Center for the Study of Ethics in the Professions at IIT

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General

Martin Marietta is dedicated to developing, producing, and furnishing products and services of the highest quality with delivery to the customer on schedule and at a fair price. We will compete for all business opportunities vigorously, fairly, ethically, and legally and will negotiate our contracts in a fair and open manner. The production and delivery of the end product must meet contractual agreements and obligations.

Marketing Information

In securing and negotiating business, good marketing information is essential. We acquire information about customers, competitors, and suppliers in the normal course of doing business, primarily from a variety of publicly available sources. Collecting this kind of information is necessary and proper. However, employees may not attempt to collect information concerning customers or competitors through improper means. Bribery, the giving of gratuities, wire-tapping, burglary, stealing, and kickbacks are glaring examples of improper means, all of which are obviously wrong and illegal. The Corporation will not tolerate such methods of gathering information. Between the clearly acceptable means of collecting information from public and other sources and the clearly unacceptable of gathering information through illegal means, there are many ways in which information may be found.

One of the necessary and appropriate marketing functions is that of involvement with a customer prior to the issuance of an Invitation for Bid or a Request For Proposal. Through this involvement, a marketing representative is able to inform a customer about the Corporation's products and services and to demonstrate our capability to meet the customer's requirements. It is even possible to suggest, often at the customer's request, specifications, terms and conditions, and evaluation criteria for incorporation into the Invitation or Request. Public contracts -state and federal are most often governed by procurement laws and regulations, which have as their purpose the encouragement of competition and the obtaining of the best possible products and services at the best price. It is essential, therefore, that our marketing activities not be viewed as, or even be suspected of being, attempts to bypass procurement laws and regulations.

Bidding for and Negotiation of Contracts

In the bidding for business opportunities and the negotiations with government representatives for those opportunities, our dealings must be characterized by fairness and professionalism. What we have to sell is the excellence of Martin Marietta's products and services. Since it is the policy of the company to develop and produce the highest quality products and services, we must sell these items on their merits. We should not sell them by disparaging our competitors or their products and services in any way. We should emphasize the advantages to the customer of buying our products and services. No false or misleading statements should ever be made in our proposals to the government or during any negotiation sessions with government representatives. Not only do such statements place the government at a disadvantage in assessing our proposal and in negotiating the contract, but they could easily form the basis for the filing of criminal charges against the company and the employees involved.

In order for the government to be able to negotiate contracts, which represent a fair bargain, we are required to disclose to the government certain information, which was used in creating our proposal. You have heard the terms "truth in negotiations" and "defective pricing." These relate to the statutory requirement that the proposals we submit to the government be based on cost and pricing data, which is accurate, current, and complete. If our data is not accurate, current, or complete, it is said to be "defective:' The government may be entitled to a subsequent reduction in the contract price because of that defective data.

Even a simple mathematical error, as where a bill of materials is added up incorrectly, can result in data being declared defective - for the simple reason that it is not accurate. In such a case, the matter would probably end with the government's administrative remedy of contract price reduction.

Where the claim of defective pricing is based on willful or deliberate actions, however, the consequences are much more severe. Both the company and the individual employees involved could be charged criminally in such cases. Misrepresentation of data, hiding or nondisclosure of data, and failure to use latest vendor quotes or labor rates are all examples of instances in which it could be charged that there was deliberate defective pricing.

Performance of Contracts

Our contracts must be performed not only in strict accordance with the requirements of each contract, but in compliance with all of the laws and regulations applicable to our business. Martin Marietta's policies and procedures are structured to recognize the requirements of these laws and regulations and to assure our compliance with them.

There is perhaps no greater area of legal and ethical concern to an employee than that of labor charging. It is mandatory that the requirements of proper time charging be observed. While Finance has the ultimate responsibility to assure that all costs are properly accounted for and charged, this is not possible unless employees and their supervisors ensure that time worked is accurately entered on the appropriate time card. Inaccurate time charging could easily warrant criminal charges. For example:

You are working in support of several different programs, and am confused about how to charge your time. If you are performing a task that benefits more than one project, your time is normally charged to overhead; but on some occasions, the time may be prorated to the projects being supported. If you are ever in doubt as to how the Cost Distribution Manual requires the charging of your time, you should consult your supervisor.

If your work does not appear to be in support of any particular program, you should consult your supervisor to obtain the correct charge number. It is your responsibility and that of your supervisor to assure your time card is filled out correctly.

