ad-
versely affect the person's (or other workers') per-
formance.
(2) Do not solicit or consider any recommenda-
tion, oral or written, about an applicj.nt or employee
you are considering for a per.^onnel action, unless it
evaluates the person's work ptrformancc, ability, ap-
titude, general qualifications, charact.i', loyalty, or
suitability for employment.
b. Using Influence Unlawfully:
(1) Do not coerce an applicant or employee to
take political actions or to make political contribu-
tions.
(2) Do not willfully deceive or obstruct applicants
or employees about their right to compete for federal
employment.
(3) Do not influence a person to withdraw from
AFR 40-101
competition for a position to improve or injure
another person's prospects.
(4) Do not grant an applicant or employee any
preferential treatment or advantage not authorized
by law, rule, or regulation.
(5) Do not appoint, employ, promote, or advance
a relative to a civilian position in the agency, or advo-
cate such actions.
c. Taking Reprisals. Do not take (or fail to take) a
personnel action, as a reprisal against an applicant or
employee, because the person:
(1) Lawfully disclosed violations of a law, rule, or
regulation; or instances of mismanagement, gross
waste of funds, abuse of authority, or substantial and
specific danger to public health or safety.
(2) Refused to engage in political activity, in-
cluding making political contributions or performing
services.
(3) Exercised an appeal right granted by law,
rule, or regulation.
d. Violating Other Merit System Principles. Do
not take (or fail to take) any personnel action in viola-
tion of a law, rule, or regulation that implements the
principles of the merit system or concerns them di-
rectly.
4. Responsibilities:
a. Management officials and supervisors must:
(1) Recognize they are an important part of the
management team. They help formulate official policy
and represent management in administering policies
and labor-management agreements.
(2) Observe the principles of the merit system,
and prohibited personnel practices, strictly.
(3) Provide progressive and constructive lead-
ership, keep employees informed about matters that
concern them, and maintain a work environment that
encourages good morale, efficiency, and effectiveness.
b. Employees must:
(1) Recognize that they share responsibility for
maintaining sound management-employee relations.
(2) Maintain high standards of integrity, conduct,
and concern for the public interest.
(3) Work efficiently and effectively, and cooper-
ate with those who direct their work.
5. Implementation. The principles of the merit sys-
tem and the prohibited personnel practices given in
this regulation are basic to the civilian personnel pro-
gram. They govern the policies and guidance in other
Air Force regulations in the 40 series.
BY ORDER OF THE SECRETARY OF THE AIR FORCE
OFFICIAL
LEW ALLEN, JR., General, USAF
Chief of Staff
VAN L. CRAWFORD, JR., Colonel, USAF
Director of Administration
SUMMARY OF CHANGES
This revision adds the merit system principles and prohibited personnel practices prescribed by the Civil Serv-
ice Reform Act of 1978 and codified in 5 U.S.C, Chapter 23.
22
THE SECRp-ARr OF DEFENSE
JU'ii ; isai
MEMORANDUM FOR SECRETARIES OF THE MILITARY DEPARTMENTS
CHAIR^U^• OF THE JCINT CHIEFS OF STAFF
,K UNDER SECRETARIES OF DEFENSE
ASSISTANT SECRETARIES OF DEFENSE
GENERAL COUNSEL
ASSISTANTS TO THE SECRETARY OF DEFENSE
DIRECTORS OF THE JHFENSE AGENCIES
SUBJECT: Defense Hotline
To publicize our efforts to combat fraud and ineffi-
ciency in DoD operations, please ensure that the attached
memorandum is widely circulated in your organization. It
emphasizes the President's and my personal commitment to the •
reduction of fraud and inefficiency in Defense progran^s and
spotlights the Defense Hotline as an important tool in this
effort. Your continuing personal^ support of this anti-fraud
and management improvement program is essential to its
success. The program's success is a key to our ability to
acquire and manage the resources we need to strengthen and
improve our military forces,
I would also like each of you to take any additional
actions you feel appropriate to publicize the Defense
Hotline within your organization to maVe all your personnel
aware of its existence and your support for its use.
Possibilities include the use of posters, telephone stickers,
pamphlets, placing Hotline numbers on covers of DoD tele-
phone books, etc.
Please advise my Assistant for Review and Oversight by
June 15, 1981 of the specific publicity actions you have
planned. «
■>
ETiclosure
23
THt SECRETARY OF DEFENSE
WASHINGTON O.C 20MI
juN 5 m\
MEMORANDUM FOR ALL DEPARTMENT OF DEFENSE PERSONNEL
SUBJECT: Deferise Hotline
The reduction of fraud and Inefficiency In all Federal programs 1s a major
conmltment and priority of President Reagan. I fully support this
Presidential program and, to strengthen and focus Departmental efforts In
support thereof, I have established a new position of Assistant to the
Secretary of Defense (Review and Oversight). This new official will serve as
my principal advisor on matters relating to the combating of fraud, waste and
abuse 1n DoD programs and operations.
The comiltment to reduce fraud and waste cannot be met, however, by simply
establishing a new oversight office. Our efforts to attack fraud, waste and
Inefficiency will require the cooperation and support of all DoD personnel.
You are the key to the success of this effort, and success is essential if we
are going to acquire the resources and carry out the programs required to
strengthen and Improve our military forces. Each of you should be alert to
opportunities for Improved economies and efficiencies in DoO operations.
Reconmendatlons for Improved efficiency and economy of operations should be
made through the appropriate management channel or as part of the Depart-
mental suggestion a*<ard program. All Instances of suspected fraudulent
activities should be promptly reported to appropriate DoD criminal inves-
tigative organizations.
To ensure that full and proper consideration is given to all suspected cases
of fraud and mismanagement In DoD, I have established the Defense Hotline
under the direction and control of the Assistant to the Secretary of Defense
(Review and Oversight). The Defense Hotl'ne Is In Washington, DC and operates
between 0800 and 1630 each workday. The Hotline numbers are: 800-424-9098
'(toll free): 693-5080 (National Capital Region); and 223-5080 (Autovon). I
have directed the Assistant to the Secretary of Defense (Review and Oversight)
- to ensure that all substantive calls are fully Investigated, and that appro-
priate criminal and administrative remedies are pursued where warranted.
Moreover, I have directed that the identity of any caller be fully protected.
I en asking for your support and cooperation to assure that our objective is
•ccoap11$hftd.
24
May 14, 1982
NUMBER 7050.
Department of Defense Directive
ATSD(R&0)
SUBJECT: DoD Hotline
References :
PURPOSE
(a) DoD Directive 5148.10, "Assistant to the Secretary
of Defense (Review and Oversight)," April 20, 1981
(b) Secretary of Defense Memorandum, "Defense Hotline "
June 5, 1981 '
(c) through (f), see enclosure 1
This Directive establishes the DoD hotline program under refer-
ences (a) and (b), assigns responsibilities, and prescribes managing
and operating procedures. -
B. APPLICABILITY
This Directive applies to the Office of the Secretary of Defense
(OSD) and its field activities, the Military Departments including
their National Guard and reserve components, the Organization of the
Joint Chiefs of Staff (OJCS), the Unified and Specified Commands, and
the Defense Agencies (hereafter referred to as "DoD Components").
C. DEFINITIONS
1. Fraud. Includes fraud and other unlawful activity and is de-
fined as any willful or conscious wrongdoing that adversely affects
the government's interest. This includes, but is not limited to,
acts of dishonesty that contribute to a loss or injury to the
government.
,' i " ■".
2. Mismanagement. A collective terra covering acts of waste and
abuse. Extravagant, careless, or needless expenditure of government
funds or the consumption or misuse of government property, resulting
from deficient practices, systems, controls, or decisions. Abuse of
authority or similar actions not involving prosecutable fraud.
3. Independence. The state or quality of being free from the
influence or control of situations, things, or others. A general
standard which incorporates this quality and places upon the audi-
tors, inspectors, and investigators and their respective organiza-
tions, the responsibility for maintaining neutrality and exercising
objectivity so that opinions, conclusions, judgments, and recommen-
dations on allegations examined are impartial and will be viewed as
impartial by knowledgeable third parties.
25
D. POLICY
It is the policy of the Department of Defense to combat fraud and mismanage-
ment in DoD programs and operations. To strengthen and focus departmental
efforts in support of this policy, the DoD hotline program, under the direction
and control of the Assistant to the Secretary of Defense (Review and Oversight)
(ATSD(R&0)), will ensure that allegations of fraud and mismanagement are evalu-
ated; substantive allegations are examined; appropriate administrative, reme-
dial, or prosecutive actions are taken; and systems of records for the control
of the hotline are established and maintained.
E. PROCEDURES
1. Methods for processing and controlling the receipt, examination, and
reporting of all allegations referred to DoD Components for audit, inspection,
and investigation through the DoD hotline program, are addressed below and in
section F. , and include procedures to account for, monitor, and follow-up on
allegations referred to the hotline, regardless of source. Sources include com-
munications referred from the Congress, General Accounting Office (GAO) hotline,
Office of Management and Budget (0MB), DoD staff activities, and those written
to the ATSD(R&0).
2. Necessary controls shall be established to protect, to the maximum
extent possible, the identity of users of the DoD hotline program. Informants
shall be assured that they can report instances of fraud and mismanagement
without fear of reprisal or unauthorized disclosure of their identity. Inform-
ants reporting alleged fraud and mismanagement should be encouraged to identify
themselves so that additional facts can be obtained if necessary.
3. All substantive allegations received by the DoD hotline shall be ex-
amined. The examinations normally shall be conducted by qualified auditors,
inspectors, or investigators. When necessary, DoD Components may use in-
dividuals or groups with other professional or technical skills to assist
in or conduct examinations under the supervision of the responsible audit,
inspection, or investigative organization.
4. Procedures must ensure that due professional care and organizational
independence are observed, and that impartial and objective examinations are
made. Allegations must be examined by officials outside and independent of
the operation in which the complaint is alleged to have occurred.
5. DoD Components shall encourage their personnel to register complaints
and grievances through appropriate management and grievance channels, and sub-
mit suggestions for management improvements as a part of the DoD Incentive
Awards Program. However, they shall encourage the reporting of suspected fraud
and mismanagement to the DoD hotline program office either by telephone
(800)424-9098, (202)693-5080, or AUTOVON 223-5080 or by mail, DoD Hotline
Program, The Pentagon, Washington, D.C. 20301.
26
May 14, 82
7050.1
F. RESPONSIBILITIES
1- The Assistant to the Secretary of Defense (Review and Oversight)
(ATSD(R&0)), as the principal advisor to the Secretary of Defense on all mat-
ters relating to the prevention and detection of fraud and mismanagement, shall
develop and oversee the DoD hotline program, provide guidance to DoD Components
for implementing its policies, and shall:
a. Direct, manage, and control the operations of the DoD hotline pro-
gram and establish procedures to ensure that full and proper consideration is
given to all alleged cases of fraud and mismanagement in the Department of
Defense that is reported through the hotline program.
b. Ensure that audits, inspections, and investigations initiated as an
integral part of the DoD hotline program are conducted in accordance with appli-
cable laws, court decisions, and DoD regulatory documents and policies, includ-
ing the Uniform Code of Military Justice (reference (c)).
c. Review and evaluate periodically the operations of the DoD hotline
program.
d. Establish a DoD hotline advisory group composed of members of the
ATSD(R&0) staff whose functions shall be to:
(1) Review DoD hotline allegations furnished in accordance with
paragraph F.2.f., and provide guidance to the Defense Criminal Investigative
Service (DoD Directive 5105.50, reference (d)) and other DoD Components regard-
ing the processing of DoD hotline allegations and related audits, inspections,
and investigations.
(2) Review selectively the reports of completed audits, inspec-
tions, and investigations of DoD hotline cases. Weaknesses and deficiencies
in examinations shall be referred to ATSD(R&0) for appropriate action and
resolution.
(3) Advise the ATSD(R&0) of serious allegations and significant
trends disclosed in the operation of the DoD hotline program.
(4) Coordinate with the GAG hotline office on hotline-related
matters .
e. Coordinate with the heads of DoD Components concerned before
directly conducting audits, inspections, or investigations of matters normally
under their jurisdiction.
f. Ensure that any allegation involving the Office of the ATSD(R&0),
persons involved in the audit, inspection, or investigative functions or any-
one connected in any way with the hotline program receives an impartial,
independent, and objective review.
27
2. The Director, Defense Criminal Investigative Service (DCIS), shall:
a. Operate the DoD hotline program, logging all allegations received
by telephone, mail, or other means of communications from all sources.
b. Under the provisions of the Secretary of Defense memorandum and
P.L. 95-452 (references (b) and (e)), establish controls to protect, to the
maximum extent possible, the identity of all persons using the hotline.
c. Maintain proper controls, files, and records for tracking allega-
tions through the receipt, examination, and close-out phases.
d. Obtain specific and detailed information to ascertain the substance
of each allegation and determine the DoD Component to whom the allegation
should be referred for action. Use the format at enclosure 2, "Record of DoD
Hotline Call," for recording and documenting each allegation received by
telephone. Refer all non-DoD-related allegations to appropriate federal
agencies .
e. Prepare a DoD processing decision memorandum (see enclosure 3)
for allegations received, annotating to whom the allegations will be referred
for information or action with a recommendation whether the independent review
should be made by audit, inspection, or investigation, and other comments and
guidance considered necessary.
f. Refer items preliminarily determined to be sensitive, controversial,
or involving flag and general officers or DoD civilian officials of equivalent
grades to the DoD hotline advisory group for review and disposition guidance.
Refer other allegations directly to the DoD Component concerned.
g. Receive all DoD-related allegations from the GAG hotline office and
process them promptly in the same manner as DoD hotline allegations. Advise
the DoD hotline advisory group of any problems encountered in performing this
function.
h. Process promptly all allegations received, and expedite the process-
ing of allegations that are time-sensitive.
i. Monitor closely the reports of completed examinations to ensure
that all aspects of the hotline complaints were fully covered, the examinations
were properly conducted, and appropriate actions were taken based on examina-
tion findings.
j. Notify promptly the appropriate DoD Component hotline coordinator
of discrepancies noted in individual reports or apparent deficiencies in the
related examination, so that the DoD Component can review, and if necessary,
redo its audit, inspection, or investigation of the complaint and submit a
revised report.
k. Notify the ATSD(R&0) hotline advisory group of all instances where
reports of completed examinations indicate that the work performed did not meet
prescribed audit, inspection, or investigation standards, or was defective in
depth, scope, independence, or some other respect.
28
May 14, 82
7050.1
1. Investigate all allegations of criminal activity in the OSD, the
OJCS, and the Defense Agencies, and other allegations directed to DCIS by the
ATSD(R&0) or the DoD hotline advisory group.
m. Investigate and participate in investigations of allegations of
DoD hotline allegations of criminal activity involving more than one DoD
Component or in other special circumstances.
n. Ensure that due professional care and organizational independence
are observed at all times and that DCIS investigations of allegations are con-
ducted impartially and objectively.
o. Retain all DoD hotline investigation files for at least 2 years
after the DCIS investigation is completed.
p. Maintain a followup system to track the in-process status and final
disposition of all DoD hotline allegations. Include the results of criminal
prosecution, sentences imposed, monetary recoveries, administrative, and other
actions taken.
q. Inform Defense Agency hotline coordinators of allegations passed
directly, either to the Defense Audit Service or DCIS, for action, to keep the
Agency hotline coordinators informed.
r. Maintain liaison and communication with DoD Component hotline
coordinators, other government agencies and organizations, and with external
investigative agencies.
s. Prepare periodic summary analyses of all DoD hotline operations,
including regular reports to the ATSD{R&0) for each 6-month period ending on
March 31 and September 30. Include in the semiannual reports an accounting
for all allegations received at the DoD hotline office from all sources, and
prepare them in accordance with the format at enclosure 4, "DoD Hotline
Program--Analysis of Allegations received."
t. Sustain the widest dissemination of information concerning the hot-
line by using such mechanisms as news releases, items in internal publications
(including telephone directories), official notices, posters, and other media.
Develop educational material for use in encouraging DoD employees to report
fraud and mismanagement in DoD programs and operations.
3. Heads of other DoD Components shall establish and implement policies
to ensure that the DoD hotline program is fully effective. To achieve this
aim, they shall:
a. Establish a single coordinator to manage, monitor, and report to
DCIS the actions of audit, inspection, and investigative groups on DoD hotline
allegations referred to the DoD Component for action.
b. Establish procedures set forth in section E., this Directive.
c. Normally, have the cognizant audit, inspection, and investigative
organizations examine DoD hotline complaints. They, in turn, shall:
29
(1) Audit, inspect, or investigate DoD hotline referrals in accor-
dance with the standards and procedures prescribed herein. Examination of DoD
hotline allegations by Army, Navy (including the Marine Corps), and Air Force
Inspectors General shall be conducted as informal investigations using the pre-
scribed procedures of each Military Department concerned. Ensure that examina-
tions conducted by other individuals or groups are supervised by one of the
audit, inspection, or investigative organizations.
(2) Maintain appropriate records to ensure accountability for all
DoD hotline referrals until final disposition.
(3) Establish necessary controls to protect, to the maximum extent
possible, the identity of all DoD hotline users who request anonymity.
(4) Ensure that due professional care and organizational inde-
pendence are observed and that audits, inspections, and investigations are
conducted impartially and objectively.
(5) Process promptly all allegations received, and expedite the
examination of allegations that are time-sensitive.
(6) Retain all working papers and files for at least 2 years after
an examination is completed.
(7) Submit to DCIS progress reports on the status of all open
cases which have been open 6 months or more as of March 31 and September 30 to
facilitate semiannual reporting under P.L. 95-452 (reference (e)). Submit a
report for eath open case using the format at enclosure 5, "DoD Hotline Pro-
gress Report," within 15 working days of the close of each 6-month period.
(8) Submit a final report through the Component's hotline coordi-
nator to DCIS within 60 days from the date the complaint was transmitted by
DCIS for action. Use the format prescribed at enclosure 6, "DoD Hotline Com-
pletion Report." When an examination cannot be completed in 60 days, notify
DCIS of the reason for the delay and the date the report can be expected.
(9) Provide ATSD(R&0) and DCIS information or documentation rela-
tive to examinations in process or closed, as may be required.
d. Cooperate with the auditors, inspectors, and investigators in
granting immediate unrestricted access to personnel, documents, and records,
and providing suitable working facilities and arrangements.
e. Ensure, under reporting requirements outlined in F.3.c.(8), above,
that local commanders report promptly to the referring audit, inspection, or
investigative organization on the administrative or other type actions taken
on cases referred to Lhem for resolution.
f. Maintain an active hotline publicity program using local newspapers,
official notices, posters, telephone directories, and other media. Implement
education programs to encourage employees to identify and report fraud and mis-
management in DoD programs and operations.
33-732 0—84 3
30
May 14, 82
7050.1
G. INFORMATION REQUIREMENTS
The reporting requirements prescribed in section F. , above are exempt from
formal approval and licensing in accordance with subsection VII. F. of enclosure
3 to DoD Directive 5000.19 (reference (f)).
H. EFFECTIVE DATE AND IMPLEMENTATION
This Directive is effective immediately. Forward two copies of implement-
ing documents to the Assistant to the Secretary of Defense (Review and Over-
sight) within 60 days.
Frank C. Cariucci
Deputy Secretary of Defense
Enclosures - 6
1. References
2. Record of DoD hotline call
3. DoD hotline processing decision memorandum
4. DoD hotline program--analysis of allegations received
5. DoD hotline progress report
6. DoD hotline completion report
31
May 14, 82
7050.1 (End 1)
REFERENCES , continued
(c) Title 10, United States Code, Sections 801-940, "Uniform Code
of Military Justice"
(d) DoD Directive 5105.50, "Defense Criminal Investigative Service,"
April 28, 1982
(e) Public Law 95-452, "Inspector General Act of 1978," October 12, 1978
(f) DoD Directive 5000.19, "Policies for the Management and Control of
Information Requirements," March 12, 1976
DATE:
CONTROL NUMBER:
ALLEGATION :
32
May 14, 82
7050.1 (End 2)
RECORD OF DOD HOTLINE CALL
TIME:
AGENT:
CALLER'S NAME:
CIVILIAN TITLE OR MILITARY RANK:
HOME ADDRESS:
HOME TELEPHONE:
BUSINESS OR FEDERAL AGENCY ADDRESS:
BUSINESS OR FEDERAL AGENCY TELEPHONE:
DID CALLER TAKE OTHER ACTION REGARDING THIS MATTER?
To Whom:
When:
Results :
IS CALLER AMENABLE TO PERSONAL INTERVIEW?
DOES CALLER REQUEST ANONYMITY?
WAS AN EXPRESSED PROMISE OF CONFIDENTIALITY GIVEN?
Yes
No
Yes
No
Yes
_ No
Yes
No
AGENT'S EVALUATION OF ALLEGATION
33
May 14, 82
7050.1 (End 2)
RECORD OF DoD HOTLINE CALL
CONTROL NUMBER:
ALLEGATION:
COMPLAINT: (Record of call should contain basic elements of information to
identify the who, what, where, when, and why of the offense. Obtain fullest
details possible, such as nature of offense; DoD Component involved; location
of offense; names, number and type of people involved; nature and extent of
loss; modus operandi; means of concealment; corroboration by persons or docu-
mentation, dates and duration of offense):
CALLER WAS GRANTED ANONYMITY under guidance contained in Secretary of Defense
Memorandum for all DoD Personnel, June 5, 1981. The identity of the caller
will be protected, to the maximum extent possible. If additional information
is necessary, contact
2-2
34
May 14, 82
7050.1 (End 3)
CONTROL NO.
DoD HOTLINE
PROCESSING DECISION MEMORANDUM
DATE:
1. REFER FOR INDEPENDENT REVIEW
(Tracking required)
FOR INDEPENDENT REVIEW BY:
Army
Navy ,
Air Force
DAS
DCIS Ixxxxxxxx
Other (specify)
AUDITORS
INSPECTORS
INVESTIGATORS
XXXX5QQ(XXX
XXXXXXXXXXXXX
XXXXXXXX
XXXXXXXXXX
1 XXXXXXXXXXXXX
REFER FOR INFO/ ACT I ON
(No tracking or response required)
Army
Navy ,
Air Force ,
Other (specify)
3. CLOSE CASE (without referral action)
I I Insufficient information
1 I Other (specify)
4. ACKNOWLEDGEMENT REQUIRED (specify)
□
□ ^
5. COMMENTS OR GUIDANCE
35
lOs'^'h \kc¥ 4)
POD HOTLINE PROGRAM
ANALYSIS OF ALLEGATIONS RECEIVED - (PROVIDE SOURCE)
SIX-MONTH PERIOD ENDED
DoD Component
Number of Allegations Received:
Prior periods
Current period
Total allegations received
Less: Number referred to other
departments
Net Allegations Received
Less: Number closed without referral
to DoD Components
Net Allegations Subject to Referral
to DoD Components
Less: Number referred to DoD
Components for information
Net Allegations Referred to DoD
Components for Examinations
Less: Allegations closed
Prior periods
Current period
Total allegations closed
Allegations Open as of
(End of period)
Aging of Open Allegations:
April 1981 - September 1981
October 1980 - March 1981
April 1980 - September 1980
Prior to April 1980
Totals
Air
Defense
Army
Navy
Force
Agencies
Total
1,455
806
753 637
750 632
243
184
532
488
424
295
19
24
8
507
448
303
243
184
224
89
21
110
100
2,261
26
2,235
100
213 2,135
16
527 210 2,119
1,296
72
1,368
751
216
151
174
71
612
18
20
16
7
61
4
4
12
8
28
5
9
22
14
50
224
100
751
Numbers supplied for illustrative purposes only.
36
May lA, 82
7050.1 (End 5)
POD HOTLINE PROGRESS REPORT
AS OF (APPLICABLE DATE)
1- Applicable DoD Compoaent:
2. Hotline Control No:
3. Date Referral Initially Received:
4. Status :
Examination is being conducted by (name of applicable organization).
(Describe in brief terms the allegation and what has been determined
to date) .
5. Expected Date of Completion:
6. Action Agency Point of Contact:
37
May lA, 82
7050.1 (End 6)
POD HOTLINE COMPLETION REPORT
AS OF (APPLICABLE DATE)
1 • Name and Organization of Examining Of f icial(s) :
2. Hotline Control No:
3. Scope of Examination, Conclusions, and Recommendations. Identify allegation,
applicable organization and location, person or persons against whom the alle-
gation was made, dollar significance of actual or estimated loss or waste of
resources, and results of examination, including amount of actual or potential
recoveries of resources which tend to prove or disprove the allegation. In-
clude comments regarding the nature and scope of examination (documentary
review, witnesses interviewed, evidence collected, or interrogations of person
or persons identified above, when appropriate). Provide comments on program
reviews made; adequacy of existing regulations or policy; system weaknesses
noted; and similar weaknesses.
^- Cite Criminal or Regulatory Violation or Violations Substantiated.
5. Disposition. Report the specific action taken. For examinations involving
economies and efficiencies, report management actions taken or planned at the
time of the final report. For examinations involving criminal or other unlawful
acts, include results of criminal prosecution, providing details of all charges
and sentences imposed. Include results of administrative sanctions, reprimands,
value of property or money recovered or other such actions taken to preclude
recurrence .
6. Security Classification of Information. Each examining organization must
determine and state, when applicable, the security classification of informa-
tion included in this report which could jeopardize national defense or other-
wise compromise security if the contents were disclosed to unauthorized sources.
7 . Location of Field Working Papers and Files.
J8
OFNAVIMST 12000.14 CH-26
J*. 15 J982
CPI 752
File Immediately Fbllowing Chapter 752
of the Federal Personnel Manual
DEPARTMENT OF NAVY ADVERSE ACTIONS
I. PURPOSE
This instruction establishes the Departmerft of tiavy (DON)
regulations for effecting adverse actions and provides guidance
in disciplinary actions.
II. DEFINITIONS
A. "Activity" means a field installation, headquarters
command, or office.
B. "Appealable Adverse Action" means a removal, suspensions
for more than 14 days, reduction in grade or pay, or furlough
for 30 days or less.
C. "Days" means calendar days.
^ D. "Employee" means:
1. RDr purposes of grievable adverse actions, a member
of the Senior Executive Service or an individual in the
competitive service who is not serving a probationary or trial
period under an initial appointment or who has completed one
year of current continuous employment under other than a
temporary appointment limited to one year or less; and ^
2. PDr purpose of appealable adverse actions:
- a. those employees listed in Dl, and
b. a preference eligible in the excepted service who
has completed one year of current continuous service in the same
or similar position.
E. "Furlough" means the placing of an employee in a
temporary status without duties and pay because of a lack of
work or funds or other nondisciplinary reasons.
F. "Grade" means a level of classification under a position
classification system.
Enclosure (1)
39
OPHM'NOTK 12752
2 0 oc r mo
CPI 752
G. "Grievable Adverse Action" means a letter of reprimand or
a suspension for 14 days or less.
H. "Letter of Admonishment" means a written correction by a
superior official of an employee's improper conduct.
I. "Letter of Reprimand" means a written remedy by a superior
official for an employee's improper conduct. "i
J. "Itoncontestable Action" means an oral admonishment or a
letter of admonishment, i.e., an action not recorded in an
employee's Official Personnel Folder.
K. "Official" means an employee who has been delegated
authority to propose or decide an adverse action under this
instruction.
L. "Oral Admonishment" means an oral (non-written) correction
by a superior official of an employee's improper conduct.
M. "Pay" means the rate of basic pay fixed by law or
administrative action for the position hold by «n employoe.
N. "Removal" means the involuntary separation of an employee
from the activity except when taken as a reduction-in-force
action.
O. "Suspension". means the placing of an employee in a
temporary status i-hout duties or pay for disciplinary reasons.
III. COVErJvGE
This instruction applies to all Department of Navy employees
as defined in II D above except:
A. An employee of a non-appropriated fund instrumentality;
B. Schedule B excepted service employees without
competitive status;
C. An employee whose appointment is made by and with the
advice and consent of the Senate;
P* ^ employee whose position has been determined to be of
a confidential, policy-determining, policy-making or policy-
Advocating character by:
Enclosure (1)
40
OH-IAVINST 12000.14 CH-26
JUL 15 m?
CPI 752
1. The Office of Personnel Management fpr a position
that it has excepted from the competitive service; or
2. The President or the Secretary of the Navy for a
position which is excepted from the competitive service by
statute, and
E. Reduction in grade or pay and furlough for 30 days or
less for a member of the Senior Executive Service;
F. Ftor suspensions of 14 days or less, members of the
Senior Executive Service and employees as defined in IID2b.
— > G. Removal or suspension for more than 14 days of a
noncareer, limited term, or limited emergency Senior Executive
Service appointee; or such removal or suspension of a career SES
member during the probationary period who, by virtue of the
appointment held immediately prior to entry into the SES, was
not covered.^ —
IV. EXCLUSIONS
A. A suspension or removal taken in the interests of
national security. (5 USC 7532)
B. A reduction-in-force action.
C. The reduction in grade of a supervisor or manager who
has not satisfactorily completed the probationary period if such
reduction is to the grade held immediately before becoming such
a supervisor or manager. (5 USC 3321)
D. A reduction in grade or removal based solely on
unacceptable performance. (5 USC 4303)
E. An action initiated under authority of the Special
Counsel or taken at the direction of the Merit Systems
Protection Board. (5 USC 1205, 1206, 1207)
F. An action taken under provision of statute, other than
one codified in 5 USC, which excepts the action from subchapter
II of Chapter 75 of 5 USC.
G. An action which entitles an employee to grade retention
and an action to terminate this entitlement. (5 USC 5362)
H. A voluntary action initiated by the employee.
I. An action taken or directed by the Office of Personnel
Management for suitability reasons. (5 CFR Parts 731 and 754)
J. Involuntary retirement because of disability.
Enclosure (1)
3
41
OPNAVNOTE 127 52
20 0CT)3eo
CPI 752
K. Termination of appointment on the expiration date
specified as a basic condition of employment at the time the
appointment was made.
L. Action which terminates a temporary promotion within a
maximum period of two years and returns the employee to the posi-
tion from which temporarily promoted, or reassigns or demotes the
employee to a different position not at a lower grade or level
than the position from which temporarily promoted.
M. An action which terminates a term promotion at the
completion of the project or a specified period, or at the end of
a rotational assignment in excess of two years but not more than
five years, and returns the employee to the position from which
promoted or to a position of equivalent grade and pay.
N. Cancellation of a promotion to a position not classified
prior to the promotion.
O. Placement of an employee serving on an intermittent,
part-time, or seasonal basis in a nonduty, nonpay status in
acccordance with conditions established at the time of
appointment.
P. Reduction of an employee's rate of pay from a rate which
is contrary to law «or regulation to a rate which is required or
permitted by law or regulation.
Q. An action against a reemployed annuitant.
R. An action against a Presidential appointee.
V. DELEGATION OF AUTHORITY
Heads of activities are delegated authority to propose and
decide adverse actions under this instruction. Activity heads
shall redelegate authority to propose and decide such actions to
subordinate supervisors and managers to the extent they deem
appropriate.
VI. STANDARD FOR ACTION
A. Activities shall take an adverse action against an
employee only for such cause as will promote the efficiency of the
service.
Enclosure (1)
42
OPNAVNOTE 12752
20 OCT /PSO
CPI 752
B. Activities may not take an adverse action against an
employee on the basis of any prohibited personnel practice. (5 USC
2302)
C. Appendix A provides guidance on taking disciplinary
actions.
D. Appendix B is the DON guideline schedule of disciplinary
offenses and remedies.
VII. PROCEDURES FOR NONCONTESTABLE ACTIONS
A. An oral admonishment will not be counted as a prior
offense when determining a remedy under Appendix B. An oral
admonishment will not be made a matter of record in an employee's
Official Personnel Folder. An oral admonishment is neither
grievable nor appealable.
B. A letter of admonishment will:
1. Specify the reasons for its issuance,
2. Specify that the letter of admonishment is neither
grievable nor appealable.
3. State that it will not be made a matter of record in
an employee's Official Personnel Folder, and
4. State that it will not be counted as- a prior offense
when determining a remedy under Appendix B.
VIII. PROCEDURES FOR GRIEVABLE ADVERSE ACTIONS
A. A letter of reprimand will:
1. Specify the reasons for its issuance,
2. Specify the employee's right to file a grievance
under CPI 771 or under a negotiated procedure, as appropriate,
3. State the length of time, not less than one nor
more than two years, that it will be made a matter of record in
the employee's Official Personnel Folder, and
Enclosure (1)
43
OPNAVNOTE 12752
20 OCT 1930
CPI 752
4. State that it may be counted as a prior offense
when determining a remedy under Appendix B.
B. An employee against whom a suspension of 14 days or
less is proposed is entitled to:
1. An advance written notice stating:
a. the specific reasons for the proposed action,
b. the name and title of the official designated
to hear an oral reply and/or receive the written reply (the
official so designated must have authority to either make or
recommend a final decision on the proposed adverse action),
c. the amount of time (but not less than 24 hours)
that the employee is allowed to answer orally and in writing, and
d. the right of the employee or the employee's
representative to review the material which is relied upon to
support the reasons given in the notice;
2. a reasonable amount of official time to review the
material relied upon to support the proposal and to prepare an
answer and to secure affidavits, if the employee is otherwise in
an active duty status;
3. a reasonable time, but not less than 24 hours, to
answer orally and in writing and to furnish affidavits and other
documentary evidence in support of the answer;
4. be represented by an attorney or other
representative; and
5. a written decision at the earliest practicable date
which:
a. considers only the reasons specified in the
notice of proposed action,
b. specifies the reasons for the decision,
c. considers any answer of the employee and/or the
employee's representative made to a designated official.
Enclosure (1)
44
OPNAVNOTE 127 52
20 OCT mo
CPI 752
d. is signed by an official in a higher position
than the official who proposed the action (if the activity head
signed the advance written notice, the next higher level of
management in chain of command must sign the written decision),
e. specifies the employee's right of appeal which
is to file a grievance under CPI 771 or under a negotiated
grievance procedure, as appropriate, and
f. which is delivered to the employee on or before
the effective date of the action.
C. Employees in receipt of an advance notice may request
an additional time to respond orally and in writing. The official
designated to accept the response may make a decision regarding
such request.
D. An employee's choice of an employee representative may
be disallowed if such representative would result in a conflict of
interest or position, conflict with the priority needs of the
activity, or would give rise to unreasonable costs to the
Government. The terms of any applicable bargaining agreement
govern representation for employees in an exclusive bargaining
unit.
1. Activity heads shall redelegate authority to make a
determination to disallow the choice of an employee's representa-
tive to an appropriate level no lower than the level of the
official designated to make the final written decision.
2. Activity instructions shall establish an expedited
process for resolving an employee's disagreement with a determina-
tion to disallow a choice of representative. At a minimum, the
review process shall require an official higher than the one who
made the disputed determination to make a final decision.
