In the Matter of the Proposed Debarment of           ) 
                                                                                )
PAUL E. JAQUISH, JR.                                            )
PRESA, INC.                                                            )
49 Singing Wood Lane                                            )
                                                                                )
at                                                                             )
                                                                                )
Orinda, CA 94563-1210                                          )   P.S. Docket No. 19/124

APPEARANCE FOR POSTAL SERVICE:                  Norman D. Menegat, Esq.
                                                                                Law Department
                                                                                United States Postal Service
                                                                                Washington, DC 20260-1121

APPEARANCE FOR RESPONDENT:                         Kenneth C. Nagel, Esq.
                                                                                Pillsbury, Nagel & Atcheson
                                                                                155 Montgomery Street
                                                                                San Francisco, CA 94104-4180

Cohen, James A.

POSTAL SERVICE DECISION
Background

By Notice dated June 20, 1984, the Assistant Postmaster General, Procurement and Supply Department, notified Paul E. Jaquish, Jr. (Respondent) that the Postal Service was considering debarring him and any company in which he has a substantial interest or control, including PRESA, Inc. (PRESA), from contracting or subcontracting with the agency until April 24, 1987. The Notice stated that the proposed debarment was based on Respondent's guilty plea in a United States District Court to charges that he knowingly failed to disclose, on a financial disclosure report, both his position as agent of PRESA and an arrangement with PRESA's incorporator concerning future employment.

As further cause for the proposed debarment, it was alleged in the Notice that Respondent, while serving as Senior Assistant Postmaster General, Research and Technology Group, approached MCR Technology, Inc. (MCR), on PRESA's behalf, with a proposal under which MCR would obtain a Postal Service contract as a Postal Contract Research Center (PCRC) or otherwise, with PRESA as subcontractor, and MCR would offer to the Postal Service Respondent's concept for "Unitized Dynamic Delivery (UDD)." Respondent allegedly advanced this proposal before presenting the PCRC concept to the Postal Service Board of Governors, and while he was actively promoting UDD to individual members of the Board of Governors. These alleged activities were characterized in the Notice as creating a serious conflict of interest which, considered with the financial disclosure report omissions, indicated a lack of business integrity or honesty which seriously and directly affected Respondent's responsibility as a contractor.

By letter dated July 10, 1984, Respondent requested a hearing before the Judicial Officer, as authorized under 39 C.F.R. Part 957. In the letter, Respondent made admissions regarding (1) his guilty plea, (2) communications with MCR, and (3) his employment with the Postal Service. However, he denied that (1) he personally promoted UDD to individual members of the Postal Service Board of Governors, (2) became a director, officer, employee or shareholder

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of PRESA until after leaving the Postal Service, (3) became an agent for PRESA other than with regard to service of legal process, and (4) that any of his actions created a serious conflict of interest or indicated a lack of business integrity or honesty seriously or directly affecting his responsibility as a contractor.

The Assistant Postmaster General subsequently filed a reply to the request for hearing, which set forth detailed factual allegations supporting the proposed debarment. These allegations concerned activities referenced in the June 20, 1984, Notice as well as other activities, including Respondent's rent-free use of a Washington, D.C. townhouse leased to MCR or its President; disclosure of a draft report on the PCRC concept to MCR; preparation of letters to the firms Elsag and Alascom; use of a postal employee for typing personal correspondence with postal facilities during work hours; and control of PRESA from the date of incorporation. Subsections 1-604.1(b)(1) and (4) of the Postal Contracting Manual (PCM) were identified as authorizing the proposed debarment.

In a telephone conference with the Judicial Officer, the parties agreed that the causes for the proposed debarment would be those stated both in the Notice and the Postal Service reply. Subse quently, Respondent filed a response in which he denied more than half of the factual allegations set forth in the reply.

The parties filed forty stipulations of fact with fourteen exhibits. A hearing was held before the Judicial Officer on October 9 and 10, 1984, following which the parties filed post-hearing briefs and reply briefs.

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Findings of Fact

A. PCRC and UDD

1. On August 6, 1980, Respondent was appointed as Senior Assistant Postmaster General, Research and Technology Group, and held this position until his resignation from the Postal Service on January 8, 1982 (Stip. 1). In this capacity, he directly supervised the Research and Technology Group, which was responsible for the Postal Service's research and development (R&D) activities (Stip. 2).

2. During May 1981, Respondent became convinced that the Postal Service's R&D laboratories were unsatisfactory and that a separate but dedicated federally-funded entity, similar to federally-funded research centers which contract with other agencies, should be created. The proposed entity ultimately became known as a "Postal Contract Research Center" (Stips. 3 and 4).

