be submitted to the appropriate Secretary or Agency Head, or his designee, after review by the counselor designated under paragraph (c) (1) of this section.

(iii) The resolution of a conflict or apparent conflict of interest either on review or after referral to the appropriate Secretary or Agency Head, or his designee, shall be effected promptly so that the conflict or appearance of conflict is ended. The resolution of the conflict or appearance of conflict may be accomplished by one or more means, such as changes in assigned duties, divestment of the conflicting interest, disqualification for a particular assignment, or disciplinary action. The resolution, whether by disciplinary action or otherwise, shall be effected in accordance with applicable laws, Executive orders, and regulations. § 40.13

Reporting suspected violations.

DoD personnel who have information which causes them to believe that there has been a violation of a statute or policy set forth in this Part will promptly report such incidents to their immediate superiors. If the superior believes there has been a violation, he will report the matter for further action in accordance with existing procedures. Any question or doubt on the part of the immediate superior will be resolved in favor of reporting the matter.

§ 40.14 Statements of employment and financial interests.

(a) DoD personnel required to submit statements.

(1) Employees paid at a level of the Executive Schedule in subchapter II of chapter 53 of title 5, United States Code.

(2) Board members of the Armed Service Boards of Contract Appeals.

(3) DoD personnel classified at GS-13 or above under section 5332 of title 5, United States Code, or at a comparable pay level under another authority, or members of the military in the rank of Lieutenant Colonel, Commander or above whose basic duties and responsibilities require the incumbent to exercise judgment in making a Government decision or in taking Government action in regard to administering or monitoring grants or subsidies.

(4) DoD personnel classified at GS-13 or above under section 5332 of title 5, United States Code, or at a comparable pay level under another authority, or members of the military in the rank of lieutenant Colonel, Commander or above

whose basic duties and responsibilities require the incumbent to exercise judgment in making a Government decision or in taking Government action in regard to:

(1) Contracting or procurement. For the purpose of this section "contracting or procurement" is defined as executing or approving the award of contracts.

(li) Auditing. Auditing private or other non-Federal enterprise including the supervision of auditors engaged in audit activities or the participating in the development of policies and procedures for performing such audits, including the authorization and monitoring of grants to institutions or other nonFederal enterprise.

(iii) Other. Activities in which the final decision or action has a significant economic impact on the interests of any non-Federal enterprise.

(b) Review of Positions. Each DoD Component shall review its positions in paragraphs (a) (3) and (4) of this section, both military and civilian, and include in each military and civilian position description, or similar documents describing the duties and responsibilities of the position, a statement as to whether the incumbent of the position must file a statement of employment and financial interests as required by this section. This determination will be reviewed at least annually. The review may be accomplished at the time performance, efficiency or effectiveness ratings are given; or incident to other currently prescribed annual reviews. Incumbents of positions identified as involving any of the functions described in either paragraphs (a) (3) and (4) of this section shall be required to comply with the filing requirements of this section. Any individual who believes that his position has been improperly included in paragraphs (a) (3) and (4) of this section may request a review of the decision requiring him to file a statement through the established grievance or complaint procedures of the department or agency.

(c) Positions in the above categories may be excluded when it is determined by the Secretary of the Military Department concerned or head of the DoD Agency concerned, or the designee of either, that the duties are at such a level of responsibility that the submission of a statement of employment and financial interests is not necessary because of the degree of supervision and review of the incumbent and the remote and inconse

quential effect on the integrity of the Government.

(d) The statements of employment and financial interests shall be submitted on DD forms furnished by the DoD agency concerned. DD Form 1555, "Confidential Statement of Employment and Financial Interests-DoD Personnel," is for use by all DoD personnel except special Government employees. DD Form 1555-1, "Confidential Statement of Employment and Financial Interests," is for use by special Government employees. Submission-State

(e) Manner of ments of Employment.

(1) The Secretary of Defense, as the Head of the Agency, is required to submit his statement of employment and financial interest to the Chairman of the Civil Service Commission under the provisions of Section 401(a) of Executive Order 11222.

(2) All civilian Presidential appointees of the Department of Defense shall submit statements of employment and financial interest to the General Counsel of the Department of Defense.

