The Public Policy/Conflict of Interest: A Necessary Good
Baldwin, Fred D.
THE PUBLIC POLICY CONFLICT OF INTEREST: A NECESSARY GOOD by Fred D. Baldwin During the first three months of this year, senior federal government officials became unusually conscious of their...
...business with them or are regulated by them...
...The Office of Government Ethics is staffed neither with philosophy majors nor former clergy...
...In short, they expect the revolving door to remain open for them, and it is in the public interest that it should...
...Moreover, you could call an old friend in the agency and try to influence a decision in your new employer's interests...
...It is impossible to say exactly how serious the revolving door problem has been, or how pernicious its consequences, but the metaphor stands for a situation that is morally offensive on the face of it...
...Several excerpts should convey the magic wrought by these 15 pages of fine print...
...It seemed a classic case of the reform instinct producing miserable side effects...
...No more phone calls...
...In the aftermath of Watergate, the 94th Congress began hearings on legislation originally titled "The Watergate Reorganization and Reform Act," one of several bills that eventually led the 95th Congress, in the fall of 1978, to pass the Ethics in Government Act...
...Title V, however, was intended to leave nothing to personal or agency discretion...
...Congressman Bob Eckhardt of Texas, no Tory, warned that "whether we like it or not, our government has become a very specialized type of operation" that needs specialized talent...
...Now the first thing that must be understood about such conduct is that it has been illegal for many years -long before Watergate...
...Clarification may be on the way...
...The record suggests that Title V was a conscious choice between conflicting values...
...and Congressman Carlos Moorhead, also of California, has introduced H.R...
...It was that a generation of government lawyers had managed to define "representation" as narrowly as possible...
...Over and over, the apparently plain meaning of the Act is shown to hide subtleties that soften its harshness, velvet fists within iron gloves...
...As the possible effects sank in, stories began to appear in the Washington Post about top-level appointees contemplating resignation on or before July 1, the date the new law takes effect...
...At less rarefied levels, career civil servants, especially those with technical or professional expertise, such as engineers, scientists, economists, and, of course, lawyers, began to accelerate their own retirement plans...
...In other words, if he can keep a straight face, he may answer the question, "Do you think this one will fly...
...To the specter of a mass exodus was added the subtler threat of reduced accountability among those who remained, exactly what the bureaucracy does not need...
...Such duties customarily require a manager to make or approve decisions and suggestions as to how, and on what terms, any of the physical or human resources of his organization will be utilized in its performance under any current or proposed Government contract or grant, and to communicate such matters to coworkers, including representatives...
...Or imagine that you had been an engineer in the Air Force...
...One reads the regulations with something like awe...
...Among other things, the new law established sweeping new financial disclosure standards for senior executive and judicial branch employees and established an Office of Government Ethics to monitor both financial disclosures and conflicts of interest within the executive branch...
...The Senior Employee does not violate 18 U.S.C...
...or, with intent to influence...
...any oral or written communication...
...No more business talks over lunch...
...First, section 207(a) deals with matters in which the ex-employee participated personally and substantially...
...In the darkest days of winter, however, old hands among the supergrades steadied the panicky with time-tested advice: "Wait until you see how they write the regulations...
...You could expect to become a valued employee of Boeing or Lockheed by helping the firm prepare a bid on a weapons system you had helped design...
...That is, if you were an ex-EPA lawyer who had helped to regulate toxic chemicals, you could go to work for DuPont and tell your new colleagues just how much (or how little) evidence the government had on the effects of DuPont products on fish...
...assistance to representatives which can reasonably be viewed as customary manage-mental activity...
...the next week he is helping the company attack that brief in court...
...What, then, was the problem...
...One may be glad that this law is being relaxed before too much mischief has been done...
...Will senior officials at HEW listen more closely to the pleas of college administrators...
...It must be borne in mind that many of the top-level officials covered by these provisions are political appointees, not career employees...
...They normally expect to go back to their former firms or institutions...
...It then announced that it would delay enforcement of the section until the matter could be cleared up...
...This good news is followed by no fewer than nine examples of prohibited and permitted conduct...
...The Office of Government Ethics, in its preamble to its regulations, drew attention to this statement but added mournfully: "The literal language of the Act, however, is constraining...
...It is instead staffed with lawyers, the spiritual heirs to those who had once concluded that "represent" meant "formal appearance at a hearing" and meant only that...
...It also contained a one-year ban on his representing anyone on something that had been part of his official responsibility, even though he himself may not have been closely involved in the matter or may not have known that it was pending in his department...
...Since certain key officials, such as a general counsel or director, have official responsibility for almost everything in an agency, and since some agencies (like EPA) regulate almost every kind of business, this prohibition may have sweeping consequences...