Obviously, when an employee knowingly charges time to an account other than that on which he or she worked, he or she is guilty of a fraudulent act. The same would be true of a supervisor who directs an employee to engage in such mis-charging. Another equally obvious fraudulent act occurs when an employee falsifies a time card to reflect more hours than were actually worked. These violations are virtually certain to result in termination of employment for the violator. Under recent commitments made by the Corporation as a signatory to the Defense Industry Initiatives, we will report such instances to the government. This commitment to disclose could lead to further action being taken against the employee by the government.

False Claims or Statements

False claims against the government or false statements to the government can arise in many forms and through many actions which we take in the performance of our duties. The following examples are given to show how relatively simple these matters can be:

It's near closing time on Friday afternoon. You are in the 99th hour of a 100-hour test of a component, as prescribed in contract specifications, before shipping it to another facility for assembly as part of a military system. You're already filling out the certification papers, preparatory to putting the component in its box for shipment, when your carpool driver calls to tell you that they are ready to leave. But the 100-hour test isn't completed, and your supervisor has told you the part has to be shipped today. "What the heck," you tell yourself, -99-plus hours is just as good as 100, and besides, the 100hour requirement is just an arbitrary number." So you sign the certification document, pack the component, and call for Shipping to pick up the package. The moment you sign that certification, you have made a false statement to the government - a federal crime. You have certified that the component meets a contract requirement - the completion of the 100-hour test - when in truth, that requirement has not been met. When the invoice for the component is mailed, it becomes mail fraud as well.

You are required to submit a report and discover that one of the requirements you were supposed to have completed has not been done. However, it can be completed in a few days. The report is due immediately. Should you, out of loyalty, keep the company from looking bad by falsifying the report, since you should have the task completed prior to anyone checking it? No. Martin Marietta sincerely expects that all employees be completely honest, irrespective of the consequences.

Contract specifications for a component your department builds call for all welds to be made by a certified welder. One welder is on vacation, and the other calls in sick. But you have an apprentice, nearly ready for certification, who you think is at least as good as the two regulars, so you tell the apprentice to weld the component. He does so, and your X-ray inspection shows that he has made a perfect weld. You apply the inspection sticker, sign the paperwork, pack up the component and ship it, congratulating yourself on getting the job done in spite of the obstacles. But even though the apprentice's weld was perfect, you have violated the terms of the contract, because the apprentice was not a certified welder. In applying the inspection sticker and signing the paperwork, you have attested falsely that the terms of the contract were met -another unethical procedure that also is a criminal violation.

You will note that in all of these examples, an extremely minor act which caused no harm to the government is in fact a criminal offense. There need be no showing that the government was damaged. The crime is in the falsity of the statement. Other such routine matters which could end up being a false certification, a false statement or a false submittal include:

Incorporating a foreign-made component into a deliverable end-item when the contract calls for American-made parts.

Supplying used, rather than new, parts.

Conflicts of Interest

Piece parts substitution without approval.

Undisclosed modifications of test programs.

Unwarranted increases in the amount of a "claim" in order to provide room for downward negotiation.

Undisclosed changes in a make-or-buy plan.

It is imperative that we be aware of the requirements of each contract under which we perform effort and that these requirements be met to the letter. Shortcuts in production and testing should be avoided if they violate contract terms in any respect.

General

You should not be subject, or even appear to be subject, to interests, relationships or influences which conflict with the interests of Martin Marietta. All employees have a duty to avoid financial, business, or other relationships which might be opposed to the interests of the Corporation or which might cause a conflict with the performance of their duties. A natural division of loyalty would arise between your personal interests and those of the Corporation.

Conflicts of interest arise in an almost limitless number of ways and situations. The following examples of conflicts of interest, by no means an inclusive listing, are provided to help you in your understanding of this critical area of your performance. Any questions concerning a potential conflict of interest should be referred to the Legal Department.

Placement of corporate business of any kind with a supplier owned or controlled by the employee, a member of his household or a close relative, unless such placement is by open competitive bidding in accordance with established corporate procurement procedures. Working part-time or serving as a consultant or on the board of directors of a competitor, a customer, or supplier.

Acceptance by an employee or a member of his family from any individual or firm which does or seeks to do business with the company, of any loan, or guarantee of loan, payment or service, excessive entertainment, travel, or gift of more than nominal value. The Code defines a gift as an item which has a retail market or exchange value of $10 or more.

