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(3) A list of his interests in real property or rights in lands, other than property which he occupies as a personal residence.

(b) Each person who enters upon duty after the date of this order in an office or position as to which a statement is required by this section shall submit such statement not later than 30 days after the date of his entrance on duty.

(c) Each statement required by this section shall be kept up to date by submissions of amended statements of any changes in, or additions to, the information required to be included in the original statement, on a quarterly basis.

SEC. 402. The Civil Service Commission shall prescribe regulations, not inconsistent with this part, to require the submission of statements of financial interests by such employees, subordinate to the heads of agencies, as the Commission may designate. The Commission shall prescribe the form and content of such statements and the time or times and places for such submission.

UNIFORM FINANCIAL STATEMENTS (Recommendation No. 2): We recommend that the Bureau of the Budget and the Civil Service Commission develop a uniform requirement for the filing of such financial statements by all senior Government personnel whose work affects procurement and contracting, whether they are "regular" or "special" Government employees under the conflict-of-interest statutes.

RESULTS. In implementation of Executive Order No. 11222, referred to above, the civil service system promulgated a new set of conflict-of-interest regulations applying to all agencies. These regulations were published in the Federal Register on October 1, 1965. In subpart D, the regulations reflect the view expressed by the committee in its recommendation: 1

Subpart D-Agency Regulations Governing Statements of
Employment and Financial Interests

§ 735.401 Form and content of statements.

The statements of employment and financial interests required under this subpart for use by employees and special Government employees shall contain, as a minimum, the information required by the formats prescribed by the Commission in the Federal Personnel Manual.

§ 735.402 Specific provisions of agency regulations for em-

Agency regulations issued under this subpart for em-
ployees, as a minimum, shall contain provisions covering
the reporting requirements set forth in §§ 735.403 through

1 See 5 CFR Part 735.

§ 735.403 Employees required to submit statements.

Except as provided in § 735.404, each agency head shall require statements of employment and financial interests from the following employees:

(a) Employees paid at a level of the Federal Executive Salary Schedule established by the Federal Executive Salary Act of 1964, as amended.

(b) Employees in grade GS-16 or above of the General Schedule established by the Classification Act of 1949, as amended, or in comparable or higher positions not subject to that act.

(c) Employees in hearing examiner positions as defined by 8930.202(c) of this chapter.

(d) Employees in positions specifically identified in the agency regulations as positions the basic duties and responsibilities of which require the incumbent to exercise judgment in making or recommending a Government decision or in taking or recommending Government action in regard to:

(1) Contracting or procurement;

(2) Administering or monitoring grants or subsidies; (3) Regulating or auditing private or other nonFederal enterprise; or

(4) Other activities where the decision or action has an economic impact on the interest of any non-Federal enterprise.

However, employees in positions that meet these criteria may be excluded from the reporting requirement when an agency head determines that the duties of a position are at such a level of responsibility that the submission of a statement of employment and financial interests by the incumbent is not necessary because of the degree of supervision and review over the incumbent and the remote and inconsequential effect on the integrity of the Government.

(e) Employees in positions specifically identified in the agency regulations as positions determined by the agency head as requiring the incumbent thereof to report employment and financial interests in order to carry out the purpose of law, the Executive order, this part, and the agency regulations.

§ 735.404 Employees not required to submit statements.

A statement of employment and financial interests is not required by this subpart from an agency head, a Presidential appointee in the Executive Office of the President who is not subordinate to the head of an agency in that Office, or a fulltime member of a committee, board, or commission appointed by the President. These employees are subject to separate reporting requirements under section 401 of the Executive order.

§ 735.405 Time and place for submission of employees'


An employee required to submit a statement of employment and financial interests under the regulations of his

agency shall submit that statement to the office designated
in the agency regulations not later than:

(a) Ninety days after the effective date of the agency
regulations issued under this part if employed on or before
that effective date; or

(b) Thirty days after his entrance on duty, but not earlier than ninety days after the effective date, if appointed after that effective date.

$735.406 Supplementary statements.

Changes in, or additions to, the information contained in an employee's statement of employment and financial interests shall be reported in a supplementary statement at the end of the quarter in which the changes occur. Quarters end March 31, June 30, September 30, and December 31, except when the Commission authorizes different dates on a showing by an agency of necessity therefor. If there are no changes, or additions in a quarter, a negative report is not required. However, for the purpose of annual review, a supplementary statement, negative or otherwise, is required as of June 30 each year.

Since October 1965, all Federal agencies have been preparing and submitting new regulations governing standards of conduct. Most agency regulations have now been published in the Federal Register.