IX. PROCEDURES FOR APPEALABLE ADVERSE ACTIONS
A. An employee against whom an appealable adverse action is
proposed is entitled to:
1. at least 30 days' advance written notice (unless
there is reasonable cause to believe the employee has committed a
crime for which a sentence of imprisonment may be imposed),
stating:
Enclosure (1)
45
OPNAVNOTE 127 52
2.oocri980
CPI 752
a. the specific reasons for the proposed action,
b. the name and title of the official designated to hear
an oral reply and/or receive the written reply (the official so
designated must have authority to either make or to recommend a
final decision on the proposed adverse action),
c. the number of days, but no less than 7 days, that the
employee is allowed to answer orally and in writing, and
d. the right of the employee or the employee's
representative to review the material which is relied upon to
support the reasons given in the notice; and
e. if appropriate, the basis of selecting a particular
employee for furlough, when some but not all employees in a given
competitive level are being furloughed, and the reason for the
furlough;
2. a reasonable amount of official time to review the
material relied upon to support the proposal and to prepare an
answer and to secure affidavits, if the employee is otherwise in
an active duty status;
3. a reasonable time, but not less than 7 days, to answer
orally and in writing and to furnish affidavits and other
documentary evidence in support of the answer;
4. be represented by an ^.ttorney or other representative;'
and
5. a written decision at the earliest practicable date
which:
a. considers only the reasons specified in the notice of
proposed action,
b. specifies the reasons for the decision,
c. considers any answer of the employee and/or the
employee's representative made to a designated official,
d. is signed by an official in a higher position than
the official who proposed the action (if the activity head signed
Enclosure (1)
33-732 O— 84-
46
OPNAVNOTE 12752
2 0 OCT 1993
CPI 752
the advance written notice, the next higher level of management in
chain of command must sign the written decision) ,
e. specifies the employee's right of appeal which is to
the Merit Systems Protection Board (MSPB) and right, when
applicable, to file a grievance under negotiated grievance
procedures, but not both;
f. provides the time limits for filing an appeal to
MSPB, the address of the appropriate Board office for filing the
appeal, a copy of the Board's regulations and a copy of the
Board's appeal form (Appendix C), and
g. which is delivered to the employee on or before the
effective date of the action.
B. Since a hearing shall be made available at an employee's
request after an action has been effected, activities may not
provide for a hearing in lieu of or in addition to the opportunity
for written and oral answer.
C. IThen the crime provision is invoked, activities may
effect an action in less than 30 days following the advance
written notice. Activities may require the employee to furnish
any answer to the proposed action and affidavits and other docu-
mentary evidence in support of the answer within such time as
under the circumstances would be reasonable, but not less than
seven days. When the circumstances require immediate action, the
activity may place the employee in a nonduty status with pay for
such time, not to exceed 10 days, as is neccessary to effect the
action.
D. The advance written notice and opportunity to answer are
not necessary for furlough without pay due to unforeseen circum-
stances such as sudden breakdowns of equipment, acts of God, or
sudden emergencies requiring immediate curtailment of activities.
for a
remova
Enclosure (1)
47
OPNAVNOTE 127
20 0cri9eD
CPI 752
52
refle
favorably on
ci
Wh
;mpl
to exceed 10 days, as
the public perception of the Department of
shall include in the not>(5e of susi5ension
ining the^mployee
perioa of a removt
ty niflty require the/femployee feO furnish any
ion and affidifvits and sxher documentary
he answer wifcHin such time as undeir the
reasonable ,^iuit not le^rs than sevgn days
require ipaiiediate aotion , the aeftivity ip«y
nondut^r status wi^ pav for ^ch timeo not
is nec^sary to el
^. ^. Employees in receipt of an advance notice may request an
additional time to respond orally and in writing. The official
designated to accept the response may make a decision regarding
such request.
F. X. An employee's choice of an employee representative may be
disallowed if such representative would result in a conflict of
interest or position, conflict with priority needs of the activ-
ity, would give rise to unreasonable costs to the Government. The
terms of any applicable bargaining agreement govern representation
for employees in an exclusive bargaining unit.
1. Activity heads shall redelegate authority to make a
determination to disallow the choice of an employee's representa-
tive to an appropriate level no lower than the level of the
official designated to make the final written' decision.
2. Activity instructions shall establish an expedited
process for resolving an employee's disagreement with a determina-
tion to disallow a choice of representative. At a minimum, the
review process shall require an official higher than the one who
made the disputed determination to make a final decision.
X. ROLE OF PERSONNEL OFFICES
A. The servicing civilian personnel office will provide
advice and guidance to employees and managers involved in adverse
actions.
B. The servicing civilian personnel office shall maintain
records required by paragraph XI of this instruction.
Enclosure (1)
10
48
OPNAVINST 12000.14 CH-11
M0\/04 1981
CPI 752
XI. RECORDS
A. A record shall be maintained which, at a minimum, shall
contain copies of:
1. The proposed action.
2. The employee's written answer, if any.
3. A summary of the employee's oral reply, if one was
made.
4. The notice of decision and the reasons therefor.
5. Any supporting material.
6. Any order effecting the decision.
— > B. If an employee appeals to the MSPB, the record shall be
furnished to the employee affected upon the employee's request
and to the MSPB. The record shall be submitted to the appropriate
field office in the following manner:
1. The documents should be placed in date order with
the earliest dated document at the bottom and the latest dated
document at the top.
2. A table of contents should be prepared which
identifies the case and lists all the enclosed documents (the
f" rliest dated document should be identified and tabbed as number
1, the next document in date sequence should be identified and
tabbed as number 2, and so on. The highest number should indicate
the most recent document.
3. The table of contents should have the following
headings:
Location Date Document Description Source
(The location indicates the tab number under which the document is
filed; the date is the date of receipt or issuance of the docu-
ment; document description should fully identify the document;
source should indicate the submitter of the document.)
11 Enclosure (3)
49
/INST J.20Q0wL4
NOV 04 19 81
OPNAVINST ^2,098^4 CH-11
CPI 752
4. Place the completed table of contents on top of the
tabbed documents or, if a manila folder or equivalent is used,
place the table of contents on the left side of the folder and -the
tabbed documents on the right side. ^—^
XII. REPORTS
Statistics on formal adverse actions effected under this
CPI shall be generated by the Personnel Automated Data System
(PADS) and reviewed by CNO {Op-14) and the Commandant of the
Marine Corps (MPC-30) for Marine Corps activities. Inconsisten-
cies revealed by such review shall be referred to the appropriate
level of command for resolution.
XIII. IMPLEMENTING INSTRUCTIONS
Activities are required to issue local instructions
implementing this Civilian Personnel Instruction by 1 October
1981.
Enclosure (3) 11.01
50
OPNAVNOTE 1275 2
20 OCT 1990
CPI 752-A
APPENDIX A - Guidance in effecting disciplinary actions
A. Purpose
The purpose of Appendix A i? to provide advice ami guidance to
supervisors and managers in effecting disciplinary actions. While
none of this advice and guidance is mandatory, it should be under-
stood to constitute minimum acceptable procedure and followed
under normal disciplinary situations. Sf.-o FPM 752 for detailed
advice and guidance of a predominately t(?clinical nature.
B.' DON philosophy of discipline
Discipline is a managerial tool intended to correct
deficiencies in employee behavior and attitude, correct situations
which interfere with efficient operations, maintain high standards
of government service and maintain public confidence 'in the
Department of the Navy. It is not the philosophy of DON to
utilize disciplinary measures for the sole purpose of punishing
employees. An employee whose behavior is not acceptable to
management but whose behavior is not correcte(] is quite likely to
persist in that unacceptable behavior in the erroneous belief that
it is correct, or at least condoned. Supervisors and managers
have an obligation to such employees to correct behavioral
deficiencies while they are still minor and before the behavior
becomes habit and a bad example to others. It is easi<-r to
correct a first instance of deficient behavior than to ignore the
situation and later try to correct the third, fourth, or fifth
instance. It is easier and better management to correct a minor
case of deficient behavior than to ignore the situation and allow
the problem to become a major one.
C. Guidance in selecting a proper course of disciplinary action
1. CHOOSE THE MINIMUM DISCIPLINARY ACTION LIKELY TO CORRECT
THE IMPROPER BEHAVIOR. Most people would not use an elephant gun
in hunting rabbits and this analogy holds true in choosinj disci-
plinary actions. For example, it would be foolish to attempt to
correct an employee's first instance of tardiness by imposing a
1-day suspension. Such an action could create a significant
amount of resentment in the employee and do more damage than good.
Determining the minimum action likely to correct the problem is
extremely important and a responsibility which frequently lies
with the first line supervisor.
12
51
OPNAVNOTE 12752
zoocjmo
CPI 752-A
2. DISCIPLINARY ACTIONS MUST BE FAIR AND JUST. This is
another way of saying that there must be similar actions for
similar offenses. This does not mean that all similar actions
must bear identical remedies since there are other factors such as
mitigating circumstances which should be considered. It is impor-
tant that managers have good reasons for imposing significantly
different remedies for similar offenses. A good place to start in
determining a proper remedy is to look at Appendix B. While the
schedule of corrective actions in Appendix B is not mandatory,
most actions within -the DON fall within its limits and there
should be good reasons for deviation from the guide when it
occurs.
3. DISCIPLINARY ACTIONS SHOULD BE. TIMELY. Being timely does
not mean that disciplinary actions should be taken in haste.
Disciplinary actions should not be taken precipitately because
important facts mights be ignored. However, the corrective
influence of a suspension, for example, is greatly diminished if
it follows the offense by six months or a year.
4. MITIGATIWG, UNUSUAL, OR AGGRAVATING CIRCUMSTANCES SHOULD
BE CONSIDERED IN DETERMINING A PROPER DISCIPLINARY ACTION. Such
considerations as the employee's position, length of service,
prior disciplinary actions, etc., should be taken into considera-
tion. If at all possible, obtain the employee's version of the
events before initiating a disciplinary action. It may be that
the employee will have an acceptable explanation or be able to
present mitigating circumstances.
5. CONSIDER THE EMPLOYEE AS A UNIQUE INDIVIDUAL. VJhat is the
employee's attitude? Does the employee fully understand the
nature of the offense and why the manager is troubled? Is the
offense part of a continuing behavioral pattern or does it repre-
sent an isolated action? Has the employee been led to believe
that the behavior in question is appropriate?
D. Alternative courses of action
V^;hile it is a generally bad idea to ignore instances of
employee misconduct, all misconduct does not warrant disciplinary
action. There are other forms of correction available.
1. EXPLANATION OR TRAINING. If the employee is unaware of
the proper performance or conduct, it may be that training, or
perhaps a sound explanation, will be sufficient to correct the
Enclosure (1) 13
52
OPNAVINST 12000. 14 CH-29
flUG 2 3 J982
CPI 752-A
problem. This alternative is likely to be appropriate
particularly when the employee is new or working in an
unfamiliar environment.
>2. CIVILIAN EMPLOYEE ASSISTANCE PROGRAM (CEAP). As a
general rule it is in the best interest of DON to rehabilitate
rather than remove an employee. Misconduct is not always
willful. It may stem from alcoholism, misuse of drugs, or from
other personal problems which may be helped through the Civilian
Einployee Assistance Program (CEAP). A manager should seek
guidance and advice from the civilian personnel office on
whether to refer an employee to a CEAP counselor or take
disciplinary action. < —
3. PERFORMANCE RATINGS. Most employees are aware of the
importance of performance ratings and want to receive favorable
ratings. Employees who are under the Merit Pay System know that
the amount of their salary depends in large part upon good
performance appraisals. A discussion about performance and/or a
low performatice appraisal should have a positive effect in
improving employee performance. If an employee's performance
becomes unacceptable, that employee may be demoted or removed in
accordance with CPI 432. ^ —
4. WITHHOLDING WITHIN-GRADE INCREASES. If an employee's
performance does not warrant a within-grade-increase, it is
appropriate to give the employee a negative determination. This
procedure is available to defer or deny unearned incremental
salary increases and to motivate the employee to improve current
performance. See CPI 431 for further details.^ —
5. FITNESS FOR DUTY EXAMINATIONS. Misconduct may be the
result of illness. In such ** instances, reassignment to a
position vhich the employee can physically handle or retiring
the employee on disability is preferable to effecting
disciplinary action. One way that management has of determining
whether or not illness is the cause of the misconduct is to
refer the employee for a fitness- for-duty examination.
Enclosure (1)
14
53
OPNAVINST 12000.14 CH-29
AUG 23 mz
CPI 752-A
6. VOLUNTARY ACTION BY AN EMPLOYEE. An employee who is
confronted by management with a potential disciplinary situation
may volunteer to accept a lower grade, a reassignment or resign
in lieu of a disciplinary action.— ^However , management must not
coerce the employee into taking such an action. <— It is
permissible to tell an employee that a removal action is
contemplated and that if he/she resigns before an action is
proposed, no record will be made in the Official Personnel
File. It is not permissible to tell the employee that he/she
must resign or face a removal action. The latter example is
coercion, and must be avoided. See FPM 75 2 for further details. <
7. LETTERS OF CAUTION. A supervisor may want to warn an
employee that continued instances of misconduct may lead to
disciplinary action. In such instances, the supervisor may wish
to issue a nondisciplinary letter cautioning the employee that
future misconduct may lead to disciplinary action. These
letters are not disciplinary or adverse actions. The warning is
prospective only and is not grievable.
8. LETTERS OF REQUIREMENT. In cases of sick or annual
leave abuse, or other specific performance deficiencies, a
supervisor may wish to impose requirements on an individual
which do not apply to the rest of the work force. This can be
done by issuing a letter of requirement which establishes the
precise circumstances under which leave will be approved or
precisely what performance is required. Letters of requirement
are not disciplinary actions. Letters of requirement are
nothing more than written orders.
E. Special disciplinary situations
1. LEAVE ABUSE. Leave Without Pay (IWOP) is an approved
absence. Supervisors should not attempt to impose disciplinary
action based on instances of IWOP. If an employee is absent
without permission, that employee must be carried as Absent
Without Leave (AWOL). A charge of AWOL will support a
disciplinary action. However, every instance of AWOL does not
demand a disciplinary action. An employee who is AWOL will not
be compensated for the period of unapproved absence. A
supervisor may determine that the loss of pay is sufficient
motivation to prevent such absences in the future.
Enclosure (1)
15
54
OPNAVINST 12000.14 CH- 29
CPI 752-A
'2. LEAVE WITH PAY. In unusual cases, an employee's actions
may represent a threat to life, health or government property,
and it may be necessary to remove the employee from the worksite
while a disciplinary action is being processed. In such
instances, it is permissible to place the employee in a nonduty
status with pay for up to->30 days. See CPI 630<-and FPM 752 for
a detailed discussion of this option.
— > 3. INDEFINITE SUSPENSION. If there is good reason, such as
an indictment, to believe that an employee is guilty of a crime,
it is possible to place the employee on an indefinite suspension
pending resolution of the matter. Though an indefinite
suspension is of unspecified duration, the same rules apply as
to any type of suspension. If it is expected that the
indefinite suspension will last for more than 14 days, the
employee must be given 30 days' notice (7 days if the crime
provision is invoked), and the employee has the right to appeal
to the Merit Systems Protection Board (MSPB) . "Emergency"
supensions without giving employees the proper notice period and
appeal rights are no longer permitted (Cuellar v. U.S. Postal
Service, MSPB Docket No. SF075299045, November 13, 1981). FPM
752 should be reviewed carefully before an indefinite suspension
is proposed.
4. DRUG ABUSE PROBLEMS. All civilian employees of the DON
support, directly or indirectly, the mission of the operating
forces. Drug abuse among these employees has a detrimental
effect on their health, conduct and performance and, therefore,
undermines their ability to provide the necessary level of"
support to assure the readiness of those forces. Consequently,
because drug abuse is incompatible with safe, effective and
efficient mission accomplishment, it must be detected and
eliminated. SECNAVINST 5300.28 prohibits the wrongful or
illegal possession or use of marijuana, narcotics or other
controlled substances in any amount, or the sale, promotion or
distribution of marijuana, narcotics or other controlled sub-
stances or drug paraphernalia. Such prohibited misconduct may
Enclosure (1)
:•: 16
55
OPNAVINST 12000.14 CH-29
AUG 2 3 1982
CPI 752-A
warrant administrative corrective action up to and including
removal. However, when such abuse is determined to be a handi-
capping condition, as defined by the Rehabilitation Act of 1973,
and the activity knew or should have known that the condition
existed prior to the incident giving rise to the consideration
of disciplinary action, it must be dealt with in accordance with
the provisions of the CEAP as promulgated by CPI 792.
a. Effecting Adverse Actions. Whether the drug abuse
involves the possession, use, sale or transfer of drugs or drug
paraphernalia, any resulting adverse action must demonstrate
compliance with certain precedential decisions rendered by the
Merit Systems Protection Board (MSPB) . By its decision in
Merritt v. Etepartment of Justice, MSPB has determined that
it is the activity's burden to prove the existence of a logical
and reasonable nexus between the misconduct (on or off-duty) on
which the adverse action is based, and the adverse effect which
that misconduct had on the employee's performance, the perform-
ance of others, or the mission of the activity. Activities are
cautioned to avoid limiting their nexus demonstration to an
assertion that the action taken or proposed promotes the
efficiency of the service. MSPB has ruled that such an
assertion, per se, fails to establish the nexus. In its
decision in Merritt, MSPB ruled that off-duty use of marijuana,
in and of itself, did not provide the requisite nexus.
Therefore, adverse actions taken for off-duty use of marijuana
will likely be reversed by MSPB in the absence of an appropriate
showing of nexus. Further, MSPB has determined through its
decision in Douglas v. Veterans Administration that it is the
activity's burden to show the reasonableness of the penalty
after appropriate consideration of each of the applicable
mitigating factors established by that decision. When an
employee has been convicted for criminal misconduct involving
drugs, and an adverse action is warranted, the adverse action
should be based on the events upon which the conviction is
based, and not on the conviction itself since the conviction
could be appealed and overturned, thus eliminating the
justification for the adverse action (the same applies to
arrests and indictments) . In summary, the requirements imposed
by Merritt and Douglas must be met by the activity in any
adverse actions based on misconduct involving drugs regardless
Enclosure (1)
17
56
OPNAVINST 12000.14 CH-29
MG2 3 J982
CPI 752-A
of the nature of the misconduct (i.e., possession, use, sale or
transfer) or whether the misconduct occurred on-duty or off-
duty. Activities should also note that the Merritt and
Douglas decisions are applied by arbitrators in arriving at
awards rendered under the grievance/arbitration process.
b. Drug Use and Reasonable Accommodation. In Ruzek v.
General Services Administration, MSPB ruled that drug abuse,
like alcholism, is a handicapping condition requiring reasonable
accommodation. Accordingly, when an employee's unacceptable
performance or misconduct on duty is caused by the effects of
the use of illegal drugs, and the activity knew or should have
known that the condition existed prior to the incident giving
rise to the consideration of disciplinary action, reasonable
accommodation, including the use of sick leave, must be accorded
to that employee prior to the initiation of adverse action for
the unacceptable performance or misconduct. In accordance with
CPI 792, Civilian Employee Assistance Program, the employee's
supervisor is obligated to (1) refer the employee to a Contact
and Referral Counselor (C&RC) for assistance and (2) warn the
employee that continued performance or conduct problems may
result in disciplinary action. If the employee refuses to seek
the assistance of or cooperate with the C&RC or health care
facility designated to assist in rehabilitation, the activity
has fulfilled the reasonable accommodation requirement and may
then initiate appropr? *; adverse action based upon the
unacceptable performance (see CPI 432) or misconduct (see CPI
752). Notwithstanding the decision in Ruzek, the entitlement
to reasonable accommodation does not arise unless the employee
establishes that the ui>acceptable performance or misconduct was
caused by the handcapping condition (drug use) as defined by the
Rehabilitation Act of 1973, and that the activity knew or should
have known that the condition existed prior to the incident
giving rise to the consideration of disciplinary action.
Accordingly, although activities can and should initiate adverse
action when warranted, they should be alert to the possibility
of this defense by the employee. Further, even in instances
where there is a requirement to accommodate, that requirement
has limits and may be met by a showing that the requisite
reasonable accommodation would impose an undue hardship on the
Enclosure (1)
18
57
OPNAVINST 12000.14 CH-29
AUG 2 3 1982
CPI 752-A
activity. Like Merritt and Douglas, the Ruzek decision is
also applied by arbitrators in arriving at awards rendered under
the grievance/arbitration process. ^r*
Enclosure (1)
19
58
OPNAVINST 12000.14 CH- 29
AUG ^3 1983
CPI 752-B
APPENDIX B - Guideline schedule of disciplinary offenses and
recommended remedies for civilian employees in the
Department of the Navy (greater or lesser remedies
may be assessed depending upon circumstances).
INSTRUCTIONS FOR USE OF THE SCHEDULE
1. The schedule is not intended to cover every possible
offense. Remedies for offenses not listed will be determined
consistent with the guidelines contained herein. —^(See Douglas v.
Veterans Administration, MSPB Docket No. ATO75299006, April 10,
1981, for guidance on selection of penalties. ) <—
2. Many of the items listed on this schedule combine several
offenses in one statement connected by the word "OR". Usage' of
the word "OR" in a charge makes it nonspecific. Therefore, use
only the items which describe the employee's actual conduct and
leave out parts which do not apply.
3. Remedies for disciplinary offenses will, in general, range
from the minimum to the maximum indicated. —^Depending on
mitigating or aggravating factors, a remedy outside the general
range may be imposed. < — ■
4. Suspension remedies on this schedule refer to calendar days.
********************************
5. In considering past offenses in determining a remedy, the
following limitations must be observed:
a. Oral ana written admonishments may not be counted as
prior offenses in determining a remedy;
D. A letter of reprimand may be counted as a prior offense
provided the letter of reprimand is dated no more than two years
before the date of the proposed notice of adverse action in
which it is cited;
c. A suspension or reduction in grade or pay (if effected
for disciplinary reasons) may be counted as a prior offense
provided the effective date of the suspension or reduction in
Enclosure (1)
r 20
59
OPNAVINST 12000.14 CH-29
AUG 2 3 1982
CPI 752-B
grade or pay is not more than three years before the date of the
proposed adverse action in which it is cited.
*********************************
d. In utilizing past offenses in determining a corrective
action, the notice of proposed adverse action should cite
specifically the past offense in sufficient detail to allow the
employee to respond. Past offenses may only be counted if the
employee was disciplined in writing, the employee had the right
to dispute the action to a higher level, and the action was made
a matter of record in the official personnel folder (Howard v.
Department of the Army, MSPB Docket No. PH075209128, May 15, 1981. )<—
6. Pbr information concerning other offenses for which
employees may be disciplined by removal, fine or imprisonment,
see FPM Chapter 735.
Enclosure (1)
21
60
OPNAVINST 12000.14 CH-29
AUG 2 3 1982
CPI 752-B
OFFENSE AND RANGE OF REMEDIES
OFFENSE
FIRST
OFFENSE
SECOND
OFFENSE
THIRD
OFFENSE
ATTENDANCE
EXCESSIVE UNAU-
THORIZED ABSENCE
(MORE THAN 5 CON-
SECUTIVE WORK DAYS)
FALSIFYING ATTEN-
DANCE RECORD FOR
ONESELF OR ANOTHER
EJ4 PLOYEE
LEAVING JOB TO
WHICH ASSIGNED
OR NAVY PREMISES
AT ANY TIME
DURING WORKING
HOURS WITHOUT
PROPER PERMISSION
UNEXCUSED OR
UNAUTHORIZED
ABSENCE ON ONE
OR MORE SCHEDULED
DAYS OF WORK OR
ASSIGNED OVERTIME
UNEXCUSED
TAR0NESS
CONDUCT
Reprimand to
removal
5-day suspension
to removal
Reprimand to 5-day suspension
5-day suspension to removal
Reprimand to 5- to 10-day
5-day suspension suspension
Reprimand to 1- to 5 -day
2-day suspension suspension
Reprimand
Reprimand to
1-day suspen-
sion
10-day
suspension
to removal
10-day
suspension
to removal
10-day
suspension
to removal
5-day
suspension
to removal
Reprimand
to 2-day
suspension
Enclosure (1)
22
61
OPNAVINST 12000.14 CH-29
AUG 2 3 1982
CPI 752-B
Reprimand to
removal
5-day suspen-
sion to removal
10-day
suspension
to removal
UNAUTHORIZED POS-
SESSION (INCLUDING
ACTUAL OR ATTEMPTED
WRONGFUL REMOVAL
FROM ITS PROPER
LOCATION) OF GOVERN-
MENT PROPERTY OR THE
PROPERTY OF OTHERS
— >Do not use "theft" as a charge unless the definition in Black ' s
Law Dictionary can be met. ^—
CRIMINAL, DISHONEST,
INFAMOUS OR
NOTORIOUSLY DIS-
GRACEFUL CONDUCT
» HAVING AN ADVERSE
EFFECT ON THE EFFI-
CIENCY OF THE
SERVICE ^—
DISOBEDIENCE TO
CONSTITUTED
AUTHORITIES, OR
DELIBERATE REFUSAL
TO CARRY OUT ANY
PROPER ORDER FROM
ANY SUPERVISOR
HAVING RESPONSIBI-
LITY K)R THE WORK
OF THE EMPLOYEE;
INSUBORDINATION
DISORDERLY CONDUCT;
FIGHTING; THREATEN-
ING OR ATTEMPTING
TO INFLICT BODILY
INJURY TO ANOTHER;
ENGAGING IN DAN-
GEROUS HORSEPLAY;
OR RESISTING COM-
PETENT AUTHORITY
Reprimand to
removal
Reprimand to
5-day suspen-
sion
Reprimand to
removal
5-day
suspension
to removal
5-day
suspension
to removal
5-day
suspension
to removal
10-day
suspension
to removal
10-day
suspension
to removal
10-day
suspension
to removal
Enclosure (1)
23
33-732 O— 84-
62
OPNAVINST 12000.14 CH- 29
AUG 2 3 1982
CPI 752-B
DISRESPECTFUL CON-
DUCT, USE OF
INSULTING, ABUSIVE
OR OBSCENE
LANGUAGE TO OR ABOUT
OTHER PERSONNEL
FAILURE TO CARRY
OR SHOW PROPER
IDENTIFICATION ON
NAVY PREMISES AS
REQUIRED BY COMPE-
TENT AUTHORITY
*********
FALSIFICATION,
MISSTATEMENT,
OR CONCEALMENT
OF MATERIAL EACT
IN CONNECTION WITH
ANY OFFICIAL RECORD
FALSE TESTIMONY
OR REFUSAL TO
TESTIFY IN AN
INQUIRY, INVESTI-
GATION OR OTHER
OFFICIAL PROCEEDING
FILING FALSE
CLAIMS AGAINST
THE GOVERNMENT
OR KNOWINGLY
AIDING AND
ASSISTING IN THE
PROSECUTION OF SUCH
CLAIMS
Reprimand to
5-day suspen-
sion
Reprimand to
1-day suspen-
sion
Reprimand to
removal
Reprint ^nd to
remov-^
Reprimand to
removal
5-day
suspension
to removal
1- to 2-day
suspension
5-day
suspension
to removal
5-day
suspension
to removal
5-day
suspension
to removal
10-day
suspension
to removal
2- to 5-day
suspension
10-day
suspension
to removal
10-day
suspension
to removal
10-day
suspension
to removal
Enclosure (1)
24
63
OPNAVINST 12000.14 CH-29
AUG 23 1982
CPI 752-B
KNOWINGLY MAKING
FALSE OR MALICIOUS
STATEMENTS WITH THE
INTENT TO HARM OR
DESTROY THE REPUTA-
TION, AUTHORITY, OR
OFFICIAL STANDING
OF INDIVIDUALS OR
ORGANIZATIONS
Reprimand to
removal
5-day
suspension
to removal
10-day
suspension
to removal
♦CARELESS WORKMAN-.
SHIP RESULTING IN
SPOILAGE OR WASTE
OF MATERIALS OR
DELAY IN PRODUCTION
Reprimand to
5-day suspen-
sion
5- to 10-day
suspension
10-day
suspension
to removal
♦COVERING UP OR
ATTEMPTING TO
CONCEAL DEFECTIVE
WORK; REMOVING OR
DESTROYING SAME
WITHOUT PERMISSION
♦FAILURE OR DELAY
IN CARRYING OUT
ORDERS, WORK
ASSIGNMENTS OR
INSTRUCTIONS
Reprimand to
2-day suspen-
sion
Reprimand to
2-day suspen-
sion
1- to 5-day
suspension
1- to 5-day
suspension
5-day
suspension
to removal
5-day
suspension
to removal
'♦Action should be taken under CPI 432 rather than CPI 752 if
these areas are covered in employee's critical elements and
performance standards. < —
LOAFING, WASTING
TIME, OR INATTEN-
TION TO DUTY
SLEEPING ON DUTY
Reprimand to
2-day suspension
Reprimand to
5-day suspen-
sion
1- to 5 -day
suspension
5-day
suspension
to removal
5-day
suspension
to removal
10-day
suspension
to removal
Enclosure (1)
25
64
OPNAVINST 12000.14 CH- 29
AUG 2 3 1982
CPI 752-B
a. WHERE LIFE OR
PROPERTY IS
ENDANGERED
^UNAUTHORIZED
USE OF, LOSS
OF, OR DAMAGE
TO GOVERNMENT
PROPERTY OR THE
PROPERTY OF OTHERS <
GAMBLING OR
BETTING DURING
WORKING HOURS
PROMOTION OF
GAMBLING ON
NAVY PREMISES
WILLFUL DAMAGE
TO GOVERNMENT
PROPERTY OR THE
PROPERTY OF OTHERS
Reprimand to
removal
Reprimand to
Removal
Reprimand to
2-day suspen-
sion
Reprimand to
removal
Reprimand
to 5-day
suspension
5-day
suspension
to removal
5-day
suspension
to removal
Reprimand to
5-day suspen-
sion
5-day
suspension
to removal
5-day
suspension
to removal
10-day
suspension
to removal
10-day
suspension
to removal
Reprimand
to removal
10-day
suspension
to removal
10-day
suspension
to removal
DISCRIMINATION
DISCRIMINATION
AGAINST AN
EMPLOYEE OR
APPLICANT BECAUSE
OF RACE, COLOR,
RELIGION, SEX,
HANDICAP, NATIONAL
ORIGIN, OR AGE OR
ANY REPRISAL ACTION
'ON SUCH BASIS *—
AGAINST AN EMPLOYEE
Reprimand to
removal
5-day
suspension
to removal
10-day
suspension
to removal
SEXUAL
HARASSMENT
Reprimand to
removal
5-day
suspension
to removal
10-day
suspension
to removal
Enclosure (1)
26
65
SAFETY
OPNAVINST 12000.14 CH-29
AUG 23 ]$82
CPI 752-B
FAILURE TO OBSERVE
PRECAUTIONS FOR
PERSONAL SAFETY,
POSTED RULES, SIGNS,
WRITTEN OR ORAL
SAFETY INSTRUCTIONS,
OR TO USE PROTECTIVE
CLOTHING OR EQUIPMENT
VIOLATION OF SAFETY
REGULATION WHICH
ENDANGERS LIFE OR
PROPERTY
Reprimand to
2-day suspen-
sion
Reprimand to
5-day suspen-
sion
1- to 5-day
suspension
2-day
suspension
to removal
10-day
suspension
to removal
10-day
suspension
to removal
ENDANGERING THE
SAFETY OF OR CAUS-
ING INJURY TO PER-
SONNEL THROUGH CARE-
LESSNESS
Reprimand to
removal
5 -day
suspension
to removal
10-day
suspension
to removal
FAILURE TO OBSERVE
NO SMOKING REGULA-
TIONS OR CARRYING
MATCHES IN RE-
STRICTED AREAS
Reprimand to
removal
5-day
suspension
to removal
10-day
suspension
to removal
VIOLATING TRAFFIC
REGULATIONS,
RECKLESS DRIVING
ON NAVY PREMISES,
OR IMPROPER OPERA-
TION OF MOTOR
VEHICLE
Reprimand to
2-day suspen-
sion
Reprimand to
5-day suspen-
sion
5- to 10-day
suspension
SECURITY
FAILURE TO SAFEGUARD Reprimand to
CLASSIFIED MATTER 5-day suspen-
OR OTHER SECURITY sion
5-day
suspension
to removal
10-day
suspension
to removal
Enclosure (1)
27
66
OPNAVINST 12000.14 CH- 29
AUG 2 8 )982
CPI 752-B
VIOLATIONS
WHEN CLASSI-
FIED MATERIAL
HAS BEEN
COMPROMISED
Reprimand to
removal
5-day
suspension
to removal
10-day
suspension
to removal
PROHIBITED PERSONNEL PRACTICE
Reprimand to
removal
5-day
suspension
to removal
10-day
suspension
to removal
COMMITTING A PRO-
HIBITED PERSONNEL
PRACTICE (SEE 5
U.S.C. 2302)
. SUBSTANCE ABUSE
♦Referral to Civilian Employee Assistance Program and reasonable
accommodation must be provided prior to initiation of disciplinary
action when the employee's substance abuse is a handicapping
condition as defined in the Rehabilitation Act of 1973 (29 C.F.R.
1613.701 et seq. ) and the activity knew or should have known that
the condition existed prior to the incident giving rise to the
consideration of disciplinary action.
POSSESSION OF
MARIJUANA, A
NARCOTIC, OR A CON-
TROLLED SUBSTANCE
OR DRUG PARA-
PHERNALIA WITHOUT
AUTHORIZATION ON
DUTY
♦REPORTING FOR DUTY
UNDER THE INFLUENCE
OF MARIJUANA, A
NARCOTIC, OR A CON-
TROLLED SUBSTANCE
WITHOUT AUTHORIZA-
TION
Reprimand
to removal
10-day
suspension
to removal
14-day
suspension
to removal
30-day
suspension
to removal
14-day
suspension
to removal
Removal
Enclosure (1)
28
67
OPNAVINST 12000.14 CH-29
AUG 23 1982
CPI 752-B
♦USE OF OR BEING
UNDER THE INFLUENCE
OF MARIJUANA, A
NARCOTIC, OR A CON-
TROLLED SUBSTANCE
WITHOUT AUTHORI-
ZATION ON DUTY
UNAUTHORIZED SALE
OR TRANSFER OF
MARIJUANA, A
NARCOTIC, OR A CON-
TROLLED SUBSTANCE OR
DRUG PARAPHERNALIA
ON DUTY
UNAUTHORIZED
POSSESSION OF
ALCOHOL ON DUTY
♦REPORTING FOR
DUTY UNDER
THE INFLUENCE
OF ALCOHOL
♦USE OF OR BEING
UNDER THE
INFLUENCE OF
ALCOHOL ON DUTY
UNAUTHORIZED
SALE OR
TRANSFER OF
ALCOHOL ON DUTY
14-day
suspension
to removal
30-day
suspension
to removal
Removal
30-day
suspension
to removal
Reprimand
to removal
Reprimand
to removal
Reprimand
to removal
Reprimand
to removal
Removal
5-day
suspension
to removal
5-day
suspension
to removal
5-day
suspension
to removal
5-day
suspension
to removal
10-day
suspension
to removal
10-day
suspension
to removal
10-day
suspension
to remova 1
10-day
suspension
to removal
Enclosure (1)
29
68
CPI 752-C
UNITED STATES MERIT SYSTEMS PROTICTIOH BOAfW
APPEAL
OPNAVINST 12000.14 CH-H
NOV 04 1981
AQEHCV use ONLY
upon requcM »od ihe Bowd «dvi«» you to review Ibem
form
In ftllmg oui <h« form, whcrcvrr .he sp«e provided .s .risufr.c.cnt you m.y «ld «Jd.,.on»l p*ges If you do ». pk^ pu. your rumc
top of the p«gc, and indicate by number which question you we wiswcnng
WHERE TO P,LE-yo« or ,o. r^;».-- - ;^r„^ »,^^r,°^-:.l-^
ofTiLi
field
[uired to
enure
e and Social Secunty Number at the
jj> ui 111* p«e<'< "■■" ■"— -J - .