3. Respondent presented the PCRC concept to the Postmaster General and senior management in early June 1981 (Stip. 4; Tr. 104-06). The Postmaster General, while expressing approval of the concept, wanted it kept confidential because of pending union negotiations and a union decertification election involving employees of the Postal Service's R&D laboratories (Stip. 5; Tr. 106; see also Tr. 109-10).

4. In an August 1981, meeting with members of his staff, Respondent stated that the PCRC concept should not be discussed with anyone not present at the meeting. One member of the staff was designated to maintain a list of those who had been advised of the PCRC concept (Stip. 6-8; Tr. 31-33). The only reason given at the

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meeting for keeping the PCRC concept confidential was the sensitive labor situation at the R&D laboratories (Stip. 7; Tr. 52).

5. The union decertification election at the laboratories took place on June 11, 1981. The union was not decertified (Tr. 106-07).

6. In September 1981, a member of Respondent's immediate staff contacted several organizations outside the Postal Service to inquire how other federally-funded R&D centers had been established and also regarding the circumstances under which federal employees could work for such centers (Tr. 34-35, 57). As of October, 1981, others outside the Postal Service were aware that the Postal Service was looking into the general PCRC concept (Tr. 113-14, 231). By late 1981, rumors were circulating at Postal Service Headquarters that a major reorganization of the R&D function, which would have a substantial impact on the R&D laboratories, was being considered (Tr. 33, 60; PS Ex. 1, p. 11).

7. A report dated November 12, 1981, recommending the creation of a PCRC, was prepared by a member of Respondent's staff at Respondent's direction and submitted to the Postmaster General (Stip. 9; Stip. Ex. 3). A shorter version of this report, dated December 10, 1981, was also prepared at Respondent's direction and submitted to the Postal Service Board of Governors before its January 6, 1982, meeting (Stip. 10; Stip. Ex. 4).

8. In late 1981, Respondent worked with his staff in preparing view graphs to accompany the report to be presented to the Board of Governors at their January 1982, meeting (Tr. 47-48). The December 10, report with the view graphs was distributed to members of the

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Board of Governors prior to the January, 1982 meeting (Tr. 124; 172-73). Page 17 of these materials concerned "Unitized Dynamic Delivery," which was an undeveloped illustrative concept generated by Respondent as the type of work in which a PCRC might engage. As reflected by the view graph and text, UDD envisioned a future mail delivery system focussing on mechanized sorting of carrier routes and delivery vehicles with robotics to speed mail delivery (PS Ex. 3; Stip. 12; Tr. 51).

9. Respondent discussed the PCRC concept with two members of the Board of Governors, on a one-to-one basis, before the January 1982, meeting (Stips. 36 & 37). The first discussion was in the nature of a briefing directed by the Postmaster General (Tr. 126 27). The second occurred during an informal conversation and included a discussion of the UDD concept (Stip. 37; Tr. 370).

10. At the January 1982, meeting of the Board of Governors, Respondent briefed the Board on the PCRC concept (Tr. 172-73, 374-75). After discussing the first eleven view graphs, Respondent's presentation was cut short by concern on the part of some Board members that Respondent might be involved in a conflict of interest situation because of his disclosure that he planned to participate in the PCRC after leaving the Postal Service (Tr. 374-78). As a result, he discontinued his briefing and did not discuss the view graph or text regarding UDD (Tr. 173).

11. The PCRC proposal was not approved by the Board of Governors (Tr. 379-80).

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B. PRESA

12. In late November 1981, Respondent authorized his attorney, Kenneth Nagel, to incorporate a new California corporation to be called PRESA, Inc. (Stip. 14; Tr. 350). On or about December 16, 1981, PRESA was incorporated, with Mr. Nagel listed as the sole incorporator and Respondent listed in the Articles of Incorporation as the agent for service of process with his home address given for service (Stip. 15). Also in December, Mr. Nagel became the corporation's secretary, after Respondent requested that he assume this function (Tr. 353).

13. At the time of incorporation, an arrangement existed between PRESA, as represented by Mr. Nagel, and Respondent, whereby Respondent would become a director of PRESA upon leaving the Postal Service (Tr. 360).

14. At PRESA's organizational meeting, which took place on January 11, 1982, Respondent became a director and president of PRESA (Stip. 16).

C. MCR

15. In November 1981, Respondent inquired whether he could rent, for a few nights, a Washington, D.C. townhouse owned or leased by MCR, a California firm which designs and produces electric buses and crash tests auto safety equipment (Stips. 18 & 22; Tr. 151-53, 313). The inquiry was made of Sam Romano, who was Respondent's friend of long standing and also MCR's vice-president for vehicle development and research (Tr. 149-50, 310-12). MCR offered the use of the townhouse on a rent-free basis, because it was not

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accustomed to renting the townhouse and did not want to bother with @ @ - @ the bookkeeping records which would be required (Tr. 154, 314). Respondent accepted the offer and stayed in the townhouse on twelve nights between November 30 and December 31, 1981 (Stip. 22).