Acquisition or sale of any property, facilities, materials, or services by the company under circumstances where there is direct or indirect compensation to an employee or member of his family.

Soliciting or accepting from present or prospective suppliers any discount on personal or family purchases of equipment, materials, or services. Obviously, an employee may accept any discount offered generally to all employees of the company or to the general public.

Accepting money or benefits from any supplier of services, materials, or equipment to the company. This could also be viewed as a bribe or a kickback, which is a felony offense.

Conflict of interest situations can arise because of circumstances alone, even without any action on your part. Since each situation is different, many factors need to be considered. Take, for example, the following situations:

You are a Martin Marietta contract specialist employee and you also hold a part-time job working nights at a local bookstore. By no stretch of the imagination would your store employment constitute a conflict of interest. For that matter, it would not make any difference what your job is at Martin Marietta. At no time, however, should your outside employment interfere with the performance of your job at Martin Marietta.

You are in the purchasing department and your spouse works for a supplier of items which you normally have occasion to buy. The supplier's annual Christmas party is open to employees and their spouses and it is known to be a lavish affair. Would your acceptance of the invitation place you in a position of conflict with this supplier who does business with Martin Marietta? Generally, this would not constitute a conflict. The invitation to you is not tied to your Martin Marietta position; it is because you happened to be the spouse of that supplier's employee. Martin Marietta should not and will not impose unreasonable restraints on employees in the enjoyment of their personal lives.

At that same Christmas party you have the extreme good fortune of having won an expensive color TV based on a ticket drawing. Would your acceptance constitute a conflict? Here again, prizes or awards given in contests or drawings open to all in attendance and not given to a specific individual because of his position are perfectly acceptable. The random selection of your ticket obviously dispels any appearance that your later purchasing decisions may be influenced.

You are the purchasing manager of a project which will require a large purchase of computer equipment and services. A manufacturer of computers has invited you to take a two-day tour of its manufacturing and service facilities in order to see first-hand its capabilities and new product lines. The manufacturer has offered to provide free transportation and lodging for the event. Your acceptance of this invitation would not in and of itself be an unethical act, nor would it necessarily be a conflict of interest. Martin Marietta normally provides funds for such trips, so this issue should arise only under extraordinary circumstances. Our travel budgets are structured to accommodate the expenses of personnel who travel to determine a subcontractor's or a vendor's capabilities.

Our vendor selection and our purchasing activities must always be free from even a perception or suspicion that favoritism is involved. For that reason, the general policy of Martin Marietta is that our employees not accept free transportation, lodging, and the like from current or prospective suppliers. There could be situations, however, in which it is determined that acceptance would be in the best interest of the Corporation. Any such invitation should be referred to the Ethics Office for a determination as to whether the circumstances warrant an acceptance of the invitation. Martin Marietta employees are occasionally invited to participate in seminars, meetings, or symposia by making speeches, presenting professional papers, or serving on panels. In some instances, the sponsoring organization will pay for the expenses of the employee and occasionally will offer the employee an honorarium. Sometimes only the honorarium is offered. On still other occasions, no honorarium or payment of expenses is offered. The Corporation recognizes that such events not only enhance the employee's personal reputation but, in many cases, reflect well on the Corporation itself. While employee participation in such events is encouraged, in each instance it must not interfere with the employee's work assignment and, therefore, the employee should have the approval of his or her supervisor. In some instances, the event may be of such benefit to the Corporation or be a part of the Corporation's community citizenship role that the expenses of the employee would be reimbursed as an approved travel expense. The issue in each instance, of course, is whether the employee's participation in an event and the acceptance of an honorarium and/or expenses would constitute a conflict of interest,

Many factors must be considered in an analysis of whether a particular event would cause a conflict of interest or whether it would be appropriate for an employee to accept an honorarium or payment of expenses. While the Corporation has no desire to unreasonably restrict an employee's ability to participate in these events, it must protect its own and the government's interests when, for example, the employee's participation in an event occurs on a scheduled and paid workday.