KHFRE TO FILE-Yoo or your repreKM.live ire required lo file oiw onginJ uvd Ihree cop.ei of Ihu form logellicr wil
^K^ .dfnuncd mfh.: d«r°i.on none, prc.ded b> fht Agrrr-cy F,l,ng mu.l Ik m.d. eulrer by personal dd.ver, dunng normal
Ji omc" or1y maS aSrcs^d .o Ih,, ofTKc The Board r«omm.nd, b„, doc, no, rcMU,-. ifral yo. .^ cerr.Hcd ma.l
PRIVACY ACT STATEMENT
T.S .orr. rs<,oes,s p««,na, ,n,o,™„oo .h.„ ,s refevan, arj nec^r, ,o rescj. L-L^tdrr^re""<.IS^Vn:.''1s"Lne'^tr4?rr ^."liT^
a" ihTinlcimMlon essen.ial 10 rcacn a dec.sran ,n your case could resull m ihe reiection ol base lo. program sialrsucs
your appeal
PART I. APPELLANT lOENTIFICATWM
1 NAME {Lasl./im. middle)
3 PHESENT ADDRESS (Number and artel, city, stale, and ZIP cade)
PART II. APPEALED ACTION
2 SOCIAL SECURITY NUMBER
4 HOME PHONE {tnctude area code)
5 OFFICE PHONE (Include area code!
6 BRIEFLY DESCRIBE AGENCY ACTION YOU WISH TO APPEAL AND ATTACH ANY RELEVANT DOCUMENTS
7 NAME AND ADDRESS OF ACTING AGENCY (Including Bureau, or olher Division as well as sireel address,
cily. Slate, and ZIP code)
ARE YOU A VETERAN OR ENTITLED
TO THE EMPLOYMENT RIGHTS OF A
VETERAN?
D NO n YES
12 TYPE OF APPOINTMENT
n Temporary
D Perrnanenl
O Applicant
D Term
13 TYPE OF SERVICE
n Competlive
a Eacepted
16 ARE YOU RETIRED?
D NO
IB DATE WRITTEN PROPOSED ACTION NOTICE
RECEIVED (Monlh. day. year! (Allacli copy)
6A IF YES. DATE OF RETIREMENT (Monlft. day year)
8 APPELLANTS POSITION TITLE AT TIME OF ACTION
9 GRADE AT TIME
OF ACTION
10 SALARY AT TIME OF ACTION
S PER
14 LENGTH OF GOVERN-
MENT SERVICE
15 LENGTH OF SERVICE
WITH ACTING AGENCY
17 WERE YOU SERVING A PROBATIONARY OR TRIAL
PERIOD AT TIME ACTION WAS TAKEN BY THE
AGENCY?
D NO D YES
.9 DATE FINAL DECISION NOTICE RECEIVED IMonlli.
day. year)
20 EFFECTIVE DATE OF ACTION fMonf*. day, year)
NSN 754O-01-O9»-1230
OPTIONAL FORM 2»3 (S/«0)
MERIT SYSTEMS PROTECTION BOARD
5 CFR 1201
69
Jl WHY CX3 YOU THINK THE AGENCY WAS WRONG IN TAKING THIS ACTION? lEtplain bnt/ly)
22 WHAT ACTION WOULD YOU LIKE THE BOARD TO TAKE ON THIS CASE?
23 HAVE YOU OH ANYONE ON YOUR BEHALF. FILED A FORMAL GRIEVANCE OH COMPLAINT. INCLUDING AN UNFAIR LABOR PRACTICE CHARGE. WITH YOUR AGENCY
OB ANY OTHER AGENCY CONCERNING THIS MATTER?
O NO O YES (Attack copy)
23A- IF YES. DATE FILED (Month, day. ytar)
23B PLACE FILED (Agtncy and localion)
23C HAS DECISION BEEN ISSUED?
D NO D YES
23D IF YES. DATE ISSUED (Month, ilay ytar)
23E NAME OF ISSUING OFFICIAL
23F TITLE OF ISSUING OFFICIAL
M W YOU BELIEVE YOU WERE DISCRIMINATED AGAINST BY THE AGENCY BECAUSE OF EITHER YOUR RACE. COLOR. RELIGION. SEX^ NATIONAL ORIGIN. MARITAL
STATLIS POLITICALAFFILIATION HANDICAPPING CONDITION. OR AGE. INDICATE SO AND EXPLAIN WHY YOU BELIEVE IT TO BE TRUE YOU MUST INDICATE. BY
EXAMPIJES. HOW YOU WERE DISCRIMINATED AGAINST.
»S HAVE YOU FILED A DISCRIMINATION COMPLAINT WITH
VOOR AGENCY OH ANT OTHER AGENCY?
a YES (Attach copy:
24A IF YES. DATE FILED (.Miinth. day. ytar}
258 PLACE FILED (-A^ancy and location)
25C HAS THERE BEEN A DECISION?
D NO a YES
OPTIONAL FOH.M 283 (J/J0;PAOF I
70
PART III. HEARING
2t YOU HAVE A RIGHT TO A HEARING ON THIS APPEAL IF YOU DO NOT WANT A HEARING. THE BOARD WILL MAKE ITS DECISION ON THE BASIS OF THE DOCUMENTS
YOU AND THE AGENCY SUBMIT DO YOU WANT A HEARING'
O NO a YES
IF YOU CHOOSE TO HAVE A HEARING. THE BOARD WILL NOTIFY YOU WHEN AND WHERE IT IS TO BE HELD
J7, YOU HAVE THE RIGHT TO DESIGNATE SOMEONE TO REPRESENT YOU ON THIS A!>PEAL IF HE/SHE AGREES TO DO SO THIS PERSON DOES NOT HAVE TO BE AN
ATTORNEY THE AGENCY HAS A RIGHT TO CHALLENGE YOUR CHOICE OF A REPRESENTATIVE IF THERE IS A CONFLICT OF INTEREST OR POSITION YOU MAY
CHANGE YOUR DESIGNATION OF A REPRESENTATIVE AT A LATER DATE, IF YOU SO DESIRE. BUT MUST NOTIFY THE BOARD PROMPTLY OF ANY CHANGE-
27A -I HEREBY DESIGNATE
>
APPEAL I UNDERSTAND THAT MY REPRESENTATIVE IS AUTHORIZED TO ACt ON MY BEHALF.
TO SERVE AS MY REPRESENTATIVE DURING THE COURSE OF THIS
279 YOUR SIGNATURE
27C. DATE
27D. REPRESENTATIVE S SIGNATURE ll/any/
27E DATE
27F. REPRESENTATIVE'S ADDRESS
27G REPRESENTATIVE'S EMPLOYER
2S YOU MAY BE PERMITTED TO CALL WITNESSES AT A HEARING UPON THE APPROVAL OF THE PRESIDING OFFICIAL IF YOU INTEND TO DO SO. PROVIDE THEIR NAMES
AND A BRIEF STATEMENT OF THEIR RELATIONSHIP TO THE CASE YOU WILL BE PERMITTED TO REQUEST OTHER WITNESSES LATER IF YOU DO NOT LIST THEM
A NAME
B RELATIONSHIP TO CASE
PART IV. REDUCTION-IN-FORCE (RIF)
INSTRUCTIONS: FILL OUT THIS PART ONLY IF YOU ARE APPEALING FROM A REDUCTIONIN-FORCE (RIF) YOUR AOENCVS PERSONNEL OFFICE CAN
FLIRNISH YOU MOST OF THE INFORMATION REQUESTED BELOW
29. TENURE OF SUB.GROUP
30 SERVICE COMPUTATION DATE
31 HAS YOUR AGENCY OFFERED YOU ANOTHER POSI-
TION RATHER THAN SEPARATING YOU?
O NO O YES
at TTTLE OF OFFERED POSITION
33 GRADE OF POSITION OFFERED
34 SALARY OF POSITION OFFERED
S PER
». LOCATION OF OFFERED POSITION
3« DID YOU ACCEPT THIS POSITION?
DNO DYES
37. EXPLAIN WHY VOU BELIEVE YOU SHOULD NOT HAVE BEEN AFFECTED BY THE REDUCTION-IN-FORCE {Explanations could include: You were placed in the wrong
tenure subgroup: an error was made in the compulation of your service computation date: competitive area was too narrow: improperly reached for separation from
competitive level, an exception was made to the regular order of selection: full 30~day notice was not given: you believe you can "bump" a person in a lower tenure ni^
group: or any other reasons. Please provide as much information as possible regarding each reason.)
(Continue on the next page)
OPTIONAL FORM 2S3 n^m, page j
71
37 iConnnued fntm Page J J
I
ATTENTION— THIS APPEAL MUST BE SIGNED
I CERTIFY that >l of the sul«fneois made m trMS Appeal v*
true, coniplew. and canect lo the best of my knowledge ar^
SIGNATURE Of APPELLANT
DATE SIGNEO
J
■U.S. KVHWrKT PPIIiTIKC CrrlCt : IMl 0 - 3«l-5Jt (t»k;)
OPTIONAL FORM 213 M/», PAGt <
72
DEPARTMENT OF THE NAVY
OFFICE OF THE CHIEF OF NAVAL OPERATIONS
WASHINGTON. D C 20350
dACu-^Vu^A ''/<fr^*3
IN REPLY REFER TO
OPNAVINST 12000.14 CH-H
OP-14 3C
NOV 04 1981
OPNAV INSTRUCTION 12000.14 CHANGE TRANSMITTAL 1^-
From: Chief of Naval Operations
Subj: Civilian Personnel/Equal Employment Opportunity Directives
System ( CIVPERS/EEODIRSYG )
Cncl: (1) Revised pages 7-8 of CPI 432
(2) Revised attachment 1 to CPI 432 (Merit Systems
Protection Board Appeals - Optional Form 283)
(3) Revised pages 11, 11.01 and reprinted page 12 to CPI
(4) Revised CPI 752-C (Merit Systems Protection Board
Appeals - Optional Form 283)
1. Purpose. To revise Civilian Personnel Instructions 432 and
752 by replacing the existing Merit Systems Protection Board
(MSPB) appeal form with a revised form and establishing the
procedure for submitting the files to the MSPB in appeals.
2. Marine Corps. This instruction has been coordinated with the
Commandant of the Marine Corps. The Commandant has authorized its
transmission to Marine Corps activities.
3. Action
a. Remove pages 7, 8 and Attachment 1 of CPI 432 and file
enclosures (1) and (2).
b. Remove pages 11 and 12 and file enclosure (3).
c. Remove CPI 752-C and replace with enclosure (4).
d. Make the following pen changes:
(1) On page 3 (CH-5) of enclosure (1) of the basic
instruction, across froru 432, in last column, line 3, change
"CH-1" to CH-11."
(2) On page 5 (CH-5) of enclosure (1) of the basic
instruction, across from 752 in the last column, change "CH-1" to
"CH-11."
73
OPNAVINST 12000.14 CH-11
N0\/04 /981
e. Enter this change on the record of changes.
4. Forms. Optional Form 283 (Merit Systems Protection Board
Appeal) may be obtained from the local Merit Systems Protection
Board.
5. Cancellation. This transmittal may be retained for reference
purposes .
■0^
1^-7///^^'
THOMAS If. MUIR
By di'rectiofi
Distribution:
(Same as basic)
Stocked:
CO, NAVPUBFORMCEN
5801 Tabor Ave.
Phila. , PA 19120 (500)
74
DEPARTMENT OF THE NAVY
OFFICE OF THE CHIEF OF NAVAL OPERATIONS
WASHINGTON, D.C. Z0350
ci\a(A(^(2S> iMdi-^ Dhsji
IN REPLY REFER TO
OPNAVINST 12000.14 CH-18
OP-143C1
MAR 1 2 3982
OPNAV INSTRUCTION 12000.14 CHANGE TRANSMITTAL 18
From: Chief of Naval Operations
Subj : Civilian Personnel/Equal Employment Opportunity
Directives System (CIVPERS/EEODIRSYS)
End: (1) Revised page 1 and reprinted page 2 of CPI 752
(Department of the Navy Adverse Actions)
1. Purpose. To promulgate a change to civilian personnel
Instruction 752, which was transmitted by OPNAVNOTE 12752 of 20
October 1980, Ser 143C/701106 (cancelled frp: Oct 81). This
change clarifies the definition of employee for the purposes of
grievable adverse actions and indicates a change in procedures
based on a recent Merit Systems Protection Board decision.
2. Marine Corps. This notice has been coordinated with the
Commandant of the Marine Corps. The Commandant has authorized
its transmission to Marine Corps activities.
3 . Action
a. Remove pages 1 and 2 of CPI 752 and file enclosure (1).
b. On pages 9-10 of CPI 752, delete paragraph IXE and
reletter paragraphs "F" and "G" as "E" and "F".
c. On enclosure (l) of the basic instruction, page 5, (CH-
5), in the last column, across from FPM Chapter 752 in the last
entry, after "CH-1" add "and CH-lg" .
d. Enter this change on the record of changes.
4. Cancellation. This transmittal should be retained for
reference purposes.
Distribution: o j ,
(Same as basic) By diierton
Stocked:
CO, NAVPUBFORMCEN
5801 Tabor Avenue
Philadelphia, PA 19120 (500)
THOMAS fj. f/iUlfi
75
cLom.^^ moJU. iijisji'^
DEPARTMENT OF THE NAVY
OFFICE OF THE CHIEF OF NAVAL OPERATIONS
WASHINGTON. D C 20350
IN REPLY REFER TO
OPNAVINST 12000.14 CH-26
Op-143Cl
OPNAV INSTRUCTION 12000.14 CHANGE TRANSMITTAL 26
From: Chief of Naval Operations
Sub j : Civilian Personnel/Equal Employment Opportunity
Directives Systems ( CIVPERS/EEODIRSYS)
End: (1) Revised pages 1 and 3 and reprinted pages 2 and 4 of
CPI 752 (Department of the Navy Adverse Actions)
1. Purposes . To amend Civilian Personnel Instruction 752,
which was transmitted by OPNAVNOTE 12752 of 20 October 1980, Ser
143C/701106 (cancelled frp: Oct '81). OPNAV Instruction
12000.14 Change Transmittal 18 of 12 Mar 1982 inadvertantly
changed the definition of employee for the purposes of grievable
adverse actions. This change reverts to the definition which
originally appeared in CPI 752. To add subparagraph IIIG to the
exclusions to clarify the rights of Senior Executive Service
members under the law.
2. Marine Corps. This issuance has been coordinated with the
Commandant of the Marine Corps. The Commandant has authorized
its transmission to Marine Corps activities.
3 . Action
a. Remove pages 1, 2, 3, and 4 of CPI 7 52 and file
enclosure ( 1 ) .
b. On enclosure (1) of the basic instruction, page 5 (CH-
5), across from "751" delete "133"
c. On enclosure (1) of the basic instruction, page 5 (CH-
5), in the last column, across from FPM Chapter 752 in the last
entry, after "CH-18" add "OPNAVINST 12000.14 CH-26"
d. Enter this change on the record of changes.
76
OPNAVINST 12000.14 CH- 26
JUI. IS V/ ".
4. Cancellation . This transmittal should be retained for
reference purposes.
^^L^Pf-^
'...■ : r r.'jin
fcs::!:;r.t Cc,-; .ty Chi=f of Naval
C?cr3l:cr,j (r,i,nicn Personnel/
Distribution : ^Sual £iiiployiTie,;t Opportunity)
(Same as basic)
Stocked :
CO, NAVPUBFDRMCEN
5801 Tabor Avenue
Philadelphia, PA 19120 (500)
77
DEPARTMENT OF THE NAVY
OFFICE OF THE CHIEF OF NAVAL OPERATIONS
WASHINGTON. DC 20350 ' (f
IN REPLY REFER TO
OPNAVINST 12000.14 cn-29
Op-143Cl
AUG i: a mz
OPNAV INSTRUCTION 12000.14 CHANGE TRANSM ITTAL 29
From: Chief of Naval Operations
Subj : Civilian Personnel/Equal Employment Opportunity
Directives System (CIVPERS/EEODIRSYS )
End: (1) Revised page 14-29 and reprinted page 13 of CPI 752-A
and CPI 752-B
1. Purpose
a. To promulgate changes to Civilian Personnel Instruction
752, which was transmitted by OPNAVNOTE 12752 of 20 October
1980, Ser 143C/701106 (cancelled frp: Oct 81). These changes
are required by recent Merit Systems Protection Board decisions
and the DON effort to detect and deter drug offenses.
b. To provide pen change to CPI 771 to extend report
requirement.
2. Marine Corps. This notice has been coordinated with the
Commandant of the Marine Corps. The Commandant has authorized
its transmission to Marine Corps activities.
3. Action
a. Remove pages 13 through 24 of CPI 752 and file enclosure
(1).
b. Make the following pen changes:
(1) CPI 771, page 11, in the second to the last
sentence, change the word "two" to "four."
(2) On enclosure (1) of the basic instruction, page 5,
(CH-5), in the last column, across from FPM Chapter 752 in the
last entry, after "CH-1" add "and CH-23 "
(3) On enclosure (1) of the basic instruction, page 5
(CH-5), across from 771, in the right column add "OPNAVINST
12000. 14 CH-29 . "
c. Enter this change on the record of changes.
33-732 O— 84-
78
OPNAVINST 12000. 14 CH- 29
AUCSS 1982
4. Cancellation. This transmittal should be retained for
reference purposes.
Distribution:
(Seune as basic)
Stocked :
CO, NAVPUBPORMCEN
5801 Tabor Avenue
Philadelphia, PA 19120 (500)
DOROTHY M. XEDETZKB
Acting Director
Civiiicn Personnel Policy DlvlsToh
79
March 21, 1983
NUMBER 1-^00.5
ASD(MRA&L)
Department of Defense Directive
SUBJECT: DoD Policy for Civilian Personnel
References: (a) DoD Directive 1400.5, "Statement of Personnel
Policy for Civilian Personnel in the Department
of Defense," January 16, 1970 (hereby canceled)
(b) Federal Personnel Manual, Chapter 250
(c) DoD Directive 1400.6, "DoD Civilian Employees
in Overseas Areas," February 15, 1980
(d) Title 5, United States Code, Sections 2301(b),
2302(b), and 2305
A. REISSUANCE AND PURPOSE
This Directive reissues reference (a) to update the civilian
personnel policy of the Department of Defense and to implement
reference (b).
B. APPLICABILITY
This Directive applies to the Office of the Secretary of Defense,
the Military Departments, the Organization of the Joint Chiefs of
Staff, and the Defense Agencies (hereafter referred to as "DoD
Components"), and to their nonappropriated fund activities. Policies
for DoD civilian personnel employed in overseas areas are set forth
in reference (c).
C. POLICY
1. It is the policy of the Department of Defense to use civilian
employees in all positions that do not require military incumbents for
reasons of law, training, security, discipline, rotation, or combat
readiness, or that do not require a military background for successful
performance of the duties involved.
2. In carrying out their responsibilities for civilian personnel
management, DoD managers shall be guided by the policies in this
Directive and reference (b) and the merit system principles in 5 U.S.C.
2301(b) (reference (d)), except as may be otherwise provided by 5 U.S.C.
2305. Managers shall also be familiar with the prohibited personnel
practices in 5 U.S.C. 2302(b).
80
D. PROCEDURES
The DoD Components shall conduct their relationships with civilian
employees in accordance with the following principles and procedures:
1. There shall be no discrimination because of race, sex, marital status,
age, color, religion, national origin, lawful political affiliation, labor
organization membership, or handicapping condition.
2. Employees shall be placed in jobs for which they are qualified and
shall be given equal opportunities for advancement. Selections to fill posi-
tions shall be made impartially on the basis of merit and fitness.
3. Training and development required to improve present job performance
and meet future skill needs shall be provided.
4. Employee work performance shall be evaluated fairly and objectively on
a continuing basis, and the results of such evaluation shall be discussed with
the employee.
5. Within whatever compensation schedule is applicable, employees shall
receive similar pay treatment for work of substantially similar difficulty and
responsibility.
6. Working conditions shall be made as safe and healthful as possible.
7. Recognizing that a well-informed work force is a productive work
force, employees and their recognized labor organizations shall be informed,
insofar as possible, of plans and policies affecting them and their employ-
ment.
8. Employees shall be encouraged to express themselves concerning
improvement of work methods and working conditions.
9. Employees shall have the right, without interference, coercion,
restraint, or reprisal, to join or refrain from joining any lawful labor
organization or employee association. When employees are represented by a
recognized labor organization, management officials and supervisors shall
endeavor to build a relationship with that organization based upon mutual
respect and trust.
10. Any employee having a grievance or complaint shall be accorded
immediately a fair and prompt discussion with the supervisor concerned, and
failing prompt and satisfactory adjustment, shall have the right to pursue the
matter under an applicable grievance or complaint system. In presenting a
grievance or complaint an employee shall be free from interference, restraint,
or reprisal, and may be accompanied and assisted by a representative.
11. Employees shall have the right to discuss their problems with their
supervisor, personnel office, equal employment opportunity officer or counselor,
labor organization representative, a person designated to provide guidance on
questions of conflict of interest, or a supervisory or management official of
higher rank or level than the immediate supervisor.
81
Mar 21, 83
1400.5
12. Employees shall have the right to participate or not to participate,
without compulsion, coercion, or reprisal, in voluntary fund-raising campaigns
and the purchase of U.S. Savings Bonds.
13. Employees shall be treated with full regard for their dignity as
individuals, and no distinctions as to trustworthiness of employees shall be
made on the basis of their wage levels or grades.
14. Supervisors shall contribute to the formulation of official policy
and shall represent management in the administration of policy and labor-
management agreements. They shall provide progressive and constructive leader-
ship and shall ensure that all employees understand what is expected of them,
to whom they are responsible, and their work relationships with fellow workers.
D. RESPONSIBILITIES
Heads of DoD Components shall comply with the provisions of this Directive.
E. EFFECTIVE DATE AND IMPLEMENTATION
This Directive is effective immediately. Forward one copy of implementing
documents to the Assistant Secretary of Defense (Manpower, Reserve Affairs,
and Logistics) within 120 days.
PAUL THAYER
Deputy Secretary of Defense
82
THE SECRETARY OF DEFENSE
WASHINGTON. O.C. 20301
1 7 OCT 1983
MEMORANDUM FOR SECRETARIES OF THE MILITARY DEPARTMENTS
CHAIRMAN OF THE JOINT CHIEFS OF STAFF
UNDER SECRETARIES OF DEFENSE
ASSISTANT SECRETARIES OF DEFENSE
GENERAL COUNSEL
ASSISTANTS TO THE SECRETARY OF DEFENSE
DIRECTORS OF THE DEFENSE AGENCIES
SUBJECT: Defense Hotline
Please ensure that the attached memorandum is widely
circulated. It emphasizes the President's and my personal
commitment to the reduction of fraud and waste in Defense
programs and highlights the Defense Hotline as an important
tool in this effort. Your continuing personal support of
this program is essential to its success and, through it, our
ability to acquire and manage the resources we need to
strengthen and improve our military forces and the defense
of the nation.
I would also like each of you to publicize the Defense
Hotline throughout your organization and ensure your
personnel are aware of its existence and your support of its
use.
Please advise my Inspector General of any specific
publicity actions you have planned or taken.
Attachment
47043
83
THE SECRETARY OF DEFENSE
WASHINGTON. THE DISTRICT OF COLUMBIA
1 7 OCT 1983
MEMORANDUM FOR ALL DEPARTMENT OF DEFENSE PERSONNEL
SUBJECT: Defense Hotline
The reduction of fraud, waste, and inefficiency in all
Federal programs remains a major commitment of this Adminis-
tration. Today, this Department continues to support the
President's program by strengthening management actions, by
developing new and innovative techniques for focusing atten-
tion on the problem, and by dedicating sufficient resources
to identify and correct instances of fraud, waste, and abuse.
Two years ago, when asked for support of the Defense
Hotline, many of you rose to the challenge. Calls are being
received in record numbers, and the addition of a mailing
address opened it up to worldwide access. Recent reports in
the media, highlighting some of our shortcomings, attest to
your support of this vital program but fail to give credit to
those of you whose hard work surfaced the problems in the
first place. Notwithstanding our progress, continued effort
is required if we are to minimize the effect of fraudulent
and wasteful practices that eat away at the tax dollars
provided for national defense.
Today, the Defense Hotline is operated by the Defense
Inspector General who will review all substantive issues and
ensure appropriate criminal and administrative remedies are
pursued where warranted. It is located in Washington, D.C.
and operates between 0800 and 1730 each workday. The Hotline
telephone numbers are: 800-424-9098 (toll free); 693-5080
(National Capital Region); and 223-5080 (Autovon). Mail can
be addressed to the Defense Hotline, The Pentagon, Washington,
D.C. 20301. Protecting the confidentiality of Hotline users
who prefer not be identified remains a cornerstone of the
program.
I ask each of you to continue to seek out and report
improvements and suspected problems through established
command channels or by calling or writing the Defense Hotline.
84
Senator Grassley. Thank you, Mr. Cooke. I appreciate that very
much, and I believe you have given us a very apt and official de-
scription of how the system should operate, at least in an abstract
sense.
I will turn to Mr. Spanton now, to see how his experience fits
into the framework that you have described. I would like to refer
first of all to page 4, which is the last page of your testimony, Mr.
Cooke, and then have Mr. Spanton comment on this provision
where you say, "There are in place a number of policies, regula-
tions, and systems which encourage employees to report fraud,
waste, and mismanagement without fear of reprisal or unauthor-
ized disclosure of their identity."
I would like to ask Mr. Spanton to comment and to see how that
official policy fits in with your relationship with the official policy
in practice.
Mr. Spanton. Well, perhaps there are sufficient regulations, in-
structions, procedures with an intent to establish protection for em-
ployees who speak out. Apparently, in my situation, they were inef-
fective. Of course, I was not concerned about disclosing my identi-
ty— that would have been impossible. However, I found that my
agency from the very beginning, since they could not suggest that I
was ineffective as an auditor, found other means to be critical of
my performance, namely, personnel problems within the office.
Well, as the matter was pursued, it was found that there were
really no problems that were longstanding in duration. In fact, my
worst critic within the office over a period of years wrote me — and
he is no longer in my office; he is now in Texas — wrote me within a
matter of months and said he was proud to have worked for me,
and that he felt I was one of the strongest managers within the
DCAA, and he strongly supports what I am attempting to do, be-
cause he has run into like conditions in other places where he is
presently assigned.
So, while the system might provide the means for protection,
again I say, in my situation it proved ineffective.
Senator Grassley. I am aware, Mr. Cooke, that we cannot expect
you to comment on the case and do not ask you to, but if you have
any comments that you want to make on what was just said, I
would invite you to do it at this point, and then I would ask Sena-
tor Heflin if he has any questions of you, Mr. Cooke, before I go
back to Mr. Spanton.
Mr. Cooke. Mr. Chairman, as I observed at the outset, I regard it
as completely inappropriate to comment on the details of the case
presently pending before the Merit Systems Protection Board.
Senator Heflin. Mr. Cooke, your testimony largely deals with
hotlines— with procedures designed to let Federal employees who
observe something going on in their department or agency to
report it and to give some form of protection. But what we have
here is an auditing group — a police group — the Defense Contract
Audit Agency. They discovered what they consider to be unusual
circumstances, and, without referring to the details of Mr. Span-
ton's case, let us take an example of a hypothetical case that an
audit does reveal that a defense contractor has spent large sums of
money lavishly entertaining officials of the Department of Defense
and the armed services. When that appears, what does your De-
85
partment, you as head of administration, what steps do you take
relative to these matters, after an audit, a poHce body, has dis-
closed this?
Mr. Cooke. Mr. Chairman, as a matter of fact, as far as the pro-
cedures in DCAA itself on handling of audits after the contract,
Mr. Spanton is undoubtedly a more expert witness than I. I can ob-
serve, however, that there are cost recoveries and cost disallow-
ances as part of the contract audit process, and I would be very
pleased to furnish for the record some of the disallowances and the
procedures followed by the agency for your examination and con-
sideration.
[Subsequent to the hearing, the following was received for the
record:]
Entertainment and certain other types of costs routinely incurred by contractors
have been declared unallowable by provisions of the Defense Acquisition Regulation.
Moreover, Cost Accounting Standard 405 specifies that these "expressly" unallow-
able costs shall be identified and excluded from any billing, claim, or proposal appli-
cable to a Government contract. When a contractor inadvertently or intentionally
attempts to claim such costs, the DCAA auditor will advise a contracting officer by
means of an audit report. The report, outlining the situation and taking exception
to the claimed costs, is addressed to the contracting officer who has procurement or
administrative responsibility for the contract or contracts involved. Contracting offi-
cer "recovery actions" can range from excluding the item from negotiation consider-
ation (in proposal negotiation proceedings) to withholding portions of ongoing pay-
ments (on open contracts) or requiring contractor refunds. Section VIII of DoD Di-
rective 5500.7 prohibits DoD employees from accepting anything of value from con-
tractors. While DCAA has no responsibility for monitoring compliance with Section
VIII, the Agency Contract Audit Manual states that detected apparent noncom-
pliances are to be reported using procedures consistent with those used to report
suspected contractor fraud or unlawful activity.
Senator Heflin. Do you know of any instances in which there
have been disallowances for lavishly entertaining Department of
Defense officials?
Mr. Cooke. I am certain there are, Mr. Heflin, but I do not know
of my own knowledge — but again, I will be very pleased to furnish
them to you for the record.
Senator Heflin. All right. We would appreciate you doing that.
[Subsequent to the hearing, the following was received for the
record:]
DoD contract provisions make entertainment costs unallowable and contractors
should not claim these costs under DoD contracts. In the event entertainment costs
are claimed, they would be disallowed by audit as reimbursable contract costs. If
they are excluded and not claimed for reimbursement, it is unlikely that audits of
contract costs would disclose the expenditures. Whenever an auditor becomes aware
of situations where Government officials appear to have accepted a gratuity they
report the details to their Headquarters. Since October 1978, six audit offices have
discovered this type of situation and these cases have been referred for appropriate
action.
Senator Heflin. Again, this is a police agency. It brings to our
attention that the salaries of officials have been increased greatly
beyond the private sector or the defense sector. It shows up in an
audit which could mean over a period of time, hundreds of millions
of dollars of costs to the Government. What happens with this? Is
this referred to any other agency, such as Internal Revenue?
Mr. Cooke. Again, may I furnish a reply for the record. Senator
Heflin, I was prepared to respond to the letter of invitation, which
did not go into the procedures as such of the Defense Contract
86
Audit Agency. And by the way, the Defense Contract Audit Agency
has two functions. It does conduct audits after a contract is let, but
it is also an integral part of the contract procurement process
before a contract is let. This does not change the nature of your
question, but I did want to make it clear that it was something
more than it had procurement functions in addition to the post-
award audits.
[Subsequent to the hearing, the following was received for the
record:]
DCAA is not a police or investigative agency. It is an audit agency, providing con-
tract audit support to DoD and other executive department procurement and admin-
istrative components. Executive compensation, like other areas of claimed costs, is
audited for reasonableness and allowability under existing procurement regulations.
If unreasonable or otherwise unallowable compensation costs are found during an
audit, the costs are questioned by the auditor and an advisory audit report is provid-
ed to the Government contracting officer having negotiation or administrative au-
thority over the contractor. Any such audit position represents a recommendation
for disallowance against a contract or contracts held by an individual contractor.
Such an audit position does not address any questions relative to the appropriate
reporting of income or expenses to the Internal Revenue Service. Thus, referrals to
the Internal Revenue Service are not routinely made. The agency does, or course,
cooperate with the Service by responding to direct inquiries.
Senator Heflin. Well, I suppose we are speaking here in the con-
text of postaward audits and contract audits. That is usually where
overruns occur, I believe. What review is given to these audits and
who reviews them? Give us the mechanism that occurs after such
an audit.
Mr. Cooke. Again, Senator Heflin, I will be pleased to respond to
this for the record.
[Subsequent to the hearing, the following was received for the
record:]
Audit findings are conveyed to acquisition officials by means of audit reports
which are subject to supervisory review prior to issuance. Audits are conducted and
reports are prepared using auditing standards published by the General Accounting
Office, which parallel standards issued by the American Institute of Certified Public
Accountants. DoD specialized contract audit requirements and applicable procure-
ment regulations are also considered. The DCAA audit staff consists of about 3080
college-trained men and women whose skills and talents are enhanced by means of
a formal continuing education program. Of those employed, 585 are Certified Public
Accountants, and an additional 177 have passed the uniform CPA examination and
are currently fulfilling experience requirements to obtain certification. Further-
more, 15 percent of the current staff hold graduate degrees in one or more disci-
plines.
Senator Heflin. Well, just in a general way, what is your proce-
dure? I am not asking you specifics.
Mr. Cooke. I understand that, but we are getting into the proce-
dures of the role, mission and procedures of the Defense Contract
Audit Agency, and I am up here to respond to the discussion of
whistleblowers, not the mission and functions of the Audit Agency.
In general, I will say that the contract audit reports are referred
through the chain of DCAA from the plant auditors up; they are
considered by management levels. They are also referred to the
procurement officials in the military departments, and there are
records, as I told you, which we will furnish for the record to disal-
low costs or recover costs from defense contractors.
[Subsequent to the hearing, the following was received for the
record:]
87
DCAA provides audit coverage sufficient to identify costs which should be disal-
lowed because of being unreasonable, nonallocable, or specifically unallowable in
provisions of the applicable acquisition regulations or in terms of the contract. The
audit recommendations are communicated to the cognizant contracting officer who
is responsible for disallowing or recovering the costs either in price negotiations,
withholding payments, or asserting contractual authority to obtain refunds.
Senator Grassley. Would you let me interrupt just a second? I
would like to give my view as chairman of the subcommittee, re-
gardless of the letter I signed, that I do not think Senator Heflin's
questions are out of order. They do contribute to a basic under-
standing of the DCAA function, which of course is very essential to
us as policymakers of the Congress, in order to decide whether or
not the people who work there are performing their duties and
whether or not people who operate within that function and make
use of whistleblower protection are doing what they should be
doing. I would think that even though you are right in coming pre-
pared to respond to the questions, the extent to which Senator
Heflin is asking what I would consider everyday functioning of the
DCAA, and since you are a top administrator within that agency,
you ought to be able to answer what the procedure is.
Mr. Cooke. Mr. Chairman, I had no intention whatsoever of sug-
gesting the Senator's questions were out of order. Because I wanted
our answers to accurately portray the role, I suggested that we pro-
vide these for the record. I am not an administrator within DCAA
at all, Mr. Chairman. I am Deputy Assistant Secretary of Defense
for Administration, and as such, have no direct line authority or
involvement in the processes of DCAA's programmatic mission.
Senator Grassley. Well, I appreciate that.
Did you want to continue, Senator Heflin?
Senator Heflin. Well, if he is not familiar with it, then there is
no point in pursuing it. But it seems to me that the issue of audits
and cost overruns is one of the most paramount issues that ought
to be confronting the administration of the Department of Defense
to date.
Mr. Cooke. Indeed, it is, and I would also be pleased to furnish
you for the record some of the specific steps and fixes that Secre-
tary Weinberger has taken since his tenure in office on this impor-
tant problem.
Senator Heflin. Well, we would appreciate you furnishing it for
the record, and sometime, I would like to have a bureaucrat up
here who can give an answer other than saying that he will fur-
nish it later.
Senator Grassley. Well, to my colleague I would say that that is
why, of course, we did invite Mr. Starrett to come and testify, and
why, at any future hearing, we will have people who are prepared
to answer those questions.