16. While visiting with Mr. Romano in November 1981, Respondent met with Donald Friedman, MCR's president (Stip. 17; Tr. 156-57). During the meeting, Respondent mentioned the UDD concept, stating that the Postal Service must do something about productivity in delivery and that MCR can help in that area (Tr. 333). Respondent gave Mr. Friedman a copy of the November 12, 1981, report recommending establishment of a PCRC (Stip. 19) and left the document with him (Tr. 230), although indicating that the report was sensitive (Tr. 230, 232, 330, 339).

17. Respondent followed up this meeting by sending Mr. Friedman

a letter, dated November 30, 1981, in which he stated in part:

"Reassuring is the word that best describes my feeling following our November 23, 1981, meeting. I am confident that you can tell from my remarks and the draft document on the PCRC that I understand the Postal problem and have in hand both complete and partial solutions. The positive reaction I received from you, Keith, and Sam was, as I say, reassuring.

"I want, for the record, to explain why I approached MCR Technology, Inc....Given a real problem (postal productivity) and saleable solutions -- Unitized Dynamic Delivery (UDD), with PCRC (complete) or without it (partial, fall-back) -- we can't help but succeed.

* * *

"The best outcome, in my view, should yield a $100 million R & D program for the UDD mail concept and I believe the potential to be 80% for a PCRC to be created and for MCR to be the successful R & D contractor." (Stip. 20; Stip. Ex. 5).

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18. Respondent's letter holds out the possibility of MCR acquiring 20% of PRESA over a 10-year period and includes matrixes detailing the different ways in which PRESA and MCR might work together after termination of Respondent's employment with the Postal Service. Matrix I addresses the possibilities of "UDD with PCRC" and "UDD without PCRC," and different ways in which a UDD bid or contract can be handled by PRESA and MCR. Matrix II addresses revenue contingencies spanning the creation of a PCRC in 1982 and a Postal Service decision never to create the PCRC. Finally, Respondent notes in the letter that

"we must make many decisions between now and your December 16, 1981 Board of Directors - Stockholder's meeting, and I am prepared to achieve a mutually advantageous arrangement within the limited time we have." Respondent included both his work and home telephone numbers, with the invitation "you may call me" (Stip. Ex. 5). The estimate given in the letter of an 80% potential for MCR to become the PCRC contractor reflects Respondent's belief at the time. Consistent with this letter, it is found that Respondent "approached" MCR with a business proposal.

19. In a response dated December 3, 1981, addressed to Respondent in care of Mr. Nagel's law firm, Mr. Friedman stated that he had read "about the PCRC in the planning document you left" and appreciated "the opportunity you've offered us to participate and that I am committed to find a mutually advantageous way to work together." He further stated that he envisioned MCR entering into an agreement with Respondent individually for acquisition of PRESA stock "based upon the

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assumption that you would at all times be the controlling stock holder in PRESA." (Stip. Ex. 6; Stip. 21.).

20. By letter dated December 9, 1981, Mr. Nagel advised Mr. Friedman that, after discussion with Respondent, he was "authorized" to respond to MCR's suggestions. The letter states, in part:

". . . PRESA is now being formed. It is anticipated that, following his departure from the postal department, Mr. Jaquish will become the corporation's principal shareholder and chief executive officer. Until such time as he has severed his ties in Washington, I believe he should refrain from the execution of documents which could give the appearance of conflict. Until PRESA has organized itself internally, it cannot enter into formal agreements. It is my opinion, however, that when Mr. Jaquish and PRESA are in a position to do so, one of their first agenda items will be the preparation of a joint venture agreement with MCR for the purpose mentioned.

From my latest conversation with Mr. Jaquish, I know it is his hope that beginning January 9, 1982, MCR and PRESA will move to more fully develop the terms and conditions of the __ UDD joint venture, recognizing that UDD is but one of several major objectives that the parties might agree to pursue." (PS Ex. 6).

21. Before leaving the Postal Service, Respondent did not inform any postal employee of his communications with MCR (Tr. 274).

D. Alascom

22. During his tenure with the Postal Service, Respondent was a member of a task force which studied the feasibility of extend ing electronic mail services to Alaska (Stip. 13). George S. Shaginaw, vice-president of marketing and external affairs for Alascom was also a member of the task force (Tr. 164-65, 267). On November 18, 1981, Respondent notified the other task force mem bers that he would not be available for meetings of the task

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force in January, 1982, because he was resigning from the Postal Service (Tr. 267-68).

23. Sometime in December 1981, Mr. Shaginaw asked Respondent if he would be interested in doing some work for Alascom and to let him know what assistance he might provide if Alascom were to develop an electronic mail system for Alaska (Tr. 164-65). In response to this inquiry, Respondent prepared a draft of a letter to Mr. Shaginaw dated December 16, 1981, for Mr. Nagel's signature (Stip. Ex. 7; Tr. 165-66).

