BARTER PROGRAM FOR STRATEGIC MATERIALS (PUBLIC LAW 480, 83D CONG.)

From July 1, 1960 through June 30, 1961, the Commodity Credit Corporation entered into 88 barter contracts totaling $165.1 million, all of which represented strategic materials to be placed in the supplemental stockpile except $5.4 million in procurements for the Department of Defense. This compares with contracts totaling $158.3 million for the preceding fiscal year. These barter contracts cover many materials now in excess of stockpile requirements.

The value of stockpile materials delivered to the Commodity Credit Corporation by contractors under barter agreements during the fiscal year 1961 totaled $168.5 million as compared with $178.9 million in fiscal year 1960 and $145.1 million in fiscal year 1959. Of the total $168.5 million delivered in the fiscal year 1961, $0.5 million was acquired under earlier procurement directives for the national stockpile to replace silk under the rotation plan and $168 million for the supplemental stockpile.

Deliveries consisted of 28 types of materials, including asbestos (amosite, chrysotile, and crocidolite), bauxite, beryllium-copper master alloy, beryl ore, bismuth, chromite metal (exothermic), columbite ore, and tungsten carbide powder, the latter to be upgraded by domestic processors.

Barter programs are carried on mainly under the authority of the Agricultural Trade Development and Assistance Act of 1954, as amended (Public Law 480, 83d Cong.). This act provides broad authority for exchange of surplus agricultural commodities for strategic and other materials when such exchange reduces the risk of loss through deterioration or entails less storage cost to the Government. This barter provision is administered by the Department of Agriculture. Materials acquired by barter do not need to be within the stockpile objectives established by OCDM, and all deliveries to the CCC inventory are transferred to the supplemental stockpile except when procured to meet the needs of individual agencies. OCDM, along with other agencies, gives advice to the Department on the listing of materials to be obtained by barter but requests procurement only when strategic materials are needed to meet strategic stockpile objectives.

Since the inception of the barter program the accumulated deliveries have amounted to $1.2 billion. The following table indicates the value of bartered materials procured by CCC for the national stockpile and the supplemental stockpile as of June 30, 1961:

1 Materials acquired for long-term (maximum) stockpile objectives but transferred or being transferred to supplemental stockpile.

2 Includes $800,000 materials originally acquired for minimum (basic) stockpile but transferred to the supplemental stockpile.

3 Includes $3,100,000 materials originally acquired for other Government agencies but transferred to the supplemental stockpile.

The following table indicates the materials which have been eligible for barter at various times since the President first designated materials on November 11, 1958. It also shows how the number of materials on the list fluctuates due to barter quotas being realized, materials being deleted because of unfavorable market conditions, and new or additional quotas being established:

During the fiscal year 1961, the Department of Agriculture continued to stress the importance of safeguarding U.S. usual marketings and avoiding undue disruption of world prices of agricultural commodities or replacement of cash sales for dollars. Revisions of the commodity-country designation list have been made from time to time, in recognition of changes in the external financial position and agricultural commodity import trends in various countries. The major changes made in the September 16, 1959, list and subsequent revisions have been the exclusion of certain countries from any barter exports of specified commodities. The primary basis for each such exclusion is the combination of a strong foreign exchange position and a predominance of imports from the United States in the country's total import picture. Countries so far placed in this special "no barter exports" category for one or more commodities are: Belgium-Luxembourg, Canada, France, Italy, Japan, Mexico, the Philippines, the Netherlands, Switzerland, the United Kingdom, and West Germany. Restriction of eligible countries has helped to focus barter efforts on countries less able to pay cash and those which have not traditionally been major markets for U.S. agricultural commodities.

There were no major changes in the barter program during the fiscal year 1961. However, during the latter part of May 1961, the Secretary of Agriculture appointed a task force from varied business firms and agricultural groups to study the barter program and make recommendations for its improvement and expansion. A report setting forth the conclusions and recommendations of the group was issued early in October. These recommendations are under consideration in the Department of Agriculture.

[Reprinted from the Federal Register, Feb. 14, 1962 (27 F.R. 134)]

MEMORANDUM OF FEBRUARY 9, 1962

[Preventing conflicts of interest on the part of advisers and consultants to the Government]

Memorandum to the Heads of Executive Departments and Agencies

Over the past twenty or more years departments and agencies of the Government have made increasing use of part-time consultants and advisers and of advisory groups. The services of highly skilled persons on a part-time and intermittent basis is in the interest of the Government and provides the Government with an indispensable source of expert advice and knowledge. Since, however, such persons have their principal employment outside the Government, and frequently with business entities which are doing business with the Government or with universities which receive Government grants, a number of conflict of interest problems arise from time to time. It is important that departments and agencies of the Government oversee the activities of such consultants in order to insure that the public interest is protected from improper conduct and that consultants will not, through ignorance or inadvertence, embarrass the Government or themselves in their activities.