[Subsequent to the hearing, the following was received for the
record:]
DoD has recognized the need for improvements in the acquisition process and has
been in the forefront in taking action to bring about those needed improvements. In
April 1981, then Deputy Secretary of Defense Frank Carlucci identified 32 decisions
designed to improve the acquisition policy and process. The decisions, generally re-
ferred to as the Carlucci Initiatives, were intended to bring about (Da reduction in
DoD acquisition costs, (2) a shortening of acquisition time, (3) improvement in weap-
ons support and readiness, and (4) improvement in the Defense Systems Acquisition
Review Council (DSARC) process. Responsibility for monitoring and follow-up of
88
these initiatives was assigned to the Under Secretary of Defense for Research and
Engineering.
In June 1983, the DoD Comptroller, Mr. Puritano, issued seven audit and manage-
ment initiatives to DCAA (the Puritano Initiatives) with the objective of creating an
impetus for achieving greater savings and economies in the DoD acquisition process.
Briefly, these seven initiatives require the following DCAA action:
1. Identify specific cost principles that require clarification or revision to correct
current problems.
2. Emphasize a series of new audit techniques in evaluating contractors' total
compensation packages.
3. Undertake a new series of operations audits in such areas as equipment utiliza-
tion, repair/ rework/scrap, and contractor projects to improve efficiency and reduce
costs on defense contracts.
4. Reevaluate the approach to potential defective pricing instances to identify con-
ditions which might be indicators of fraud and to pursue recoveries.
5. Analyze DCAA's role in reviewing proposed subcontract costs and identify
needed changes in appropriate regulations, if appropriate.
6. Look for ways of exchanging information among DCAA offices and throughout
the DoD.
7. Investigate methods to increase DCAA productivity and improve management
effectiveness.
I can report that DCAA is seriously addressing each of these initiatives and is pro-
viding milestone status reports to the Comptroller.
Yet another example of DoD self-initiated programs to improve the acquisition
process is Secretary Weinberger's 25 July 1983 announcement of a ten-point pro-
gram to improve DoD's spare parts procurement programs. The program is wide-
ranging, and includes a requirement for continued audits of spare parts procure-
ments. At the present time, the DoD IG is conducting a DoD-wide audit of spares
procurements, involving the support of all audit components. DCAA is providing
direct support to this audit by performing all contract audit tasks.
For these brief comments, I believe you can get a feel for the overall DoD commit-
ment— and the specific commitment of the Comptroller and DCAA — to bringing
about improvements in the acquisition process.
The Department of Defense has few reported "whistleblowers." Perhaps the
reason is that our program is designed to recognize suggestions, making it unneces-
sary to restort to "whistleblowing." We have a well-publicized program to give mon-
etary awards for suggestions. Attached is a list of civilian and military employees
granted monetary awards for achieving cost reductions in defense operations.
Senator Grassley. I guess I would ask Mr. Cooke for the record,
and because you did make mention of the whistleblower process
working successfully and about people being rewarded, I would ap-
preciate then again for the record — and you can submit this in
writing — a list of whistleblowers who during the past 5 years have
been rewarded through promotion or monetary awards for the un-
covering of waste, fraud, and abuse.
[Subsequent to the hearing, the following was received for the
record:]
89
MONETARY AWARDS GRANTED TO POD MILITARY AND CIVILIAN
PERSONNEL FOR ACHIEVING COST REDUCTION IN DEFENSE OPERATIONS
NAME AMOUNT OF AWARD TANGIBLE SAVINGS
Mr. Frances J. Sweeny $1,565.00 $28,835.00
The savings resulted from Mr. Sweeny's idea to revise
purchase orders for the U.S. Army Engineer District,
Sacramento.
Mr. Deloy Evans $1,929.00 $40,952.00
Mr. Evans, Tooele Army Depot, suggested the repair of the
truion assembly on semi-trailer straddle carriers in lieu of
purchasing new walking bean assemblies.
Mr. J. Wellington Crane $2,538.00 $61,257.00
Mr. Crane, U.S. Army Aviation Research and Development
Command, suggested a change to the procurement plan for
CH-47 Helicopter (AN-APN-209) installation kits.
Mr. Bernard C. Hardy $3,450.00 $1,141,773.00
Mr. Hardy, DARCOM, suggested the compressing of a two-year
procurement into a one-year delivery schedule.
Mr. Joe R. Montoya $1,961.00 $42,022.00
Mr. Montoya, Pueblo Depot Activity, suggested the
modification of the T-Pins to accommodate the installation
of required maximum security locks on existing structures.
Mr. Richard Dinterman $1,500.00 $110,000.00
Mr. Dinterman, U.S. Army Health Services Command, Research
Chemist, accomplished the development of a tethering system
for the maintenance of chronically catheterized monkeys.
The new system allows the monkey to live under far more
humane and comfortable conditions than the previous chair
restraint .
Mr, Kenneth Bellinger $5,240.00 $4,136,000
Mr. Bellinger, U.S. Army Materiel Development and Readiness
Command suggested the acquisition and modification of nine C
model cinetheodolites to meet operational requirements in
lieu of purchasing new model F cinetheodolites.
Mr. Otto Kroeger $4,500 $2,000,000
Mr. Kroeger, White Sands Missile Range, developed and
applied his idea to employ a destruct inhibit mechanism
after second stage burnout on the long range Pershing II
Missile •
90
NAME AMOUNT OF AWARD TANGIBLE SAVINGS
Mr. Linnie E Newsome $2,235 $1,121,163
Mr. Newsome suggested the repair of and reclamation of 7.62
Ammunition Drums. The method of welding and brazing these
areas resulted in substantial savings.
Mr. John V. Menig $2,070 $970,020
Mr. Menig, Mechanical Engineer, U.S. Army Communications
Electronics Command, was rewarded for his idea of an antenna
group design modification.
Mr. William Sontes $1,500 $404,503
Mr. Sontes, U.S. Army Communications Systems Agency,
detected and corrected contractor use of the EPA clause of a
contract .
Mr. Doyle Johnson $1,065 $144,284
Mr. Johnson conducted a study of welding methods used on
combat vehicles (tanks) which resulted in an improved method
of welding. The new method reduced materiel cost,
protective equipment cost and significantly reduced air
pollution .
Mr. Leslie Whitener $2,155 $1,053,300
Mr. Whitener, Writer/Editor, U.S. Army Troop Support and
Aviation Materiel Readiness Command was recognized for
in-house preparation of equipment publications by placing
emphasis on the in-house page program.
Mr. Michael Hoffman $1,620 $519,195
Mr. Hoffman, U.S. Army Aviation R&D Command, suggested that
closed circuit refueling be deleted from the proposed CH-47
fuel system improvement, the UH-60A and the AH-64 attack
helicopter and that the actual requirement for its
application in the AH-1 aircraft be reviewed.
Mr. Charles Thompson $2,805 $2,738,000
Mr. Thompson, DARCOM, devised a method to recirculate
back-wash waste water, thereby reducing the loads being
placed on the city of Rock Island sewer plant and providing
temporary relief from imposing restrictions from the city.
Mr. Jacob Gregory $1,700 $600,000
Mr. Gregory, Redstone Arsenal, suggested that equipment
which was being obtained for use in the Army Missile
Command laboratories be removed from PERSHING II Engineering
Development Contract. It was determined that the
laboratories had neither the personnel nor the
operating/storage space for this equipment, thereby
providing a cost avoidance to the Government.
91
NAME AMOUNT OF AWARD TANGIBLE SAVINGS
Mr. Owen T, Miller $1,500 $249,465
Mr. Miller, White Sands Missile Range, suggested the
modification of the PATRIOT ultra high frequency
communications network test to provide for the testing of
the entire network and each of the single links
simultaneously.
Mr. Harry Woolverton $2,785 $1,681,902
Mr. Woolverton, U.S. Army Troop Support and Aviation
Materiel Readiness Command, suggested that the method used
by Beech Aerospace Services, Inc. for calculating
engineering support cost be revised to establish proper
bulletin liability. The method recommended was that the
applicable service bulletins be backed out of overhaul cost
by engine serial number and a raw mean overhaul cost be
establ ished .
Mr. Ivy Smith $1,740 $637,200
Mr. Smith, U.S. Army Troop Support and Aviation Materiel
Readiness Command, suggested that the fuel pods of the
CH-47A model helicopter be modified to fit the CH-47B model,
CW3 James Loftus $1,250 (Intangible Benefits)
Chief Loftus, HHC, 2d SUPCOM (CORPS), suggested the use of a
foam packaging machine instead of the currently used wooden
boxes for the transporting of tank components.
Sgt. Timothy Winter $3,652 $2,618,918
Sgt. Winter suggested repairing hoods that could no longer
be used to be recycled as training hoods.
Mr. James Procyk $1,930 $828,084
Mr, Procyk, U.S. Army Troop Support and Aviation Materiel
Readiness Command, submitted a value engineering proposal
which eliminated the installation tool (stapler) , crimping
tool, terminals and sandpaper from the Gridwire Sensor, a
component of the Joint Services Interior Intrusion Detection
System.
Mr. Rudolph Staples $2,120 $1,015,320
Mr. Staples, U.S. Army Troop Support and Aviation Materiel
Readiness Command, submitted a value engineering proposal
which eliminated the support of an unnecessary 3.7 million
dollar requirement without any degradation in performance or
readiness of the AN/PSS-11 Mine Detector.
Mr. Mark Swendiman $1,255 $150,993
Mr. Swendiman, White Sands Missile Range, suggested the
installation of an Electronics Intrusion and Detection
System in a building which had firm fixed power.
92
NAME . AMOUNT OF AWARD TANGIBLE SAVINGS
Mr. Ottis Bates $1,630 $527,436
Mr. Bates, Redstone Arsenal, suggested the use of 70-30
octol in the M207 warhead in lieu of 75-25 mixture, thereby
providing a cost reduction per pound of octol.
Mr. James Traglia $2,045 $941,554
Mr. Traglia, Redstone Arsenal, suggested that action be
taken to reinstate and allow ref urbishments of I HAWK
containers at Red River Army Depot.
Mr. Thomas Wilson $1,245 $20,808
Mr. Wilson, Redstone Arsenal, suggested a change to the
System for Automation of Materiel Plans Army Materiel
(SAMPAM) Program which significantly enhanced the program
and benefited the Government by reducing the number of
printed pages required.
Mr. Roger Leonard $2,100 $1,000,000
Mr. Leonard, Eighth U.S. Army, initiated a study which
identified a deficiency upon which a tariff is based.
Implementation of his recommendation resulted in a
renegotiated five-year contract which will increase U.S.
Government revenues by approximately 11.5 million dollars.
Mr. John Smith $1,475 $372,200
Mr. Smith, Redstone Arsenal, suggested the implementation of
a separable gripstock for the STINGER Weapon System.
Mr. Herbert Gebhart $1,760 $658,631
Mr. Gebhart, Redstone Arsenal, suggested an alternate
approach be adopted for buying out the Silicon Controlled
Rectifier in the required quantities and furnishing
these against future Command Module Procurement as
Government furnished equipment.
LTC James Griffin, Jr. $18,800 $17,700,000
LTC Griffin, Kelly AFB, Texas, suggested direct procurement
of F-15 Avionics Intermediate Shop (AIS) Test Stations from
vendor in lieu of through prime weapon system contractor,
thereby avoiding added costs incurred by prime contractor
for administration and technical surveillance.
MSGT Roy Kappus $20,950 $3,549,962
MSGT Kappus, Kadena AB , Japan, submitted a suggestion that
corrected severe corrosion problems in the outer fin and
nozzle assemblies of rocket motors. By manufacturing fin
and nozzle assemblies out of the same material used to
manufacture fin blades, only the rocket motor assemblies
were replaced.
93
^MI AMOUNT OF AWARD TANGIBLE SAVINGS
CWO Ronald Howell $5,000 $1,609,626
CWO Howell, MacDill AFB, Florida, proposed the modification
of power cargo trailers destined for disposal and use them
in support of deployment equipment requirements.
Previously, trailers had to be towed by trucks. The
proposal reduced contract costs by eliminating the need to
purchase trucks to tow trailers; saved airlift costs and
eliminated two driver positions in each working unit.
CMSGT Edward Ezzell $3,685 $2,582,260
CMSGT Ezzell, Offutt AFB, NE, suggested the modification of
an existing space antenna in lieu of building a new antenna
for use in a communication receiving facility. The
recommendation cancelled a proposed contract.
TSGT Gary Lynch $5,000 $2,610,921
TSGT Lynch, Seymour Johnson AFB, NC , suggested to locally
repair mounting br'acket on the bleed air duct on F-4
aircraft. Previously, the complete duct assembly had to be
discarded when the bracket cracked.
MSGT Jerry McCallister $2,380 $1,276,375
MSGT McCallister, Eglin AFB, Florida, recommended the
stationing of one KC135 aircraft at Eglin for a prescribed
period of time to meet local refueling requirements.
Previously, four different organizations used aircraft flown
from different Strategic Air Command bases resulting in
sometimes two aircraft being assigned to the base at the
same time.
MSGT Kenneth Taylor $7,995 $2,114,717
MSGT Taylor, Shaw AFB, SC, suggested the modification of the
tactical support communication (TSC) vans with a teletype
multiplex capability. Now only TSC vans need to be deployed
during contingencies instead of sending both the TSC van and
a radio van. The flexibility and standardization provided
by this addition saves in planning communications support,
fuel and airlift costs.
Mr. Alexander Perez $3,220 $2,115,645
Mr. Perez, McClellan AFB, CA, suggested the procurement of
general radio digital analog test systems. This allowed
development of depot support equipment recommendation data
for the virtual image display and signal date converter shop
replaceable units. As a result, more expensive contracts
for the preparation of data were eliminated.
Mr. Ray Smith $3,295 $2,194,416
Mr. Smith, Tinker AFB, OK, suggested the installation of
amplifier computers obtained from Boeing 707s acquired for
spare parts on E-3A airborne warning and control aircraft
used for altitude surveillance and other missions. As a
result, purchase of new amplifier computer was eliminated.
33-732 O— 84 7
94
fj^ME AMOUNT OF AWARD TANGIBLE SAVINGS
MS. Mary Seaton $2,105 $1,000,132
Ms. Seaton, Naval Air Station, Lemoore, CA, clarified the
requirements and regulations for packing stereo components
for shipment as loose household goods.
Mr
Mr
Russell Martin $13,120 $7,020,000
Martin, Naval Air Rework Facility, Norfolk, suggested
that Prototype A6 Bulkheads be replaced by the Naval Air
Rework Facility, Norfolk vice contractor.
Mr. Joseph Swan $3,745 $2,373,000
Mr. Swan, Naval Air Test Center, Patuxent River, proposed
and investigated the feasibility of providing the required
signals with "Off the Shelf" equipment instead of purchasing
certain modified equipment.
Mr. Arthur Dodd $3,140 $2,037,840
Mr. Dodd, Naval Sea Systems Command suggested removal of 750
Kw'electrical generating units from 2 classes of ships and
reuse of these units in another class of vessel.
Mr. Frank Kulischak $2,500 $3,330,043.73
Mr. Kulischak, Naval Air Rework Facility, North Island, San
Diego, CA, was rewarded for his suggestion concerning
inventory procedure. He noted that an unrecorded inventory
of H-3, H-46 and H-53 components were being held in various
storage areas. He recommended that all material and parts
be inventoried, evaluated, and returned to the supply
system.
SMSGT Rodney Hindley $10,000 $32,000,000
SMSGT Hindley, AFSC, Wright-Patterson AFB, Ohio suggested an
update and modification of F-15 and F-16 engines to be used
for training purposes thereby precluding acquisition of 10
new production engines.
Mr. Benjamin Haralson $8,060 $6,957,790
Mr. Haralson, Robins AFB, Georgia, suggested the
modification of the Radar Data Processor 3137081-155 to the
Radar Data Processor 3173081-170 configuration and saved the
Government nearly $7 million.
CMSGT Julius Jurek $2,000 $5,975,382
CMSGT Jurek, Langley AFB, Virginia suggested the use of_a_
22 cal. conversion rim fire adapter for small arms training
resulting in savings in rehabilitation and construction
costs.
95
NAME AMOUNT OF AWARD TANGIBLE SAVINGS
Mr. Christopher Conrad $5,225 $4,186,212
As a result of Mr. Conrad's suggestion at the Naval Air
Rework Facility, Norfolk, Virginia, many F-14 beryllium
brake components that were previously rejected and replaced
because of chips and cracks are now being blended to
acceptable limits.
L/CDR Boyd Fowler $2,500 $1,947,000
L/CDR Fowler is stationed at the USNAS, Cubi Point,
Philippines. As a result of his suggestion concerning the
repair of damaged TF-41 case and vane assemblies by which
good blades from defective units are used to replace blades
in working units, a substantial savings was realized.
Mr. Bruce Black $2,870 $1,773,108
Mr. Black, McClellan AFB, CA, submitted a suggestion
concerning the repair of fill spoiler lap bodies and saved
the Government nearly $1.8 million.
Colonel Richard Richter $3,705 $1,603,804
Colonel Richter of the Air Force Tactical Air Command
suggested modification of mobility bins which were designed
many years ago to accommodate kits supporting B-29 aircraft,
to be carried in the aircraft bomb bay.
Mr. James R. Pierce $8,968 $1,153,350
Mr. Pierce, U.S. Army Missile Command, recommended the
modification of existing W-30 cables at Red River Army Depot
in lieu of purchasing new cables.
Mr. Bobbie Scott $2,180 $1,141,773
Mr. Scott, Keesler AFB, Mississippi suggested the
replacement of 487L TL Trainer with Electronic Systems
Tests Sets which resulted in substantial savings.
Colonel A. R. McCahan $5,000 $925,000
Colonel McCahan, Organization of the Joint Chiefs of
Staff, submitted a suggestion dealing with Tactical
Satellite Communications and in doing so saved the U.S.
Government approximately $925,000.
96
GROUP AWARDS
tjAME AMOUNT OF AWARD TANGIBLE SAVINGS
Mr
Ralph Carson (Undetermined) $1,077,249
Mr. Richard Ransdell
Mr. Charles Moore
Mr . Thomas Johnson
Mr. Simon King
Mr . Mark, Black
Mr . Thomas Jensen
Mr. Salvador Gutierrez
Mr. Abraham Gumbayan
Mr. Charles Cummings
Mr. Nicholas Mosley
Mr. Iven Cobb
Ms. Jody Small
The "Super Savers Quality Circle" in the Hydraulic and
Miscellaneous Section at NARF, North Island, estimate that
their suggestion to add an aircraft examiner to monitor work
in various processing shops will save more than $1,000,000
after the first year.
Mr. Wallace Day $10,000 with $1,160,000
Mr. Edwin Lard an additional
(Navy Ship Research $1,500 approved
and Development Center) by 0PM
Messrs. Day and Lard devised a system which reduced fresh
water consumption of a ship's laundry by over fifty percent.
This is a very significant contribution in light of the
limited availability of fresh water aboard ship.
Mr. James Jarrell $9,700 $1,200,000
Mr. Nathaniel Gelber
Mr. Wong Fun Ark
Mr. Francis X. Murphy - '
Mr . Henry Kramer
Mrs. Virginia Hogan
These six employees of the U.S. Army Materiel Development
and Readiness Command received a group award for their
special efforts in the development of analytical procedures
for the quality and process control of the continuous
production of ni troguanid ine .
Mr. Delmar Rockemann $1,542.50 ' $1,980,435
Mr . Vernon Lahay
Messrs. Rockemann and Lahay, DARCOM, recommended a procedure
for processing of Department of Defense Provisioning Data
prior to Provisioning Design.
Mr. William Haley $5,560 $357,348
Mr. Daniel Pollard
(Redstone Arsenal)
The suggester's idea resulted in a new concept for
documenting Quality Assurance Provisions on Army drawings,
thereby providing a savings to the Government.
NAME
97
AMOUNT OF AWARD TANGIBLE SAVINGS
Mr. Donny Dreaden $4,950 $1,500,000
Mr. Alton McAllister
Mr. Thomas Moore
Mr. Charles Raley
Mr. Kenneth Beam
Mr. Jerri Cornelius
Mr. Dennis Henry
Mr . Kenneth Johnson
Mr. Clyde Morris
Mr. Robert Payne
Mr. Ben Williams
These individuals designed and developed the computer
lash-up software/hardware configuration. Their achievement
provided MICOM and DARCOM with the ability to increase
computer productivity without the normal comparable increase
in hardware and support personnel costs.
$2,930,133
Mr. Leonard Deney $4,035
Mr. Joseph Manna
Mr. Robert Monahan
Mr. Richard Botticelli
Mr. Werner Field
(Large Caliber Weapon Systems Lab, Dover, NJ)
This team was responsible for the initiation and
implementation of a Value Engineering Action. The nature of
cost deduction involved the reduction from eight to six
Grenade Body Loading Systems. This resulted in substantial
equipment and operating savings. ^tanciai
M^rJ ^^°^^ ^f"^^"^ $1,000.00 $60,000
MSGT Leroy Stone
CPT Gregory Ratz
Cpt Michael Topp
(HQ 4th Trans Bde, 3d Movement Region, Europe)
w^thin^nsARPHR^h^^^ a centralized control for mail movement
within USAREUR by implementation of this suggestion the
and"fina'lir'"''°'^'\''°" "^^"'"""^ °"^-- waf abl^;; compile
rCnsf movement requirements and consolidate mail
Mr. Paul isham $2,200 $1,098,360
Mr. Donen Miller (Shared
(U.S. Army Troop Support, equally)
St. Louis, Missouri)
These suggesters developed an in-house Program of
Instruction (POI) for a very complex subsystem on the AH-15
Aircraft Program.
98
Senator Grassley. Mr. Spanton, I would like to have you elabo-
rate on your point that we cannot rely upon self-restraint of cost
incurrence by the contractor.
Mr. Spanton. The simple contract procedure is self-defeating as
far as cost restraint. The contractor assigns a profit to the cost in-
curred. That in itself creates no incentive to reduce costs. The
greater the cost, of course, the greater profit. For example, if a cost
on a contract is $25 million, and his profit was 15 percent, it would
be 15 percent of $25 million. If he spent $35 million, then he would
get the 15 percent. If his estimated costs were $35 million, he
would get the 15 percent on top of that. So there is no self-re-
straint, because it is to the contractor's advantage from a profit
standpoint to incur costs. And as far as the areas where the con-
tractor is incurring costs, possibly in answer to Senator Heflin's
question, the best point to control costs is at the time of contract-
ing— do not give the contractor the money so he can spend it. We
attempted to do this when we did our labor and salary audit in
1982, in March. At that time, the economy was somewhat de-
pressed, and there were major companies such as Eastern Airlines
and General Motors, freezing or rolling back salaries. People were
getting laid off At the very same time these events were taking
place, defense contractors were free to give increases to the extent
that they desired — there were no limitations — while these other in-
dustries in the private sector were controlled by the economy, the
only controls over defense contractors is the size of the defense
budget. And we stepped foward and said: it was unreasonable
during this period of time that Pratt & Whitney should allow these
high rates of escalation for future year contracts at the same time
that these other conditions existed in the private sector. It was our
endeavor, then, to roll back through lessening the escalation rates,
to roll back the salaries so that they would become closer to the
amounts that were paid by the private sector.
That is how we projected in one plant alone over a 3-year period
that the cost reductions would be $150 million. And we do not have
a very large plant— there are 7,000 employees. If you project those
savings throughout the defense industry, and major defense con-
tractors, we are talking about billions of dollars in that one area
alone. We are not saying that the salaries should be reduced below
the private sector, but certainly, they should not exceed the private
sector.
Now, we pursued this issue up to the present date, let us say. We
tried to impress my agency and procurement each day that passed
where there was inaction, it cost the Defense Department and the
taxpayer millions of dollars daily; yet we could get no movement.
And we were unsuccessful until the media became aware of what
was taking place and began to publicize it.
Recently, there was an effort, not on the part of DCAA, but there
was an effort by the Defense Contract Administrative Services to
review salaries of another major contractor. However, and unfortu-
nately, they concentrated not on the high and middle-level execu-
tives, but on the lower scale employees, the lowest levels. I have in
my hand here a regional memorandum which shows at one defense
contractor location, there was one group of employees whose aver-
age salary was between $24,900 and $25,600, while in the local
99
sector, the range was between $12,000 and $18,000. Here is a
second category of employees at this major contractor location,
where the salaries were between $22,000 and $24,000. The private
sector was in the range of $12,500. In the third category, I have an
average salary here by this major contractor of $25,000. In the pri-
vate sector, $13,000.
Now, it does not take long, using a calculator, to find that if you
took these conditions and applied this throughout the defense con-
tractor community, we are talking about billions of dollars.
This report was submitted by my agency to all the field offices. I
would like to draw your attention to the lack of impetus in resolv-
ing the problem. "You may find this audit approach and related
data useful in similar reviews performed by FAOs under your su-
pervision."
Now, this is a fallout of the situation that we tried to portray
when we said if the defense contractor continually gives a pay esca-
lation which greatly exceeds that of private industry, then this
compounds upon itself, and within a very short period of time, you
have the condition I just outlined. And to further portray the total
separation between what the defense contractors perceive their re-
sponsibilities to the Department of Defense versus the private
sector, I have a copy of an ad placed in a newspaper by Pratt &
Whitney, and it reads this way:
Pratt-Whitney's Final Offer: More, not Less, for Employees. Pay cuts, freezes,
COLA wipe-outs, benefit reductions-they are all common in labor settlements across
America in these tough economic times. But not at Pratt-Whitney. The company
has proposed to the union a new 3-year agreement providing solid economic gains
and improved benefits for employees, plus major breakthroughs in job and income
security.
Again, unfortunately, the attention is being directed toward the
lowest level employee, with very little or no attention given to the
executives, those who get these substantial salaries, and on top of
that, they get year-end bonuses, rental automobiles, and the latest
personal home computers for use in home or office as they choose.
Certainly, these are not conditions conducive to provide a strong
military situation where we can feel proud that we have done our
best. What we have here, as the budget goes up, the armament just
costs more. We are not getting more armament. It is just keeping
pace with the increase in the budget, and somehow in some way,
this has to be brought to the attention of those in Congress that
can do something about it.
One other word on the DCAA concerning the savings. I have
here a bulletin which is dated March 1982, and on the face of the
bulletin, it shows that in 1975 through 1981, the cost savings were
$14 for every dollar spent on DCAA operations. It went up in 1980
to $27. In 1981, in the space of 1 year, it jumped to $47. This is to-
tally unrealistic. Yes, the DCAA does have savings, but certainly
not to the extent being reported.
One of the areas that I am responsible for is the reporting of cost
savings and avoidances. That is an area I received a great deal of
criticism on, because I refused to report savings that never materi-
alized, and I think this type of information is self-defeating. Again,
it places the agency in the position of gaining the public's trust and
not earning it.
100
Senator Grassley. Well, I think those items that you quoted
from, I would like to have submitted for the record, if you would
submit those.
Mr. Spanton. Yes, Senator.
Senator Grassley. Without objection, they will be included.
[The following was received for the record:]
[From the Sunday Republican, Nov. 28, 1982]
Pratt & Whitney's Final Offer: More, Not Less, for Employees
(Pay cuts, freezes, COLA wipeouts, benefit reductions — they're all common in
labor settlements across American in these tough economic times. But not at Pratt
& Whitney. The company has proposed to the union a new three-year agreement
providing solid economic gains and improved benefits for employees — plus major
breakthroughs in job and income security.)
Three-year wage and COLA increases average $2.01, or 19.6%.
Current 84-cen.t COLA folded into first-year base rates:
1st year: increases up to 88 cents an hour, averaging 63 cents.
3nd year: increases up to 90 cents, averaging 69 cents.
3rd year: increases up to 90 cents, averaging 69 cents.
Faster wage progression — 10 cents every 24 weeks to maximum rate.
COLA — 5 cost-of-living adjustments, each up to 18 cents, totaling up to 90 cents
over 3 years.
Special retirement supplements — Voluntary program during the first 3 months of
1983 for employees 55 or older with 25 or more years' credited service. Special sup-
plement up to $10 a month for each year of credited service paid to age 62 or for 4
years, which ever is longer, but not beyond 65. However, employees 64 or older can
receive supplements for one year.
Severance pay — Weekly benefits equal to 50% of 1 week's pay including COLA for
up to 12 weeks, depending on seniority, for employees with at least 3 years' seniori-
ty who must be laid off indefinitely.
Strengthened seniority — Greater protection against layoff for longer-service em-
ployees through consolidation of job groupings and reduction of number of seniority
areas in the East Hartford plant.
Seniority recall rights, now at 2 years' maximum, extended to 5 years' maximum.
Insurance — Company continues to pay full cost of health and dental insurance,
despite increase in cost in 1983 to more than $900 for individual coverage and
nearly $2,400 for family coverage.
Weekly disability income maximum raised to $200 on Jan. 1, 1985 . . . still 52
weeks of coverage.
Lifetime major medical maximum raised from present $100,000 to $2.50,000.
Dental: Payments increased for Class II (fillings) and III (dentures) procedures.
Age limit removed for orthodontia treatment for employees and dependents, and
maximum benefit raised 50% to $750 in January, 1985.
Pensions — Guaranteed maximum monthly pension per year of credited service in-
creased to $20 on Jan. 1, 1983 . . . rising to $21 on Jan. 1, 1984.
New retirement benefit for surviving spouses of employees with 10 or more years'
service who die before age 55.
Savings plan — Employees' rhaximum weekly savings opportunity increased to $12
on Jan. 1, 1983 ... $14 on Jan. 1, 1984 ... and $16 on Jan. 1, 1985— with company
providing 50% match.
Other benefits — Christmas minivacation preserved with 12 paid holidays in 1st
and 2nd contract years and 13 in 3rd year . . . paid military leave increased from 10
to maximum of 30 days . . . more than 30% increase in cash performance awards
. . . up to 5 weeks' vacation, as at present.
PAY PROGRESS FOR EMPLOYEES
Job grade
11 10 9 8 7 6 ,5 4 3 2 1
Current maximum rate $8.27 $8.54 $8.92 $9.34 $9.80 $10.29 $10.83 $11.41 $12.02 $12.73 $13.44
Maximum rate, November
1985 9.79 10.13 10.59 11.10 11.66 12.25 12.89 13.58 14.32 15.18 16.07
101
PAY PROGRESS FOR EMPLOYEES-Continued
Job grade
11 10
Total three-year increase 1.52 1,59 1.67 1.76 1.86 1.96 2.06 2:i7 2.30 2.45 2.63
General Increases: Nov. 29, 1982; December 5, 1983; December 3, 1984.
COLA increases: May 30, 1983; December 5, 1983; June 4. 1984; December 3, 1984; June 3, 1985; Rates in table assume 5.8% inflation per
year.
The three-year package summarized here is the company's final offer. The company has told the union It will carefully consider any proposals but
It will not increase the total value of the offer.
Defense Contract Audit Agency,
Atlanta Region,
Marietta, GA, August 31, 1983.
Regional Audit Memorandum No. RSO-73-83.
Memorandum for all Regional Audit Managers, Atlanta Region, DCAA.
Subject: Unreasonable labors costs.
One of our FAOs was recently asked for input (assistance) regarding a DCASR
Compensation System Review of a large airframe manufacturing company. Review
was made of three specific labor categories, namely: (1) security guards, (2) plant
service workers (janitors), and (3) secretaries.
DAR 15-205.6(2) states, "Compensation is reasonable to the extent that the total
amount paid or accrued is commensurate with compensation paid under the con-
tractor's established policy and conforms generally to compensation paid by other
firms of the same size, in the same industry, or in the same geographic area, for
similar services."
Exhibit A presents comparison of average pay, minimum pay and maximum pay
for each of the labor categories by the contractor and by other employers.
Exhibits B, C and D present the job descriptions for each of the labor categories
named in the first paragraph hereof.
You may find this audit approach and related data useful in similar reviews per-
formed by FAOs under your supervision.
Paul Evans,
Regional Director.
Enclosures 4.
EXHIBIT A.— COMPARISON OF WAGES WITH AREA WAGE SURVEYS
straight time wages Time required
between minimum
Minimum Maximum and maximum
Security Guards (fiscal year 1982 Average— $26,894)
Contractor ' $24,960 » $25,688 15 mc.
Major airframe defense contractors (Avg.) 16,265 22,346 6 to 12 yr.
Local city police 11,378 18,554 do
Local city police 11,748 17,876 do
SAC AFB (Civilian) 13,369 17,383 do
Local county police 12,064 18,532 do
Janitors (Last Quarter fiscal year 1982 Average— $24,232)
Contractor ^ 22,048 ^ 24,7312 18 mo.
Major airframe defense contractors (Avg.) 12,771 19,000 10 to 12 yr.
Bureau of Labor Statistics (BLS) (local large city manufacturing) 14,518
American Management Association (AMA) (Geographical segment of United 11,440
States where contractor located).
Secretaries (Fiscal year 1982— $24,544) (14% random sample)
Contractor ^ 24,960 ^ 25,688 18 mo.
Major airframe defense contractors 11,254 19,509 10 to 12 yr.
Bureau of Labor Statistics (BLS) (local large city) 14,976
American Management Association (AMA) (geographical segment of United 12,896
States where contractor located).
■ Based on negotiated hourly wage rates (excluding shifl differential) as of the last quarter of fiscal year 1982 times 2,080 hours.
2 Based on negotiated hourly wage rates as of the last quarter of fiscal year 1982 times 2,080 hours.
102
EXHIBIT B. — SECURITY GUARDS TECHNICAL AND OFFICE JOB DESCRIPTION
Occupational summary
Perform guard, watch, and patrol duties essential to employee and plant protec-
tion.
Work performed
Perform any guard, watch, and patrol duties on any assigned post.
Make preliminary investigation and reports as required.
Maintain order in emergencies. Make special investigations as assigned and in ac-
cordance with Company and Civil regulations.
Carry firearms when assigned.
Use two-way radio communication system and possess Third Class Radio-Tele-
phone Operator's license, as required.
Perform routine clerical duties and make detailed written reports as required for
post assignment.
EXHIBIT C. — PLANT SERVICE WORKER (JANITOR) FACTORY JOB DESCRIPTION
Occupational summary
This occupation requires the performance of hand sweeping, cleaning, dusting,
waxing, polishing, mopping, and scrubbing operations, and other related duties nec-
essary to maintain good housekeeping in office, factory, and ground areas; and other
janitorial duties involving heavy manual work.
Work performed
Performs such typical operations as operating hand-power sweepers, waxers, pol-
ishers, and scrubbers; washing walls and ceilings; cleaning windows requiring the
use of safety belts and performing janitorial duties involving the lifting of heavy
containers and the moving of heavy equipment.
Performs such typical operations as sweeping outside, factory and office areas;
emptying waste baskets and trays; placing sweepings and trash in carts and recepta-
cles; hand scrubbing, mopping, washing and drying floors, woodwork and furniture;
cleaning carpets, carpeting, and rugs with brooms, brushes, sweepers and vacuum
cleaners; hand polishing and waxing office furniture, floors, linoleum and wood-
work; washing and polishing windows where use of safety belts is not necessary;
cleaning drinking fountains and lavatories; replenishing supplies, such as soap,
towels, drinking cups, disinfectants, and sanitary napkins.
Maintains good housekeeping in office, factory, and ground areas. Does gardening
as required.
EXHIBIT D. — SECRETARIES TECHNICAL AND OFFICE JOB DESCRIPTION
Occupational summary
Perform stenographic duties, compose letters for superior's signature, follow up
superior's business arrangements, schedule and arrange appointments, and exercise
discretion and judgment in conserving superior's time and promoting good depart-
mental or company relations.