24. A slightly revised version of the draft letter was sent by Mr. Nagel to Mr. Shaginaw on or about December 22, 1981 (Resp. Ex. 2; Tr. 166-67). The revised letter states in part:

"I am confident that PRESA, Inc., will be pleased to assist Alascom in preparing an unsolicited proposal to the United States Postal Service, for a contract under which Alascom would provide turnkey implementation of Postal E-COM service in Alaska. . .

PRESA, Inc., will be well qualified to provide such assistance to Alascom. Mr. Paul Jaquish, who will join PRESA, Inc., as Chief Executive Officer on January 9, 1982, was a member of the Alaska Electronic Mail Task Force and is thoroughly familiar with Alaska and with postal operations including electronic mail, as a result of his 10-year career in Postal Service management in the Western Region and most recently as Senior Assistant Postmaster General for Research and Technology. . .

If Alascom desires to engage the services of PRESA, Inc., I believe the following proposal would be favorably received. PRESA, Inc., would be engaged by Alascom to provide up to 100 man-days of assistance to Alascom during the period from January 9 through April 11, 1982, for preparation of an Alascom proposal to the Postal Service. The charges for such assistance by PRESA, Inc., would be $80,000 for professional services; direct expenses such as travel, communications and secretarial and other support services, incurred in the course of the work, would be separately billed and would not be expected to exceed $20,000.

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You may respond directly to the undersigned, or should you prefer to defer your reply until after January 9, 1982, you may communicate directly with PRESA, Inc., and Mr. Jaquish. . .This proposal will remain in effect through January 15, 1982, and may be extended upon request, by mutual agreement." (Resp. Ex. 2)

E. Elsag

25. In the fall of 1981, Mr. Aldo Mazzoni, an employee of Elsag, a company which sells postal equipment, suggested that Respondent could assist Elsag in establishing a North American affiliate (Tr. 263-65; Stip. Ex. 8).

26. Respondent prepared a letter dated December 16, 1981, for Mr. Nagel's signature, advising Mr. Mazzoni of PRESA's interest in assisting Elsag (Stip. Ex. 8). Using language similar to that contained in his draft letter to Alascom, Respondent stated that PRESA would be pleased to assist Elsag in establishing such an affiliate and that it is well qualified to do so primarily because of Respondent's participation and experience. The draft detailed a proposal including man days of assistance and estimated cost and stated that the proposal would remain in effect through January 15, 1982, unless extended by mutual agreement (Stip. Ex. 8).

27. The draft was forwarded to Mr. Nagel (Stip. 23), who sent a slightly revised version to Mr. Mazzoni on December 22, 1981, (Resp. Ex. 3; Tr. 170). The letter states the desirability of Elsag establishing a North American affiliate; states his confidence that PRESA could assist Elsag, primarily because of Respondent's participation and experience; and sets forth the same proposal specified in Respondent's draft. The letter stated the

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proposal would remain open through January 15, 1982, unless extended by mutual agreement. Also, as in the Alascom letter, the addressee is invited to respond directly to Mr. Nagel or, after January 9, 1982, to PRESA and Respondent (Resp. Ex. 3).

28. The letters to Elsag and Alascom constituted solicita tions of business (Tr. 360). While employed by the Postal Service, Respondent did not disclose to any Postal Service employee other than his secretary that he had drafted letters to Alascom and Elsag (Tr. 274).

G. The Guilty Plea and Conviction

29. On March 15, 1984,^1/ Respondent entered a plea of guilty in the United States District Court for the District of Columbia to charges he had violated 18 U.S.C. § 1001 by having knowingly made and caused to be made a false statement and representation as to material facts on a financial disclosure report, SF-278, which he had certified as true when he submitted it to the Postal Service on January 22, 1982. Specifically, it was charged that he did not disclose on the form under an item captioned "Positions Held" that he was designated as the agent for service of process in PRESA's Articles of Incorporation, or that he had an arrangement with Mr. Nagel concerning his future employment as president and director of PRESA (Resp. request for a hearing, Admission A; Stips. 38 & 39; PS Ex. 5). In accordance

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with the plea, Respondent was convicted of one count of making a false statement in violation of 18 U.S.C. § 1001 (PS Ex. 5, p. 23).