...Another section of Title V, section 207(c), contains a flat one-year prohibition on contacts with one's former agency, regardless of prior involvement...
...Those regulations have now appeared, and there is hope again in Washington...
...As long as you did not make an official appearance on behalf of the private firm, your conduct in these cases would have been legal under the statute as sometimes interpreted...
...Interim regulations that "particularize" the language of Title V appeared in the Federal Register on April 3 after previous circulation in draft throughout the upper levels of the bureaucracy...
...Many agencies, however, enforced much stricter codes...
...They come to government for periods of perhaps two to eight years from business, industry, the universities, and the professions...
...Among those publicly talking about leaving were such officials as the general counsel of the National Labor Relations Board, the director of the National Institutes of Health, and the Undersecretary of HEW...
...Yes, and for a few weeks this winter, one difference stood out-it was the bureaucrats' ox that was being gored.t was the bureaucrats' ox that was being gored...
...It applies to top-level officials at GS-17 and above and to those at equivalent pay grades in the Foreign Service and military...
...It is located within the Office of Personnel Management, which contains most of what was formerly the Civil Service Commission...
...He urged his colleagues to seek "processes which strengthen traditional restraints,'' rather than to try to close every possible loophole...
...In 1977, in testimony before a subcommittee of the House Judiciary Committee, the Chairman of the SEC, Irving M. Pollack, said he was "terribly fearful" that unduly restrictive provisions "may create a revolving door in that our career staff will decline to accept supergrade positions and instead will go out into private practice...
...That older sense of ethics deterred many abuses...
...Title V replaces two narrow bars across the door with three broad ones...
...As noted, the law's drafters have stated on the floor of Congress that its most objectionable section (the two-year ban on aiding or advising a party before the government) was intended to apply only to matters in which the former official was personally and substantially involved, not his whole jurisdiction...
...It prohibits communications on such matters for two years, twice as long as under previous rules...
...This is the one that forbids an ex-fed, with respect to any matter under his official responsibility, to "represent or aid, counsel, advise, consult, or assist in representing" anyone before the government...
...2119, which would strike the "aids and assists" language from 207(b)(ii...
...The restrictions were held to apply only to a former employee who "appears personally...
...Title V is still a classic case of good intentions gone awry, but its interpretation provides an equally classic twist: how lawyers' verbal alchemy can transform leaden bars across a revolving door into golden turnstiles...
...Just to make matters worse, a few old hands who did not want to leave early started manipulating their job descriptions so as to bring fewer matters under their official cognizance...
...What distressed senior bureaucrats was Title V of the act, a set of rules intended to eliminate "post-employment conflict of interest," a phenomenon better known as "the revolving door'' between government agencies and the private firms that do Fred D. Baldwin is a consultant on public program management living in Carlisle, Pennsylvania...
...That would seem to wrap things up...
...Pre-1978 law contained a lifetime prohibition against a former federal employee's representing any private interest before the government on a matter in which he had participated "personally and substantially" while on the public payroll...
...Or so it seems to read...
...To the previous ban on "representation," it adds a ban on "any formal or informal appearance...
...From their point of view their experience represented a valuable asset that the new law threatened to confiscate...
...They often incur some financial sacrifice while in government, though many no doubt make it up later...
...2843) to delay the effective date of Title V until January 1, 1980...
...Perhaps we are about to see a new era of government responsiveness...
...A lawyer in the antitrust division of the Department of Justice works on a case involving, say, IBM...
...Nevertheless, the White House, in the form of a letter from Stuart Eizenstat, Assistant to the President for Domestic Affairs and Policy, opposed "weakening amendments," even those that were added to permit scientific and technical communications...
...When the Post puts "reform" in quotes, one knows things must have gotten nearly out of hand...
...The Post also hoped that in the future "the champions of public virtue will think twice before they pass a comparable 'reform.' " Although some damage has been done, and more may yet be done (for however the law is construed, its tendency must be to make it harder to attract top-level talent to government), reason seems likely to prevail...
...In a second example, assuming the same facts, "F Company believes that changes should be made in the design of the fighter plane, in allocation of work force, in the work schedule and pricing...
...On the contrary, all the signs suggest that the ardor of Congress for this particular reform has cooled...
...as an agent or attorney...
...The application is submitted to NIH by the university and lists the Senior Employee as principal investigator...
...One topic engaged the attention of $47,500-a-year executives in such diverse places as the Environmental Protection Agency, the Securities and Exchange Commission, and the Department of Health, Education and Welfare...
...They carry fines of up to $10,000 or prison terms of up to two years, or both...
...Two are especially illustrative of the lawyers' reasoning...
...But, it will be objected, those kinds of cases are different...
...Congressman George Danielson of California has introduced a bill (H.R...
...He then goes to work for F Company, and, subsequently, F Company wants to renegotiate the price of its contract...
