U.S.Office of Government Ethics
     1201 New York Ave., NW
     Suite 500
     Washington, DC  20005-3917

       
                                   September 20, 2004
                                   DO-04-029 
       
      MEMORANDUM
       
      TO:       Designated Agency Ethics Officials, General Counsels
                and Inspectors General 

      FROM:     Marilyn L. Glynn
                Acting Director 

      SUBJECT:  Seeking Employment
      
      
           The Office of Government Ethics (OGE) recently reissued its summary 
      of the post-employment restrictions in 18 U.S.C. &#167; 207, so that ethics 
      officials would have up-to-date information when they counsel employees 
      who are planning to leave Government service.  DAEOgram DO-04-023, July 
      29, 2004.  It is equally important, however, to remember that certain 
      ethical requirements apply to employees even before they leave Government, 
      i.e., while they are still seeking future employment.
       
           As recent events illustrate, there can be serious consequences if an 
      employee violates the criminal restriction on participating in a 
      particular matter affecting the financial interests of a prospective 
      employer, 18 U.S.C. &#167; 208. See United States v. Druyun (E.D. Va. 2004) 
      (plea agreement), www.usdoj.gov/usao/vae/ArchivePress/AprilPDFArchive/04/
      druyunpa042004.pdf. Indeed, cases involving prospective employers frequently 
      are represented in OGE's own annual surveys of criminal prosecutions and 
      civil penalty actions under the Federal conflict of interest laws.  E.g., 
      DAEOgram DO-04-019, July 6, 2004 (two out of ten reported cases in 2003).  
      Apart from the prospect of prosecution, employment discussions by Federal 
      officials recently have been the subject of scrutiny by Congress and the 
      media.  E.g., Cahlink, "Closing Doors," Government Executive, July 15, 
      2004.  Therefore, this is an opportune time to highlight some important 
      issues that can arise when an employee is seeking employment outside the 
      Government.

      Overview of Restrictions
       
           The basic provisions governing seeking employment are set out in 
      subpart F of the Standards of Ethical Conduct, which implements not only 
      the criminal restrictions in 18 U.S.C. &#167; 208 but also the broader 
      restrictions imposed by Executive Order 12674, &#167; 101(j).[1]  Pursuant to 5 
      C.F.R. &#167; 2635.604(a), an employee "shall not participate personally and 
      substantially in any particular matter that, to his knowledge, has a 
      direct and predictable effect on the financial interests of a prospective 
      employer with whom the employee is seeking employment."  For these 
      purposes "seeking employment" includes not only the kinds of bilateral 
      employment negotiations that would implicate section 208, but also certain 
      unilateral expressions of interest in employment by the employee.  
      Specifically, in addition to actual negotiations, as described in section 
      2635.603(b)(1)(i), seeking employment also includes unsolicited 
      communications by the employee regarding possible employment, as described 
      in section 2635.603(b)(1)(ii)[2], and any response by the employee, other 
      than rejection, to an unsolicited overture from a prospective employer, as 
      described in section 2635.603(b)(1)(iii).
       
           It is important for employees to be reminded that the regulations 
      cover not only direct communications between the employee and the 
      prospective employer but can also include communications through an agent 
      or intermediary, such as a headhunter.  See 5 C.F.R. &#167; 2635.603(c).  
      Additionally, employees should know that their recusal obligations under 
      the rules are unaffected by such subjective factors as whether they think 
      they are "just testing the waters" or "not really serious about the job"; 
      in fact, OGE has reported one case in which the Department of Justice 
      proceeded against an employee under section 208 even though the employee 
      ultimately declined the offer of employment.  DAEOgram DO-02-003, February 
      12, 2002 (United States v. Filchock).  Finally, employees should be 
      advised that, once their employment discussions result in an actual 
      agreement or arrangement for prospective employment, they must continue to 
      recuse from particular matters in which their prospective employer has a 
      financial interest.  18 U.S.C. &#167; 208(a); 5 C.F.R. &#167; 2635.606(a).[3]
       
      Rejection of Employment
       
          Employees occasionally receive unsolicited overtures from prospective 
      employers.  An employee is not necessarily seeking employment, within the 
      meaning of the rules, simply as a result of such an unsolicited contact.  
      However, an employee is deemed to be seeking employment if he makes any 
      response "other than rejection" to an unsolicited communication from a 
      prospective employer.  5 C.F.R. &#167; 2635.603(b)(1)(iii).
       