An employee who is contemplating participation in an event where there has been an offer of an honorarium or payment of expenses should review the matter with his or her supervisor and, if uncertainty still exists, then contact the Ethics Office or the Legal Department for an analysis. In addition to the various conflicts of interest outlined in the Code and above, there is another conflict that might arise from an employee owning or having substantial interest in an outside business. This conflict would result when an employee uses Martin Marietta work time to conduct or assist in conducting business for the employee's privately owned business. For example, an employee who owns his or her own business should not use Martin Marietta working hours, facilities (including the telephone, computer or word processor), the time of a secretary to write letters for his or her firm, Martin Marietta stationery, or any other Martin Marietta equipment or service to further the outside firm's business.

If customers of your outside business call you at your Martin Marietta office, for example, you should require the callers to contact you at home or your firm's office after Martin Marietta working hours. Employees, in other words, should not use company time to perform any action in support of a personally owned business or one in which they have a significant business interest.

While it is the general rule that company telephones not be used for personal calls, it is recognized that there are occasional times when such usage may occur. For example, you may receive a call from a doctor's office reminding you of an appointment; or the garage may call you to tell you that your automobile is ready to be picked up. Similarly, there are times when you yourself may make the call, such as to check on the condition of a sick family member, or to set up an appointment. Employees are strongly encouraged to be sensitive to the frequency and duration of personal calls and to avoid abuse of the telephone system by exceeding a reasonable standard.

Former Government Employees/Military Personnel

There is another area of potential conflict of interest which must be addressed, and that involves the hiring as employees or use by the Corporation as consultants of former military officers and federal government employees. In keeping with the Corporation's belief that the federal government must have the highest caliber personnel if it is to properly serve the nation, Corporate policy prohibits the solicitation and recruitment of active military and government civilian employees into the employ of the Corporation. Once such an individual has made the decision to leave government service, however, it is permissible to grant employment consideration to that individual. In fact, we believe it would be improper to discriminate against these individuals who have chosen to serve their country in a military or civilian capacity.

The Ethics in Government Act, the Defense Improvement Act of 1986, other laws, and the standards of conduct of various federal agencies impose restrictions on the activities of certain officers and employees who retire from or leave government service. Violation of these restrictions could lead to the imposition of severe civil penalties on the Corporation and the individual. In some cases, violation could result in criminal penalties and forfeiture of Federal retirement pay.

Even in the case of a violation where the penalty would be imposed only on the individual, Martin Marietta has a responsibility not to place that individual in a position or assign him a task which could cause a violation.

The primary purpose of the laws and regulations in question is to prohibit those activities which would enable a former officer or employee from using his former position or proprietary knowledge gained in that position to benefit himself or his client or employer. In offering employment, such circumstances should always be avoided.

In order to carry out this responsibility to the individual and to ensure compliance with those laws which affect the Corporation, we have established a procedure by which the legal department will perform a Conflict of Interest Analysis to determine if the former officer or employee is eligible for employment and, if eligible, which job responsibilities and tasks must be avoided by the individual.

While many of the post-government service prohibitions expire two, and sometimes three, years, after the individual has left the government service, others are permanent, or lifetime, prohibitions. For example, a retired regular officer of the armed forces is prohibited for a period of two years after leaving service from representing anyone in the sale of anything to the government through the military department in which he holds retired status. Further, that officer may never act as an agent or attorney for prosecuting any claim against the government, or assist in the prosecution if such a claim involves any subject matter with which he or she was directly connected while on active duty.

 

ENTERTAINMENT, GIFTS, AND PAYMENTS CUSTOMER AND SUPPLIER PERSONNEL

Employees who are former government employees at GS-13 and above or military grade 0-4 and above should be alert to job responsibilities and tasks which might involve them in matters which were under their responsibility while in their former government jobs or in which they had a substantial involvement. Retired military officers in particular should be alert to situations which might be viewed as claims prosecution or selling activities. Employees are strongly encouraged to discuss such matters with the Legal Department because of the broad range and extreme complexity of the various statutes and regulations.

General

It is the policy of Martin Marietta to conduct all of its business on a sound ethical basis. We will procure goods and services and will sell our products and services on an impartial and objective basis, free from outside influence. Our business transactions should always be free from even a perception that favorable treatment was sought, received, or given as the result of furnishing or receiving gifts, favors, hospitality, entertainment, or any similar gratuity. While there are various circumstances under which it is permissible to furnish or accept such items, there is one area of activity for which there is an absolute prohibition. Martin Marietta specifically prohibits the offering, giving, soliciting or receiving of any form of bribe or kickback. These are criminal acts and will be dealt with by termination of employment and referral for criminal prosecution. The prohibition against bribes and kickbacks extends as well to transactions involving foreign countries in which the practice is acceptable or is considered "a way of doing business:'

Relations with Government Employees

There are many federal and state laws which address the acceptance by federal, state, and local government employees of entertainment, meals, gifts, gratuities, and other things of value from firms and persons with whom government agencies and departments do business or over whom they have license or regulatory authority. Additionally, these departments and agencies have issued regulations implementing these laws.