Work performed
Perform stenographic duties and, in addition, prepare letters, a portion of which
are composed or compiled by the secretary on the basis of her personal knowledge of
the subject matter, department or restricted files, or outside source of required data.
Arrange for and schedule appointments for superior, exercising discretion in con-
serving his time and promoting good public relations, including interviewing callers
and making proper referrals; prepare material and make arrangements for meet-
ings as required.
Perform general office work. Relieve superior of certain duties by transmitting in-
formation concerning the established policies and procedures of the company or the
expressed wishes of superior. Make systematic follow-up of superior's business ar-
rangements and correspondence.
Receive, scan, and sort mail for reply by superior personally, by other company
personnel, or by secretary for superior s signature. Answer correspondence by col-
lecting information and composing and typing replies on own initiative or brief gen-
eral instructions for approval or signature of superior.
103
Distribute work to and review completed work of clerks, stenographers, and typ-
ists, as specifically authorized by superior.
Knowledge and ability required
Knowledge of company policies and procedures affecting department. Ability to
operate a typewriter and knowledge of shorthand, speedwriting, stenotype or other
method of taking and transcribing dictation.
EXAMPLE.— CONTRACTOR PROPOSED— AUDIT RECOMMENDED— DOD NEGOTIATED SALARY LABOR
RATES
[Dollars per hour]
1981 1982 1983 1984
Contractor:
Paid 20.00
Projection 23.00 26.50 30.50
Paid 23.50
Projection 27.00 31.00
Paid 28.00
Projection 32.00
Paid 32.00
DCAA: Recommended (1980) 19.00
Basis 20.00
Recommended 22.00 24.00 26.00
Basis 23.50
Recommended 25.50 27.50
Basis 28.00
Recommended 30.50
Private Industry: Actual 15.00 16.50 17.50 19.00
DOD: Negotiated (1980) 19.00 21.00 23.00 25.00
Basis 20.00
Negotiated 22.50 25.50 28.00
Basis 23.50
Negotiated 26.25 29.00
Basis 28.00
Negotiated 30.00
EXAMPLE OF UNCONTROLLED ESCALATION OF SALARY RATES AND ITS COMPOUNDING
EFFECTS IN DISPARITIES WITH PRIVATE INDUSTRY
1981
The actual rate paid by the contractor for 1981 was $20.00 hr. despite the contrac-
tor's negotiated agreement (in 1980) that $19.00 hr. was reasonable.
The DCAA will use $20.00 hr. as its bases for projecting rates for the years 1982-
1984 even though it had recommended (in 1980) a rate of $19.00 hr. as a reasonable
rate for 1981.
DOD procurement will use $20.00 hr. as its bases for negotiating,1982-1984 rates
despite its negotiation (in 1980) of $19.00 hr. as a reasonable rate for 1981.
DOD Procurement and DCAA do not evaluate the "reasonableness" of the 1981
rate of $20.00 hr. They will accept it as the bases for projecting future rates with
the simple explanation that it is their practice to accept whatever rates the contrac-
tor has paid as the bases for future rates.
Private industry in a competitive environment and recognizing the economics of
the times paid $15.00 hr. in 1981.
The DOD contractors in a non-competitive environment pursued the practice of
incurring cost on the bases of the availability of funds within the DOD budget. If
the argument is presented that there is competition between the DOD contractors,
it is only within limited confines where all the competitors are following the same
practice of paying salaries greatly exceeding private industry. The only limitations
in costs in this environment are those imposed by the magnitude of the Defense
budget. Do not have to exercise the restraints imposed by competition within the
private sector.
104
The entire purpose of our March 1982 labor report was to narrow the wide dispar-
ity between the salary rates paid to private industry and those paid by defense con-
tractors.
Example Difference
1981 $5.00
1982 7.00
1983 10.50
1984 13.00
DOD
Private
contractor
industry
1 $20.00
$15.00
1 23.50
16.50
1 28.00
17.50
1 32.00
19.00
105
the
bulletin
Defense Contract Audit Agency /Cameron Station, Alexandria, Va. 22314
■sfami^NEU-? -- Sk-jt-l;-.
--^
DOLLAR SAVED^ ^ .^
PER $1 SPENT ON 3
r/arch 1982
■««.;::'^^ "
DCAA OPERATIONS
/,/V
*" <• -, ■■'■'■■•■•■'"^3 ^■-^=<» i. -Xiii-il^
106
SPECIAL RECOGNITION AND AWARDS
QUALITY PERFORMANCE PAY INCREASE
Dina Caren Johnson
Debra Kay McAllister
Krlstlna L. Denton
Carol A. Shultz
Georgia J. Welker
Clerk- Typist
Office Supervisor
Clerk-Typist
Secretary Steno
Office Supervisor
Chicago
Chicago
San Francisco
San Francisco
San Francisco
SUSTAINED SUPERIOR ACCOMPLISHMENT AWARD
3 -
n-
i'6-
1^
I 5
3
I I
Joe I. Allen Supervisory Auditor
Robert P. Basinger Supervisory Auditor
Marlon J. Bishop R<\-^iC) Supervisory Auditor
James C. Bourne fer.rr^r. Mr4'*-'-^i«.V./»<-.X:S Supervisory Auditor
Marvin L. Burroughs, Jr ."Br.rr;., 7^,,^ Supervisory Auditor
Jack C. Clark Supervisory Auditor
Robert E. Coffelt Supervisory Auditor
Jesse E. Collins Supervisory Auditor
James T. Cox Supervisory Auditor
Richard A. Cudd Supervisory Auditor
Wade E. Emory Auditor
Louis M. Esposito R. Atftl^hsect Supervisory Auditor
Thomas A. Gayhart, Sr. Supervisory Auditor
Ray F. Griffith, Jr. &r. |W<, 0^(.v/J6c^ Supervisory Auditor
Jack D. Hartsock. (2 A.Wv^^Te-fM^f^c Supervisory Auditor
Paul C. Higgins Supervisory Auditor
Wilfred R. Johnson Supervisory Auditor
Fred Kasmir R Ta - vy^ -is,., V, a Supervisory Auditor
Glenn Robert Myers ^r.frM,, ij>>lVas Supervisory Auditor
Levd.s G. Rink Supervisory Auditor
Dick Hubert Roof Supervisory Auditor
John J. Sack i^A, l^ojrcui?'. Supervisory Auditor
Vernon B. Tabor ^fv*--' '^^-^'^ Supervisory Auditor
William G. Thorns KA. \kiw.^ Supervisory Auditor
Claude L- Turner ^,.frM.K llul-lt•i.^/■uc Supervisory Auditor
Bedford J. Walters Supervisory Auditor
William R. Wells - Supervisory Auditor
James D. White ' Supervisory Auditor
Jack Pihlak Supervisory Auditor
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Chicago
19
107
Senator Grassley. I have a report here I would hke to ask you if
you are famiUar with. The title reads, "Audit Report on the Eval-
uation of Proposed 1982 to 1984 Forward Pricing Direct Labor
Rates." Are you familiar with this report?
Mr. Spanton. Yes, Senator.
Senator Grassley. Would you explain the report, summarize it?
Mr. Spanton. Yes, sir. That is a report where we are pointing
out that if the escalation rates related to the private sector and re-
lated to those given Government employees showed some restraint,
we could save the $150 million. It seems strange that the Govern-
ment can establish what it can afford to give its own employees as
a pay raise, while at the same time defense contractors virtually
100 percent involved in Government work can have no restraints,
no limitations, no exercises towards keeping the expenditures down
and can pay what they want, as I said at the inception of my dis-
cussion.
The method of contracting is self-defeating. The profits earned by
the contractors, based upon the amounts that they invest, consider-
ing the many advantages, the progress payments that they receive
as they proceed in the performance of their contracts, far exceed
private industry. The rate of failure on these major defense con-
tractors is in itself an indication that defense business is a good
area to get into if you want to make money at minimum risk.
Senator Grassley. We have this report in our possession and I
want to put it in the record. So without objection, the entire report
will be printed.
[The following was received for the record:]
108
fAUDlT REPORT ON EVALUATION OF
I PROPpS^D 1982-1984 FORWARD
\_P^f^lNG DIRECT LABOR RATES
ITED TECHNOLOGIES CORPORATION
PRATT ( WHITNEY AIRCRAFT GROUP
GOVERNMENT PRODUCTS DIVISION
WEST PALM BEACH, FLORIDA
The /5efense Contract Audit Agency has no objection to the
(lease>o£ this report, at the discretion of the Contracting Of-
icer, Ao the duly authorized representatives of Pratt & Whitney
,i4cr/ft Group, Government Products Division.
OJnder the provisions of Title 32, Code of Federal Regula-
tions, Part 290.26(b) (2) (as amended August 10, 1977), all
Freedom of Information Act requests for audit reports received
by DCAA will be referred to the cognizant contracting officer
for determination as to releasabil Ity and a direct response to
the requestor.
Contractor information contained in this audit report may be
confidential. The restrictions of 18 DSC 1905 should be considered
bofore this information is released to the public.
This report may not be released to any Federal agency outside
the Department of Defense without the approval of Headquarters,
DCAA, except to an agency requesting the report in negotiating or
administering its contract.
DEFENSE CONTRACT AU15IT AGKNCY
ATLANTA REGION
PRATT & KHITNKY AIRCRAFT RESIDENT OFFICE
P. 0. BOX 2691
WEST PALM BEACH, FLORIDA 33402
Audit Report No, 14 81-2A230006
Date of Report* 13 March 1982
FOR OFFICIAL USE ONLY
109
ft. V. M|l»^lY A.I
v-,itT rAL»-4 i»t^rM
I
1 t»l
r 1 /'MID*
1.^81/MG
13 Karch 1982
SUBJECT: Report on Evaluation of Proprjr.cd 1S32-19
Forward Pricing Direct tabor Patca
United TechT.ol ogies Corporation
Pratt & WliUney Aircraft Group
' _CovernniL-nt Proc^ucts Division
Vest Palm Beach, Florida
Audit Report Ko. 1/^ SI -2A230006
TO: Adininistrative Contracting Officer
AF Plant Representative Office (Det ^)
Pratt & Vliitney Aircraft Group
Governinent Products Division
West Palm Beach, Florida
ATTN: -m (H. J. >5oyes, PACO)
1. Purpose and Scope jofAu^dit^
a. In accordance with the APPRO (Det. A)/TI^O letter
dared 29 January 1982, we reviewed the subject forward pricing
labor rate proposal dated 27 January 1982 to orovide an advisory
audit report to assist in the negotiation of labor rates. The
proposal provides for domestic foi-v-ard pricing direct labor
rates for 1982-198^.
b. The evaluation was performed in accordance with
generally accepted auditing standards and included such tests
of the contractor's data and records and such other auditing
procedures as considered necessary in the circumstances except
as noted in paragraph 2. The cost principles contained in DAR
Section XV, Part 2. and the practices required by applicable
Cost Accounting Standards were used as criteria in the evaluation
of the proposea rates.
Sumrnary of Audit Jvcsul t3.
Exhibit A
a. The results of audit, summarized on
of this report, show that' GPD has propos^d^over $150 million of 2
feNcess labor-c6st?"to'be incurredr'ort' cur rent and f_utur^^Contracts-
from 1981' thru 198^. Our recommended direct labor rates will, over
the 1982-1983 time frame, bring these abnormal GPD labor
related costs in line with national averages and inflation indices.
FOR OFFICIAL USE ONLY
33-732 O— 84-
no
AUDIT REPORT OH EVALUATION OF •
PROPOSED 1982-1 98A FORVJ/JID
PRICING DIRECT LABOR PJ^TES
UNITED TECHNOLOGIES CORPORATION
PRATT t. WHITNEY AIRCRAFT GROUP
GOVEPJJHEnJT PRODUCTS DIVISION
VJEST PALM BEACH, FLORIDA
The Defense Contract Audit Agency has no objection to the
release of this report, at the discretion of the Contracting Of-
ficer, to the duly authorized representatives of Pratt & Whitney
Aircraft Group, Governjnent Products Division.
Under the provisions of Title 32, Code of Federal Regula-
tions, Part 290.26(b) (2) (as amended August 10, 1977), all
Freedom of Information Act requests for audit reports received
by DCAA will be referred to the cognizant contracting officer
for determination as to releasabil ity and a direct response to
the requestor.
Contractor information contained in this audit report may be
confidential. The restrictions of 18 DSC 1905 should be considered
before this information is released to the public.
This report may not be released to any Federal agency outside
the Department of Defense without the approval of Headquarters,
DCAA, except to an agency requesting the report in neg'otiating or
administering its contract.
DEFENSE CONTRACT AUDIT AGENCY
ATLANTA REGION
PRATT & WHITNEY AIRCRAFT RESIDENT OFFICE
P. O. BOX 2691
WEST PALM BEACH, FLORIDA 33402
Audit Report No. 1481-2A230006
Date of Report: 13 March 1982
FOR OFFICIAL USE ONLY
Ill
OIJ IJii^L CONTRACT AUDIT AGENCY
A7I>.UTA nrcioM
r'n.-.i I /v v/Mii »/» V /.iKciiAr 7 Nr.nt>LM7 orricr
V/r».7 CALM If* ACM» rL-oniL»A >»103
1.^81/MG 13 J-larch 1982
SUBJECT: Report ion Evaluation of Proposed 1982-1984
Forward Pricing Direct Labor Rates
United Technologies Corporation
Pratt & VThitney Aircraft Group
Government Products Division
West Palm Beach, Florida
Audit Iv=;port No. 1481 -2A230006
TO: Administrative Contracting Officer
AF Plant Representative Office (Det 4)
Pratt & VThitney Aircraft Group
Govemrcjent Products Division
■West Palm Beach, Florida
ATTN: TM (H. J. Moyes, PACO)
1. Turpose and Scope of Audit.
a. In accordance vith the AJPRO (Det. 4)/TM0 letter
dated 29 January 1982, we reviewed the subject forward pricing
labor rate proposal dated 27 January 1982 to provide an advisory
audit report to assist in the negotiation of labor rates. The
proposal provides for domestic forward pricing direct labor
rates for 1982-1984.
b. The evaluation was performed in accordance with
generally accepted auditing standards and included such tests
of the contractor's data and records and such other auditing
procedures as considered necessary in the circumstances except
as noted in paragraph 2. ' The cost principles contained in DAR
Section XV, Part 2, and the practices required by applicable
Cost Accounting Standards were used as criteria in the evaluation
of the proposed rates.
2. " Summary of Audit Results.
a. The results of audit, summarized on Exhibit A
of this report, show that GPD has proposed over $150 million of
excess labor costs to be incurred on current and future contracts
from 1981 thru 1984. Our recommended direct labor rates will, over
the 1982-1983 time frame, bring these abnormal GPD labor
related costs in line with national averages and inflation indices.
FOR OFFICIAL USE ONLY
112
h. 7)1 our o])inioT], the offeror hnn Du1>inJLtc-d ndequutt
cost or pricing (lota. The proj)ODnl \'inD preportd In occordiince
with applicable Coct Accounting Standards ijnd DAR Section XV,
Part 2. Therefore, we consider the propocnl to be acceptable
for negotiation of a price. This Btattment should not be inter-
preted to mean that the data are necessarily accurate, complete
and current in accordance v;ith Public Law 87-653, since a postav;srd
audit review may disclose evidence not now discernible. Mor should
the statement be interpreted to mean that the offeror is necessarily
in compliance in all respects with Public Law 91-379, since a firisl
recommendation cannot be made in a preaward evaluation. Instances
of additional noncompliance with Public Law 91-379 may be reported
during contract performance.
c. Factual audit matters were discussed with the
contractor's authorized representative, Mr. J. M. Hritz, Contracts
Liaison, to the extent necessary to ensure that the conclusions
reached by the auditor were based on a proper understanding of
the data involved, but results of audit v;ere not disclosed.
d. Accounting counsel or additional audit services,
as may be required, will be provided upon request to this office
(Attention: Mr. L. Rink, Supervisory Auditor, telephone
305/8^0-^05^). In any case, additional audit support should be
requested if changed requirements or more current cost or pricing
data have a significant impact on the proposal. VJe recommend
that an auditor be invited to attend negotiations.
e. As required by DAR 3-807. 8(c), please furnish us
a memorandum of the negotiations as promptly as possible. In
addition, a copy of the forward pricing rate recommendation
memorandum is requested.
f. This report should not be used for other than the
purpose stated in paragraph 1 above without prior consultation
with this office.
Defense Contract Audit Agency
"GEORffE" R. SyANTON, Resident Auditor
End. a/s .
Copy furnished:
AFPRO/CC
RAMA-1 (Mr. A. Tueller)
FOR OFFICIAL USE ONLY
2
113
/■jj.Ul. Iv-jo/L )>', I'lV.)-'/--
"■'"^ )';,,;t ) of 6
ITfitt i VJnit-nty /drcrnfL OrtAJj*
Ccrjisrmisnt TroAoctD Dlvio5on
West Palm Boach, FDorlda ' .
STATB-CiOT OF CONTRACTOR'S 27 JAIJUARY 1982 PROPOSED n)K.2/iRD PK1C1J*3 DrKFX-T Iv'vlOK PAlllS
AI© RESULTS OF AUDIT REVIEW
Later Category
Contractxrr
'e
■ RcEulti
5 of Au
dit P^v
Ic-.^ OiDte 1)
Proposed Plates
Questioned Rstee
1982 1983 1984
1982
1983
1984
Ifetes
$10.08
$11.5^
$13.09
$ .57
$1.79
$2.68
2
15.98
19.54
22.02
.97
3.13
4.49
2
27.53
• 31.51
35.73
1.60
4.93
7.34
2
10.73
11.75
12.77
.65 ■
1.42
1.75
3
12.11
13.13
14.15
.72
1.46
1.70
3
11.51
13.17
14.94
.69
2.08
3.11
3
17.08
19.54
22.16
.96
3.01
4.52
3
10.82
11.84
12.86
.65
1.43
1.75
3
9.11
10.42
11.82
.08
1.16
1.94
3
U.Sti
17.10
19.39
.85
2.65
3.97
3
11.13
12.15
13.17
.75
1.51
1.82
3
11.01
12.03
13.05
.62
1.38
1.69
3
17.03
19.49
22.10
.45
2.03
3.45
4
8.02
9-18
10.41
.27
1.01
1.68
4
U.b7
16.67
18.91
.41
1.75
2.98
4
16.06
18.37
20.84
.51
1.98
3.34
4
- Ehgr. Salary Itonexenpt
Ihgr. Salary Exenpt
Tngc. Treasury
Manufacturing Hcurly
Test Hourly
Test Salary t^anexsnpt
Test Salary Exenpt
Quality Raurly
Quality Salary Nonexenpt
Quality Salary E>-pnpt
Tooling Haurly
Assenbly Hourly
Field Sr-yc. Salary Exenpt
Tech. Pubs Salary Nonexenpt
-Tech. Pubs Salary Exenpt
AGE Design Salary Exenpt
Explanatory Notes:
1. Within tlie context of (i) the public ntmdate for restraint in Federal spending
and elimmation of deficits, (ii) the need for strengthening the military with
limited funding, and (iii) the threat of expansion of foreign business and vor]<^s
into overpriced markets, it is reasonable to expect Government contractors to be
sensitive to the need for controlling costs, especially since they are consunnng
public tax dollars. The GovemnEnt has set an exanple for private industry witn itB
curbs on Federal enployee labor cost escalations. It is appropriate to e>pect
GCTvemnent contractors, including the GPD, to lead private industry iri restraining
spending, thereby dentmstrating responsiveness to national public policy concerns as
required by DAR 15-201. 3(a) (iii). Beyond responsiveness to Govemuient interests lies
the issue of what eventually befalls industries Where labor costs far exceed inter-
national conpetition. In the defense industry, lack of fiscal responsibility also
threatens the existence of private enterprise as adequate defensive weapons becorc too
costly for tVe free world to afford.
Regarding the expectation for prudent uHnagement by Defense ccntractors in
expenditures against Govemmsnt progranB. the one area where GPD has alnost
Ssolute control over costB-nan^ly. labor rates-should reflect ^"^f^^'^ J;"^^.
escalation. Labor rates should be uanaged judiciously so that escalation appr^
Btes a micfeoint range between private industry and Federal e^loyee escalation. -.
T.^ever, to the contrary, GPD far exceeded— and was a driving force in raising
FOR OFFICIAL USE ONLY
3
114
AudU KcpoTl No. lhi',l-'/./:2-M)U0b ];xini;jTA
Viiyo 2 of b
national avcragr with exccsnlve ] tibor c-fjc/i] at ion in 1981. And
despite some proposed moderation for 1982, It pi imu to rc/uiine
these exceeses in 1983 and 196^. The chart on Appendix 1
illustrates the year to year GPD engineering labor rate escala-
tion compared with Federal employee and private industry
escalation. The primary cause of this labor cost escalation is
the salary increases GPD gives to its employees. The chart on
Appendix 3 (see related notes) compares the GPD average increase
for those employees on board at both December 1980 and December
1981 with labor escalation in private industry and the rise in
the consumer price index. As this chart indicates, GPD granted
raises which were 178 percent higher than Federal employee
escalation and 108 percent higher than all private industry
(nonsupervisory , nonagricultural) workers . The chart on Appendix 'i
details these inordinate increases by principal GPD direct labor
categories.- Such raises are extreme, damaging to the economy and
unreasonable. GPD's failure to control/manage labor rates adds
to the bidding up of labor costs in the Defense industry and
contributes to labor inflation throughout the economy.
Within the Defense industry this xinreasonable consumption
of tax dollars itrqjacts 1981 and" future years as excesses
compound (see Appendix 2 chart). The chart on Appendix 5, with
related notes, illustrates an approximation of the cumulative
impact of these costs from' 1981 thru 198A. This unwarranted
waste of public funds ($155 million thru 198^), which fuels
inflation and contributes to Government deficits, must be
challenged now by the Government acquisition community. The
1981 excesses cannot be undone. However, current planned
escalation can be scaled down to insure that GPD becomes fully
responsive to both (k)vernment and public expectations rather
than a driver of inflation in our economy.
The 1982 salary escalation of 10.5 percent proposed by GPD
effective June 1982 is based on an average of the escalation rates
of 10.9 percent for engineers and 10.0 percent for accountants
[which were taken from the National Survey of Professional,
Administrative, Technical, and Clerical Pay, and represent
percentage increases from average March 1980 salaries to average
March 1981 salaries}. The 1983 and 1984 proposed escalations are
based on undocumented judgemental estimates (by Messrs. J. C. Macko ,
Contracts Liaison, and L. M. Mazer, Business Forecasting) of five
percent annually for general wage increases and skill mix
enrichment, and an additional eight percent for merit increases.
We find these rates unacceptable bttause (i) no consideration is
given to current economic forecasts which show substantial reduc-
tions in inflation for 1982 thru 1984 compared to the March 1980-
1-larch 1981 base period used by GPD, (ii) no consideration is
given to (of f setting) theexcessive individual raises granted by
GPD during 1981, (iii) provision is made for skill mix enrichment
FOR OFFICIAL USE ONLY
it
115
AudU V.cyoTl Uc, . ] /ilO - ;^A230006
L/lUIilT A
I'Q|;e 3 of 6
v;hich is not JuiaifJcd by increaBed (higher bVJII) rcqulremente ,
(Iv) no considc-r/jt Ion is f,iven to public policy concerns to
reduce spending on Government programs/contracts, and (v) the
annual increases plus an additional eight percent represent
exorbitant, unsupported/judginental estiTnates,
We recommend that the proposed 1982 and 1983 rate increases
be limited sufficiently to offset the excess escalation (rate
increases) given in 1981. A reasonable rate of escalation for the
1981 thru 1983 period will be attained by limiting proposed escalation
for 1982 and 1983 to rates vjhich, v7hen compounded with the actual
1981 escalation rate, v;ill approximate the cumulative 1981-1983
average of private industry and Federal employee escalation.
Then, by 198A, GPD should have its labor rates under control
and i9SA recommendations could be based on the recommended 1983
direct labor rate, escalated by the expected 198A private indus-
try/Federal employee average percentage increase. Computations
are shown in Notes 2 thru A.
2. Our recommended engineering labor rates are based on the
rationale described in IJote 1. The recommended rates for
1982 and 1983 were calculated by escalating 1981 actual labor
rates by our recommended escalation factors computed as follows:
Estimated
Engineering
(b)
Actuals
1980-
1981(a)
8.0%
1981-
1982(a)
5.^%
1982-
1983(a)
Three Year
Compounded
Escalation
1983-
198Ma)
6.6%
5.5%
Government Labor
Escalation
Private Industry
Escalation
Average Escalation
Recommended
Escalation Factor
Recommended Yearly
Average Labor Rates (f)
Salary l^onexempt
Salary Exempt
Treasury
(a) The percentages shown represent the (rate of) escalation
from the 12 month average labor rate of one year to the 12 month
average labor rate of the following year.
(b) Represents the average escalation of all Federal employees
in labor grades GS-7 thru GS-13 from year to year, based on increases
of A. 8 percent, 7 percent, 5.5 percent and 5.5 percent for the 12
month periods beginning in October of 1981 thru 198'), respectively,
including the impact of turnover, step increases which average
1 1/2 percent annually, and within grade changes in mix.
(c)
(d)
10.0%
9.0%
8.0%
6.7%
8.0%
7.3%
. 2A.8%
8.0Z
6.8Z
(e)
18.8%
2.5%
2.5%
2A.8%
6.8%
s(f)
1981
$ 9.28
$15.62
$25.30
1982
$ 9.51
$16.01
$25.93
1983
$ 9.75
$16. Al
$26.58
198A
$10. Al
$17.53
$28.39
FOR OFFICIAL USE ONLY
116
/.lidlt V.cy'^Tl )1d. 1/,h]-y/-y^U00G
EXlUhlT A
Vuj^c. A of 6
(c) The cDtiinatcd privetfe lnc3uBtry eBcalotlon rattr. for
the years, 1980 thru 19£A were taced on the 1976 tliru 19B1 iiverage
March year to' year relationship of nationwide engineering increacee
with rices in the comBumer price index (CPI) and the Bureau of
Lator Statistics index for private industry manufacturing hourly
earnings, as shown below. K^ationwide engineering increases are
from Text Table 2 of the Bureau of Labor Statistics l^ational Survey
of Professional, Administrative, Technical, and (;;ierical Pay
(PAT&C) which measures average I-iarch year to year percentage
salary increases by using January thru April data collections
to reflect an average March reference period.
Index of
Avg. Hrrurly
Earnings
•• -Mfg.
8.9Z •
9.0Z
7.5Z
Actuals (1) CPI
l-iaxch I575^Tfe-ch 1977
M^ch 1977-M3rch 1978
hfarch 1978-Karch 1979
)-iarch 1979-March 1980
March 1980-March 1981 10. 9Z 10. 8Z
Projections (3)
1^-1981^
1981-1982
1982-1983
1983-1984
Kat'l. Survey of tAT&C
Ebgineering
"Ehgin earing ' Technlci^an
6.AZ - 7T22
9.0% 7.1Z -
S.lfZ ,7.61
9.8Z 11. OZ "
10. 9Z
10. 2Z
10.3Z(4) 5.2Z(4)
7.4Z(A) 7.3Z(4)
7.5Z(4) 7.6Z(4)
7.2Z(4) 7.9Z(4)
Weighted
Average (2)
— E:f%
8.5Z
. 8.1Z
10. 2Z
10. 7Z
10. OZ (5)
8.0Z (5)
8.0Z (5)
8.0Z (5)
(1) Actuals represent j'ear to year average March
percentage increases (i.e., the average of the first four
months of one calendar year compared to the same average one
year later, expressed as a percentage change) for comparability
with the National Survey of PAT&C (Text Table 2) data.
(2) The weighted average actuals represent a composite
of the percentage increases in Engineering and Engineering
Technician salaries shown in Text Table 2 of the March 1981
National Survey of PAT6C. The composite (average) was weighted
based on the ratio of GPD salary nonexempt (engineering technician)
labor to GPD salary exempt and treasury (engineering) labor, as
follows :
Period
March 1976-March 1977
March 1977-March 1978
March 1978-March 1979
March 1979-March 1980
March 1980-March 1981
Engineering
Engineerin
^'
Technician
762
2A2
Ikl
26Z
68Z
32Z
68Z
32Z
74Z
26Z
FOR OFFICIAL USE ONLY
6
117
Audit I;e;>orl N(;. ] /.c;] -2A230006 EXHIBIT A
Face 5 of 6
(3) The projections differ from the- actuals in that
the projections are based on the percentage increase of the 12
month average (midpoint) of one year over the 12 month average
(midpoint) of the following year.
(^) The CPI and Private Industry Manufacturing Average
Hourly Earnings projections represent Data Resources, Inc.
predictions as of February 1982.
(5) The vjeighted average (composite) engineering
projections are auditor estimates based on the historical per-
centage increase relationships of the composite engineering
rate to the CPI and I'lanuf acturing Average Hourly Earnings
indices and the DRI projections of these indices, rounded
to whole percents.
(d) Represents the arithmetic mean of private industry
escalation [see Note 2(c)]. and Federal employee escalation
[see Note 2 (b)] .
(e) The 18.8 percent GPD escalation in 1981 is the actual
incurred percentage increase of the composite GPD Engineering
Department average direct labor rates from $12.53 in 1980 to
$15.01 in 1981. The 6.8 percent escalation recommended for
1983-198A is the projected average of private industry
escalation and Federal employee escalation [see Note 2(d)].
The recommended 2.5 percent GPD escalation factors for 1982
and 1983 represent those factors which, when compounded with
the 18.8 percent actual 1981 incurred escalation, will equate
to the 24.8 percent compounded three year total average of
private industry escalation and Federal employee escalation for .
the period 1981-1983 [see Note 2(d)].
(f) The recommended direct labor rates represent the
GPD actual 1981 incurred average rates, escalated by the
recommended factors of 2.5 percent for 1982, 2.5 percent
for 1983 and 6.8 percent for 1984 [see Note 2(e)]. The
questioned rates shown in Exhibit A are the difference
between the 27 January 1982 proposed rates and our recom-
mended direct labor rates.
3. The questioned manufacturing, test, quality, tooling
and assembly rates are based on the same rationale described
in Notes 1 and 2. Computation of the recommended GPD labor
rates follows : -
FOR OFFICIAL USE ONLY
7
118
Audit I'LjjorL Ho. UB1-2A230006
Operations
r.xmhir a
Actual
■Lhrcii
Yenr
1980-
1981-
1982-
Cowpoanded
] 983-
1981
1982
1983
Escalation
1984
8. OX
5.«
6.6%
~575I
9.2Z
7.3%
7.6%
7.9%
8.6%
e.1^7.
7.1%
23.
,8%
5.7%
17.9Z(b)
2.5%
2.5%
23.
8%
6.7%
1981
1982
1983
1984
$ 9.83
$10.08
$10.33
$11 02
$11.11
$11.39
$11.67
12 45
$10.55
$10.82
$11.09
11 83
$15.73
$16.12
$16.53
17 64
$ 9.91
$10.16
$10.41
11 11
$ 8.81
$ 9.03
$ 9.26
9.88
$13.75
$1A.09
$1A.«
15 42
$10.13
$10.38
$10.64
11 35
$10. lA
$10.39
$10.65
11.36
Government Labor Escalation
Private Industry Escalation-J-lfg. (a)
Average Escalation
Recomnended Escalation Factor
RecoTTTiended Yearly
Average Labor iStes
Mfg. Hourly
Test Hourly
Test Salary Itonexenpt
Test Salary Exempt
Quality Hourly
. Quality Salary Nonexenpt
Quality Salary Exempt
Tooling Hourly
Assembly Iburly
(a) Private Industry Average Hourly Earnings— 1-lanufacturing represent
Data Resources, Inc. actual/predictions as of February 1982.
(b) The actual 1981 direct labor hour mix of operations rate categories was
\jsed to conpute the 17.9 percent ccsiposite rate escalation from 1980 to 1981.
^- Questioned product support labor rates are also based on the
same rationale stated in Notes 1 and 2:
Estimated
Actual
Three
Year
1980-
1981-
1982-
Conpounded
1983-
1981
1982
1983
Escalation
1984
8.0%
5.4^
6.6%
5.5%
10.0%
8.0%
8.0%
8.0%
9.0%
6.7%
7.3%
24.
.8%
6.8%
12. 4% (b)
5.4%
5.4%
24.
.8%
6.8%
1981
1982
1983
1984
$15772
$16.57
$17.46
$18.65
$ 7.35
$ 7.75
$ 8.17
$ 8.73
$13.43
$14.16
$14.92
$15.93
$14.75
$15.55
$16.39
$17.50
Product Support
Government Labor Escalation
Private Industry Escalation (a)
Average Escalation
Reconmended Escalation Factors
Recomnended Yearly
Average Labor Rates
Domestic Field Service
Tech. Piibs. Itonexenpt
Tech. Pubs. Salary Exenpt
AGE Design Salary Exerrpt
(a) See Note 2(c) above.
. Xb) the actual 1981 direct labor headcount mix of the product support rate
categories was used to conpute the 12.4 percent composite rate escalation from 1980
to 1981.
FOR OFFICIAL USE ONLY
119
120
' O
o
w
=3
i-i
u
i-i
o
o
121
7^
GfS
):.r-i:
.' i 1 [ — - -
^=^4
:Lii:nh
._.: .1. . (
t).--"
iil
^Q
' ' r r'l
\m
^
i;:ii I
'r±:
:UjjJ4^iii±
?H1=^?P
S-Fp:m=+F
iiittiti
U_l_Ll^^^
'Tpn^-
tf±fi±|
::^^^l-
i ! : : : I : : ' i : ' ! :^^i44h4-4444TP^: : : : : ' i =T^
fi-rl;t!i±
t
IX
±Hf^i
HH
1^
h.
>•
►J
O
W
CO
3
o
o
122
D- an
o. ffl
< cu
CM
<:
o
u
o
■o
<
123
J :• '^^ijll: : ■ :J] '^■i^ ^-li j -Tirr! jiJ"
►J
o
w
CO
.J
<
O
OS
o
124
AMciit rL.],hTi I'O. i 1,1:1 -'//.'/.iUUOG /■.]->]'Lu6i>: ] l)nv l
l'cif:t 6 of 7
Ey.plunritOTy JjoLec to Ch^jrtE on Appendlxc-E 1 thru 5:
1. The chfjrt on Appendix 1 compares year to 'ytar GPD actual
and proposed composite engineering labor escalation with private
industry and Federal Government escalation. The escalation rates
shown on the Appendix 1 chart are the percentage increases, from
calendar year midpoint to the next calendar year midpoint, of
average direct engineering labor. The comparison shows that a
given amount of engineering labor performed by GPD in 1981 cost
18.8 percent more than it would have cost in 1980.
2. The chart on Appendix 2 illustrates the total effect of the
same data on a compounded basis from 1979 to 198A rather than
year by year.
3. The Appendix 3 chart shows GPD average December 1980 to
December 1981 percentage salary increases for employees who
remained on board the entire year compared with the increases
in the Consumer Price Index and the Index of Average 1-lanuf actur ing
Hourly Earnings during the same period. - ; .
li . The Appendix A chart breaks out the GPD direct labor
increases by major operating area (function). The differences
between the individual - percentage increases shown on the Appendix 4
chart and the 1980-1981 actual escalation factors shown in Notes 2
and 3 of Exhibit A and also shown on the Appendix 1 chart, are due
to timing and skill mix differences. For example, the 15.8
percent engineering increase for 1981 shown on the Appendix 4
chart represents the average percentage increase in pay rates
for engineers on board at 31 December 1980 and 1981 based on
actual annual salary levels per employee at 31 December. The
18.8 percent increase shown in Note 2 to Exhibit A and on the
Appendix 1 chart represents the overall increase in the total
average engineering labor rate between 1980 and 1981, includes
the effect of terminations and skill mix enrichment, and is
based on total salaries paid and hours worked for each of the
two years.