          Sometimes employees will have questions about what kind of response is 
      sufficient to constitute "rejection."  In this connection, the regulations 
      provide that "a response that defers discussion until the foreseeable 
      future does not constitute rejection of an unsolicited employment 
      overture, proposal, or resume nor rejection of a prospective employment 
      possibility."  5 C.F.R. &#167; 2635.603(b)(3).  The regulation provides two 
      related examples to illustrate the distinction between a rejection of 
      employment and a mere deferral of discussions to the foreseeable future.  
      5 C.F.R. &#167; 2635.603(b)(examples 1 and 2).
       
          Nevertheless, OGE's experience indicates that employees still may 
      benefit from additional practical guidance in this area.  There are no 
      required "magic phrases" that can and should be used in all circumstances, 
      but agency ethics officials still may want to provide employees with 
      practical suggestions for ways in which they can handle situations that 
      can be awkward.[4]  So, in addition to using the examples found in the 
      regulation, ethics officials might advise employees that they can politely 
      but firmly communicate rejection with responses along the lines of "All my 
      time and attention right now are devoted to my Government job, and I am 
      not in a position to discuss employment," or "I am not really planning on 
      leaving Government in the near future but I will keep you in mind in case 
      I ever change my mind."  Some employees may prefer simply to cite ethics 
      considerations as a reason for rejecting employment discussions, which is 
      perfectly acceptable, provided that they do not merely defer the 
      discussions until the completion of some assignment affecting the 
      prospective employer, as explained in example 2 following 5 C.F.R. &#167; 
      2635.603(b); thus, responses such as the following would be appropriate: 
      "The ethics rules do not permit me to discuss possible employment with you 
      while I am working on your contract/grant/case/etc., so I am afraid my 
      answer has to be 'no.'"

      Notification of Recusal
       
           Employees comply with any recusal obligations under section 208 and 
      subpart F by avoiding participation in any particular matter in which 
      their prospective employer has a financial interest.  Frequently, however, 
      employees ask whether they must advise their supervisors or other agency 
      personnel about their employment contacts and any resulting recusal 
      obligations.  OGE recognizes that this is a sensitive area and that many 
      employees do not want to alert their supervisors unnecessarily or 
      prematurely to a job search.  At the same time, an agency has legitimate 
      interests in regulating the flow of work among its employees and 
      preventing situations that could result in actual or apparent conflicts of 
      interest.
       
           These questions are addressed in 5 C.F.R. &#167; 2635.604(b).  Under this 
      provision, an employee who becomes aware of the need to recuse from a 
      matter affecting a prospective employer "should notify the person 
      responsible for his assignment."  Id. (emphasis added).  If the employee 
      is responsible for his own assignments, he "should take whatever steps are 
      necessary to ensure that he does not participate in the matter."  Id.  
      These provisions fall short of a mandatory notification duty, but they do 
      point employees in the direction of common sense.[5]  As described in OGE 
      Informal Advisory Letter 95 x 7:  "While there is no requirement that an 
      employee notify a supervisor or other agency official of the need to be 
      disqualified from assignments affecting a prospective employer, 
      notification permits a supervisor to minimize any disruption of the 
      agency's mission by arranging assignments accordingly.  Moreover, an 
      employee may, as a practical matter, have to explain his avoidance of 
      certain duties."
       
           Where employment negotiations have resulted in an actual agreement or 
      arrangement for future employment, employees may have financial disclosure 
      obligations.  Employees who file SF 278s or OGE Form 450s must disclose 
      any such agreement or arrangement in existence at any time during the 
      reporting period.  5 C.F.R. &#167;&#167; 2634.306(a); 2634.907(a)(5). It is a good 
      practice for ethics officials to remind 278 filers that such information 
      is required on their termination reports, as this item is sometimes 
      overlooked.
       