Basically, these laws and regulations prohibit government employees from soliciting or accepting entertainment, meals, gifts, or things of value from persons or firms with which they do business or over whom they exercise authority. It is therefore the policy of Martin Marietta to prohibit its employees from giving or offering to give these items to such employees. These laws and regulations do, however, vary with respect to coverage and permissible exceptions. Since these exceptions are narrowly construed, any question concerning them should be referred to the Ethics Office or to the Legal Department. The following illustrate some of the established exceptions:

The Department of Defense permits its employees to accept transportation and related travel expenses from a potential employer in connection with a job interview provided that the employee discloses these arrangements to his superior or supervisor and provides some evidence that the potential employer offers the same benefits to all applicants in similar situations.

Customary exchanges of gifts or hospitality between government personnel and their friends and relatives and the friends and relatives of the spouse, children and household members are permitted. It should always be clear, however, that it is the family or social relationship, and not the business of the person concerned, that is the motivating factor for the gift or hospitality. Under no circumstances whatsoever can the cost of the gift or hospitality be paid for by the company.

Government employees are generally permitted to accept unsolicited advertising or promotional items of nominal value. Such items as fact sheets, brochures, pencils, pens, decals, patches, technical publications, coffee cups, key chains and the like, are generally not considered to be gifts within the definition of the Code and the regulations applicable to government employees.

As a general rule, government employees may not accept meals or transportation. There are circumstances, however, under which some departments and agencies will permit their employees to accept these items. Thus, while it is the policy of the Corporation that our employees are not permitted to provide meals and transportation to government employees, we do, nevertheless, recognize these exceptions to the standards of conduct of the departments and agencies. Any questions regarding the propriety of furnishing these items to a government employee should be referred to the Ethics Office or the Legal Department.

There are times when Martin Marietta, alone or in conjunction with other companies, hosts functions at which it is reasonably anticipated that government personnel will appear, or indeed, to which we may even desire to invite them. Such functions as gatherings at the Paris Air Show, technical and professional association meetings, ship launching and other "roll relations-out" ceremonies, and certain community relations programs are considered to be of interest to and to benefit not only industry but the government as well. The propriety of inviting government personnel to such functions varies from agency to agency. Questions regarding any such proposed invitations should be referred to the Legal Department for consideration and, if necessary, gaining prior approval from the appropriate agency.

Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act, in general, prohibits the giving of money or things of value to a foreign official for the purpose of influencing a foreign government. In our international transactions, many of our people have occasion to meet with civil and military officials of foreign governments. Many of these meetings are in a social context, in which the propriety of furnishing meals, transportation, entertainment, or other items may be questioned. The law and regulations governing the matters are quite different from those affecting U.S. government personnel. Any question concerning our relationships with foreign officials should be referred to the Legal Department in advance of the transaction or activity. It is, of course, a violation of the Code, and of federal law, to engage in any form of bribery, notwithstanding the fact that it may be a local practice or custom.

Relations with Non-Government Personnel

The furnishing of business courtesies in conjunction with business discussions with non-government personnel is a commonly accepted practice of long standing. A business courtesy is generally a benefit extended to, or on behalf of, a recipient. It may take the form of meals, entertainment, hospitality, tickets to sporting or other events, recreation, or any other thing or benefit for which the recipient does not pay fair value.

As a general rule, Martin Marietta permits its employees to furnish and accept customary business courtesies, although some operating elements of the Corporation may have more restrictive procedures on the subject. Since business courtesies are intended to create goodwill and not to gain an improper advantage, good judgment must always be exercised in the furnishing and the receiving of such items and the expenses involved should always be kept at reasonable levels. Under no circumstances can the use of business courtesies lead to an obligation to "pay back" on the part of the recipient. When in doubt, you should call the Ethics Office or the Legal Department.