(3) Officers or employees of the Office of the Secretary of Defense shall submit statements of employment and financial interest to the General Counsel of the Department of Defense.

(4) Officers and employees of the Military Departments or Defense Agencies shall submit statements of employment and financial interest to officials of the Military Departments or Defense Agencies to be designated by the Secretaries of the Military Departments or the heads of Defense Agencies in the regulations of those departments and agencies.

(5) Statements of employment and financial interest shall be submitted by each officer or employee required by this Directive to file such a statement, not later than June 30, 1966, and periodically thereafter as prescribed in paragraph (i) of this section. Employees who enter Government service after the effective date of this Directive, who are required to file a statement of employment and financial interest, shall file such statements within 30 days from the date of commencement of such service. Designees to positions requiring the approval of the Secretary of Defense or the Secretary of a Military Department shall execute the statement in advance of

'Filed as part of original. Copies available at respective Military Department Publications Counter.

nomination so that it may be reviewed prior to appointment.

(f) Excusable Delay. If by reason of his duty assignment it is impracticable for an individual to submit a statement within the period required by this section, his immediate superior may grant an extension of time therefor. Any extension in excess of 30 days requires the concurrence of the head of the Military Department or Defense Agency concerned, or his designee. Statements submitted pursuant to an extension of time granted hereunder shall include appropriate notation to that effect.

(g) Special Government EmployeesStatement of Employment and Financial Interest.

(1) For the purpose of this paragraph, "Special Government Employee" has the meaning given that term by § 40.15(b) (1).

(2) Each special Government employee who is an adviser or consultant shall, prior to appointment, file with a designated official of the Military Department or Defense agency where he is employed a statement (DD Form 1555-1'), setting forth his Government employment, his private employment, and his financial interests. An appointee must list all of his investments and other financial interests such as a pension; retirement; group life, health, or accident insurance; and profit-sharing, stock bonus, or other employee welfare or benefit plan maintained by a former employer. He is not required to list precise amounts of investments.

The following categories of special Government employees are not considered advisers or consultants within the meaning of this section when performing the specific services listed below and are not required to file the statement referred to above.

(i) Physicians, dentists, and allied medical specialists performing care and service to patients.

(vii) A special Government employee who is not a "consultant" or "expert" as those terms are defined in Chapter 304 of the Federal Personnel Manual. (h) Exceptions to Specific Appointees. The Secretary or the Deputy Secretary of Defense, or the Secretary of a military department may grant an exception to a specific appointee from completing that part of the statement relating to his investments and other financial interests referred to in paragraph (g) of this section, upon the making of a determination that this information is not relevant in the light of the duties the appointee is to perform. (i) 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 as of June 30th each year. Even though no changes or additions occur a negative report is required. Notwithstanding the filing of the annual report, DoD personnel shall at all times avoid acquiring a financial interest that could result, or taking action that would result, in a violation of the conflict-of-interest provisions of 18 U.S. Code 208 or this Part.

(j) Interests of Employee's Relatives. The interest of a spouse, minor child, or other member of an employee's immediate household is considered to be an interest of the employee. For the purpose of this section, "member of an employee's immediate household” means those blood relations who are residents of the employee's household.

(k) Information Not Known by Employees. If any information required to be included on a statement of employment and financial interests or supplementary statement, including holdings placed in trust, is not known to the employee but is known to another person, the employee shall request that other person to submit information in his behalf.

(1) Information Not Required to be Submitted. An employee is not required to submit on a statement of employment and financial interests or supplementary statement any information relating to the employee's connection with, or interest in, a professional society or a charitable, religious, social, fraternal, recreational, public service, civic, or political organization or a similar organization not conducted as a business enterprise. For the purpose of this section, educa

tional and other institutions doing research and development or related work involving grants of money from or contracts with the Government are deemed "business enterprises" and are required to be included in an employee's statement of employment and financial interests.

(m) Confidentiality of Employee's Statements. An agency shall hold each statement of employment and financial interests, and each supplementary statement, in confidence. An agency may not disclose information from a statement except as the agency head or the Civil Service Commission may determine for good cause. Persons designated to review the statements are responsible for maintaining the statements in confidence and shall not allow access to, or allow information to be disclosed from the statement except to carry out the purpose of this Part.