5. The cost lines on the Appendix 5 chart were computed as
follows :
a. The 1981 level of effort (actual hours) were used
(held constant thru 1984) to calculate the excess labor costs
for 1981 thru 1984. The point on the direct labor cost line
for 1981 is the difference between the actual costs for 1981
and what the costs would have been had the labor (including
fringe benefits) risen only by the average private industry/
Federal employee rate of escalation as detailed in Notes 2, 3
and 4 to Exhibit A. The 1982, 1983 and 1984 cumulative amounts
are based on the sum of (i) 1981 actual labor hours times the
difference between the proposed labor rates and the "expected"
• ■ FOR OFFICIAL USE ONLY
14
125
AlxHi I'.ij-ort V.o. 1 /I'n - ^A^3(i006 A)>]>uu<iiy. 1 Il.ru
I'/j[;e 7 of 7
rates p]uc (il) iJj)pl icoble fringe, diverted direct labor,
and prior year by.ccBB labor (cince 19B0). The "expected" labor
rates represent 1980 actuals, escalated by an average of
Governnent and private industry escalation.
b. Excess indirect labor escalation vas estimated by
advancing (marking up) the direct labor cost line by the
ratio of indirect payroll dollars to direct payroll dollars
(55Z divided by ^5Z or 1.22222). This estimate was based on
the assumption that excess indirect labor escalation approximates
that of direct labor. (GPD does not accumulate the type of in-
direct labor rate data that it does for direct, -which precludes
us from estimating more accurate indirect labor escalation).
c. The total labor cost line is a combination of the
direct and indirect cost lines.
d. The total cost to the Government is the total labor
cost line plus a profit xate of 13.4 percent.--
FOR OFFICIAL USE ONLY
15
33-732 O— 84-
126
Senator Grassley. Would it be fair to say in summary of what
you said, Mr. Spanton, that the incentives within the Defense De-
partment and the procurement process exist to increase costs
rather than toward cost savings? Is that a correct summary?
Mr. Spanton Yes, sir.
Senator GRAL.c)i.ii;Y. I had other questions that I think I will
submit to you in writing, Mr. Spanton, but I do want to give Mr.
Cooke an opportunity to comment on anything you said, if he
would care to.
Mr. Cooke. My only comment, Mr. Chairman, is that it seems to
me the announced purpose of the hearing, to discuss whistleblower
protection, has moved far afield to matters which are undoubtedly
of great concern to the Department; as a matter of fact, other com-
mittees in the Senate and in the other body are pursuing the same
hearings at the present time
Senator Grassley. Yes.
Mr. Cooke [continuing]. On this same subject.
Senator Grassley. And I hope other people do pursue this topic.
I would say in the context of the additional witnesses that we are
going to have at this hearing that, in our oversight capacity we are
very concerned about the operation of whistleblower activities, and
I would expect to hear from people yet on the program who would
help us continue our inquiries in relation to specific cases, but also
in general.
I may submit additional questions to you, Mr. Spanton. I want to
thank you, and I want to thank Mr. Cooke for taking time to be
with us. Again, there may be additional followup, as I previously
suggested.
I will now go to our next witness, who is Mr. Ernest Fitzgerald,
Management Systems Deputy, Office of the Assistant Secretary for
Financial Management, in the U.S. Air Force.
Before you start your testimony, Mr. Fitzgerald, I hope that you
can clear up a certain matter. Last week, I was informed by my
staff that you had submitted your testimony, and that at some
point between then and now, the Air Force held it up.
Would you explain what happened, and why?
STATEMENT OF A. ERNEST FITZGERALD, MANAGEMENT SYS-
TEMS DEPUTY, OFFICE OF THE ASSISTANT SECRETARY FOR FI-
NANCIAL MANAGEMENT, U.S. AIR FORCE
Mr. Fitzgerald. Yes, sir.
Since I arrived at work this morning, we have had some clarifica-
tion of that. It is true that my testimony was sent over, as you re-
quested, last week, but it was requested by the Deputy General
Counsel of the Air Force that it be withdrawn, and that was done.
Subsequently, we have been able, I believe — and I am stating
this to the best of my belief and knowledge — that I now have a
statement cleared by the Air Force, though not by the Office of the
Secretary of Defense, I cannot account for what has gone on; I have
been out of the city. I can only apologize to the subcommittee for
delay and say that I do have a statement that I believe is
Cleared by the Air Force. I unfortunately do not have it prepared
127
for you, but I can read from my notes and submit it later for the
record.
Senator Grassley. I would like to have you proceed, then, with
your testimony.
Mr. Fitzgerald. All right, sir, thank you.
I am pleased to be here this morning to present Air Force views
on the subject of this hearing. Following my opening remarks, any
discussion, including my responses to questions you might have,
will be my own views, which I hope will be shared by my superiors.
The Air Force views regarding unpleasant truths, whether they
surface through so-called whistleblowers or otherwise, are shaped
by the Constitution and statutes of the United States. In the case
of the Constitution, the first amendment is obviously the most per-
tinent, especially that portion which deals with the right to peti-
tion Congress for redress of grievances. With the exception of true
national security inhibitions, the Air Force supports the view that
any citizen, including Government employees, has the right to com-
municate with Congress.
Of the Federal statutes which govern the right — indeed, the obli-
gation— of employees to speak out, several are pertinent. For exam-
ple, 18 U.S.C. 1505, makes it a serious crime to interfere with a
congressional witness or to retaliate against that witness for his
testimony. Then there is 18 U.S.C. 1001, which is short enough to
be repeated in its entirety here, and I will quote:
Whoever, in any matter within the jurisdiction of any department or agency of
the United States knowingly and willfully falsifies, conceals or covers up by any
trick, scheme, or device a material fact, or makes any false, fictitious, or fraudulent
statements or representations, or makes or uses any false writing or document
knowing the same to contain any false, fictitious, or fraudulent statement or entry,
shall be fined not more than $10,000 or imprisoned not more than 5 years, or both.
Several sections of title V of the United States Code also bear on
the questions of rights, responsibilities, and protection of Govern-
ment employees who speak the truth. These sections are 1206,
1208, 2302, and 7211, and are involved in the Spanton case. The
process envisioned in these statutes can be evaluated by the out-
come of the Spanton case.
Finally, the Air Force wholeheartedly endorses the Code of
Ethics for Government Service set forth in Public Law 96-303,
unanimously passed by Congress on June 27, 1980, and signed into
law by the President on July 3, 1980. Pertinent portions of the con-
stitutional provisions and statutes are attached for ready reference.
That is the end of my prepared official statement, Mr. Chairman,
but I would like to add just some very brief personal views.
Our value systems, beyond the Constitution and the various stat-
utes that we operate under, profess to revere truth. The major reli-
gions of the world today all endorse it. You know, you can go
beyond the Ten Commandments, and there is one in particular
that I came across, an ancient Hebrew prayer from the distant
past, and I will quote it. "From the cowardice that shrinks from
new truth, from the laziness that is content with half-truths, from
the arrogance that thinks it knows all truth, O God of truth, deliv-
er us."
Now, that is repeated in our own time, in our ethical consider-
ations. We almost literally worship truth in the abstract but, in
128
particular, particularly embarrassing truth, embarrassing to pow-
erful special interests, we hate it.
I think you have heard within the last couple of weeks that I and
some of my associates are probably the most hated people in the
Pentagon for committing truth. I think that is what Mr. Spanton is
up against. He is bucking a system that rewards not rocking the
boat, not finding unpleasant truths, and I think he is in for a very
difficult time. Fortunately for him, he is eligible to retire. But I am
very much concerned, as I know he is, about the future of his em-
ployees, whom I have observed to be very diligent and highly moti-
vated.
I do not know what we can do to counteract the natural tenden-
cy of the big spenders to strike out at its critics.
I was struck, listening to Mr. Cooke testify, at the genius of the
Federal personnel system to change the subject. In almost every
one of these cases, including my own, involving allegations of
waste, mismanagement, or whatever, once the matter is into the
Federal personnel system, we tend to forget, to lose from sight, the
original problem that we were talking about. Fortunately, Mr.
Spanton resurfaced those problems in his testimony. But it is some-
how considered inappropriate to continue to talk about the rip off
of the taxpayers once the matter is in administrative or legal pro-
cedures. I just disagree personally very much with that point of
view. I think that our stewardship responsibilities continue and
need to be discharged on a daily basis, whether or not the matter is
before some quasi-judicial or judicial body.
[The following submissions of Mr. Fitzgerald were submitted for
the record:]
129
CODE OF ETHICS
FOR GOVERNMENT SERVICE
ANY PERSON IN GOVERNMENT SERVICE SHOULD:
I. Put loyalty to the highest moral principles and to country
above loyalty to persons, party, or Government department.
II. Uphold the Constitution, laws, and regulations of the United
States and of all governments therein and never be a party
to their evasion.
III. Give a full day's labor for a full day's pay; giving earnest
effort and best thought to the performance of duties.
IV. Seek to find and employ more efficient and economical ways
of getting tasks accomplished.
V. Never discriminate unfairly by the dispensing of special
favors or privileges to anyone, whether for remuneration
or not; and never accept, for himself or herself or for
family members, favors or benefits under circumstances
which might be construed by reasonable persons as influencing
the performance of governmental duties.
VI. Make no private promises of any kind binding upon the duties
of office, since a Government employee has no private word
which can be binding on public duty.
VII. Engage in no business with the Government, either directly
or indirectly, which is inconsistent with the conscientious
performance of his governmental duties.
VIII. Never use any information gained confidentially in the
performance of governmental duties as a means of making
private profit.
IX. Expose corruption wherever discovered.
X. Uphold these principles, ever conscious that public office
is a public trust.
Authority of Public Law 96-303, unanimously passed by the Congress
of the United States on June 27, 1980, and signed into law by the
President on July 3, 1980.
33-732 O— 84 10
130
ARTICLES IN ADDITION TO, AND AMENDMENT OF, THE CONSTI-
TUTION OF THE UNITED STATES OF AMERICA, PROPOSED BY
CONGRESS, AND RATIFIED BY THE SEVERAL STATES, PUR-
SUANT TO THE FIFTH ARTICLE OF THE ORIGINAL CONSTI-
TUTION '
Amendment [I.] '
Confess shall make no law respecting an establishment of
religion, or prohibiting the free exercise thereof; or abridging the
freedom of speech, or of the press; or the right of the people
peaceably to assemble, and to petition the Government for a redress
of grievances.
Md Dillon V. Olosf. 256 U.S. 368 (1921), the Supreme Court stated that It would take
judicial notice of the date on which a State rntified a proposed constitutional nmendment.
Accordingly the Court consulted the State journals to determine the dates on which each
house of the legislature of certain States ratified the Eighteenth Amendment. It, therefore,
follows that the date on which the governor npprored the ratification, or the date on which
the secretary of state of a given StJite certified the ratification, or the date on which the
Secretary of State of the United States rewived a copy of said certificate, or the date on
which he proclaimed that the amendment had been ratified are not controlling. Hence, the
ratification date given in the following notes is the date on which the legislature of a given
State ajiproved the particular amendment (signature by the si>eaker or presiding officers of
both houses being considered a part of the ratification of the "legislature"'). When that date
is not available, the date given Is that on which it was approved by the governor or certified
by the secretary of state of the particular State. In each case such fact has been noted.
Exce]it as otherwise indicated information as to ratification is based on data supi)lied by
the Department of State.
• Brackets enclosing an amendment number indicate that the number was not specifically
assigned in the resolution proi>osing the amendment. It will be seen, accordingly, that only
the Thirteenth, Foiirtw^ntli, Fifteenth, and Sixteenth Amendments were thus technically
ratified by number. The first ten amendments along with two others which failed of ratifica-
tion were proj'osed by Congress on September 25, 1789, when they passed the Senate, having
previously passed the House on September 24 (1 Annals of Conr/rrtis 8S, 913). They appear
officially in 1 Stat 97. Ratification was completed on December 15, 1791, when the eleventh
State (Virginia ) ajiiiroved these amendments, there being then 14 States in the Union.
131
S7211
TITXE 5— GOVERNMENT ORGANIZATION AND EMPLOYEES
Page 818
position to which appointed" ire substituted for
"same compensations, as are prescrit>ed for men".
This subsection *as part of title IV of the Revised
Statutes The Act of July 26. 1947. ch. 343. I 201(d). as
added Aug 10. 1949. ch 412. i 4. 63 Slat 579 (former 5
US C 171-1). which provides "Except to the extent In-
consistent with the provisions of this Act (National
Security Act of 1947). the provisions of title IV of the
Revised Statutes as now or hereafter amended shall be
applicable to the Department of Defense" Ix omitted
from this title, but Is not repealed
Subsection (c) is added on authority of former sec-
tions 1072 and 1072a. which are codified In section
SllS
Standard changes are made to conform with the
definitions applicable and the style of this title as out-
lined in the preface to the report.
1967 Aci
This section deletes subsection (a) of 5 U.S C. 7154
to reflect the repeal ot the source statute of that sub-
section by Public Law 89-261. 79 SUt. 987.
AMENSMEirTS
1978— Subsec. (c). Pub L 95-454. i 906(a)(2). substi-
tuted "Office of Personnel Management" for "ClvU
Service Commission".
1972— Subsec (b) Pub L 92-392 Included reference
to subchapter IV of chapter 53 of this title.
EmcTivx D*Tt or 1978 Amendmcnt
Amendment by section 906(a)(2) of Pub. L. 95-454
effective 90 days after Oct 13. 1978. see section 907 of
Pub. L 95-454. set out as an Effective Dale of 1978
Amendment note under section 1101 of this title.
EmcTivi Dati of 1972 Akenduent
Amendment by r^jb L. 92-392 effective on first day
of first applicable pay period beginning on or after the
90th day after Aug 19. 1972. see section 15(a) of Pub
L 92-392. set out as an Effective Date note under sec-
tion 5341 of this title.
Suction RErmnn) to ih OTHa Sectiohs
This section Is referred to In section 2105 of this
title: title 10 sections 4540. 7212. 9540.
SUBCHAPTER II-EMPLOYEES- RIGHT
^^^ TO PETITION CONGRESS
6 7211. Employees' right to petition Congresa
The right of employees. Individually or collec-
tively, to petition Congress or a Member of
Congress, or to furnish information to either
House of Congress, or to a committee or
Member thereof, may not be interfered with or
denied.
(Added Pub. L. 95-454, title VII, 1 703Ca)(3).
Oct. 13, 1978, 92 Stat. 1217.)
Prioii Provisioms
Provisions of this section were contained In section
7102 of this title prior to the general amendment of
chapter 71 of this title by Pub. L 95-454, title VII.
i 701, Oct. 13. 1978. 92 Slat. 1191.
Errtcnvt Dats
Section effective 90 days after Oct 13. 1978. see sec-
tion 907 of Pub L 95-454. set out as an Effective Dale
of 1978 Amendment note under section 1101 of this
title
Sectiok KrratitzD to in Otke» Sectiors
This section Is referred lo in title 39 section 1002.
CHAPTER 73— SUITABILITY. SECURITY. AND
CONDICT
SUBCHAPTER I-REGULATION OF CONDUCT
7301. Presidential regulations.
SUBCHAPTER II-EMPLOYMENT UMITATIONS
7311. Loyalty and striking.
7312. Employment and clearance: Individuals re-
moved for national security.
7313. Riots and civil disorders.
StJBCHAPTER III-POLITICAL ACTIVITIES
7321. Political contributions and services
7322. Political use of authority or Influence: prohi-
bition.
7323. Political contributions: prohibition.
7324. Influencing elections; taking part In political
campaigTu: prohibitions, exceptions.
7325. Penalties
7326. Nonpartisan political activity permitted
7327. Political activity permitted: employees resid
ing In certain municipalities.
7328. General Accounting Office employees.
SUBCHAPTER IV-POREIGN GIFTS AND
DECORATIONS
(7341. Repealed]
7342. Receipt and disposition of foreign gifts and
decorations.
StTBCHAPTER V-MISCONDUCT
7351. Gifts to superiors.
7352. Excessive and habitual use of Intoxicants.
Amendhdtts
1980— Pub L. 96-191, i 8(e)(2), Feb. IS. 1980. 94 Sut
33. added Item 7328.
1968-Pub. L. 90-351, title V, i 1001(b). June 19
1968. 82 Slat. 235. substituted "Employment Limiu
tions" for "Loyally, Security, and Striking" as the sub-
chapter II heading and added item 7313
1957-Pub. L 90-83. | 1(46). Sept 11. 1967. 81 Stat
209. Inserted "Gifts and" preceding "Decorations" in
the heading for subchapter IV. deleted item 7341. and
added Item 7342.
CKArTTK ReTTRKCII TO IH OTHER SECTTIONS
This chapter Is referred to in section 3374 of this
Utle: title 39 section 410; title 42 sections 2991c. 3522
SUBCHAPTER I-REGULATION OF
CONDUCT
C7301. Presidential regulations
The President may prescribe regulations for
the conduct of employees In the executive
branch.
(Pub. L. 89-554. Sept. 6. 1966. 80 Stat. 524.)
Historical ahs Revisiok Notts
Derivalton
VJ Codt
i VSC 611 <Ia«t la
«ord>>.
Jterurd SiatMlr' tni
Staluta at Largt
H£ 1 1753 <U<t l« vorii'
The words "employees In the executive branch" are
substituted for "persons who may receive appoint-
menu In the civil service".
Standard changes are made to conform with the
definitions apphcable and the style of this title as out-
lined in the preface to the report
132
Page 1193
TITLE 18— CRIMES AND CRIMINAL PROCEDURE
1 1507
Minor offenses tried by DnJted SUtes m»g1str«les as
excluding offenses punishable under this section, see
aection 3401 of this title.
SicTiOH Rcnsuus TO w Other Sections
This section Is referred to In sections 201. 3401 of
this title.
( 1505. Obstruction of proeee<)inrR before depart-
ments, agencies, and committeeB
Whoever corruptly, or by threats or force, or
by any threatening letter or communication,
endeavors to Influence, Intimidate, or Impede
any witness In any proceeding pending before
any department or agency of the United States,
or In connection with any inquiry or Investiga-
tion being had by either House, or any commit-
tee of either House, or any Joint committee of
the Congress; or
Whoever injures any party or witness In his
person or property on account of his attending
or having attended such proceeding, inquiry, or
Investigation, or on account of his testifying or
having testified to any matter pending therein:
or
Whoever, with intent to avoid, evade, prevent,
or obstruct compliance, in whole or In part,
with any clvU Investigative demand duly and
properly made under the Antitrust Civil Pro-
cess Act, willfully withholds, misrepresents, re-
moves from any place, conceals, covers up, de-
stroys, mutilates, alters, or by other means fal-
sifies any documentary material, answers'" to
written interrogatories, or oral testimony,
which is the subject of such demand; or at-
tempts to do so or solicits another to do so; or
Whoever corruptly, or by threats or force, or
by any threatening letter or communication in-
fluences, obstructs, or Impedes or endeavors to
Influence, obstruct, or Impede the due and
proper administration of the law tinder which
such proceeding is being had before such de-
partment or agency of the United States, or the
due and proper exercise of the power of inquiry
under which such Inquiry or Investigation Is
being had by either House, or any conamittee of
either House or any Joint committee of the
Congress-
Shall be fined not more than $5,000 or Impris-
oned not more than five years, or both.
(June 25, 1948, ch. 645, 62 Stat. 770; Sept. 19,
1962, Pub. L. 87-664. J 6(a), 76 Stat. 551; Oct. 15,
1970, Pub. L. 91-452. title IX. J 903. 84 Stat. 947;
Sept. 30. 1976, Pub. L. 94-435, title I. 1 105, 90
8Ut. 1389.)
BisTORiCAi. Aicc Revision Notes
Based on title 18. U.S.C. 1940 ed.. | 241«. (Mar. 4.
1909. Ch. 321, (135a. as added Jan. 13, 1940. ch. 1, 54
Stat. 13; June 8, 1945. ch. 178. i 2. 59 Sut. 234).
Word "agency" was substituted for the words "Inde-
pendent establishment, board, commission" Id two In-
stances to eliminate any possible ambiguity as to scope
of section (See defiailive section 6 of this title.)
Minor changes were made In phraseology.
Reteremces in Text
The Antitrust ClvU Process Act. referred to In text.
Is Pub L. 8T-664, Sept. 19, 1962. 76 Stat. 548. which Is
Classified generally to chapter 34 (}1311 et seq.) of
Title 15. Commerce and Trade. For complete classifi-
cation of this Act to the Code, see Short Title note set
out under section 1311 of Title 15 and Tables volume.
Amendments
1976— Pub. U 94-435 struck out reference to "section
1968 of this title" following "Antitrust Civil Process
Act". Inserted "withholds, misrepresents" following
"willfully", "covers up" following "conceals", "answers
to written Interrogatories, or oral testimony". (oUow-
ing "any documentary material", and "or attempts to
do so or solicits another to do so:" following "such
demand".
1970— Pub. U 91-452 added reference to section 1968
of this title.
1962— Pub. L. 87-664 substituted the catchllne "Ob-
struction of proceedings before departments, agencies,
and committees" lor "Influencing or injuring witness
before agencies and committees" and punished the
willful removal, concealment, destruction, mutilation,
alteration or falsification of documents which were
the subject of a demand under the Antitrust Civil Pro-
cess Act If done with the Intent to prevent compliance
with a ClvU Investigative demand.
BrracTivi Date or 1976 Amendment
Amendment by Pub. L. 94-435 as effective on Sept
30. 1976, see section 106 of Pub. L. 94-435. set out as an
Effective Date of 1976 Amendment note under section
13 1 1 of Title IS, Commerce and Trade.
CaOSS RETUtENCES
Bribery of public officials or witnesses, see section
201 of this Utle.
Section RETEiutED to in Other Sections
This section Is referred to In section 201 of this title;
Utle 12 section 1457; title 29 section 1111.
{ 1506. Theft or alteration of record or process; false
bail
Whoever feloniously steals, takes away,
alters, falsifies, or otherwise avoids any record,
writ, process, or other proceeding. In any court
of the United States, whereby any Judgment Is
reversed, made void, or does not take effect: or
Whoever acknowledges, or procures to be ac-
knowledged In any such court, any recogni-
zance, bail, or Judgment, In the name of any
other person not privy or consenting to the
same-
Shall be fined not more than $5,000 or Impris-
oned not more than five years, or both.
(June 25. 1948. ch. 645. 62 Stat. 770.)
BlSTOUCAL AND REVISION NOTES
Based on title 18. U.S.C.. 1940 ed., |233 (Mar. 4.
1909. Ch. 321. 1 127. 35 Stat. 1111).
The term of Imprisonment was reduced from 7 to 5
years, to conform the punishment with Uke ones for
tlmllar offenses. (See section 1503 of this title.)
Minor Changes were made in phraseology.
Caoss Reterences
Concealment, removal or destruction of records, see
section 2071 of this title.
Embezzlement or theft of records, generally, see sec-
Uon 641 of this tlUe.
Section RErzRitEs to in Other Sections
This section Is referred to In title 29 section 1111.
{ 1507. Picketing or parading
Whoever, with the Intent of Interfering with,
obstructing, or Impeding the administration of
Justice, or with the Intent of Influencing any
Judge, Juror, witness, or court officer. In the dis-
charge of his duty, pickets or parades in or near
a building housing a court of the United States,
133
Page 1151
TITLE 18— CRIMES AND CRIMINAL PROCEDURE
1 1001
Utilized or occupied by any foreign govemment
or International organization, by a foreign offi-
cial or official guest, shall be fined not more
than $10,000, or imprisoned not more than five
years, or both.
(b) Whoever, willfully with Intent to Intimi-
date, coerce, threaten, or harass—
(1) forcibly thrusts any part of himself or
any object within or upon that portion of any
building or premises located »1thin the
Uruted States, which portion Is used or occu-
pied for official business or for diplomatic,
consular, or residential purposes by—
(A) a foreign government. Including such
use as a mission to an international organi-
sation:
(B) an international organization;
(C) a foreign official; or
(D) an official guest; or
(2) refuses to depart from such portion of
such building or premises after a requests—
(A) by an employee of a foreign govern-
ment or of an international Organization, if
such employee Is authorized to make such
request by the senior official of the unit of
such government or organization which oc-
cupies such portion of such building or
premises;
(B) by a foreign official or any member of
the foreign official's staff who is authorized
by the foreign official to make such request;
(C) by an official guest or any member of
the official guest's staff who is authorized
by the official guest to make such request;
or
(D) by any person present having law en-
forcement powers;
shall be fined not more than $500 or impris-
oned not more than six months, or both.
(c) For the purpose of this section "foreign
government", "foreign official", "international
organization", and "official guest" shall have
the same meanings as those provided in section
1116(b) of this title.
(Added Pub. L. 92-539. title TV. §401. Oct. 24.
1972, 86 Stat. 1073. and amended Pub. L. 94-
467. { 7, Oct. 8. 1976, 90 Stat. 2000.)
AxEMDMZirrs
1076— Subsec. (b). Pub. L. 94-467. |7(b). added
■ubsec. (b). and redesignated former subsec. (b) as (c).
Subsec. (c). Pub. L. S4-467. f7(a). redesignated
former tubsec. (b) as (c). and as so redesignated, struck
out reference to section 1116(c) of this title.
CHAPTER 47— FRAUD AND FALSE
STATEMENTS
Sec.
1001. Statements or entries generally.
1002 Possession of false papers to defraud Dnlted
States.
1003. Demands against the United Sutes.
1004 Certification of checks
lOOb Bank entries, reports and transactions.
1006 Federal credit institution entries, reports and
transactions.
1007. Federal Deposit Insurance Corporation transac-
tions.
1008 Federal Savings and Loan Insurance Corpora-
tion transactions.
1009. Rumors regarding Federal Savings and Loan In-
surance Corporation.
Sec
1010. Department of Housing and Orban Develop-
ment and Federal Bousing Administration
transactions.
1011. Federal land bank mortgage transactions.
1012. Department of Bousing and Urban Develop-
ment transactlorvs.
1013 Farm loan bonds and credit bank debentures.
1014. Loan and credit applications generally; renewals
and discounts; crop insurance.
1015. Naturalization, citizenship or alien registry.
1016. Acknowledgment of appearance or oath.
1017. Government seals wrongfully used and instru-
ments wTongtully sealed.
1018. Official certificates or writings.
1019. Certificates by consular officers.
1020. Bighway projects.
1021. Title records.
1022. Delivery of certificate, voucher, receipt for mili-
tary or naval property.
"1023. Insufficient delivery of money or property lor
military or naval service.
1024. Purchase or receipt of military, naval, or veter-
ans' facilities property.
1025. False pretenses on high seas and other waters.
1026. Compromise, adjustment, or cancellation of
farm Indebtedness
1027. False statements and concealment of facts in re-
lation to documents required by the Employee
Retirement Income Security Act of 1974.
Amensktmts
1974-Pub. L 93-406, title 1. | in(aX2)(B)(iil). Sept.
J, 1974. 88 Swt. 852. substituted "Employee Retire-
ment Income Security Act of 1974" for "Welfare and
Pension Plans Disclosure Act" In Item 1027.
1967-Pub. L 90-19, 124(e)(1), (2). May 25, 1967, 81
Stat 28. included "Department of Housing and Drban
Development" in item 1010 and substituted the same
for "Public Housing Administration" in Item 1012, re-
spectively.
1962-Pub. L 87-420, 1 17(d). Mar. 30. 1S62, 76 SUt.
42, added item 1027.
1951-Act Oct. 31. 1951. ch. 655. | 25, 65 SUt 720.
■ubstltuted, in item 1012, "Public Housing Administra-
tion" for "United States Housing Authority".
1949-Act May 24, 1949, ch. 139. if 18. 19. 63 SUt 92.
corrected speDmg of "1016. Acknowledgment etc.",
and substituted "officers" for "offices" In "1019. Certi-
ficates by consular officers."
Citoss Reterznces
Allen registration, fraud and false statements, lee
•ection 1306 of Title 8. Aliens and Nationality.
Carriers' reports to Interstate Commerce Commis-
sion, false entries, see section 20 of Title 49. Transpor-
Utlon.
China Trade, false or fraudulent statements prohib-
ited, see section 158 of Title 15. Commerce and Trade.
Cratter Rcfcuui) to in Otkzr Sections
Tills chapter Is referred to in title IS sections 78o,
80b-3.
{ 1001. Statements or entries generally
Whoever, In any matter within the Jurisdic-
tion of any department or agency of the United
States knowingly and willfully falsifies, con-
ceals or covers up by any trick, scheme, or
device a material fact, or makes any false, ficti-
tious or fraudulent statements or representa-
tions, or makes or uses any false writing or doc-
ument knowing the same to contain any false,
fictitious or fraudulent statement or entry,
shall be fined not more than $10,000 or impris-
oned not more than five years, or both.
(June 25. 1948. ch. 645. 62 Stat. 749.)
134
Page 465
TITLE 5— GOV^NMZNT ORGANIZATION AND EMPLOYEES
I120C
priftte committees of Congress, an annual
budget of the expenses and other Items relating
to the Board which shall, as revised, be Includ-
ed as a separate item in the budget required to
be transmitted to the Congress under section
1105 of title 31.
(k) The Board shall submit to the President,
and. at the same time, to each House of the
Congress, any legislative recommendations of
the Board relating to any of Its functions under
this title.
(Added Pub. L. 95-454. Utle 11. | 202(a). Oct. 13.
1978 92 Stat. 1122, and amended Pub. L.
97-258, i 3(aK2), Sept. 13. 1982. 96 Stat. 1063.)
AjmwKEirTS
1J82— Subsec. (J) Pub L. 97-258 lubstttuted "section
1105 of title 31" for "section 201 of the Budget and Ac-
counting Act. 1821 (31 U.S.C. ID".
i 120(. Authority and retponiibilitiet of the Special
Couniel
(»)(1) The Special Counsel shall rt'ceive any
illegation of a prohibited personnel practice
and shall investigate the allegation to the
extent necessary to determine whether there
are reasonable grounds to believe that a prohib-
ited personnel practice has occurred, exists, or
is to be tal(en.
(2) If the Special Coui^el terminates any in-
vestigation under paragraph (1) of this subsec-
tion, the Special Counsel shall prepare and
transmit to any person on whose allegation the
Investigation was initiated a written statement
notifying the person of the termination of the
investigation and the reasons therefor.
(3) In addition to authority granted under
paragraph (1) of this subsection, the Special
Counsel may. in the absence of an allegation,
conduct an investigation for the purpose of de-
tenmining whether there are reasonable
sTounds to believe that a prohibited personnel
practice has occurred, exists, or Is to be taken.
(b)(1) In any case involving—
(A) any disclosure of information by an em-
ployee or applicant for employment which
the employee or applicant reasonably believes
evidences—
(i) a violation of any law. rule, or regula-
tion: or
(!i) mismanagement, a gross waste of
funds, an abuse of authority, or a substan-
tial and specific danger to public health or
safety;
if the disclosure Is not specifically prohibited
by law and if the information is not specifi-
cally required by Executive order to be kept
secret in the interest of national defense or
the conduct of foreign affairs: or
(B) a disclosure by an employee or appli-
cant for employment to the Special Counsel
of the Merit Systems Protection Board, or to
the Inspector General of an agency or an-
other employee designated by the head of the
ijency to receive such disclosures of informa-
tion which the employee or applicant reason-
ibly believes evidences—
(i) a violation of any law, rule, or regula-
tion: or
111) mismanagement, a gross waste of
funds, an abuse of authority, or a substan-
tial and specific danger to public health or
•afety;
the Identity of the employee or applicant may
not be disclosed without the consent of the em-
ployee or applicant during any investigation
under subsection (a) of this section or under
paragraph (3) of this subsection, unless the
Special Counsel determines that the disclosure
of the identity of the employee or applicant is
necessary in order to carry out the functions of
the Special Counsel.
(2) Whenever the Special Counsel receives In-
formation of the type described in paragraph
<1) of this subsection, the Special Counsel shall
promptly transmit such information to the ap-
propriate agency head.
(3)(A) In the case of information received by
the Special Counsel under paragraph (1) of this
section. If, after such review as the Special
Counsel determines practicable (but not later
than 15 days after the receipt of the informa-
tion), the Special Counsel determines that
there is a substantial likelihood that the infor-
mation discloses a violation of any law. rule, or
regulation, or mismanagement, gross waste of
funds, abuse of authority, or substantial and
specific danger to the public health or safety,
the Special Counsel may, to the extent pro-
vided in subparagraph (B) of this paragraph,
require the head of the agency to—
(i) conduct an investigation of the Informa-
tion and any related matters transmitted by
the Special Counsel to the head of the
agency: and
(ii) submit a written report setting forth the
findings of the head of the agency within 60
days after the date on which the information
is transmitted to the head of the agency or
within any longer period of time agreed to in
writing by the Special Counsel.
(B) The Special Counsel may require an
agency head to conduct an investigation and
submit a written report under subparagraph
(A) of this paragraph only If the information
was transmitted to the Special Counsel by-
CD any employee or former employee or ap-
plicant for employment in the agency which
the information concerns: or
(11) any employee who obtained the infor-
mation in connection with the performance
of the employee's duties and responsibilities.
<4) Any report required under paragraph
<3)(A) of this subsection shall l>e reviewed and
signed by the head of the agency and shall in-
clude—
(A) a summary of the information with re-
spect to which the investigation was initiated:
(B) a description of the conduct of the in-
vestigation;
(C) a summary of any evidence obtained
from the investigation;
(D) a listing of any violation or apparent
violation of any law. rule, or regulation: and
(E) a description of any corrective action
taken or planned as a result of the investiga-
tion, such as—
(1) changes in agency rules, regulations, or
practices;
135
■ 1206
TITLE 5— GOVERNMENT ORGANIZATION AND EMPLOYEES
P»«e 466
(U) the restoration of ^ny Merle ved em-
ployee;
(111) dlsclpllnaj-y ftction against any em-
ployee; and
(Iv) referral to the Attorney General of
any evidence of a criminal violation.
(9)(A) Any such report shall be submitted to
the Congress, to the President, and to the Spe-
cial Counsel for transmittal to the complainant.
Whenever the Special Counsel does not receive
the report of the agency head within the time
prescribed in paragraph (3>(A)(ii) of this sub-
section, the Special Counsel may transmit a
copy of the information which was transmitted
to the agency head to the President and to the
Congress together with a statement noting the
failure of the head of the agency to file the re-
quired report.
(B) In any case in which evidence of a crimi-
nal violation obtained by an agency in an Inves-
tigation under paragraph (3) of this subsection
is referred to the Attorney General-
CD the report shall not be transmitted to
the complainant; and
(11) the agency shall notify the Office of
Personnel Management and the Office of
Management and Budget of the referral.
(6) Upon receipt of any report of the head of
any agency required under paragraph (3)(A)(ii)
of this subsection, the Special Counsel shall
review the report and determine whether—
(A) the findings of the head of the agency
appear reasonable; and
(B) the agency's report under paragraph
(3)(A)(ii) of this subsection contains the In-
formation required under paragraph (4) of
this subsection.