PRESERVATION OF ASSETS AND COST-CONSCIOUSNESS

General

Every employee is charged with the duty to preserve the Corporation's assets, its property, and equipment, including that furnished by our customers and suppliers. We are also charged with being cost-conscious, acquiring materials and services in accord with the most rigorous procurement standards and obtaining items of appropriate quality at a price that optimizes total cost to Martin Marietta and to the customer. The Corporation will provide for reimbursement of reasonable expenses of employees who travel on business or to Corporation-sponsored events. Reasonable economy should be practiced at all times in the selection of air carriers, vehicle rentals, accommodations, and meal expenditures. For example:

You an- charged with screening supplier competitive bids for a project. The practice cost-consciousness to the fullest, should you always accept the lowest bid in competitive vendor bidding? No. The lowest bid may not be as inexpensive as it appears if the supplier cannot provide the proper quantity and quality of goods to the agreed schedule. In fact, the lowest bid may cost the Corporation and the customer the most if delays in delivery and/or inadequate quality result. The accepted bid should optimize the total cost, in comparison with the benefit received, not just merely be the lowest cost.

You are on travel status and know that government guidelines generally limit spending to $25 per day on meals. In addition, you know that the Corporation's policy for reimbursement of expenses is to reimburse the actual cost expended and to require receipts for all items in excess of $25. Should this $25 be claimed every day as sort of a per diem? No. It is not a per diem. You should claim only that reasonable amount you actually spend on meals. Claiming a flat $25 constitutes the making of a false claim. Company policy is to reimburse actual and reasonable expenses. The Corporation absorbs reasonable expenses above the $25 per day guideline. If you have to spend more than $25 on a particular day, obtain a receipt for those costs in excess of $25, obtain your supervisor's approval, and submit it with your expense report. You may not, however, claim from the Corporation money spent on alcoholic beverages before, during, or after a meal. Further, such expenses are specifically disallowed as costs to the government and the Corporation does not seek reimbursement for any expenses that relate to alcoholic beverages.

COMPLIANCE WITH SECURITIES LAWS AND REGULATIONS

The use of material information for your own financial benefit or for another may be more than an ethical concern; it could very well be a violation of law. Until released to the public, certain information regarding Martin Marietta's plans and activities is considered "inside" information and must therefore be handled in a confidential manner. This data does not belong to any director, officer, or employee who may handle it or know of it. It is an asset of the Corporation. It is a violation for any person to use such information for his personal benefit or to disclose it outside the Corporation.

In connection with trading in Martin Marietta's securities, such use or disclosure defrauds not only the company but the investing public which does not have the benefit of such information.

If you have non-public information that Martin Marietta or another company with which it is dealing is planning to build a new facility, you should not invest in land or business near the planned site.

If you invest in a company with which Martin Marietta does business, or plans to do business, you should not buy or sell stock in that 0company based on any inside information you may have acquired concerning that company, nor should you use inside information to assist that company in any way.

You should not place a purchase or sale order in the Corporation's securities when you have knowledge of material inside information which has not been disclosed to the public. The same is true of information about a customer. supplier, or competitor company.

You should not disclose material inside information to anyone, except to persons within the Corporation whose positions require them to know it.

You should not attempt to evade these guidelines by acting through anyone else.

COMPLIANCE WITH ANTITRUST LAWS

General

The business of Martin Marietta is subject to the provisions of the various federal antitrust laws. These laws, which have been in effect for many years, focus on the principle that the economy and the public will benefit from a healthy state of business competition, free from unreasonable restraints. Under these laws, companies may not enter into agreements with other companies that unreasonably restrict the competitive process. Nor may a company, by its actions alone and not acting jointly with someone else, take action which would restrict the process.

These antitrust laws cover all business transactions in the United States and certain foreign transactions. Additionally, the international activities of the Corporation could be subject to the antitrust laws of foreign countries or organizations such as the European Economic Community.

In reading the following guidelines, you should bear in mind that there need not always be a formal agreement or understanding as to the prohibited activity. The agreement or understanding can be found to exist - can be inferred - from circumstances which show that the parties had some kind of a mutual understanding.

Competitors may not agree, understand, or arrange among themselves to raise, lower, fix, or stabilize prices.

A seller may not sell a product upon condition that the buyer will not purchase or use the products of the seller's competitor.