...Thus matters stood in January...
...Used by doctors, lawyers, and real estate salesmen, the word principally refers to a variety of anti-competitive practices, and that usage was at least one aspect of the federal officials' concern...
...They naturally had no intention of letting this happen...
...Someone, they felt, had gone too far...
...It would be wrong, however, to assume that the Office of Government Ethics is bent on subverting the intent of Congress...
...it makes it a crime if, within two years, a former senior official "aids, counsels, advises, consults, or assists in representing" anyone before the government on a matter previously under his jurisdiction...
...The topic uppermost on the bureaucrats' minds was ethics...
...THE PUBLIC POLICY CONFLICT OF INTEREST: A NECESSARY GOOD by Fred D. Baldwin During the first three months of this year, senior federal government officials became unusually conscious of their common interests...
...A visitor who moved from office to office in Washington might have thought he was in some small Midwestern town during a dry July, when bankers, barbers, and barbed-wire salesmen all share a farmer's preoccupation with the weather...
...One week he is helping to write the government's brief...
...For reasons to be discussed later, the law's congressional drafters have stated for the record that it was intended to apply only to matters of "personal and substantial" participation, but they are probably lying like gentlemen to relieve a bad situation...
...This section not only bans oral or written communications with intent to influence...
...Third, section 207(b)(ii) also deals with matters of official responsibility...
...A two-year ban on aiding or consulting for any organization that might value relevant government experience potentially affected a great many senior officials...
...The Office of Government Ethics had this to say about that: The statute does not prohibit...
...Will senior officials at the Occupational Safety and Health Administration move as quickly as those at the Office of Government Ethics . to relieve any distress OSHA's regulations may cause small businessmen...
...Will senior officials at the SEC now accept the claim of a corporate executive that his use of inside information was a routine exercise of managerial discretion...
...The former official supervises the division of F Company which is working on this contract...
...Even more important, such conduct would have been perceived by many of your former federal colleagues as unethical, using the word here in the layman's sense of "dishonorable" or "wrong...
...The sons (and daughters) proved worthy of their sires...
...Imagine first an extreme instance...
...When the former official discusses and evaluates the content of the proposed changes with the contract representatives who will in turn discuss proposals with the Department, such official is discharging a legitimate managerial duty...
...The former official could not advise the lawyers for the contractor on how to obtain DOD approval of that revision...
...During the course of the resulting litigation, he accepts an offer of higher salary from IBM and switches sides...
...As already mentioned, the Ethics in Government Act created, predictably, an Office of Government Ethics...
...Second, section 207(b)(i) deals with mere "official" responsibility...
...The Office of Government Ethics indicates that its staff and the Attorney General may seek other "technical amendments.'' The Washington Post editorialized that the "regulations construe the law in much more reasonable and limited-though inevitably complicated-ways...
...Three different kinds of post-employment conflicts are declared to be criminal offenses...
...Consider now what the Office of Government Ethics says this prohibition might mean in practice: Example 1. A former Senior Employee of the National Institutes of Health (NIH), employed by a university, prepares an application to NIH for a research grant...
...That means "ethics" in the professional sense, of course...
...As elsewhere, the language of the statute is forbidding: no "oral or written communication" with intent to influence, no "formal or informal appearance," etc...
...Congressmen paid lip service to the need to balance (a) avoiding even the appearance of conflicts of interest with (b) hiring and holding good people, but they consistently opted for language that loaded the scales in favor of the former...
...Could a dean or president claim not to "advise," "consult," or "assist" with such contacts when his very position might require his signature on grant applications...
...Moreover, it was not as if - the reformers had not been warned...
...Apparently, almost every political appointee would be forced to change careers...
...For example, no Commissioner of Education could for two years become a university dean or president, for what university does not have to deal with HEW...
...First, we are asked to suppose that a senior Defense Department official participated personally and substantially in a contract award to F Company for fighter planes...
...Those who stay will be a few who are personally committed to a lifetime career in public service and a great many who have nowhere else to go...
...Take first the interpretation of the most draconian section of all, section 207(b)(ii...
...It may strike some readers as funny, even as good news, that half of the nation's highest-paid bureaucrats may soon bail out...
...The bad news is that it will be the wrong half...
...207(c) by preparing the application or by being listed as principal investigator, since these are not representational activities...
...If the most restrictive provisions of the Ethics in Government Act are given full force, the most energetic and technically qualified members of the civil service are likely to leave...
...Indeed, someone had...
...Understandably, section 207(b)(ii) caused the widest consternation...
...He may also communicate with NIH to provide scientific or technical information on the application, including presentation to NIH personnel at the research site, so long as he does not argue for approval or funding of the application...
Vol. 12 • June 1979 • No. 6
