> 1. Rackers are encouraged to contribute on their own time, and if they wish to contribute during work hours they must obtain approval from their manager.
> 2. If a Racker would like to contribute to a project that is directly competitive with Rackspace, we’d like to understand why before they contribute.
2 has got to mean
"If a Racker would like to contribute to a project that is directly competitive with Rackspace [during work hours], we’d like to understand why before they contribute."
otherwise, i don't think such a policy is even legal?