Competitors may not have understandings or agreements with respect to the division or allocation of markets, territories, or customers, nor to the amount of their production. A company may not attempt to eliminate a weak competitor by selling its products and services at a below-cost price in an attempt to force the competitor out of business. A company may not agree that it will buy goods and services from a supplier conditional on the supplier's agreement to buy the company's goods and services. Occasionally, however, a sale may involve additional commitments such as the offsets which occur in some international transactions. Any such arrangement should be referred to the Legal Department for review.

Teaming Agreements

Our participation in teaming agreements could, under certain circumstances, raise antitrust issues. Since the complexity or size of a particular government program may place it beyond the capability of a single company, a potential prime contractor may need to proceed in joint venture with others or by subcontracting significant portions of the program. It is no defense to antitrust illegality that a teaming agreement was requested or encouraged by a government agency or the fact that even the Federal Acquisition Regulation condones the use of a teaming agreement.

A teaming agreement's legality will turn primarily upon a determination of the agreement's dominant purpose. A teaming agreement will be held illegal per se where its dominant purpose is to eliminate or restrain competition. Certain conduct is regarded as so contrary to the principles of free and open competition as to be immediately condemned under the antitrust laws regardless of the circumstances. A perfect example of this is price-fixing. Where such conduct is shown to exist, it makes no difference what the company's motives were, or even whether the conduct was designed to counteract illegal conduct by others.

Where conduct is not considered illegal per se, it is measured by what is referred to as "the rule of reason."

The use of teaming agreements must be restricted to specific opportunities and, in all cases, must have specific prior approval of the Legal Department.

INTERNATIONAL BOYCOTTS AND RESTRICTIVE TRADE PRACTICES

General

Various laws of the United States carry criminal penalties and loss of tax benefits for cooperation with foreign country boycotts that discriminate against U.S. firms or citizens on the basis of race, color, religion, sex, or national origin. These laws also apply to compliance with requests for information or action which would further the boycott of those countries friendly to the United States as a condition of sales of goods or services to the boycotting countries. Even the mere receipt of a request to engage in such activity is a reportable event under these laws. While these laws relate principally to the Arab boycott of Israel, it is always possible that other "blocs" or nations could be included as world circumstances and situations change.

The purpose of the following guidelines is to help you increase your awareness of this critical area of compliance and to further your understanding of the ways in which this restrictive trade practices might arise.

In general, federal anti-boycott law prohibits U.S. firms and persons from providing information concerning business relationships with boycotted countries, information concerning the U.S. firm's or person's own business relationships, and information concerning any other person's relationships in or with a boycotted country. It is not permissible to provide this information, or agree to provide it, even if it relates to a past relationship. Further, it cannot be provided in anticipation of a request.

A boycott request can take many forms. It could be a direct request to furnish information. It could be a request to take action, or even to refrain from taking action, which could support or further a boycott. It could appear as an invitation for bids, a contract, or a purchase order. It may appear in a letter of creditor other financial document.

No information with regard to any such requests may be furnished. Remember, too, that the volunteering of such information is prohibited, as where the Corporation is making a presentation to a large group of possible customers in anticipation of future business. You cannot use that presentation to notify your audience that you have no connections of the type sought, or any of the other prohibited informational items.

In summary, not only is the furnishing, orally or in writing, of boycott related information prohibited, but the mere receipt of a request for such information is required to be reported. The complexities of the law in this area are such that employees are required to immediately report to the Legal Department any request which calls for, or even appears to involve, any prohibited information.

POLITICAL CONTRIBUTIONS

Political Contributions

Federal law and the laws of most states and foreign countries prohibit political contributions, whether by direct or indirect use of corporate funds, to any party or candidate or to any organization that might use the contribution for a political party or candidate. Additional laws in this area apply specifically to defense contractors.

As authorized by the Federal Election Campaign Act, the Corporation has established a Political Action Committee which may lawfully make contributions.

Your work time is also considered the equivalent of a contribution by the Corporation. Therefore, you cannot be paid by the Corporation for any time spent in any campaign efforts for a political candidate or party. Similarly, if you run for or hold an elective office, the time you spend in campaigning or performing the duties of that post must be your own time, whether it be vacation, unpaid leave, after hours, or weekends.

Martin Marietta encourages all employees to participate personally and actively in the political process. An employee's contributions to a political candidate or party must not be made with, or even appear to be made with or reimbursed by, the Corporation's funds.