(n) Effect of Employees' Statements on Other Requirements. The statements of employment and financial interests and supplementary statements required of employees are in addition to, and not in substitution for, or in derogation of, any similar requirement imposed by law, order, or regulation. The submission of a statement or supplementary statement by an employee does not permit him or any other person to participate in a matter in which his or the other person's participation is prohibited by law, order, or regulation.

§ 40.15 Conflict of interest laws.

(a) Full-time Officers and Employees (1) Definition. The term "fulltime officer or employee" includes all civilian officers and employees, and all military officers on active duty, except those who are "special Government employees" (See paragraph (b) of this section.) It does not include enlisted personnel.

(2) Prohibitions. Appendix B(a) contains a discussion of criminal laws relating to conflict of interest and exemptions therefrom. In general, a full-time officer or employee is subject to the following major prohibitions.

(1) He may not, except in the discharge of his official duties, represent anyone else before a court or Government agency in a matter in which the United States is a party or has an interest. This prohibition applies both to paid and unpaid representation of another (See 18 U.S.C. 203 and 205).

(ii) The indirect interests in business or supplementation of his Government salary, from a private source as compensation for his services to the Government (See 18 U.S.C. 209).

(iii) He may not participate in his Governmental capacity in any matter in which he, his spouse, minor child, outside business associate or person with whom he is negotiating for employment, has a financial interest (See 18 U.S.C. 208). Instead of participating in such a matter, he must promptly disqualify himself in accordance with (4) of this paragraph, except as provided in (3) of this paragraph.

(3) Nondisqualifying financial interest. (i) A full-time officer or employee need not disqualify himself under paragraph (a) (2) (iii) of this section, if his financial holdings are in shares of a widelyheld diversified mutual fund or regulated investment company.

(ii) The indirect interests in business entities which the holder of shares in a widely-held diversified mutual fund or regulated investment company derives from ownership by the fund or investment company of stocks in business entities is hereby exempted from the provisions of 18 U.S.C. 208a, in accordance with the provisions of 18 U.S.C. 208b (2) as being too remote or inconsequential to affect the integrity of the Government officers' or employees' services.

(4) Disqualification procedure. (i) In any case where a full-time officer or employee must disqualify himself under paragraph (a) (2) (iii) of this section, he will promptly notify his superior thereof and make a full disclosure of the financial interest. The superior will thereupon relieve him from his duty and responsibility in the matter, unless the Government official responsible for his appointment makes a written advance determination that the interest is not so substantial as to be deemed likely to affect the integrity of the services which the Government may expect from the officer or employee. Such written determination shall be retained in the agency records.

(ii) In the case of a military officer or a civilian employee, the "official responsible for his appointment" shall, for purposes of this paragraph, be his immediate superior or an official designated to perform this function.

(iii) In addition, where a superior thinks anyone responsible to him may have a disqualifying interest, he will dis

cuss the matter with that person, and, if he finds such an interest does exist, he will relieve the person of duty and responsibility in the particular matter.

(iv) In cases of disqualification under this paragraph, the matter will be reassigned for decision and action to someone else who is not subordinate to the disqualified person.

(b) Special Government Employees(1) Definition. The term "special Government employee" includes an officer or employee who is retained, designated, appointed, or employed to perform, with or without compensation, for not to exceed 130 days during any period of 365 consecutive days, temporary duties either on a full-time or intermittent basis. (See 18 U.S.C. 202). The term also includes a Reserve officer while on active duty solely for training for any length of time, one who is serving on active duty involuntarily for any length of time, and one who is serving voluntarily on extended active duty for 130 days or less. It does not include enlisted personnel.

(2) Prohibitions. Appendix B contains a detailed discussion of criminal laws relating to conflict of interest. In general, a special Government employee is subject to the following major prohibitions:

(1) He may not, except in the discharge of his official duties, represent anyone else:

(a) Before a court or Government agency in a matter in which the United States is a party or has an interest and in which he has at any time participated personally and substantially for the Government (See 18 U.S.C. 203 and 205).

(b) In a matter pending before the agency he serves unless he has served there no more than 60 days during the past 365 (See 18 U.S.C. 203 and 205). He is bound by this restraint despite the fact that the matter is not one in which he has ever participated personally and substantially.