30. At an arraignment proceeding before a United States District Court Judge, Respondent stated while represented by counsel that he wished to plead guilty "because I am guilty" (PS Ex. 5, p. 3). Respondent was then advised of the specific charges against him (PS Ex. 5, pp. 8-9) and the evidence that would be presented regarding these charges if the case went to trial (PS Ex. 5, pp. 20-22). Respondent agreed with the summary of evidence and stated that he had committed the offense of making a false statement in violation of 18 U.S.C. § 1001 (PS Ex. 5, p. 22). The Judge thereupon found that the plea was voluntarily made, without improper inducements, conditions, or coercion, and after consultation with competent counsel (PS Ex. 5, p. 23). The Judge accepted the guilty plea and after being advised by Respondent's counsel in the presence of Respondent that there was no reason why a judgment of guilty should not be entered, found Respondent guilty as charged (PS Ex. 5, p. 23).

H. Awareness of Ethic s Requirements

31. As of November 12, 1981, senior management was aware of Respondent's plans to work with a PCRC after leaving the Postal Service (Tr. 140-41; Stip. Ex. 1; Resp. Ex. 1). Members of his immediate staff were careful not to discuss any of the specifics of the PCRC in Respondent's presence in order to avoid a potential conflict of interest situation (Tr. 73). In this regard, there is

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no evidence that Respondent tried to influence his staff regarding what company might become the ultimate PCRC contractor (see Tr. 76; see also Tr. 131).

32. In the fall of 1981, Respondent became aware of, and concerned about, ethical conduct restrictions on subsequent employment of Postal Service employees (Stips. 24, 26, 29, & 30; Tr. 64-65). In December 1981, he sent Mr. Nagel a copy of regulations published by the Office of Government Ethics (OGE), Office of Personnel Management, with the comment that an official of that agency "indicated that the proposed actions did not violate Title 18." The "proposed actions" Respondent was referring to concerned his expected participation in PCRC after leaving the Postal Service, not the propriety of engaging in business solicitations while still a Postal Service employee (Stips. 30, 33 & 34; Stip. Exs. 9, 10 & 12).

33. In late November 1981, the Postal Service Law Department prepared a draft letter to the OGE addressing the propriety of Respondent's future involvement with a PCRC. The letter did not mention the incorporation of PRESA or the propriety of engaging in business solicitations while still a Postal Service employee. Respondent reviewed the draft and made no changes. However, the letter was not sent (Stip. 31 & 32; Stip. Ex. 11; Tr. 74-75, 293-94).

34. Before leaving the Postal Service, Respondent worked with the agency's General Counsel on a letter which Respondent could give potential business contacts after leaving the Postal Service.

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The letter explained the restrictions applicable to Respondent's participation in postal business during the one year period following termination of his Postal Service employment (Stip. 35; Stip. Ex. 13).

35. Respondent did not seek guidance from the Postal Service in completing the financial disclosure report which he submitted to the Postal Service on January 22, 1982, because he believed the instructions on filling out the report were clear (Tr. 223; c @ . 182).

I. Present Responsibility

36. Aside from his conviction and the present debarment action, Respondent has had a distinguished career as a Postal Service Officer and employee (Resp. Ex. 6).

37. The record raises substantial questions as to whether Respondent appreciates the seriousness of his wrongdoing. A member of his staff gave unrebutted testimony that Respondent characterized his crime as a "technical violation" and compared the conviction to a traffic ticket (Tr. 54). Similarly, Respondent testified, in contrast to what was stated at the arraignment proceeding, supra, that "at this moment it's inconceivable for me to see that . . . that's a violation" (Tr. 191. See also Tr. 302).

DECISION

A. Cause to Debar

1. Respondent's Guilty Plea and Conviction The Postal Service contends that Respondent's guilty plea to a violation of 18 U.S.C. § 1001 and his conviction thereof constitute

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cause for debarment under § 1-604.lb(1) of the PCM. This subsection authorizes the debarment of a firm or individual in the public interest because of

"conviction for commission of a criminal offense as an incident to obtaining or attempting to obtain a public or private contract, or subcontract thereunder, or in the performance of such contract or subcontract." Respondent argues that the circumstances surrounding his guilty plea and the intent of the statute under which the plea was made do not constitute a cause for debarment under § 1-604.lb(1). Respondent also contends that the subsection is inapplicable because the offense was not committed as an incident to obtaining or attempting to obtain or perform a contract or subcontract.

Notwithstanding Respondent's assertions regarding the circumstances surrounding his guilty plea and the intent of the statute under which the plea was made, the record establishes that he was convicted of knowingly making a false statement in violation of 18 U.S.C. § 1001. A debarment proceeding is not the proper forum for challenging the conviction or obtaining an interpretation of the intent of the statute on which the conviction was based. Thus, the only question regarding the applicability of § 1-604.lb(1) is whether the offense for which Respondent was convicted was committed as an incident to obtaining or attempting to obtain a contract or subcontract or in the performance of such contract. The Postal Service has not established that the omission of information relating to PRESA, on the SF-278 was such an offense.