      Waivers
       
           Questions sometimes arise concerning whether an employee may be 
      permitted to participate in a particular matter affecting a prospective 
      employer, notwithstanding the disqualification requirements in subpart F.  
      The OGE regulations recognize two different mechanisms that may apply in 
      such situations: a "waiver" under 18 U.S.C. &#167; 208(b), if the employment 
      contacts have already reached the stage of bilateral negotiations or have 
      resulted in an arrangement for prospective employment, within the meaning 
      of the criminal statute; and an "authorization" under 5 C.F.R. &#167; 
      2635.605(b), if the contacts fall short of actual negotiations but still 
      amount to seeking employment, within the meaning of 5 C.F.R. &#167; 
      2635.603(b)(1)(ii) and (iii).  Although the standards and procedures for 
      the two mechanisms differ, the present memorandum will focus on section 
      208(b) waivers, because that is the area that has engendered the most 
      questions for OGE.[6]

            Under section 208(b)(1), the official responsible for an employee's 
      appointment may grant a waiver of the recusal requirement if he makes a 
      certain written determination in advance of the employee's participation 
      in the matter.  The standard for this determination is that the affected 
      financial interest "is not so substantial as to be deemed likely to affect 
      the integrity" of the employee's services.[7]  OGE has provided guidance 
      concerning such determinations in 5 C.F.R. &#167; 2640.301(b).  One important 
      point, which is sometimes overlooked, is that the deciding official must 
      consider not only the financial interests of the employee--e.g., the 
      effect, if any, of the particular matter on the employee's own employment 
      prospects--but also the interests of the prospective employer itself in 
      the particular matter.  See 5 C.F.R. &#167;&#167; 2635.605(a); 2640.301(b)(2).
       
           OGE historically has given particular scrutiny to proposed waivers in 
      employment negotiation situations.[8]  In general, where a waiver would 
      cover the financial interests of a person other than the employee, OGE has 
      indicated that the deciding official "should examine the relationship of 
      the person to the employee."  60 Federal Register 47207, 47222 (Sept. 11, 
      1995)(preamble to proposed part 2640); see 5 C.F.R. &#167; 2640.301(b)(2).  The 
      relationship of an employee with a prospective employer can be especially 
      sensitive.[9] Employment negotiations often are seen as involving a 
      "courtship" process, and there may be an appearance that an employee has a 
      motive to ingratiate himself by being responsive to the interests of a 
      prospective employer.  In sum, OGE would expect that waivers for 
      employment negotiations would be issued only in compelling circumstances.
       
           Therefore, although it may be appropriate to grant waivers in some 
      situations involving employment negotiations, agencies are urged to 
      consider closely all the relevant facts in each case.  This includes an 
      evaluation of the nature and sensitivity of the particular matter 
      (including any actual or anticipated controversy among competing 
      interests), the employee's level of responsibility and the nature of the 
      employee's role in the matter, the identity of the prospective employer 
      and the magnitude of that person's stake in the matter, and any other 
      circumstances that could bear on whether "the interest is not so 
      significant that the employee can be relied upon to act or appear to act 
      impartially in the matter."  60 Federal Register at 47221.  See 5 C.F.R. &#167; 
      2640.301(b)(1-6).  Waivers covering such situations should be 
      well-supported factually and carefully articulated to explain the 
      justification for the determination.  Additionally, as described below, 
      the White House has prescribed special procedures before waivers may be 
      granted to certain high level officials who wish to negotiate for 
      employment.
       
      Special Considerations for High Level Officials
       
           For the reasons discussed above, it should be all the more apparent 
      that higher level officials need to be particularly careful in matters 
      relating to waivers for future employment.  As the White House Chief of 
      Staff explained in a Memorandum issued earlier this year, "serious 
      administration policy interests" may be implicated when a Presidential 
      appointee confirmed by the Senate (PAS) undertakes a job search while 
      acting on a matter "where his loyalty to the Government is subject to 
      question."  Andrew H. Card, Jr., Assistant to the President and Chief of 
      Staff, Memorandum for the Heads of Executive Departments and Agencies, 
      January 6, 2004.
       
           Agency officials are reminded, therefore, that no waiver may be 
      granted to a PAS "for the purpose of negotiating for outside employment 
      unless agency personnel have first consulted with the Office of the 
      Counsel to the President."  Id.  This consultation requirement is in 
      addition to the general requirement that agencies consult with OGE, where 
      practicable, before issuing waivers under section 208(b).  See Executive 
      Order 12674, &#167; 301(d); 5 C.F.R. &#167; 2640.303.
       
           Sometimes, a waiver is not deemed appropriate but recusal is still 
      not desirable.  OGE has encountered such situations particularly in 
      connection with high level officials who have significant responsibilities 
      for an entire agency or a major program within an agency.  The official 
      may serve as decisionmaker for a wide range of important matters, and the 
      recusals required by the individual's job search--especially a lengthy 
      search--could result in serious inefficiencies or gaps in the policy 
      process.  In such cases, there may be no practical alternative but to 
      defer the job search until after the official leaves Government service or 
      until a brief recusal period near the end of Government service.
       
