Treading in Gray Areas

Avoiding the appearance of a conflict of interest can be a high wire act.

Sometimes white-collar fraud provides prosecutors with a slam-dunk case involving bribe lists, cash hidden in a freezer and damning FBI videotape. Other times, it's unclear whether the condemned person is a villain or victim. Bobby L. Jolley's case falls into the latter category.

On May 16, the procurement fraud branch of the Army's Legal Services Agency suspended a senior Army director and his friend, a contractor, from doing business with the government. According to an internal Army memo, Jolley, then-director of the War Fighting Center at I Corps at Fort Lewis, Wash., shared sensitive pricing information with John P. Doran, owner of Walking D Ranch Adventures in Twisp, Wash. In 2003 and 2005, the ranch won two contracts with the Army, worth a total of $65,190, to provide Army personnel with staff rides, or educational tours about historical battles. The memo states that the bid proposal submitted by Walking D Ranch was identical to the Army's internal cost estimate, a highly unusual occurrence. It also says Jolley served as president of U.S. Cavalry School, which is part of Walking D Ranch Adventures, and he did not disclose that fact.

If what the memo reports is true, then Jolley engaged in criminal procurement fraud. Sharing sensitive information with a contractor can result in a prison sentence of up to five years. Failing to disclose financial interests, especially when they affect one's role as a public official, carries similar punishment. If the accusation is not true-and there is some reason to believe that is the case-the memo libels a man who has spent most of his life serving his country.

The allegation that Jolley shared pricing information with Doran is based primarily on two pieces of evidence. First, the Walking D Ranch bid was equal to the Army's internal estimate. Second, in a phone call to Doran from an undercover agent posing as a businessman, Doran allegedly said Jolley had told him how much he should bid on the contracts and the Army wrote the requirements to guarantee that Walking D Ranch would win them.

Now consider Doran's side of the story. He says his bid was equal to the Army's internal estimate because he had previously sole-sourced his staff ride services to the Army. As a result, the Army's internal estimate was based on his own prices, which he used again in the competitive bid. He says he tried to explain that to Army officials, but no one listened.

As for the allegation that Doran himself told an Army investigator that Jolley shared sensitive procurement information with him, Doran says he explained to the investigator that he and Jolley discussed the contract when it was sole-sourced to his company. As is typical in sole-sourced situations, he and Jolley had to review costs and negotiate price. "The moment it [no longer] became sole-sourced, we said, 'We can no longer speak about this,' " says Doran. He adds that Jolley worked for the U.S. Cavalry School and Walking D Ranch Adventures in a volunteer capacity, in contrast to the Army's assertion in the memo.

An Army spokesman says Doran was suspended as a contractor based on information available at the time. Doran had the opportunity to submit information in opposition to the suspension, the spokesman says, but he did not, so his suspension stands.

Four months after the Army memo was filed, Jolley pleaded guilty to failure to disclose his ownership of a separate ranch, Woodland Farm. Federal employees are required to disclose financial assets annually. He will be sentenced on Dec. 7; his plea deal advises one year of probation and a $2,500 fine. The plea sheds little light on the more serious charges of procurement fraud. The spokesman for the Western District of Washington's U.S. Attorney's Office says that in light of available evidence, the case was handled appropriately. Jolley's lawyer says the procurement fraud allegations were based on inaccurate information.

Prior to the allegations, Jolley appears to have been respected by his colleagues, especially for training troops on their way to combat zones. According to his lawyer, the commanding officer at Fort Lewis once rated Jolley the best civilian employee on base, and he's been recognized as one of the Army's best trainers. A bio from a horse riding Web site describes Jolley, a former Army lieutenant colonel, as an avid horseman and frequent participant in historical cavalry reenactments, including Custer's last stand at the Battle of the Little Bighorn. Doran says he plans to hire Jolley to serve as a cavalry instructor for civilians on his ranch.

It might never be clear whether May's Army memo was accurate. But there are some lessons to be learned about the gray areas of procurement ethics. Jolley appears to have been friends with Doran. While friendship with a contractor isn't illegal, it can raise questions about impartiality. According to the Code of Federal Regulations, a federal employee should not make decisions affecting someone for whom he has served as an employee or consultant within the last year or someone with whom he actively participates in an organization. Furthermore, he should remove himself from decisions in which "circumstances would cause a reasonable person with knowledge of the relevant facts to question his impartiality in the matter."

The Office of Government Ethics encourages federal employees to talk to their supervisors and agency ethics officials to clarify any confusion and to declare conflicts of interest. Just don't lie to an ethics official. It could result in a felony conviction.