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The SF-278 is required by the Ethics in Government Act to be filed annually by high Government officials including the officers and specified employees of the Postal Service. While the information on the form may be used to determine whether a conflict of interest exists with respect to a proposed or existing contract, it is not submitted as a part of the contract formation or performance process. Therefore, it cannot be concluded that a conviction under 18 U.S.C. § 1001 for omission of information on the form is a conviction for commission of a criminal offense as an incident to obtaining or attempting to obtain or performing a public or private contract, or subcontract within the meaning of § 1-604.lb(1).

Although Respondent's conviction does not constitute cause for debarment under § 1-604.lb(1) of the PCM, it, and his guilty plea, constitute such cause under § 1-604.lb(4). This subsection authorizes debarment for

"Any other cause of such serious and compelling nature, affecting responsibility as a Government contractor, as may be determined by the Postal Service to warrant debarment."

Respondent's failure to disclose his relationship with PRESA on the financial disclosure report, under the circumstances disclosed by this record, raises serious questions regarding his personal judgment and integrity. As discussed below, such questions affect Respondent's present responsibility as a Postal Service contractor. Subsection 1-604.lb(4) affords independent support for debarment. See Winnie Faye Owings, HUDBCA No. 80-468-D16, 81-1 BCA § 15,048. Respondent's guilty plea and

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conviction establish cause to debar under this section by clear and convincing evidence in accordance with § 1-604.1(c)(3) of the PCM.

2. Other Causes

The debarment notice and Postal Service reply set forth, as additional causes for debarment under § 1-604.lb(4) of the PCM, Respondent's business dealings with MCR, Elsag and Alascom; rent-free use of MCR's townhouse; disclosure of the November 12, 1981, draft PCRC report to MCR; use of a Postal Service secretary to type personal correspondence; and presentation or promotion of the PCRC and UDD concepts while in a conflict of interest situation. In arguing that the cited activities fall within this provision, the Postal Service more specifically alleges that they constitute violations of the Postal Service standards of conduct set forth in 39 C.F.R. ??447.21 and .22. Respondent contends that his dealings with Elsag, MCR and Alascom while with the Postal Service were proper and did not concern a "particular matter" in which he was involved as that term is used in 18 U.S.C. § 208(a).

No question exists, based on this record, that Respondent was soliciting business on his own behalf through PRESA while employed by the Postal Service. Respondent's technical arguments regarding the limited authority of PRESA's incorporator and that PRESA was neither organized nor conducted business until he left the Postal Service cannot offset the specific business proposals and terms contained in his and Mr. Nagel's letters to MCR, Elsag, and Alascom. These letters made clear that the proposals were

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subject to acceptance during Respondent's Postal Service employment. Respondent cannot defeat basic conflict of interest prohibitions by hiding behind PRESA's formal corporate veil.

With respect to MCR, Respondent's attempts at obtaining business were the most direct. The record supports the Postal Service's charge that Respondent "approached" MCR regarding the possibility of obtaining a Postal contract as a PCRC - utilizing UDD - with his/PRESA's assistance. However, ultimately the question of who initiated this discussion is unimportant. The fact of the discussion and Respondent's willingness to follow it up with a specific proposal based on an 80% expectation that MCR would obtain the PCRC contract constituted both bad judgment and a conflict of interest situation, which was further compounded by Respondent's use of MCR's townhouse on a rent free basis while still employed by the Postal Service.

Respondent argues that his business negotiations with MCR, Elsag, and Alascom did not concern "particular matters" in which he was involved while still in Federal service and therefore were not prohibited under 18 U.S.C. § 208(a). This provision precludes an officer or employee of any independent Federal agency from participating, in his official capacity, through

". . . recommendation, the rendering of advice, . . . or otherwise, in a . . . contract . . . or other particular matter in which, to his knowledge, he . . . or any person or organization with whom he is negotiating or has any arrangement concerning prospective employment, has a financial interest . . ." unless his appointing official issues a written determination that the interest will not affect the integrity of the services

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expected. Respondent argues that @ particular matter" should be defined in accordance with OGE's definition of this term in 5 C.F.R. § 737.11(d) as excluding "broad technical areas and policy issues and conceptual work done before a program has become particularized into one or more specific

Violation of 18 U.S.C. § 208(a) has not been alleged as cause for Respondent's debarment. Accordingly, the applicability of this criminal provision to the instant facts and, in turn, the applicability of OGE's regulatory definition to § 208(a), need not be addressed. Whether or not Respondent's dealings with MCR, Elsag, and Alascom concerned "particular matters" within the meaning of a criminal statute, they were sufficiently improper to warrant administrative debarment. In this regard, 39 C.F.R. § 447.21(a) of the Postal Service standards of conduct regulations requires that employees

". . . avoid any action, whether or not specifically prohibited by this Code, which might result in or create the appearance of:

(1) Using Postal Service office for private gain;

* * *

(4) Losing complete independence or impartiality;

* * *

(6) Affecting adversely the confidence of the public in the integrity of the Postal Service."