No. 3):

To promote uniformity of treatment and self-enforcement among contractors, we recommend that a single central register of contracts which include hardware or similar restrictions imposed under Department of Defense Directive No. 5500.10 be maintained in the Office of the Secretary of Defense for the information of contracting officers and defense contractors.

RESULTS. The Department of Defense did not maintain a central listing of all such contract clauses used or imposed by all divisions. and offices as recommended. In January 1965, the subcommittee requested and received a listing of all such contracts, and this information was promptly submitted by the Department of Defense.

In so responding, it was learned by the Department that Army commands had written some 218 such contracts, while the Navy had written only 19 and the Air Force only 14. The Department of Defense thus discovered that the Army implementation of the regulations had been mistakenly applied too broadly in inappropriate



We recommend that the information in the central register be studied and collated by the appropriate procurement policy authorities in the Department of Defense, and that standard contract provisions to effectuate the purposes of Directive No.

5500.10 be developed as soon as experience and information


RESULTS. The Department did attempt to keep abreast of current developments for a period of 6 months, with informal submissions of language used in contract clauses to the Armed Services Procurement Regulation Committee in the Office of the Secretary of Defense. It was decided at an early stage that it would be inappropriate to develop standard contract language, on the grounds that such contracts would be too infrequent to warrant this.


We recommend that the Department of Defense study further the need for protection of contractor proprietary data, which is the purpose of rule 4 of Directive No. 5500.10. The Department should take steps to require contractors covered by this rule to convey to contracting officers (1) copies of contract clauses or agreements made with the owners of proprietary data, and (2) information on measures taken by the contractor to protect such data.

RESULTS. The Department of Defense has continued to review the problems of handling and protecting proprietary data for the past 2 years. In 1964 and 1965, a new system for identifying, marking, handling, and negotiating for proprietary data was instituted. The policy was announced in Defense Procurement Circular No. 6, dated May 14, 1964. It contained changes to section 9 of the Armed Services Procurement Regulation which were made optional until October 1, 1964, after which they became mandatory.

The policy created new categories of limited rights and unlimited rights in data, technical and other kinds related to or developing from contracts. It provided for a balancing of the Government and contractor interests in data rights, and predetermination and specific acquisition of data and rights arising from contracts.

In Defense Procurement Circular No. 12, dated October 16, 1964, the date for mandatory applications of the new rights in technical data regulations was deferred until January 2, 1965. In Defense Procurement Circular No. 20, dated December 18, 1964, the mandatory applications was further modified, in order to provide for a period of transition, to procurement solicitations dated on or after January 2, 1965, and in all contracts dated after March 31, 1965. In Defense Procurement Circular No. 24, dated February 26, 1965, the policy was slightly modified to clarify certain points, but the basic form of the new provisions remained the same.

The committee believes that the steps taken by the Department of Defense indicate full consideration of the problems indicated. For instance, the ASPR provisions contain specific declaration that it is against DOD policy for prime and higher-tier contractors to use the economic leverage of their power to award subcontracts to acquire rights in the data of subcontractors for themselves.


To achieve all feasible uniformity in contractor codes promulgated by other agencies and modeled on the Department of Defense directive, we recommend that the Bureau of the Budget and the Department of Justice undertake to coordinate such codes prior to their further promulgation.

RESULTS. After a year of study, the National Aeronautics and Space Administration adopted the contents of DOD Directive No. 5500.10 as a code of conduct for its contractors. The code was issued as a NASA regulation in December 1963. In this way, uniformity among contractors of the two largest Government agencies in research and development contracts was assured. In addition, the Atomic Energy Commission has recently issued substantially the same code of conduct for its contractors, bringing a third major agency into conformity.


We recommend that the Department of Defense and other Federal departments and agencies recognize a need to avoid conflicts of interest among contractor organizations and their personnel. Contract clauses requiring the personnel of contractors to meet conflict-of-interest standards more closely approaching those applied to Government employees should be considered.

RESULTS.--The committee believes that policies concerning regulation of potential conflicts of interest have been carefully considered in the course of writing new Federal regulations. While no new Department of Defense regulations similar to those used by the Atomic Energy Commission have been formulated, personnel conduct standards of contractors working under hardware ban contractshave been examined.


The importance of objectivity in key technical services needs explicit statement. The preamble to the rules in Department of Defense Directive No. 5500.10 is an inappropriate place to declare policy relating to the role of nonprofit organizations in the performance of such services. We recommend that a new policy statement relative to contracting with nonprofit organizations for technical support be issued by the Department of Defense. Steps already taken by Government-sponsored nonprofit organizations to insure objectivity and impartiality should be evaluated and made uniform where appropriate.

RESULTS. The Department of Defense has undertaken a review of nonprofit corporations engaged in defense work. Also, the De

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