No employee in any position may use the influence of that position to persuade another employee to work for candidates, political organizations, or issues, or to make personal contributions to a party or candidate. No employee will be favored or penalized because of making or not making a political contribution or for participating in any legal political activity.

Civic Activities

Martin Marietta also encourages its employees to become involved in civic affairs. As with political activities, employees must recognize that their involvement and participation must normally be on an individual basis, on their own time, and at their own expense. However, there are some allowable exceptions:

You are a member of the executive committee of a Boy Scout troop which meets at 4:30 p.m. on the third Thursday of each month. Since your workday does not end until 4:30 and it takes you an hour to reach the meeting site, does this mean that you must resign from this group because you cannot leave work in time to make the meetings? No. If your supervisor approves and your absence will not violate some special local rule or a union contract, will not interfere with your job, and the time missed is accounted for properly, you may leave in time to make the meeting.

The Corporation itself is involved in many community activities. Civic activities supported by Martin Marietta's community relations program must be tax-exempt and include such activities as welfare or charity fund drives such as the United Way, working with educational institutions and groups, assisting non-political civic and cultural activities, working with organizations involved in training and motivating the disadvantaged, and supporting agencies and organizations funded, at least in part, by the United Way or similar umbrella groups.

You are appointed to head the United Way or U.S. Savings Bond campaign drive for your department or work section. It is not required that you do this on your own time. It is expected that the activity will require you to use work time. In this instance, it is the Corporation that is involved in the activity and you are acting in its behalf. You should, however, along with your supervisor, assure that the time spent on these efforts is accounted for properly.

You notice that some employees are members of boards of directors of various organizations, including publicly held corporations, academic institutions and charitable and scientific institutions. Is this contrary to the Code? In certain instances and provided the individual's supervisor has approved such memberships, the answer is no. The Corporation has approved employee membership on boards of directors of financial institutions, hospitals, educational institutions, industrial organizations, non-profit associations supporting technology advancement or national security, and non-profit organizations that operate for the good of the community such as the United Way and its supported agencies, cultural activities, and so forth. Board memberships provide valuable experience and perspective to the employees concerned and in many cases are of obvious benefit to the community. However, in all instances, employee board members must disassociate themselves from any board action that involves actual or perceived conflict of interest between Martin Marietta and the board's organization. Members must also serve as individuals and not as representatives of Martin Marietta. If you are asked to join a board of directors and you have any doubt about whether your membership will violate the Code, consult the Ethics Office or the Legal Department.

As to membership on the board of a firm which does business or seeks to do business with Martin Marietta or is a competitor of Martin Marietta, a conflict of interest in violation of corporate policy could arise. Such involvement is required to be disclosed for the purpose of analysis by the Legal Department.

COMPLIANCE AND DISCIPLINE

General

The Code requires that "as with all matters involving investigations of violations and discipline, principles of fairness and dignity will be applied." Investigative personnel of any type must remember that an employee charged with anything is considered innocent and should be so treated. Investigative personnel should also ensure that all investigations be conducted with as much confidentiality as possible.

Retaliation

Disciplinary action will be taken against any supervisor who retaliates, directly or indirectly, or encourages others to do so, against an employee who reports a violation of the Code. In order to preserve the integrity of the Code and to permit every employee to meet his or her obligations under the Code, it is imperative that an employee have the opportunity to raise concerns or to report misconduct without fear of retribution. It is the Corporation's determination to establish an environment in which employee reports are expected and accepted and in which an employee may feel free to voice a concern or report a violation without fear of intimidation on.

SUMMARY

As noted in the Foreword, it is expected that every Martin Marietta employee and consultant will transact the Corporation's business with the highest standards of integrity. The Code of Ethics and Standards of Conduct, which is a compilation of our current policies and procedures, sets forth those standards. These guidelines are an amplification of items set forth in the Code, utilizing not only examples in which the conduct is clearly wrong or improper, but also those in which the conduct is entirely proper. By understanding the basis and rationale for the distinctions between the two, you will be able to determine the appropriate course of action you should take in any particular situation. As a highly visible and major participant in the government contracting process, Martin Marietta, and each of us, must accept and support the public examination of our performance. By maintaining a sensitivity to and an awareness of the ethical aspects of what we do, we can ensure that our conduct in all respects is exemplary. Martin Marietta and its employees enjoy an outstanding reputation. Adherence to these Guidelines and to the Code will uphold and enhance that reputation.