Respondent continued to be involved with PCRC and UDD as a senior Postal Service official and favorably presented these

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concepts to the Board of Governors while advising MCR that a sub stantial probability existed of its becoming the PCRC contractor, seeking its business in this regard, and after staying at MCR's townhouse. Such involvement at least created the appearance of using his Postal Service office for private gain and losing com plete independence or impartiality. In this regard, § 447.22(b)(7) of the standards of conduct states that

"no employee shall participate in his official capacity in any decision or other matter in which, to his knowledge, he, or any entity by which he is or may become employed, has a financial interest" unless he receives the specified written determination by the Associate Ethical Conduct Officer after making full disclosure of all relevant facts.

Moreover, subsection (d) of this provision states that

"no employee, whether acting for personal benefit or not, shall use or appear to use, his official position or infor- mation obtained as a result of his employment to further any private interest whether his own or that of any other person." (Cf. 18 U.S.C. § 208(a), supra.) Respondent's communications with Mr. Friedman and his disclosure of the November 12, 1981, PCRC report, whether or not this document was subject to a specific confidentiality restriction, violated the sense of this provision.

Respondent also violated § 447.21(a)(1) & (4), supra, with respect to the proposals offered to Alascom and Elsag. The letters to these firms prepared by Respondent and sent on his behalf concern potential business prospects with the Postal Service and tout Respondent's thorough familiarity with Postal operations and technology.

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Finally, it is concluded that Respondent's involvement with MCR, Elsag, and Alascom, without full disclosure, constituted actions which might result in or create the appearance of affecting adversely the confidence and integrity of the Postal Service, in violation of § 447.21(a)(6).

Respondent's arguments that the standards of conduct provisions are inapplicable because his activities did not concern "particular matters" and that Respondent did not in fact lose all impartiality and objectivity regarding PCRC are unpersuasive. In this regard, while Respondent dismisses UDD as an undeveloped concept, his November 30, 1981, letter to Mr. Friedman shows, on its face, that he considered UDD a key component of his proposed working relationship with MCR. Further, he planned on discussing UDD at the January 1982, Board of Governors meeting. Respondent's @ -- @ arguments that § 447.21(a)(6) is inapplicable because the public was unaware of his letters and that he first intended to work on the cited proposals after terminating Postal Service employment are also rejected as unpersuasive in light of this record.

Accordingly, it is concluded that Respondent's undisclosed business activities with MCR, Elsag and Alascom, whether directly or through Mr. Nagel and PRESA, while a Postal Service official and advocating PCRC and UDD; his use of MCR's townhouse on a rent-free basis; and his failure to disclose his position or arrangement with PRESA on the financial disclosure report, all constitute cause for debarment under § 1-604.lb(4) of the PCM. It is further concluded that the above causes were established by clear and convincing evidence as required under § 1-604.lc(3).

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The Postal Service reply to Respondent's request for a hearing sets forth, as an additional cause for debarment, Respondent's improper use of his confidential secretary. It also appears to allege that disclosure of the November 12, 1981, report to MCR violated a specific confidentiality restriction regarding PCRC. However, the Postal Service has not shown that Respondent directed his confidential secretary to type his personal correspondence on "company" time, or that he even knew she did so. It also has not shown that concern about disclosure of the PCRC concept extended beyond Respondent's employees at the R&D laboratories. While use of Postal Service facilities and equipment, even in off hours, to perform private typing is not condoned, these elements alone, under the facts established by this record, are not sufficiently serious and compelling within the meaning of § 1-604.lb(4) of the PCM to constitute a separate cause warranting the extreme remedy of debarment. Similarly, while, as discussed, disclosure of the November 12 report was improper in any event^2/, the record does not support a separate cause for debarment because of this disclosure based on violation of a specific confidentiality restriction relating to the PCRC.

The Postal Service's allegations that Respondent retained official documents and arranged for a meeting between the

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B. Period of Debarment

1. Standard of Present Responsibility Section 1-604.2 of the PCM states, in part, that debarment

"shall be for a reasonable, definite, stated period of time, commensurate with the seriousness of the offense or the failure or inadequacy of performance. As a general rule, a period of debarment shall not exceed three years." Subsection 1-604.lc(1) states, in part, that

"all mitigating factors may be considered in determining the seriousness of the offense, failure, or inadequacy of performance, and in deciding whether debarment is warranted."

Under these provisions, the standard for determining an appropriate period of debarment is present responsibility, which authorizes exclusion from contracting or subcontracting with the Postal Service to the extent that the individual or company involved remains a present business risk. Nathan Del Santo, P.S. Docket Nos. 15/130 and 16/33 (P.S.D. June 10, 1983, p. 3) and cases cited therein. Past acts, including those which raise serious and compelling questions concerning the potential contractor's judgment and integrity, can be the basis for a determination that the contractor is not presently responsible. Nathan Del Santo, supra; Roemer v. Hoffman, 419 F. Supp. 130 (D.D.C. 1976).