      Conclusion
       
           OGE recognizes that seeking employment can be a sensitive subject, 
      both for the employee involved and for the employee's agency.  Therefore, 
      this Office stands ready to assist agency ethics officials in resolving 
      any questions arising under the rules discussed above.  OGE makes 
      particular efforts to respond promptly to agency inquiries about waivers, 
      as part of the consultation process described in 5 C.F.R. &#167; 2640.303.  
      Finally, it is important for employees themselves to be aware that their 
      own agency ethics office is available to help them navigate the ethical 
      issues that can arise in connection with a job search.

      _______________________________

      [1] Section 208 provides, in pertinent part, that an executive branch 
      employee may not participate personally and substantially in any 
      particular matter in which, to his knowledge, "any person or organization 
      with whom he is negotiating or has any arrangement concerning prospective 
      employment, has a financial interest."  Section 101(j) of Executive Order 
      12674 provides: "Employees shall not engage in outside employment or 
      activities, including seeking or negotiating for employment, that conflict 
      with official Government duties and responsibilities."
       
      [2] This is subject, however, to two important exceptions: an employee has 
      not commenced seeking employment if his communication is solely for the 
      purpose of: (1) requesting a job application, or (2) submitting a resume 
      or employment proposal to a person affected by the employee's duties only 
      as part of a class.  5 C.F.R. &#167; 2635.603(b)(1)(ii)(A), (B).  Note that 
      regulations do not contain any special exception for the "mass mailing" of 
      resumes, as this suggestion was expressly rejected in the preamble to the 
      final rule.  57 Federal Register at 35028.

      [3] Note that an agency also has the discretion to impose a recusal 
      obligation after an employee has stopped seeking employment with a 
      particular person, even if employment discussions concluded without any 
      arrangement or agreement for employment.  See 5 C.F.R. &#167; 2635.606(b).  An 
      agency designee may impose a period of disqualification based upon the 
      determination that the concern that a reasonable person may question the 
      integrity of the agency's decisionmaking outweighs the Government's 
      interest in the employee's participation in a particular matter.  Id.

      [4] As OGE stated in the Preamble to the final rule: "If the employee 
      makes it clear to the prospective employer that he or she has no interest 
      in considering the employment overture at the present time and has no 
      plans for such consideration in the foreseeable future, the employee may 
      couch his or her rejection in whatever language the circumstances and 
      etiquette require."  57 Federal Register 35006, 35029 (August 7, 1992). 

      [5] In certain circumstances, an agency ethics official may require 
      written documentation of a recusal, and such documentation also may be 
      required as written evidence of compliance with an ethics agreement under 
      5 C.F.R. part 2634.  5 C.F.R. &#167; 2635.604(c).  Additionally, certain 
      procurement officials are subject to written notification requirements 
      with respect to employment contacts, under the Procurement Integrity Act.  
      41 U.S.C. &#167; 423(c).

      [6] Ethics officials should remember, however, that an authorization under 
      section 2635.605(b) will not suffice for situations covered by the 
      criminal statute, i.e., where the employee is actually "negotiating" or 
      has an "arrangement" for prospective employment.  See 18 U.S.C. &#167; 208; 5 
      C.F.R. &#167; 2635.605(a) (waiver for negotiations); 5 C.F.R. &#167; 
      2635.606(a)(waiver for arrangement).
       
      [7] Agencies also may issue waivers pursuant to 18 U.S.C. &#167; 208(b)(3), 
      which provides a somewhat more liberal standard but which is applicable 
      only to special Government employees serving on an advisory committee 
      within the meaning of the Federal Advisory Committee Act.  See 5 C.F.R. &#167; 
      2640.302.
       
      [8] Agencies are required, where practicable, to consult with OGE before 
      issuing waivers under section 208(b).   Executive Order  12674, &#167; 301(d); 
      5 C.F.R. &#167; 2640.303.  Agencies also are required to forward a copy of each 
      completed waiver to OGE.  Id.
       
      [9] Even in the case of an employee's relationship with a current outside 
      employer, OGE has observed that:  "[e]mployment interests often create 
      ties stronger than mere stock ownership that might affect an employee's 
      judgment."  60 Federal Register at 47222.