The restrictions described in paragraph (b) (2) (1) (a) and (b) of this section apply to both paid and unpaid representation of another.

(ii) He may not participate in his governmental capacity in any matter in which he, his spouse, minor child, outside business associate or person with whom he is negotiating for employment, has a financial interest (See 18 U.S.C. 208). Instead of participating in such a matter, he must promptly disqualify himself in

accordance with § 40.15(a) (4), except as provided in § 40.15(a) (3).

(iii) After his Government employment has ended, he is subject to the prohibitions in § 40.15(c) (2) as a "former employee." (See 18 U.S.C. 207).

(c) Former Officers or Employees—(1) Definition. The term "former officer or employee" includes those full-time civilian officers or employees who have left Government service, special Government employees who have left Government service, retired regular officers and reserve officers released from active duty. It does not include enlisted personnel.

(2) Prohibited activities. Appendix B(b) contains a more detailed discussion of the criminal law. In general, a former officer or employee is subject to the following major prohibitions:

(i) He may not, at any time after his Government employment has ended, represent anyone other than the United States in connection with a matter in which the United States is a party or has an interest and in which he participated personally and substantially for the Government (See 18 U.S.C. 207(a)).

(ii) He may not, for one year after his Government employment has ended, represent anyone other than the United States in connection with a matter in which the United States is a party or has an interest and which was within the boundaries of his official responsibility during the last year of his Government service (See 18 U.S.C. 202(b) and 207 (b)). This temporary restraint, of course, gives way to the permanent restriction described in paragraph (c) (2) (i) of this section if the matter is one in which he participated personally and substantially.

(d) Retired Regular Officers-(1) Prohibitions. Appendix B (c) to this Part contains a summary of the laws applicable to retired regular officers. In general, a retired regular officer is subject to the following major prohibitions:

(1) As an officer whose "employment has ceased," he may not engage in the prohibited activities listed in paragraph (c) of this section. (See 18 U.S.C. 207).

(ii) He may not, at any time, assist in prosecuting a claim against the United States if he worked on that claim while on active duty (See 18 U.S.Č. 283),

(iii) He may not, within two years after his retirement, assist in prosecuting a claim which involves the depart

ment in whose services he holds a retired status (See 18 U.S.C. 283).

(iv) He may not, at any time, sell anything to the department in whose service he holds a retired status (See 18 U.S.C. 281).

(v) He may not, within three years after retirement, sell supplies or war materials to any agency of the DoD, the Coast Guard, the Coast and Geodetic Survey, or the Public Health Service (See 37 U.S.C. 801(c), as amended October 9, 1962, Pub. L. 87-777, formerly 5 U.S.C. 59(c)). (See definition of "Selling," Appendix B(c) (I.) (C.) to this Part.)

(2) Required Statement of Employment. (1) Each regular retired officer of the armed forces shall file with the military department in which he holds a retired status a Statement of Employment (DD Form 1357). Each regular officer retiring hereafter shall file this Statement within thirty days after retirement. Whenever the information in the statement is no longer accurate, each such officer shall file a new DD Form 1357.3

(ii) The Military Departments shall appropriately review the Statements of Employment to assure compliance with applicable statutes and regulations.

(e) Officers of the Reserve Components. (1) A Reserve officer who is voluntarily serving a period of extended active duty in excess of 130 days is a full-time Government officer, and § 40.15(a), applies to him.

EXCEPTION: Any Reserve who, before being ordered to active duty, was receiving compensation from any person may, while he is on that duty, receive compensation from that person (See 10 U.S.C. 1033).

(2) A Reserve officer who is serving on active duty involuntarily for any length of time, and a Reserve officer who is voluntarily serving on extended active duty for 130 days or less, is a "special Government employee," and § 40.15(b), applies to him.

(3) A Reserve officer (unless otherwise a full-time officer or employee of the United States) who is on active duty solely for training for any length of time is a "special Government employee," and § 40.15(b), applies to him.

(4) When he is released from active duty, a Reserve officer described in paragraphs (e) (1), (2), or (3) of this section,

Filed as part of original. Copies available at respective Military Department Publications Counter.