The established causes for debarment implicate both Respond ent's judgment and integrity. They reflect an attempt to elevate

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self interest above Respondent's public obligation as a high ranking Postal Service official. In view of the evidence of impropriety presented, including Respondent's criminal conviction, it is concluded that the period of debarment proposed, which would run until April 14, 1987, is reasonable, unless this evidence can be offset by mitigating circumstances.

2. Mitigating Circumstances

While Respondent cites his distinguished career with the Postal Service as a mitigating circumstance, this factor must be viewed as an uncertain gauge in predicting future conduct, particularly in view of his attitude regarding what has transpired. Testimony that Respondent characterized his criminal offense as a mere technical violation comparable to a traffic ticket was unrebutted. This testimony was given added credibility by Respondent's own admission that he still cannot discern the impropriety involved, and the manner in which he described the circumstances of his guilty plea.

Respondent's characterization of his visit to MCR and his specific testimony that he did not intend to make any business proposals encounter serious credibility problems when weighed against contemporaneous documents in which he is characterized as the initiator and his own admission that he brought the November 12, 1981, PCRC report to Mr. Friedman's office. Finally, Respond ent's attempt at the hearing to downplay MCR's chances of obtain ing a PCRC contract contrasts sharply with his November 30, 1981, estimate of an 80% probability that MCR would be the successful

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contractor. Such unexplained inconsistencies do nothing to dispel lingering questions regarding Respondent's judgment and integrity as a public contractor. They certainly cannot be viewed as an acknowledgement of wrongdoing and remorse.

Respondent also cites his efforts at compliance with conflict of interest requirements and to obtain guidance in this area as mitigating circumstances. While the record reflects the claimed efforts to a certain extent, his knowledge of the statutory and regulatory prohibitions ultimately makes his dealings with MCR, Elsag, and Alascom, and the financial disclosure report omissions, all the more suspect. While displaying sufficient sophistication in this area to obtain a written statement regarding his employ ment restrictions for distribution to potential clients, he was at the same time holding himself open, through PRESA, to accept pro posals prior to his resignation. In this regard, Respondent's attempt to excuse his actions by stating that the Postal Service did not give him adequate guidance is unpersuasive. He did not seek guidance in completing the financial disclosure report, finding the instructions to be clear. While the record shows that the Postal Service did not send a letter to OGE on his behalf regarding future involvement with a PCRC, the letter did not seek guidance regarding the pre-resignation business dealings on which his debarment is substantially based.

Finally, while Respondent alleges as a mitigating circumstance that he relied on professional advice, it is determined that Respondent is an intelligent, knowledgeable individual who should

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have realized the impropriety of his actions and be held accountable for them.

Respondent correctly states that debarment should not be imposed for purposes of punishment. Debarment under the Postal Service regulations is a protective action. Nathan Del Santo, supra, at p. 3. After considering the mitigating circumstances advanced by Respondent, it is determined that the proposed period of exclusion until April 24, 1987, is reasonable and appropriate under the present responsibility standard.

C. Debarment of PRESA

Subsection 1-604.3b of the PCM states, in part, that

"the criminal, fraudulent, or seriously improper conduct of an individual may be imputed to the firm with which he is connected where such grave impropriety was accomplished within the course of his official duty or was effected by him with the knowledge or approval of that firm." In view of the nexus shown in the record between Respondent and PRESA, it is determined that Respondent's criminal and seriously improper conduct should be imputed to PRESA under this provision, and that the proposed debarment of PRESA until April 24, 1987, is reasonable and appropriate.

Respondent argues, in its reply brief, that the Postal Service has adopted two contradictory "themes" in attempting to support its proposed debarment -- that PRESA is a distinct corporate entity with which Respondent arranged for subsequent employment and which he served as agent for service of process; and that the firm, in reality, was Respondent's alter ego. If any contra- diction exists in these positions, it is the result of Respondent's own actions. Although PRESA was set up as an independent

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entity, the record discloses that, from the outset, it was under Respondent's direct control.

In accordance with the foregoing, and upon consideration of the entire record in this matter, it is concluded that Respondent, PRESA, and any other company in which Respondent has a substantial interest or control, be debarred from Postal Service contracting and subcontracting, as set forth in Part 6 of the PCM, effective from the date of issuance of this Decision and extending until April 24, 1987.

1/ While the debarment notice and Respondent's request for a hearing state that the guilty plea was made on March 25, 1984, PS Ex. 5 shows that the correct date is March 15.

2/ Respondent's possession and disclosure of the PCRC report have also been considered in determining whether Respondent "approached" MCR for the purpose of doing business.