(7) Whenever the Special Counsel transmits
any information to the head of the agency
under paragraph (2) of this subsection but does
not require an investigation under paragraph
(3) of this subsection, the head of the agency
shall, within a reasonable time after the infor-
mation was transmitted, inform the Special
Counsel, In writing, of what action has been or
Is to be taken and when such action will l>e
completed. The Special Counsel shall Inform
the complainant of the report of the agency
head.
(8) Except as specifically authorized under
this subsection, the provisions of this subsec-
tion shall not be considered to authorize disclo-
sure of any information by any agency or any
person which Is—
(A) specifically prohibited from disclosure
by any other provision of law; or
(B) specifically required by Executive order
to be kept secret in the interest of national
defense or the conduct of foreign affairs.
(9) In any case under subsection (b)(1)(B) of
this section Involving foreign Intelligence or
counterintelligence Information the disclosure
of which Is specifically prohibited by law or by
Executive order, the Special Counsel shall
transmit such information to the Permanent
Select Committee on Intelligence of the House
of Representatives and the Select Committee
on Intelligence of the Senate.
(c)(l)CA) If, in connection with any investiga-
tion under this section, the Special Counsel de-
termines that there are reasonable grounds to
believe that a prohibited personnel practice has
occurred, exists, or is to be taken . which re-
quires corrective action, the Special Counsel
shall report the determination together with
any findings or recommendations to the Board,
the agency Involved, and to the Office, and may
report the determination, findings, and recom-
mendations to the I>resident. The Special Coun-
sel may include in the report recommendations
as to what corrective action should be taken.
(B) If, after a reasonable period, the agency
has not taken the corrective action recommend-
ed, the Special Counsel may request the Board
to consider the matter. The Board may order
such corrective action as the Board considers
appropriate, after opportunity for comment by
the agency concerned and the Office of Person-
nel Management.
(2)(A) If. in connection with any investigation
under this section, the Special Counsel deter-
mines that there Is reasonable cause to believe
that a criminal violation by an employee has
occurred, the Special Counsel shaU report the
determination to the Attorney General and to
the head of the agency involved, and shall
submit a copy of the report to the Director of
the Office of Personnel Management and the
Director of the Office of Management and
Budget.
(B) In any case in which the Special Counsel
determines that there are reasonable grounds
to believe that a prohibited personnel practice
has occurred, exists, or Is to be taken, the Spe-
cial Counsel may proceed with any investiga-
tion or proceeding instituted under this section •
notwithstanding that the alleged violation has
been reported to the Attorney General.
(3) If, in connection with any investigation
under this section, the Special Counsel deter-
mines that there is reasonable cause to believe
that any violation of any law, rule, or regula-
tion has occurred which is not referred to in
paragraph (1) or (2) of this subsection, the vio-
lation shall be reported to the head of the
agency involved. The Special Counsel shall re-
quire, within 30 days of the receipt of the
report by the agency, a certification by the
head of the agency which states—
(A) that the head of the agency has person-
ally reviewed the report; and
(B) what action has been, or is to be. taken,
and when the action will be completed.
(d) The Special Counsel shall maintain and
make available to the public a list of noncri-
minal matters referred to heads of agencies
under subsections (bHSKA) and (c)(3) of this
section, together with—
(1) reports by the heads of agencies under
subsection (b)(3)(A) of this section, in the
case of matters referred under subsection (b);
and
(2) certifications by heads of agencies under
sulxsection (cK3). in the case of matters re-
ferred under subsection (c).
The Special Counsel shall tAke steps to ensure
that any such public list does not contain any
information the disclosure of which Is prohibit-
ed by law or by Executive order requiring that
136
Page 467
TITLE 5-OOVERNMENT ORGANIZATION AND EMPLOYEES
S1207
Information be kept secret In the Interest of na-
tional defense or the conduct of foreign affairs.
(e)(1) In addition to the authority otherwise
provided In this section, the Special Counsel
shall, except as provided In paragraph (2) of
this subsection, conduct an investigation of any
allegation concerning—
(A) political activity prohibited under sub-
chapter III of chapter 73 of this title, relating
to political activities by Federal employees;
(B) political activity prohibited under chap-
ter 15 of this title, relating to political activi-
ties by certain State and local officers and
employees:
(C) arbitrary or capricious withholding of
Information prohibited under section 552 of
this title, except that the Special Counsel
shall make no investigation under this subsec-
tion of any withholding of foreign intelli-
gence or counterintelligence information the
disclosure of which is specifically prohibited
by law or by Executive order;
(D) activities prohibited by any civil service
law, rule, or regulation, including any activity
relating to political intrusion in personnel
decisionmaking: and
(E) involvement by any employee in any
prohibited discrimination found by any court
or appropriate administrative authority to
have occurred in the course of any personnel
action.
(2) The Special Counsel shall make no inves-
tigation of any allegation of any prohibited ac-
tivity referred to in paragraph (1)(D) or (1)(E)
of this subsection if the Special Counsel deter-
mines that the allegation may be resolved more
appropriately under an administrative appeals
procedure.
(f) During any Investigation initiated under
this section, no disciplinary action shall be
taken against any employee for any alleged
prohibited activity under Investigation or for
any related activity without the approval of the
Special Counsel.
(g)(1) Except as provided in paragraph (2) of
this subsection, if the Special Counsel deter-
mines that disciplinary action should be taken
against any employee—
(A) after any investigation under this sec-
tion, or
(B) on the basis of any knowing and willful
refusal or failure by an employee to comply
with an order of the Merit Systems Protec-
tion Board,
the Special Counsel shall prepare a written
complaint against the employee containing his
determination, together with a statement of
supporting facts, and present the complaint
and statement to the employee and the Merit
Systems Protection Board in accordance with
section 1207 of this title.
(2) In the case of an employee In a confiden-
tial, policy-making, policy-determining, or
policy-advocating position appomled by the
President, by and with the advice and consent
of the Senate (other than an individual in the
Foreign Service of the United Slates), the com-
plaint and statement referred to in paragraph
(1) of this subsection, together with any re-
sponse by the employee, shall be presented to
the President for appropriate action in lieu of
being presented under section 1207 of this title.
<h) If the Special Counsel believes there is a
pattern of prohibited personnel practices and
such practices involve matters which are not
otherwise appealable to the Board under sec-
tion 7701 of this title, the Special Counsel may
seek corrective action by filing a written com-
plaint with the Board against the agency or em-
ployee involved and the Board shall order such
corrective action as the Board determines nec-
essary.
(1) The Special Counsel may as a matter of
right intervene or otherwise participate in any
proceeding before the Merit Systems Protec-
tion Board, except that the Special Counsel
shall comply with the rules of the Board and
the Special Counsel shall not have any right of
judicial review in connection with such inter-
vention.
(J)(l) The Special Counsel may appoint the
legal, administrative, and support personnel
necessar;- to perform the functions of the Spe-
cial Counsel.
(2) Any appointment made under this subsec-
tion shall comply with the provisions of this
title, except that such appointment shall not be
subject to the approval or supervision of the
Office of Personnel Management or the Execu-
tive Office of the President (other than approv-
al required under section 3324 or subchapter
VIII of chapter 33 of this title).
(k) The Special Counsel may prescribe regula-
tions relating to the receipt and investigation of
matters under the Jurisdiction of the Special
Counsel. Such regulations shall be published in
the Federal Register.
(f) The Special Counsel shall not issue any
advisory opinion concerning any law, rule, or
regulation (other than an advisory opinion con-
cerning chapter 15 or subchapter III of chapter
73 of this title).
(m) The Special Counsel shall submit an
annual report to the Congress on the activities
of the Special Counsel. Including the number,
types, and disposition of allegations of prohibit-
ed personnel practices filed with It. investiga-
tions conducted by it, and actions Initiated by it
before the Board, as well as a description of the
recommendations and reports made by it to
other agencies pursuant to this section, and the
actions taken by the agencies as a result of the
reports or recommendations. The report re-
quired by this subsection shall Include what-
ever recommendations for legislation or other
action by Congress the Special Counsel may
deem appropriate.
(Added Pub. L. 95-454. title II. { 202(a). Oct. 13.
1978. 92 Stat. 1125.)
Sbctioh RcmuixD to m Otheh Sections
This section li referred to In sections 1207. 2303.
7502. 7512. 7521. 7542 of this title, title 22 section 4139
S 1207. Hearings and decisions on complaints Tiled by
the Special Counsel
(a) Any employee against whom a complaint
has l)een presented to the Merit Systems Pro-
tection Board under section 1206(g) of this title
is entitled to—
137
11208
TITLE 5— GOVERNMENT ORGANIZATION AND EMPLOYEES Page 468
(1) a reasonable time to answer orally and
In UTiting and to furnish affidavits and other
documentary evidence in support of the
answer;
(2) be represented by an attorney or other
representative;
(3) a hearing before the Board or an admin-
istrative law Judge appointed under section
3105 of this title and designated by the
Board.
(4) have a transcript kept of any hearing
under paragraph (3) of this subsection; and
(5) a *Titten decision and reasons therefor
at the earliest practicable date, including a
copy of any final order imposing disciplinary
action.
(b) A final order of the Board may Impose dis-
ciplinary action consisting of removal, reduc-
tion in grade, debarment from Federal employ-
ment for a period not to exceed 5 years, suspen-
sion, reprimand, or an assessment of a civil pen-
alty not to exceed $1,000.
(c) There may be no administrative appeal
from an order of the Board. An employee sub-
ject to a final order imposing disciplinary
action under this section may obtam Judicial
review of the order in the United Slates court
of appeals for the judicial circuit in which the
employee resides or is employed at the time of
the action.
(d) In the case of any State or local officer or
employee under chapter 15 of this title, the
Board shall consider the case in accordance
with the provisions of such chapter.
(Added Pub. L. 95-454. title II. { 202(a), Oct. 13,
1978, 92 Stat. 1130.)
Section RmjOdD to ik Othe? Sectioks
This Bectlon it. referred to in secUoris 1206. 3393 of
this title.
S 1208. StavB of certain penonnel actiona
raxi) The Special Counsel may request any
member of the Merit Systems Protection Board
to order a stay of any personnel action for 15
calendar days if the Special Counsel determines
that there are reasonable grounds to believe
that the personnel action was taken, or is to be
taken, as a result of a prohibited personnel
practice.
(2) Any member of the Board requested by
the Special Counsel to order a slay linder para-
graph (1) of this subsection shall order such
stay unless the member determines that, under
the facts and circumstances Involved, such a
stay would not be appropriate.
(3) Unless denied under paragraph (2) of this
subsection, any stay under this subsection shall
be granted within 3 calendar days (excluding
Saturdays, Sundays, and legal holidays) after
the date of the request for the sUy by the Spe-
cial Counsel.
(b) Any member of the Board may, on the re-
quest of the Special Counsel, extend the period
of any stay ordered under subsection (a) of this
section for a period of not more than 30 calen-
dar days.
(c) The Board may extend the period of any
stay granted under subsection (a) of this sec-
tion for any period which the Board considers
appropriate, but only if the Board concurs in
the determination of the Special Counsel under
such subsection, after an opportunity is pro-
vided for oral or written comment by the Spe-
cial Counsel and the agency involved.
(Added Pub L 85-454, title II. { 202(a), Oct. 13.
1978. 92 Stat. 1130.)
1 1209. Inrormation
(a) Notwithstanding any other provision of
law or any rule, regulation or policy directive,
any member of the Board, or any employee of
the Board designated by the Board, may trans-
mit to the Congress on the request of any com-
mittee or subcommittee thereof, by report, tes-
timony, or otherwise, information and views on
functions, responsibilities, or other matters re-
lating to the Board, without review, clearance,
or approval by any other administrative au-
thority.
(b) The Board shall submit an annual report
to the President and the Congress on Its activi-
ties, which shall include a description of signifi-
cant actions taken by the Board to carry out its
functions under this title. The report shall also
review the significant actions of the Office of
Personnel Management, including an analysis
of whether the actions of the Office of Person-
nel Management are in accord with merit
system principles and free from prohibited per-
sonnel practices.
(Added Pub. L. 95-454. title II, { 202(a), Oct. 13,
1978, 92 Slat. 1131.)
CHAPTER 13— SPECIAL AITHORITV
1301 Rules.
1302 Regulations.
1303. Investigations: reports.
1304. Loyalty investlgaiions; reports; revolving
fund.
1305 Administrative la« Judges.
1306 Oaths to witnesses
ISOT. Minuies
1308 Annua] re[>orts.
AMEKVMEirrS
1978-Pub L 95-251. 12(c)(1). Mar 27, 1978. 92 Sut.
183. lubstltuted "Administrative law Judges" for
"Hearing examiners" in Item 1305.
1 1301. Rules
The Office of Personnel Management shall
aid the President, as he may request, in prepar-
ing the rules he prescribes under this title for
the administration of the competitive service.
(Pub. L. 89-554, Sept. 6, 1966, 80 Stat. 401; Pub.
L. 85-454. title IX. | 906(a)(2). Oct. 13. 1978. 92
Stat. 1224.)
Historical axd Revisioh Notes
V.S Codt
»D£C M3<1)
(funrtlon of Clvl)
Servlct
CommlsioD).
Knised Sttttuta and
SUtuUt at Lcrff
Jan le. 1M3 ch n. I Ml
(function of Civil Servlct
CommiMlonl. 23 6ui
409
138
Pwe 485 TITLE 5— GOVERNMENT ORGANIZATION AND IMPLOYEES
• 2302
i}04. Responsibility of the General Aocountlng
Ottice.
SOS. Coordination with certain other provisions
of law.
CHArm Rdzkko to ik Other SBcnoRS
This chapter is referred to in lection 4703 of this
title.
ItSOl. Merit lyitcm principles
(t) This section shall apply lo-
ci) an Executive agency;
(2) the Administrative Office of the United
States Courts: and
(3) the Government Printing Office.
(b) Federal personnel management should be
Implemented consistent with the following
merit system principles: /
(1) Recruitment should be from qualified
Individuals from appropriate sources In an en-
deavor to achieve a work force from all seg-
ments of society, and selection and advance-
ment should be determined solely on the
basis of relative ability, knowledge, and skills,
after fair and open competition which assures
that all receive equal opportunity.
(2) All employees and applicants for em-
ployment should receive fair and equitable
treatment in all aspects of personnel manage-
ment without regard to political affiliation,
race, color, religion, national origin, sex, mari-
tal status, age, or handicapping condition,
and with proper regard for their privacy and
constitutional rights.
(3) Equal pay should be provided for work-f
of equal value, with appropriate consideration I
of both national and local rates paid by em- *■
plovers in the private sector, and appropriate
incentives and recognition should be provided
for excellence in performance.
(4) All employees should maintain high
standards of integrity, conduct, and concern
for the public Interest.
(5) The Federal work force should be xjsed
efficiently and effectively.
(6) Employees should be reUined on the
basis of the adequacy of their performance,
inadequate performance should be corrected,
and employees should be separated who
cannot or will not Improve their performance
to meet required standards.
(7) Employees should be provided effective
education and training in cases in which such
education and training would result In better
organizational and individual performance.
(8) Employees should be—
(A) protected against arbitrary action,
personal favoritism, or coercion for partisan
political purposes, and
(B) prohibited from using their official
authority or Influence for the purpose of In-
terfering with or affecting the result of an
election or a nomination for election.
(9) Employees should be protected against
reprisal for the lawful disclosure of Informa-
tion which the employees reasonably believe
evidences—
(A) a violation of any law, rule, or regula-
tion, or
(B) mismanagement, a gross waste of
funds, an abuse of authority, or a substai)-
tial and apedflc danger to public health or
safety.
(c) In administering the provisions of this
chapter—
(1) with respect to any agency (as defined in
•ection 2302(a)(2)(C) of this title), the Presi-
dent shall, pursuant to the authority other-
wise available under this title, take any
action, including the issuance of rules, regula-
tions, or directives: and
<2) with respect to any entity in the execu-
tive branch which is not such an agency or
part of such an agency, the head of such
entity shall, pursuant to authority othem-ise
available, take any action, including the Issu-
ance of rules, regulations, or directives;
which is consistent with the provisions of this
title and which the President or the head, as
the case may be, determines is necessary to
ensure that personnel management is based on
and embodies the merit system principles.
(Added Pub. L. 95-454. title I. 1 101(a). Oct. 13.
1978. 92 SUt. 1113.)
Errscnvi Dati
ChapKr effective 90 days after Oct. 13, 1978. see sec-
tion 907 of Pub L. 9S-4S4. set out as an Effective Date
of 1978 Amendment not* under section 1101 of this
Utle.
Stcnon RtJTKxzD to ib Otrxr Sectiors
This section is referred to In section 2302 of this
Utle: utle 22 secUon 3902, tlUe 31 secUon 732.
e 2302. Prohibited peraonnel practice*
(a)(1) For the purpose of this title, "prohibit-
ed personnel practice" means any action de-
scribed In subsection (b) of this section.
(2) For the purpose of this section—
(A) "personnel action" means-
CD an appointment;
(ii) a promotion;
(ill) an action under chapter 75 of this
title or other disciplinary or corrective
action;
(iv) a detail, transfer, or reassignment;
(V) a reinstatement;
(vi) a restoration;
(vll) a reemployment;
(viii) a performance evaluation under
chapter 43 of this title;
(Ix) a decision concerning pay, benefits, or
awards, concerning education or training if
the education or training may reasonably
be expected to lead to an appointment, pro-
motion, performance evaluation, or other
action described in this subparagraph; and
(X) any other significant change in duties
or responsibilities which is Inconsistent
with the employee's salary or grade level;
with respect to an employee in, or applicant
for. a covered position in an agency;
(B) "covered position" means any position
in the competitive service, a career appointee
position in the Senior Executive Service, or a
position in the excepted service, but does not
Include—
(i) a position which is excepted from the
competitive service because of its confiden-
139
12302
TITLE 5— GOVERNMENT ORGANIZATION AND EMPLOYEES
Page 486
tial. policy-determining, policy-making, or
policy-advocating character; or
(11) any position excluded from the cover-
age of this section by the President based
on a determination by the President that it
l5 necessary and warranted by conditions of
good administration.
(C) "agency" means an Executive agency.
the Administrative Office of the United
States Courts, and the Government Printing
Office, but does not include—
(I) a Government corporation;
(II) the Federal Bureau of Investigation,
the Central Intelligence Agency, the De-
fense Intelligence Agency, the National Se-
curity Agency, and. as determined by the
President, any Executive agency or unit
thereof the principal function of which is
the conduct of foreign intelligence or coun-
terintelligence activities; or
(iii) the General Accounting Office.
(b) Any employee who has authority to take,
direct others to take, recommend, or approve
any personnel action, shall not. with respect to
such authority—
(1) discriminate for or against any employee
or applicant for emploj-ment-
(A) on the basis of. race, color, religion.
sex. or national origin, as prohibited under
section 717 of the Civil Righu Act of 1964
(42 U.S.C. 2000e-16);
(B) on the basis of age. as prohibited
under sections 12 and 15 of the Age Dis-
crimination in Employment Act of 1967 (29
U.S.C. 631, 633a);
(C) on the basis of sex. as prohibited
under section 6(d) of the Fair Labor Stand-
ards Act of 1938 (29 U.S.C. 206(d));
(D) on the basis of handicapping condi-
tion, as prohibited under section 501 of the
Rehabilitation Act of 1973 (29 U.S.C. 791);
or
(E) on the basis of marital status or politi-
cal affiliation, as prohibited under any law,
rule, or regulation;
(2) solicit or consider any recommendation
or statement, oral or written, with respect to
any individual who requests or is under con-
sideration for any personnel action unless
such recommendation or statement is based
on the personal knowledge or records of the
person furnishing it and consists of—
(A) an evaluation of the work perform-
ance, ability, aptitude, or general qualifica-
tions of such individual; or
(B) an evaluation of the character, loyal-
ty, or suitability of such individual;
(3) coerce the political activity of any
person (including the providing of any politi-
cal contribution or service), or take any action
against any employee or applicant for em-
ployment as a reprisal for the refusal of any
person to engage in such political activity;
(4) deceive or willfully obstruct any person
with respect to such person's right to com-
pete for employment;
(5) influence any person to withdraw from
competition for any position for the purpose
of improving or injuring the prospects of any
other person for employment:
(6) grant any preference or advantage not
authorized by law, rule, or regulation to any
employee or applicant for employment (in-
cluding defining the scope or manner of com-
petition or the requirements for any position)
for the purpose of improving or injuring the
prospects of any particular person for em-
ployment;
(7) appoint, employ, promote, advance, or
advocate for appointment, employment, pro-
motion, or advancement, In or to a civilian po-
sition any Individual who is a relative (as de-
fined in section 3110(a)(3) of this title) of
such employee If such position Is in the
agency in which such employee is serving as a
public official (as defined in section 3110(a)(2)
of this title) or over which such employee ex-
ercises Jurisdiction or control as such an offi-
cial;
(8) take or fall to take a personnel action
with respect to any employee or applicant for
emplo>TDent as a reprisal for—
(A) a disclosure of information by an em-
ployee or applicant which the employee or
applicant reasonably believes evidences—
(I) a violation of any law, rule, or regula-
tion, or
(ii) mismanagement, a gross waste of
funds, an abuse of authority, or a substan-
tial and specific danger to public health
or safety,
if such disclosure is not specifically prohib-
ited by law and if such information is not
specifically required by Executive order to
be kept secret in the interest of national de-
fense or the conduct of foreign affairs, or
(B) a disclosure to the Special Counsel of
the Merit Systems Protection Board, or to
the Inspector General of ain agency or an-
other employee designated by the head of
the agency to receive such disclosures, of in-
formation which the employee or applicant
reasonably believes evidences—
(Da violation of any law, rule, or regula-
tion, or
(II) mismanagement, a gross waste of
funds, an abuse of authority, or a substan-
tial and specific danger to public health
or safety: »
(9) take or fall to take any personnel action
against any employee or applicant for em-
ployment as a reprisal for the exercise of any
appeal right granted by any law, rule, or regu-
lation;
(10) discriminate for or against any employ-
ee or applicant for employment on the basis
of conduct which d(5€s not adversely affect
the performance of the employee or applicant
or the performance of others; except that
nothing in this paragraph shall prohibit an
agency from taking into account in determin-
ing suitability or fitness any conviction of the
employee or applicant for any crime under
the laws of any Sute, of the District of Co-
lumbia, or of the United States; or
(11) take or fail to take any other personnel
action If the taking of or failure to take such
action violates any law, rule, or regulation im-
plementing, or directly concerning, the merit
140
Pace 487
TITLE &-OOVERKMENT ORGANIZATION AND EMPLOYEES
12305
lystem principles contained in section 2301 ot
thU title.
This subsection shall not be construed to au-
thorize the withholding of Information from
the Congress or the taking of any personnel
action against an employee who discloses infor-
mation to the Congress.
(c) The head of each agency shall be resporul-
ble for the prevention of prohibited personnel
practices, for the compliance with and enforce-
ment of applicable civil service laws, rules, and
regulations, and other aspects of personnel
management. Any individual to whom the head
of an agency delegates authority for personnel
management, or for any aspect thereof, shall be
similarly responsible within the limits of the
delegation.
(d) This section shall not be construed to ex-
tinguish or lessen any effort to achieve equal
employment opportunity through affirmative
action or any right or remedy available to any
employee or applicant for employment in the
cJvH service under—
(1) section 717 of the Ovil Rights Act of
1964 (42 U.S.C. 2000e-16). prohibiting discrim-
ination on the basis of race, color, religion,
sex, or national origin;
(2) sections 12 and IS of the Age Discrimi-
nation in Employment Act of 1967 (29 U.S.C.
631. 633a), prohibiting discrimination on the
basis of age;
(3) under section 6(d) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(d)), pro-
hibiting discrimination on the basis of sex;
(4) section 501 of the RehablllUtlon Act of
1973 (29 U.S.C. 791), prohibiting discrimina-
tion on the basis of handicapping condition;
or
(5) the provisions of any law. rule, or regu-
lation prohibiting discrimination on the basis
of marital status or political affiliation.
(Added Pub. L. 95-454, title I. 1 101(a). Oct. 13.
1978. 92SUt. 1114.)
Rcmizncrs iH Text
The clvU service l»*s. referred to In tubsec. (c). are
■et out In this title. See. particularly, section 3301 et
■eq. of this title.
StcnoK Retekjixs to in Ormoi SEcnoni
This section Is referred to in sections 120S, 3301.
3303, 4703. 7116. 7121, 7701 of this Utle; UUe 33 sec-
tions 3»0S. 4115; tlUe 31 section 732.
12303. Prohibited personnel practices In the Federal
Bureau of InvesUration
(a) Any employee of the Federal Bureau of
Investigation who has authority to take, direct
others to take, recommend, or approve any per-
sonnel action, shall not, with respect to such
authority, take or fall to take a personnel
action with respect to any employee of the
Bureau as a reprisal for a disclosure of informa-
tion by the employee to the Attorney General
(or an employee designated by the Attorney
General for such purpose) which the employee
or applicant reasonably believes evidences—
(Da violation of any law. rule, or regula-
tion, or
(2) mismanagement, a gross waste of funds,
an abuse of authority, or a substantial and
specific danger to public health or safety.
For the purpose of this sut>section, "personnel
action" means any action described in clauses
(1) through (X) of section 2302(a)(2)(A) of this
title with respect to an employee In. or appli-
cant for, a position in the Bureau (other than a
position of a confidential, policy-determining,
policymaking, or policy-advocating character).
<b) The Attorney General shall prescribe reg-
ulations to ensure that such a personnel action
shall not be taken against an employee of the
Bureau as a reprisal for any disclosure of Infor-
mation described In subsection (a) of this sec-
tion.
(c) The President shall provide for the en-
forcement of this section In a manner consist-
ent with the provisions of section 1206 of this
title.
(Added Pub. L. 95-454. title I. | 101(a). Oct. 13.
1978. 92 SUt. 1117.)
12304. Responsibility of the General Accounting
OfTiee
(a) If requested by either House of the Con-
gress (or any committee thereof), or if consid-
ered necessary by the Comptroller General, the
General Accounting Office shaU conduct audits
and reviews to assure compliance with the laws,
rules, and regulations governing employment in
the executive branch and in the competitive
service and to assess the effectiveness and
soundness of Federal personnel management.
(b) the ' General Accounting Office shall pre-
pare and submit an annual report to the Presi-
dent and the Congress on the activities of the
Merit Systems Protection Board and the Office
of Personnel Management. The report shall in-
clude a description of—
( 1 > significant actions taken by the Board to
carry out Its function under this title; and
(2) significant actions of the Office of Per-
sonnel Management, including an analysis of
whether or not the actions of the Office are
in accord with merit system principles and
free from prohibited personnel practices.
(Added Pub. L. 95-454. title I. 1 101(a). Oct. 13,
1978. 92 SUt. 1118.)
1 2305. Coortlination with certain other provisions of
law
No provision of this chapter, or action taken
tinder this chapter, shall be construed to impair
the authorities and responsibUities set forth in
section 102 of the National Security Act of 1947
(61 Stat. 495; 50 U.S.C. 403). the Central InteUi-
gence Agency Act of 1949 (63 Stat. 208; 50
U.S.C. 403a and following), the Act entitled "An
Act to provide certain administrative authori-
ties for the National Security Agency, and for
other purposes", approved May 29. 1959 (73
Stat. 63; 50 U.S.C. 402 note), and the Act enti-
tled "An Act to amend the Internal Security
Act of 1950". approved March 26, 1964 (78 SUt.
168; 50 D.S.C. 631-835).
'So Is orlclnsl Should be "Tlie".
141
I" I
y
_ 7 October 1970
»!."j:o re;; secretary Packard "
Soj-ncli)iie ago you and I discussed the role of Ihc
Defense contract auditor. I think the attached
jnemoraiidum is along the lines you would like.
I have discussed i.t with Bob Moot a)id he is in
accord v.nth it as written. Your signature is
recommended.
, ., B/iURl/j. SMII^LITO
^
I^^JUI-'
^.^
^/^/
2602X
142
^m^^
- V . *
VMS i.inn.'fv S!.ci:t»A;:Y or iititWSE
OCT 9- 1370
MKMOPvANDUM FOR Ar.sir.tanl Sccielary of Dcfcjisc (Comptroller)
As'nisliint Secretary of Defense (I?iL)
SUBJECT: Pv.olc of the Defence Contract A\iditor
I ain concerned that tlicrc he a' clear understanding of the advisory
role tlie contj-act auditor has in sxxpport of the contjacting officer.
The iri'.lcpendcnt prc>fescional advice of auditors is essential to good
Defense contracting. The contracting officer jTix'.rt consider such ad-
vice» Neverth.elcr.E, contracting officers' decisions on matters of
contract pricing have to tahc; into acco\int jv.any factor? in addition to
those prcsenlcd hy the a\iditorSc It in, therefore, nc-ccssai-y that all
those responsible for'furnisliing support to the conti-acting officer
understand the advisory role they should play.
We should avoid actions by autUtors in their advisory capacity v.hich
appear to dispute or qvicstion specific decisions of contracting bfficcrr-.
I want our contracting people to exercise judgment in their day-to-day
work. • The escalation of pocr-ible disputes relative to specific decisions
should be avoided^ If, however, sucli decisions or judgment have ge.n- •
cral a p;>li cation und, in the professional opinioji of th.c aviditoi", indicate
a change or trend in pricing or costing policy, the auditors ariay, of
course, tiansniit tlie appropriate i)i formation. tliro\-,£h audit co)Timand
channels, /\ T j /i
143
Senator Grassley. Thank you, Mr. Fitzgerald.
You are one of the most famous of the whistleblowers, and with
your track record, I would be surprised if your advice is not sought
out by those people who are concerned about waste, fraud, and
abuse, and about things not being right. I would guess they prob-
ably do.
Do you have people who are whistleblowers, or who are prompt-
ed to enter into the world of whistleblowing seek your advice?
Mr. Fitzgerald. Yes, sir. This happens very frequently, several
times a week on the average. Some concerned Government employ-
ee will call and recite a horror story of waste or mismanagement.
Invariably, these people say the same thing, namely, that they
would do the right thing if they could get away with it. Now, that
to me in itself is a very, very sad commentary on the state of our
motivational system and our system of real values in the Federal
bureaucracy.
George Spanton was one of those people. I had known George
and had done business with him when I was in the Department of
Defense, in the Air Force, before being fired. He called me in
March of 1982, when he first began encountering difficulties with
his labor audit report. That was the reason that I became very in-
terested in the Spanton matter. As we pursued it, we found that
Mr. Spanton's views on excessive labor rate escalation — and
"labor" is a term of art that embraces the executive salaries and
benefits, as well, not just the blue collar people — we found that Mr.
Spanton was the only person in the field with significant responsi-
bility in the area who was supporting the views of our Secretary,
the Secretary of the Air Force, Verne Orr, who as Mr. Spanton tes-
tified, had separately arrived at the same conclusion.
So we tried to get support within the Department of Defense and
within the Department of the Air Force for Mr. Spanton's views —
by we, I mean my office — on the grounds that we had very few sup-
porters for the Secretary's views, and it was unwise, it seemed to
me, to allow the cannibals to eat our missionaries, and that was
what was happening. It was obvious that our chief missionary, Mr.
Spanton, was being severely harassed by the people who wanted to
preserve the status quo.
Senator Grassley. I would like to have you relate for us some of
your experiences and the sort of resistance you have encountered
up to the present. And correct me if I am wrong, but I think you
have been a Government employee at least since President John-
son, and under every President since then. I would also like to
have you relate to us whether it is any different under one Presi-
dent or another, whether he happens to be a Republican or Demo-
crat or the different personalities of the different Presidents.
Mr. Fitzgerald. That is correct. I joined the Government service
as a civilian employee. I had been in the military as a youngster.
In 1965, under President Johnson — and as a matter of fact, I first
got in trouble, as Senator Heflin may remember from the reaction
of my family down in Alabama — in 1968, under Lyndon Johnson,
and I have been in varying degrees of difficulty ever since. I think
that the stewardship performance in the Pentagon has declined
steadily as a matter of historical tendency regardless of party.
Each successive administration in the Pentagon seems to get
144
weaker in regard to controlling the costs and controlling the appe-
tites, generally, of the giant contractors who consume so much of
the Nation's resources and sometimes do not give us the best prod-
uct.
I do not think it is a partisan matter. I do think it is a matter of
patronage run wild and overwhelming the considerations of getting
the best equipment at the lowest sound price, which has always
been the stated policy of the Pentagon.
The reason for this, I think, is very simple. You can ask yourself,
"Why not?" Why should you do otherwise than to allow nature to
take its course and not buck the trend and face the difficulties that
Mr. Spanton has faced and others have faced even less successfully
than he. The Spanton case is unusual only in that, I think, due to a
peculiar set of circumstances and his own strong character, Mr.
Spanton will come out all right. Among other things he is eligible
to retire. But we see others who are just utterly crushed, or who
fire and fall back and go along with the gag, as we say in the Pen-
tagon.
Senator Grassley. Do you see this matter getting, as you said,
progressively worse?
Mr. Fitzgerald. Yes, sir.
Senator Grassley. You are talking about up to and now, the
present?
Mr. Fitzgerald. Yes, and I should quickly add that I believe that
our Secretary, Mr. Orr, would like very much to do something to
change the direction that we have been going for the last 20 or 30
years, to my knowledge. I believe his desire is shared by my boss.
Assistant Secretary Hale, and certainly it is, as you know. Senator
Grassley, from talking to them by my associates. I believe you have
met them, and you can sense their determination.
We have a very large number of excellent people in the Depart-
ment of Defense, military and civilian, and I truly believe that
most of them would do the right thing if they could get away with
it, just as the would-be whistleblowers, whom we call closet patri-
ots, tell me.
Senator Grassley. What do you mean, "if they could get away
with it"? They are in charge, right?
Mr. Fitzgerald. Well, unfortunately, the people who seem to dis-
play the best motivations are not in charge.
Senator Grassley. Well, then, who is in charge?
Mr. Fitzgerald. That is hard to say.
Senator Grassley. Well, are the civilians in charge?
Mr. Fitzgerald. Well, I think in the sense that civilians appro-
priate the money for the budget, you would have to say in the final
analysis, "Yes." But I do not believe that we have adequate civilian
control of the military procurement bureaucracy in the Pentagon.
Senator Grassley. In other words, what Secretary Orr and his
counterparts would like to accomplish is not carried out by mili-
tary subordinates, or civil servant subordinates below him?
Mr. Fitzgerald. I believe that is often the case. Mr. Spanton, I
think, referred in his testimony to an April 15, 1982, memorandum
by Secretary Orr, regarding excessive wages and salary increases
by the defense contractors and requesting that something be done
about it. I do not believe that memorandum in its original, unblem-
145
ished form, was ever transmitted to the procurement officers who
would have to take action on it. Somewhere along the line, it was
sidetracked, and we find
Senator Grassley. The person who sidetracks it will not be fired?
Mr. Fitzgerald. Well, I do not know who that person is. I sup-
pose one could find out, but we have great difficulty getting infor-
mation from the military acquisition community. I have what
amounts to a court-guaranteed contract that gives me the right to
direct access to that kind of material, and it is simply flaunted by
the military. They do not do it.
Senator Grassley. The military people are ignoring a court order
involved with your position?
Mr. Fitzgerald. It certainly seems that way to me, Senator, yes,
sir.
In those instances where I have taken matters directly to Secre-
tary Orr, we have gotten some momentary relief in a couple of
cases, but the problem resurfaces and has to be dealt with on a
continuing basis — which, again, diverts your attention and saps the
energies that should be applied to doing something about the stew-
ardship problems. It is another case of changing the subject, just as
the Federal personnel system changes the subject and does not deal
with the underlying problems, which I perceive to be a waste of
money and acceptance of shoddy product.