Many intermittent personnel serving the Government today are individuals with specialized scientific knowledge and skills who are regularly employed in industry, research institutes or education. Their employers in many cases have contracts with or research grants from the Government. The areas in which the skills and talents of these individuals are put to use by the Government on a part-time basis may be the same as the areas with which the contracts or grants received by their employers from the Government are concerned. An individual employed by a university may act as an intermittent consultant not only for the Government but for a private firm and either his university or the firm or both may be engaged in work for or supported by the Government. A consultant to the Government may have other financial connections with firms doing business with the Government in the general area of his expertise and, therefore, his consultancy. The many possible interrelationships between a consultant's service to the Government and his own and his employer's financial interests demonstrate that conflicts problems may frequently arise.

Both the part-time adviser and the department or agency which makes use of his services must be alert to the possibility of conflicts. It is, of course, incumbent upon the consultant to familiarize himself with laws and regulations applicable to him. The responsibility of the agency is equally great. It must assist the consultant to understand those laws and regulations. It must obtain from him such information concerning his financial interests as is necessary to disclose possible conflicts. It must take measures to avoid the use of his services in any situation in which a violation of law or regulation is likely to occur. And it must take prompt and proper disciplinary or remedial action when a violation, whether intentional or innocent, is detected.

Most of the departments and agencies of the Government currently have regulations applicable to intermittent consultants and advisers. There is, however, considerable diversity in their detail and, in some cases, their interpretation of applicable law. While the problems will undoubtedly vary from department to agency, and different rules and regulations may in some instances be appropriate, I believe it desirable to achieve the maximum uniformity possible in order to insure general standards of common application throughout the Government. This memorandum is designed to achieve that purpose.

CONFLICT-OF-INTEREST STATUTES

There are six basic conflict-of-interest laws which are pertinent to the subject matter of this memorandum. Four of the laws, sections 281, 283, 434 and 1914 of Title 18 of the United States Code, in general prohibit certain activities by a person who is in the employ of the Government. Two statutes, section 284 of Title 18 and section 99 of Title 5, prohibit a person who has left the employ of the Government from engaging in certain activities during a two-year period following the termination of his Government service. The six statutes are set forth in full in the appendix to this memorandum. They contain restrictions which, with an exception discussed hereafter, are fully applicable to an individ

ual who serves or has served the Government as an adviser or consultant, whether with or without compensation. The six statutes are discussed separately below. 18 U.S.C. 281. This statute prohibits an "officer or employee of the United States or any department or agency thereof" from receiving or agreeing to receive compensation for any services rendered in relation to any "proceeding, contract, claim, controversy, charge, accusation, arrest, or other matter in which the United States is a party or directly or indirectly interested, before any department, agency, court martial, [or] officer. * * In general, the effect of this section is to preclude a Government employee from acting, in most of the important matters that come before the Government departments and agencies, on behalf of a non-Government employer or other person from whom he receives compensation.

I have received an opinion from the Attorney General concluding that 18 U.S.C. 281 applies to all intermittent consultants and advisers on those days on which they are actually employed by the Government but that it applies only to certain consultants and advisers on the days during the period of their availability for Government service when they are not so employed. Those to whom section 281 applies on their days away from the Government service are: intermittent consultants and advisers whose Government employment during the period of their availability occupies a substantial portion of that period, or affords their principal means of livelihood.

In order to clarify the application of section 281 and promote its policies, each department and agency should take steps to insure that at the time a consultant or adviser is appointed, an accurate estimate is made of the extent to which it will make use of his services. The following rules should be employed :

(a) No appointment should extend beyond the end of the current fiscal year. (b) The period of appointment to be made for a part, or all, of the fiscal year, or of the remaining part of the fiscal year, should reflect the agency's best estimate of its employment of the individual.

(c) Whether the estimate is that the consultant or adviser will be employed intermittently throughout the entire fiscal year or that part of the year which remains at the time of appointment, or throughout a shorter interval, the appointment should be made as follows:

(1) If the agency estimates that the consultant or adviser will be employed 40% or more of the time within the period designated, the individual should be carried on the rolls as a Government employee for the entire period and should be informed that he is administratively regarded as subject to section 281 for the entire period.

(2) If the agency estimates the consultant or adviser will be employed less than 40% of the period designated, the individual may be carried on the rolls as an intermittent consultant or adviser pursuant to an arrangement by which he would receive implementing appointments from time to time within the period, rather than an appointment for the entire period, and the individual should be informed that he will be treated as a Government employee for purposes of section 281 only on the day or days within the pertinent period covered by implementing appointments.

(3) If the consultant or adviser is serving more than one department or agency, he shall inform each of his arrangements with the others so that appropriate administrative measures may be effected by the departments or agencies involved.

(4) For consultative or advisory boards, individual appointments should be made for the entire fiscal year, or such other period as may be prescribed by law, and the appointee informed that insofar as his board membership is concerned, he will be regarded as a Government officer or employee only on the days when the board meets.

To a considerable extent the prohibitions of section 281 are aimed at the sale of influence to gain special favors for private business and at the misuse of governmental position or information. In accordance with these aims, it is desirable that even a consultant or adviser who is subject to the section only on the days he serves the Government should make every effort to avoid any personal contact with respect to negotiations for contracts or grants with the department or agency which he is advising if the subject matter is related to the subject matter of his consultancy. I recognize that this will not always be possible to achieve since there are instances where the consultant or adviser may have an executive position and responsibility with his regular employer