Disclosure is Key to Avoiding Conflicts of Interest (Excerpt from May 1999 Circuit)

Every Northrop Grumman employee occupies a position of trust. We must all be particularly sensitive to any situation, on or off the job, that might erode that trust or cause others to doubt our fairness. Situations in which personal or financial interest conflict with Northrop Grumman responsibilities must be carefully avoided.

Potential conflicts can involve customers, suppliers, present or prospective employees, shareholders, or members of the communities in which we live and work. Even if you are the most conscientious person, a conflicting interest may influence you. The mere existence of that interest may cause the propriety of your acts to be questioned.

Avoiding the appearance of a conflict can be just as important as avoiding an actual conflict. In testing for conflict of interest, keep in mind that others tend to judge a situation by what they think it is, not by what it may actually be. If you ever have a question about whether a situation constitutes a conflict for you, always choose the safer route and report the relationship to Northrop Grumman.

Whether a situation constitutes a conflict of interest may depend on your position at Northrop Grumman and the extent of your outside interests. For example, employees whose position responsibilities require them to meet with suppliers or their representatives must conduct themselves so that no undue influence can be inferred. They must also pay their fair share of expenses in accordance with company procedures that address solicitation and receipt of anything of value.

All employees are obligated to comply with the provisions of company policy. In addition, all exempt employees are required to complete a Certificate on Conflict of Interest (form C-196) annually, or whenever situational changes occur that impact responses provided on the previously executed form. This year, C-196 forms will be individually addressed, bar-coded, and mailed during the first week in May. Training materials and relevant procedures are available through Command Media, in HR/Ethics Procedures and under Legal Compliance; hard copies may be acquired from the Ethics Office.

Relationships with suppliers

Helpful, friendly, professional relationships are essential to any business. While maintaining such relationships with our suppliers, we must also maintain an honest, objective and efficient procurement process.

Federal law prohibits kickbacks, i.e., the offering or acceptance of anything of value in exchange for favorable consideration in connection with a government contract or subcontract. Northrop Grumman's policies in this regard go beyond the letter of the law. We must avoid even the appearance of improper conduct in all of our business dealings.

Generally, Northrop Grumman employees and members of their immediate families may not solicit or accept any gifts, payment, or gratuities from our suppliers. Certain exceptions may be approved if properly disclosed on the C-196 form and specifically provided in company procedures.

10 points to remember about conflicts of interest--

It is your duty to report any known conflicts of interest within the company.
Be sure any outside financial or business interests--either as investments or operating businesses--do not conflict with your obligations to Northrop Grumman. This applies to your immediate family as well.
Obtain prior approval of management before serving as a consultant to, a director, trustee, officer or employee of a company, organization or government agency that competes or deals with Northrop Grumman.
The purchase of materials and services must be in accordance with Northrop Grumman procurement policies and procedures.
Northrop Grumman employees must not accept gifts unless specifically authorized by Northrop Grumman policies and procedures.
As required by the Anti-Kickback Act, Northrop Grumman will report to the government whenever there are grounds to believe a kickback may have occurred.
Any financial interests in a Northrop Grumman supplier, or someone seeking to become a supplier, must be reported to the company.
If an employee recommends or approves a supplier, knowing that a family member or other employee's family member is employed by, has control of, or has a substantial interest in that supplier, then the employee must disclose this information in a memo to the vice president of Procurement and Material Management.
Acceptance of any gift or gratuity, regardless of the value, in return for favorable treatment is strictly prohibited.
When adherence to general prohibitions places the employee or the other individual in an awkward or embarrassing situation, the employee must exercise good judgment. If deviation is necessary, the employee must notify his or her immediate supervisor, in writing, within two business days of the event or, if occurring during a business trip, within two business days of return. A copy of the employee's report must be filed with the Ethics Office.