Senator Grassley. In regard to our present hearing is it at the
lower levels, below the political appointees, where the obstacle to
whistleblowers' protections are found?
Mr. Fitzgerald. I cannot make that as a general statement, but
it appears to me that our Secretary does want to do something
about the problem. I am not sure that that view is shared by the
other political appointees. I just do not know; I do not know them.
You have got to be very careful in looking at public statements. As
I indicated earlier, the official view of the Department of Defense
in these matters always, as far back as I can remember, has been
to obtain the necessary equipment at lowest sound price. But the
actual behavior of the system is quite different. And this is not un-
usual. It is so usual that management writers have given it a
name. It is called adumbrations, which is a coined word, which
means communicating your true intent by your actions rather than
your words. And oftentimes, the true intent of an organization is
diametrically opposed to what they pronounce for public consump-
tion. That is why I think the Spanton case is so important. The re-
wards and punishment system could be exercised properly at this
moment. We do not need to wait until all of this long, drawn-out
hearing takes place. Mr. Spanton could be rewarded; people who
have not done their stewardship jobs correctly could be punished or
retrained or something, today. We do not need to wait to take these
corrective actions.
Senator Grassley. Thank you.
Senator Heflin.
Senator Heflin. Mr. Fitzgerald, you have given some rather
shocking testimony. As I wrote down from it, you in effect have tes-
tified that Mr. Spanton, an auditor, is suffering from rocking the
boat because he brought out irregularities.
33-732 O— 84 11
146
Mr. Fitzgerald. Yes, sir, that is correct. That is what I feel to be
the case.
Senator Heflin. To me, an auditing agency is Uke the poUce.
They are supposed to do investigations, they are supposed to audit,
they are supposed to point out irregularities. And if by pointing out
an irregularity, you are rocking the boat, then something is wrong.
And it seems to me that the agency, the structure, ought to be
carefully reviewed.
In regard to general whistleblowing, your statement was that
you thought that the average civil servant would do the right thing
if he could get away with it, as if doing the right thing is some-
thing that is wrong, in effect, within the establishment. This is
rather shocking to me. It seems to me that from a structural view-
point, there needs to be changes made. Perhaps Secretary Orr
wants to. But if he cannot, then there is something wrong with his
review structure and mechanism.
Now, we created the Inspector General's Department of the De-
partment of Defense, and there was quite a battle as to whether or
not it was going to be an independent Inspector General's Depart-
ment, and it was finally created as being one that was under the
Secretary of Defense, and not independent.
Will an independent Inspector General's Department, in the De-
partment of Defense, in your judgment, aid in bringing out irregu-
larities and preventing fraud and abuse?
Mr. Fitzgerald. I think it would have a beneficial effect, at least
for a short time. Senator. But I do not see that it is a permanent
fix. The independence of evaluation groups is very difficult to
maintain, as you understand, and they themselves tend to be dis-
couraged. One of the shocking things to me was to learn that rela-
tions with contractors was a matter on which people like Mr. Span-
ton were graded by their superiors. Now, you know, I personally do
not really care whether Mr. Spanton gets along with the contrac-
tors or not. He would, he is a gentlemanly type, and most of his
associates are the same. You can be firm without being too objec-
tionable. But these bureaucratic pressures seem to wear down the
critical agencies. The independence of the Defense Contract Audit
Agency should definitely be increased. They come under the Comp-
troller of the Department of Defense, administratively, and they
are not the least bit independent of the procurement people. I can
furnish for the record a memorandum about 10 years old that took
to task the DCAA for being too tough on procurement and suggest-
ed that they should restrain their criticism of procurement actions.
Now, you know, I do not think that is right. I think they should be
straightforward, and if the procurement community needs criticiz-
ing, they should be criticized.
The DCAA was only created in the late 1960's after the General
Accounting Office was eased out, in effect, of auditing defense con-
tracts. This was done by the Congress, primarily, the House Com-
mittee on Government Operations, which held what I consider a
shameful series of hearings in the summe?- of 1965, which brought
about this debacle that we are dealing with now. The General Ac-
counting Office now primarily relies on defense auditing, for their
auditing results, by the Defense Contract Audit Agency, which is
147
far from independent. They just do not have a semblance of inde-
pendence you would require of an auditor.
So I quite agree with you that should be reviewed, but I think it
needs to go beyond just establishing an independent Inspector Gen-
eral. We certainly need to review the congressional actions that
have debilitated and dehorned the General Accounting Office.
Senator Heflin. Well, this Defense Contract Audit Agency — how
is it organized? What layers are involved in it? Let us say Mr.
Spanton's West Palm Beach office, are there then regional offices,
or how is it structured?
Mr. Fitzgerald. I am not intimately familiar with that. Senator,
but I can give you my general knowledge of what I know about it.
There are at the plants of a number of major contractors — I
think there are some 25 under Air Force jurisdiction and a lesser
number in the other services — resident offices staffed by Air Force
people in the case of the Air Force and parallel offices staffed by
Defense Contract Audit Agency people, of which Mr. Spanton is
one. He is the head of one of those 25 offices. They in turn report
to a regional office. Mr. Spanton reports to the office in Atlanta,
Ga. And they in turn report to the national headquarters here in
northern Virginia. There are in some cases subordinate layers, but
I am not too clear on those between the regional offices and some
of the plant representative offices.
Senator Heflin. Then, who does that agency operate under —
what division?
Mr. Fitzgerald. Normally, under the Office of the Secretary of
Defense.
Senator Heflin. Well, does he have a Deputy Secretary or a
Deputy Assistant Secretary?
Mr. Fitzgerald. Yes, sir. The Assistant Secretary of Defense
Comptroller has a sort of policy oversight office of that, and he has
a Deputy Assistant Secretary who is responsible for audit oversight
and followup, that sort of thing— audits generally, including DCAA.
But the DCAA, as Mr. Spanton testified, is mostly responsive to
the procurement community. Now, I should explain that that com-
munity is perceived by those of us who work in the business as
being not only the Government procurement people, but the con-
tractors as well. And it really does not go well for the auditors if
they are too pushy and alienate the giant contractors. You can
beat up on the little guys, but it is not considered good form to beat
up on the big contractors. And we have results every day that
speak to that. I saw in the paper this morning an article in the
Washington Post alleging illegal work reported at a missilemaking
plant. This was allegedly taking place at the Hughes plant out in
Tucson, Ariz. Now, we have been forbidden by court order to talk
about this. Hughes went into court over here in Alexandria, Va.,
and got an order forbidding us from talking about this. I found in-
dications that something was amiss at this plant more than a year
ago. Other people have seen the same indications. The DCAA found
no evidence whatsoever, none whatsoever. They have come to spe-
cialize, I think — this is not too harsh a statement — in finding no
evidence. That is what they do best.
Senator Heflin. Well, then, what suggestions would you make as
to the structure of the audit division of the Department of Defense?
148
I assume that you feel there is an inherent danger because of its
connection with procurement and that therefore that ought to be
separated. Is that your feeUng?
Mr. Fitzgerald. Yes, sir, but I would go beyond that, because of
the nature of the organization over its history — and it is not that
old; you know, the republic survived for nearly 200 years without a
Defense Contract Audit Agency — I would suggest that we abolish
the Defense Contract Audit Agency, because I do not think you
could readily clean house with the staff without doing that and
divide the functions either amongst the service audit agencies and
the General Accounting Office, or perhaps, create a new agency
under the Inspector General, as is done in other departments of the
executive branch.
My understanding is that in other departments of the executive
branch, the auditing function is part of the Inspector General. It is
not, in our case. But anything you could do, Senator, to increase
the independence of the agency and to clean house of the staff of
people who have grown up through successive selection of compli-
ant, noninquisitive auditors, would help.
Senator Heflin. Well, is there an inherent weakness in having
resident auditors who, in effect, live day-by-day with the defense
contractor and who deal only with that one defense contractor over
a period of time, as opposed to a methodology of auditing by which
the defense contractor, who might not know on Monday what audi-
tor will be coming in, like traveling auditors or some sort — in your
judgment, is the methodology of resident auditors which sometimes
brings about a coziness that can exist — do you have any sugges-
tions as to changes that could occur in that?
Mr. Fitzgerald. Yes, sir. We have severe problems with resident
people, both in our military representative offices and on occasion
in the Defense Contract Audit Agency offices. The problems are so
common that they have acquired a name. It is called going native.
These people come to view the contractor as their client, and, at
least in my observation, often represent the views of the contractor
to the higher levels of the Government and to the taxpayers, indi-
rectly, rather than representing the interest of the taxpayers and
the higher levels of the Government to the contractor.
We have rules requiring rotation of the Defense Contract Agency
auditors, and I think that is generally a good rule.
Unfortunately, in the Spanton case, it is quite obvious that Mr.
Spanton had not gone native. The agency sought to invoke these
rules in order to move Mr. Spanton prematurely. We have gotten
statistics that showed that compliant officers — ones who did not
find evidence of waste or other problems — are given extensions in
their tour of duty. But there was an attempt to move Mr. Spanton
prematurely.
So again, you have got to look at the motivations of the people at
the top. It would obviously be better to have all surprise audits and
visits by traveling auditors, if you could arrange it, but there is
also something to be said for familiarity with the contractor's oper-
ation.
So I think I would tend to reduce the resident staffs, but not do
away with them altogether.
149
Senator Heflin. Let me ask you this. Is there a need for an im-
provement in the liaison between the whistleblower and the audi-
tor, or the person or agency that can do something about it? A
whistleblower may make a phone call or reveal something on this
hotline. Does it depend on the hotline and the agency as to wheth-
er or not that information gets to the proper person that can take
action?
What is your observation of the liaison between the Federal em-
ployee who sees something going on, who wants to report it? Does
it get mired down into the layers of bureaucracy?
Mr. Fitzgerald. It often gets mired down in the layers of the bu-
reaucracy, Senator. The general feeling of the people that I talked
to, the so-called closet patriots and an occasional whistleblower, is
that nothing happens as a result of the hotline calls in most cases.
It is my observation that allegations of a relatively minor
nature — that is, relatively minor in their financial and political
impact — are sometimes followed up rather vigorously. If you look
at the cases that have been taken to conclusion by the Department
of Defense IG, you will find that the vast majority of them are rela-
tively small items. You can report your office-mate for cheating on
a travel voucher and get away with it, probably. But it is not clear
that you can get away with or have anything done about a disclo-
sure that would seriously embarrass and hurt financially a giant
military contractor. There is a matter of degree there in what you
can get something done about and what you cannot.
In those cases where we have been able to take specific items to
our Secretary, we have sometimes gotten things done about them.
Senator Grassley was on television this morning, and the introduc-
tory part used a little stoolcap that goes on a navigator's stool legs
on Boeing airplanes. We had been paying over $900 apiece for
these little plastic caps, and one of the sergeants in the Air Force,
Sergeant Kessler, noticed that the contractor was requesting an in-
crease of more than $200 apiece for them, and he thought it was
outrageous. He reported it to the hotline, and nothing happened
until the matter was taken directly to the Secretary of the Air
Force. In this case, the Secretary saw to it that Sergeant Kessler
got a bonus and a commendation letter, and that the company was
called on the carpet.
Now, I do not know that we have done anything about spare
parts pricing generally as a result of that, but I thought that was
the right action, and I think if we could get more cases like that,
we could eventually turn around the perception that the top people
do not care about saving money.
Senator Grassley. And then, in turn, encourage people below
that to be more diligent in seeking out fraud, waste, and abuse.
Mr. Fitzgerald. I think it had a momentary good effect. I do not
know that it is going to last. We have got to follow through and
systematically correct the overpricing of not only spare parts, but
big articles, as well. Otherwise, isolated actions like that come to be
viewed as show business. So you need to follow through and correct
the big stuff, also.
Senator Grassley. I have a couple wrap-up questions, and then I
will not hold you anymore. I know Mr. O'Connor has been so pa-
tient through this entire hearing, so we will get to him right away.
150
I just wondered, as one final wrap-up in regard to Mr. Spanton.
You told about the problems he has had up to this point. Do you
anticipate that he is going to have greater problems in the next
few weeks or months as he remains in Government employment —
and hopefully, he will — and pursues what his audits show should
be pursued?
Mr. Fitzgerald. I anticipate he will continue to have difficulties.
I think that Mr. O'Connor and his investigators, Mr. Tyrell and
Mr. Gordon, have done an excellent job in the Spanton case, and
that is the most hopeful thing we have, is the fine work done by
the Special Counsel's Office and the very impressive documentation
they pulled together on it. And if that could be made widely known
outside this little hearing room where the thing will be judged by, I
guess, an administrative law judge, I think that the Spanton case
could have a happy outcome, and not only Spanton, but the people
who have stuck their necks out for him could be protected and we
would send the right signal to all Government employees.
It is hard to think of Government employees not watching the
Spanton case. If it turns out as I think the Special Counsel sees it, I
think it will be a very constructive signal to the rest of the Govern-
ment employees. If, on the other hand, the administrative law
judge contrives some tortured reasoning to rule that the people
who put Spanton down were within their rights, well, then, the
wrong signal will be sent.
Senator Grassley. Just by way of summary I would like to have
a statement from you about what you believe the consequences are
over a period of time of our failure to heed the warnings of whis-
tleblowers.
Mr. Fitzgerald. We have turned the rewards and punishment
system on its head. The people who make waves are discouraged,
put down; their careers are destroyed, even if they win, as I have
been said to have done. My career was ended effectively, or ad-
vancement of my career was ended, when I committed truth over
in this building. No one wants to have their career nipped in the
bud. Now, the secondary consequences of this, I believe, are the
stupendous prices that we are paying for sometimes shoddy hard-
ware for the operating forces in the Department of Defense and the
consequent burden on the taxpayers. I do not think that is going to
change until we go back and set the rewards and punishment
system rightside up.
Senator Grassley. I thank you for being so patient and so dili-
gent in your work and for your desire to want the best out of our
Defense Department, and for seeking that goal. Your testimony is
appreciated by this subcommittee, but more importantly, I think it
is appreciated by the public. Your service to the public is appreciat-
ed, as well. You may not know that, but I think it has been.
Thank you.
Mr. Fitzgerald. Thank you, sir.
Senator Grassley. I would now like to call our final witness, Mr.
William O'Connor. Mr. O'Connor is the Federal Government's Spe-
cial Counsel. As such, it is his job to investigate whistleblower com-
plaints. I want to thank you again for the second time, Mr. O'Con-
nor, for being so patient, and I would ask you to proceed with your
testimony as you see fit.
151
STATEMENT OF K. WILLIAM O'CONNOR, OFFICE OF THE SPECIAL
COUNSEL, U.S. MERIT SYSTEMS PROTECTION BOARD
Mr. O'Connor. Thank you, Senator Grassley, for inviting me to
be here, and Senator Heflin, thank you for your patience in wait-
ing to hear whatever I had to say.
I would say, Senator Grassley and Senator Heflin, that I did not
bring a prepared statement because I felt that it would be appro-
priate for me to respond to the questions of the subcommittee, and
I would be glad to do that. I will only insert one caveat, and that is
that I will not discuss or mention any case presently in litigation
before my Office. As a lawyer, I feel that you can appreciate that,
and you can understand why I cannot.
Senator Grassley. Yes, I can.
I heard Mr. Spanton refer to what he called certain legal protec-
tions afforded by your Office. Can you elaborate on those protec-
tions?
Mr. O'Connor. Well, they are incidental, actually, sir. The Office
is charged with the responsibility of dealing with prohibited per-
sonnel practices and for taking actions in the event of the determi-
nation that such a thing has occurred. The Office was established
to protect the merit system rather than to protect the individuals
who are employees in the Federal Government, the theory being
that the protection of the merit system would produce protection
for individuals. Thus, my Office does not represent and is not con-
stituted to represent any individual at all, and instead represents
only the system. It is in that sense like a prosecutor's office, which
deals with the enforcement of the law rather than representing pri-
vate clients. And so the protections are, as I say, incidental to the
enforcement of the law.
Senator Grassley. Well, then, is anyone in the Federal govern-
ment specifically charged with protecting the employee's interests?
Mr. O'Connor. Yes, sir. The Assistant Secretaries for Adminis-
tration and Management throughout the agencies of the executive
branch have the responsibility for insuring fair treatment of the
employee within the various executive departments. There is, of
course, a variety of grievance procedures and mechanisms set up,
and those gentlemen and ladies are charged with that responsibil-
ity.
Equally, Inspectors General are charged with some areas of re-
sponsibility for investigation and bringing to the attention of the
Secretaries or directors or administrators of their respective agen-
cies any kind of misconduct which relates to or is done by an em-
ployee. So to that extent, one might say that there are protections
built into the executive branch.
Senator Grassley. Well, would you yourself ever be a whistle-
blower, knowing what you know about the system?
Mr. O'Connor. If I were as a counsel approached by an individ-
ual who asked me as a lawyer in the private practice of law wheth-
er or not he or she should become a whistleblower, I would say that
the cost-benefit analysis was counterindicated. [Laughter.]
Senator Grassley. Thank you for being so candid.
Now, as an attorney, do you believe that an employee's interest
can ever be adequately protected by an agency which, by the very
152
nature of the employee's revelations, is placed in an adversarial po-
sition?
Mr. O'Connor. Well, I think that it comes to how much informa-
tion and how proper the information is that is brought to the head
of the agency. It seems to me that in the selection of executives
and in the appointment of them, we go through a pretty complex
process that is intended to insure probity among other things, but
singularly, probity in the leadership of the Government. If properly
informed, yes, I think the Secretary of an agency can insure that
an individual is properly protected, and I would say that on a
number of occasions where my Office has interceded, or other pred-
ecessors in my Office have interceded, Secretaries or administra-
tors have taken appropriate corrective action to insure that what
had been determined to be improper practices were stopped. So,
yes, the Secretary of the agency may do that without being re-
quired to do so in a litigated mode. However, that is a very arduous
process, a very difficult process, time-consuming, expensive, and
not readily effective.
Senator Grassley. From the standpoint that you say the system
does provide protection, even in the adversarial position that the
employee might find himself with his administrative head, does
that happen very often, in the vein that you would say that it
could be done?
Mr. O'Connor. As always is the case in the practice of law, the
theory and the fact are often somewhat different. So the answer to
your question is "Sometimes."
Senator Grassley. Does the process mandate that the employee
provide counsel at his or her own expense to insure that his own or
her own rights are protected?
Mr. O'Connor. Are we speaking of whistleblowers, sir?
Senator Grassley. Yes.
Mr. O'Connor. There is no provision for counsel for whistle-
blowers.
Senator Grassley. So, then, it would have to be at the employ-
ee's own expense?
Mr. O'Connor. Well, an agency in some circumstance or other
might decide that it should appoint a counsel for an individual who
is identified as a discloser susceptible to making protected disclo-
sures as defined in the statute. That would be a discretionary act
by the executive in charge of the agency or perhaps delegated to
the general counsel of the agency. It could happen. It need not.
There is no provision of law for it.
Senator Grassley. Even considering the employee as an inciden-
tal beneficiary of the system, what mechanisms exist through your
Office to safeguard the employee's rights?
Mr. O'Connor. There are two. The first is the process which my
Office may undertake to seek corrective action in the event, for ex-
ample, that something in the nature of a reprisal were taken,
something in the nature of a prohibited personnel practice were
being asserted and were in fact being done by an agency toward an
employee. We could seek and obtain from the Merit Systems Pro-
tection Board a stay of that action, and then we would advise the
Secretary or the administrator and so forth of the agency of the
problem and we would ask the individual who was the head of the
153
agency to take internal corrective action, and he or she very well
may do that. If, on the other hand, he or she does not, then the
option arises as to whether or not my Office should bring an action
before the Merit Systems Protection Board to seek an order com-
pelling that action to be taken. That process is attenuated, and it is
an administrative law process. It would constitute first an applica-
tion for appropriate relief being filed with the Board; that would be
assigned to an administrative law judge; the administrative law
judge in due course would hold a hearing and render an opinion,
and in due course, that would be appealed to the Board, and in due
course, the Board would render a decision. At that point, adminis-
trative finality would attach.
Senator Grassley. Is the protective order the best tool that your
office has to protect the rights of an employee?
Mr. O'Connor. Yes.
Senator Grassley. In 1980, the President signed into law a Code
of Ethics consisting of 10 canons that any person in Government
service must follow. Who is in charge of investigating allegations of
action contrary to the code?
Mr. O'Connor. I think that I would say that is a distributed re-
sponsibility. The Office of Government Ethics has certain responsi-
bilities for that area of enforcement. The Inspectors General all
have responsibilities in that area, and so do, in most cases, the As-
sistant Secretaries for Management in the agencies. My Office
would pick up on something like that only in the event that it re-
lated to a prohibited personnel practice in which we were other-
wise interested, because my Office has a limitation of jurisdiction
to prohibited personnel practice actions.
Senator Grassley. Do sanctions exist for actions in violation of
the code?
Mr. O'Connor. When I was an Inspector General, we Inspectors
General discussed that sort of question extensively in this adminis-
tration, and in some of the agencies there are — perhaps now in
all — standards of sanction for violations of those ethical standards.
However, any sanction that is imposed for violation is under the
administrative procedures which are available, susceptible, if it is
more than a very trivial sanction, to appeal, reappeal, reevalua-
tion, and so forth, through the agency and ultimately to the Merit
Systems Protection Board. So if the idea was to have prompt disci-
pline for a violation, I think that is pretty hard to do.
Senator Grassley. Do you know of any congressional efforts un-
derway to strengthen your Office?
Mr. O'Connor. There was a bill proposed by Senator Stevens. It
is called S. 1662, as to which there were hearings held recently,
and that bill is replicated to some extent by another bill, the
number of which I do not know, which was pending in the other
House, but I understand those portions which relate to my Office
in the other House are no longer being pursued.
Senator Grassley. Do you believe that these efforts ought to be
underway, or would you encourage them to be underway?
Mr. O'Connor. I think that there ought to be a change. Senator
Grassley, Senator Heflin. My Office has 80 people, and there are
about 3 million civilian workers in the Federal system. And I think
that one of two things ought to happen. And now, I am speaking as
154
Bill O'Connor. I am not speaking for the administration. This is
not A-19 testimony; it has not been cleared. But if I were looking
at this as a political philosopher, as a student of government, I
would take this organization that I run and remove it from the
MSPB and probably place it within the Department of Justice. I
think it would do better as a barnacle on a battleship than it does
as a free-floating anemone. And it could be the latter, but to have
it as part of the MSPB seems to me to be not the best role for it,
and I do not think that the resources which replicate those for liti-
gation and for investigation of the Department of Justice should be
reestablished in another freestanding agency. I think that redun-
dant agency-forming is not a desirable thing for government to do.
Senator Grassley. Would you have any other recommendations
for improving it — and of course, that one you just suggested is a
very major change.
Mr. O'Connor. Well, if it is expected that my Office will have
opportunity to provide protections of various kinds, we need access
to a Federal court system as well as to the Merit Systems Protec-
tion Board, because the Merit Systems Protection Board by its very
nature has limited jurisdiction, and that limitation on jurisdiction
of the Merit Systems Protection Board means that my Office, in
the event, for example, we were seeking witness protection, could
not get it from the Merit Systems Protection Board, which — let us
be very blunt — does not even have contempt power in its own stat-
ute. If an order of the Merit Systems Protection Board were en-
tered, then that order would have to be brought to a district court,
which would have to be then asked to provide a contempt sanction
in order to enforce the order of the Merit Systems Board.
So what we have is no real access to any available sanction to
provide protection for anybody in my Office. We have an adminis-
trative process which goes as I have described.
Senator Grassley. Whose decision, or who is responsible that you
do not have access to the courts?
Mr. O'Connor. Well, that is the Congress, sir. That is how the
statute reads.
Senator Grassley. Are you curtailed by 0MB in any way in any-
thing you do in fulfilling your responsibilities that the law gives
you?
Mr. O'Connor. Well, the Deputy Director of 0MB is the Chair-
man of the President's Council on Integrity and Efficiency, and I
am part of that Council, so we have a good relationship there. A-19
review of the Office of Special Counsel's proposals for legislation
may or may not be required. There seems to be some question
about that, and some of my predecessors have fought for one, and
some the other, and budget, of course is tied to the MSPB budget
practice, but OMB has review there, too, and we have generally not
had a problem with OMB about such things, because they under-
stand the function of the Office. But the review process is there.
We do not have what is called in the argot, budget bypass or leg-
islative bypass authority clear in the statute under which I oper-
ate.
Senator Grassley. Senator Heflin?
155
Senator Heflin. Do you have any idea what percentage of the
cases that are handled by the Merit Systems Protection Board are
whistleblower-related?
Mr. O'Connor. Infinitesimal, sir. The Merit Systems Protection
Board would get whistleblower cases from me. My Office has had
very, very few, and the output of my Office is probably something
like 20 or 30 cases a year, not all of which are whistleblowers, and
the output of the Merit Systems Protection Board, for example, in
the past year was, I think, around several thousand.
Senator Heflin. That brings up the question of whether or not a
person who wanted to seek the remedies that your Protection
Board gives would be the employee, would be the whistleblower,
and if after trying, he gives up and is willing to acquiesce, he does
not seek your protections, I suppose — there could be a lot of people
who would like to do it, but eventually just acquiesce and do not
move forward.
Mr. O'Connor. Well, Senator, there is more than one road avail-
able through my office for whistleblowers. One road works pretty
well. We have a statutory provision which makes it possible for me
to keep secret the information source. If someone comes to me and
says, "We have information about a bad thing being done in
Agency X," I can keep information of that type source secret and
pass on the information, which I do, generally speaking, to the In-
spector General of the agency or to the appropriate Cabinet officer,
under B-2 or B-3 referrals, as they are called.
Those things work pretty well. Of course, if a person is effective
in targeting a particular kind of abuse, it does not take much to
run a back azimuth to that person's place of business to find out
who it was. I think I could do it in most cases, if I had worked in
an agency for a little while.
So the protection of anonymity is a limited one, but that does
permit a piece of information to be passed on, and often it turns
out that good remedies are imposed by the secretaries. We are not
talking about reprisal, now. We are talking about correction of the
problem to which the whistleblower addresses his disclosure.
Senator Heflin. It could be both ways. Some people might ex-
press the idea, or use the idea that they, in effect, reveal something
on a superior or something else as their defense or excuse, but
since there are very few that are related, you do not have many of
those instances?
Mr. O'Connor. Well, that comes up, sir. The legal problem, if I
may digress for a moment — well, I can state it fairly simply. Under
the law as it is now applied, the Office of Special Counsel enforce-
ment process is analogous to the National Labor Relations author-
ity type enforcement. That is to say we have what might be de-
scribed as mixed motive cases. We have an individual who is per-
haps susceptible to reprisal for a particular action; at the same
time, the individual may also be susceptible to a sanction or an
action which the agency was going to take because he or she was
incompetent or because he or she was in some way inappropriately
disposed and susceptible to discipline within the agency. Under the
status of the law, if the reprisal composes part of the motive, and if
the retaliatory action or disciplinary action or whatever it may be
is also an action which would have been taken by the agency even
156
if the disclosure had not been made, then the rule of law would be
that the individual who had made the disclosure would be subject
to the sanction, even if the disclosure were right, and even if the
retaliation were partly based upon the disclosure. That is the out-
come of the decisions of the Supreme Court in Mount Healthy v.
Doyle and of the National Labor Relations Board in what is called
Wright Line case, from Massachusetts. That is the status of the
law. It makes litigation of this type complex, because even though
you win, you often lose.
Senator Heflin. No further questions.
Senator Grassley. Thank you. Senator Heflin.
I have one final question, and it refers back to your answer to
my question that protective orders were the best tool that you have
to protect employees. Are these protective tools readily issued?
Mr. O'Connor. A protective order may be issued by the Board in
three ways, sir. There is what we call an A stay, a B stay, and a C
stay. The A Stay is essentially granted by the Merit Systems Pro-
tection Board on less information than it would take to sustain a
search warrant, and it is a 15-day stay. The B stay is 30 days, usu-
ally, and that requires a little higher threshold. For a C stay, the
Board really has to agree with me that there is something wrong
before they will grant it. So the level of ease with which such
orders are obtained for the Merit Systems Protection Board de-
pends on the effectiveness with which the burden of persuasion is
carried and received by the respective entities. In order to obtain
the ultimate order of corrective action from the Board after pro-
tracted litigation, that can take 3 or 4 years.
Senator Grassley. Do you mean it would take 3 or 4 years to get
a protective order?
Mr. O'Connor. Well, in most cases, the Board would probably
leave the C stay in place — that is to say, the third level of stay,
which would be a protective order, in place — while the litigation
ran its course. But it takes a long time for administrative litigation
to run its course, and in some cases, has taken up to 3 years for it
to get through the pipeline to the end. In a recent decision, the
Mortonson decision, it was a case in which the Board finally ren-
dered a decision in favor of the agency, although retaliatory intent
was found, and they applied the Mount Healthy test as I described.
I think the stay was in effect for 2 or 3 years.
Senator Grassley. Well, thank you. I ran across an article by
Tom Diaz in the Washington Times, saying how difficult your job
is. If that article is an accurate description of your position and
your job, I would like to include it in the record, if you do not
object.
Mr. O'Connor. I do not object at all. Senator. I would just ask
somebody to light a candle for me.
Senator Grassley. Mr. O'Connor, I think the article says a
prayer.
[The following was received for the record:]
157
[From the Washington Times, Nov. 1, 1983]
"Whistleblowers" Hard to Sort Out
(By Tom Diaz)
Let us pray for K. William "Bill" O'Connor.
O'Connor is the federal government's Special Counsel. As such, it is his job to pro-
tect "whistleblowers" (who are sometimes also known by such less noble names as
"fink," "squealer" and "rat"). He does this by investigating when a whistleblower
complains that his boss is doing bad things to him (such as firing him) as retaliation
for his committing truth.
If O'Connor finds that bad things are in fact being done to someone who is legally
entitled to protection by virtue of being a true whistleblower, he can ask the Merit
Systems Protection Board (a sort of civil service court) to intervene and stop the bad
things. If the board agrees with O'Connor, it sometimes has the power to help.
Sometimes it is helpless to stop what is going on. Whether it has power to intervene
or not in a given case is one of those questions over which lawyers were invented to
haggle. And they do.
Back to O'Connor. He has an important job, but one that is guaranteed to be
thankless. Many who fashion themselves "whistleblowers" are nothing more than
ankle-biting crackpots — malcontents and incompetents whose last refuge before
being fired is a well-timed toot on a penny whistle. It falls to O'Connor to sort out
the nuts from the bolts, the screwballs from the straight arrows.
The nature of truth being what it is, this is at best a difficult task. My own obser-
vations lead me to believe that about nine out of every 10 "whistleblowers" are
simply loose cannons, people who never grasp the big picture, can't get things their
own way and set about destroying their more talented superiors through the press.
Yet whistleblowers as a class are indiscriminately revered by the press and con-
gressional opportunists alike. In the press they often find kin in spirit, for the skep-
ticism inherent in the craft of journalism feasts on doubts about the honesty and
competence of public servants. In the Congress, whistleblowers often find their intel-
lectual peers, an observation which — lest it be misunderstood — reflects to the credit
of neither.
All of this puts O'Connor in a "no win" position. If he declares in favor of a puta-
tive whistleblower against a high-level official, then he is accused by the incumbent
administration of trashing its officers for darkly suspect reasons. On the other hand,
if he finds that one of these self-anointed whistleblowers is really nothing but a
pious pain in the perimeter, than he is accused by the other side of being incompe-
tent himself and betraying his oath of office.
No matter how O'Connor does his job, he is bound to make someone angry.
A good example of the perpelexity of his problem is provided by the case of one
Bertrand Berube, who was fired from a high-level job at the General Services Ad-
ministration some weeks ago by Gerald Carmen, the agency's chief.
Berube says he was fired because he was trying to blow the whistle on GSA by
exposing dangerous neglect in the agency's maintenance of federal buildings.
Carmen says he canned Berube because he was insubordinate and was merely seek-
ing sensational press coverage about problems for which he had no constructive so-
lutions.
After an investigation, Special Counsel O'Connor agreed with Carmen.
I don't know which version of the events surrounding Berube is the truth. I have
read a good bit of material about the case, and I specifically suspend judgment. It is
a complicated matter, full of shadowy factual meanderings wrapped in self-serving
gloss by both sides. At bottom, I suspect that only two men know the truth —
Carmen and Berube. And the truth is quite likely different for both of them.
However that may be, I do know that O'Connor has suffered an orchestrated
trashing ever since he did his duty as he saw it. For example. Rep. Barney Frank,
D-Mass., held a show trial hearing to rake O'Connor and his decision over the coals.
A related event is scheduled to happen today in the House subcommittee on civil
service, whose chairman is that irrepressible oddball. Rep. Patricia Schroeder, D-
Colo.
Schroeder is holding hearings on a bill that would put O'Connor and other gov-
ernment personnel agencies— the MSPB, the Office of Personnel Management, and
the Federal Labor Relations Authority — on a short leash. Schroeder wants to au-
thorize them to exist for only three years at a time. This is so Congress would be
able to constantly second-guess their decisions.
This scheme is about as transparent a political ploy as has come down the pike.
What Schroeder really wants is to ram the highly political views of the Democrats
158
on the House Post Office & Civil Service Committee down the collective throat of
the executive branch.
Schroeder and Frank run in a crowd that are constantly bellyaching about the
reputed "politicization" of the federal work force. But by interfering with the work
of supposedly independent personnel officials such as O'Connor, they are really
playing the same game of retaliation they profess to abhor when it is done to
" whistleblowers. ' '
Senator Grassley. Well, thank you, Mr. O'Connor. I appreciate
your testimony very much.
Before we close, I have a few comments and observations I would
like to make. This has been a preliminary exploration of a serious
matter in the administrative process of Federal Government. I
have seen striking similarities in the cases of Mr. Fitzgerald and
Mr. Spanton. There are disturbing signs that this pathology is an
enduring one.
The term, "bureaucrat," is not a dirty word, nor are the people
who are bureaucrats to be considered malicious or undermining.
They do bear a responsibility, however, the responsibility of run-
ning the day-to-day affairs of the Federal Government. The Con-
gress also bears a responsibility. It is the responsibility of determin-
ing the context in which the bureaucrat works. If there is a mis-
match between what we proclaimed as our Code of Ethics and how
the work of Government is executed, then we will destroy any
high-minded sense of purpose in our bureaucrats and feed a cancer
of cynicism.
Based on what I have heard here this morning, I do not like
what I see so far. I fully intend to look at it more. There are sever-
al issues that come into play, but the most important issue is that
of trust. Trust is the glue which holds a free government together.
We cannot demand trust unless we are prepared to earn it, and
that relationship holds true not only in the bureaucracy, but also
in the relationship between the people of this country and their
Government.
I wish to thank those who testified here today for contributing to
a broader understanding of the administrative process, and before
closing, I would like to ask Senator Heflin if he has anything in
closing.
Senator Heflin. No, I have no closing statement, Mr. Chairman.
Senator Grassley. Thank you. Senator Heflin.
The meeting is adjourned.
[Whereupon, at 12:22 p.m., the subcommittee was adjourned.]
o
BOSTON PUBLIC LIBRARY
I nil II II II 11 III
3 9999 05445 2709
Live Music Archive
Librivox Free Audio
Metropolitan Museum
Cleveland Museum of Art
Internet Arcade
Console Living Room
Books to Borrow
Open Library
TV News
Understanding 9/11