CARGO ACFT PLT ON VFR DEP PASSES IN PROX TO SMA JET 5 MI N OF ARPT. BOTH ACFT REQUESTED IFR CLRNC. AS ATC IDENTS BOTH ACFT; SMA JET INITIATES TCASII CLB. RPTR OF CARGO ACFT DISAGREES WITH JET PLT AS TO EXISTING FLT CONDITIONS; RIGHT OF WAY PROCS AND INFLT ACTIONS TAKEN BY ATC TO SEPARATE BOTH ACFT.

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I TOOK OFF FROM PGV WITH AWOS RPTING 2200 FT OVCST. PGV ELEVATION IS 27 FT MSL. LEVELED OFF AT 1900 FT TO PICK UP IFR CLRNC. FIRST CALL TO ZDC GOT NO RESPONSE. APPROX 30 SECONDS LATER; A MEDIUM SIZE TWIN ENG JET; WHOSE CALL SIGN WAS ACFT Y; CALLED ZDC AND SAID SOMETHING ABOUT ALWOOD INTXN. I CALLED AGAIN TO ZDC STATING I WAS VFR OFF PGV AT 2000 FT; LOOKING FOR IFR CLRNC TO RDU. ACFT Y XMITTED THAT THEY WERE AT 2000 FT AS WELL. I WAS GIVEN A SQUAWK CODE AND IMMEDIATELY TOLD TO LOOK FOR TFC AT 9 O'CLOCK; LESS THAN 1 MI. I VISUALLY SAW A TWIN ENG JET WITH ONLY ITS NAV LIGHTS ON. NO STROBES; NO LNDG LIGHTS. I TOLD ATC I HAD TFC IN SIGHT. ACFT Y SAID SOMETHING ABOUT TCASII AND BEGAN A CLB; PASSED ABOUT 2000 FT IN FRONT AND 300 FT ABOVE. ACFT Y PLT RPTED HE WAS IN THE CLOUDS. I WAS AGAIN ASKED BY ATC IF I HAD TFC IN SIGHT. JUST AS I REPLIED YES; I LOST SIGHT OF HIM MOVING AWAY FROM ME AT APPROX 2 O'CLOCK. I WAS THEN GIVEN MY ATC CLRNC WITH A CLB TO 4000 FT. MY ENTIRE CLB TO 4000 FT WAS VMC. I WAS THEN GIVEN A FREQ CHANGE BY ATC. BEFORE I CHANGED FREQ I HEARD ACFT Y PLT TELLING ATC THAT HE WAS IN THE CLOUDS AT 2000 FT. THE CTLR REPLIED THAT HE HAD STEPPED AWAY FROM THE CONSOLE FOR A FEW MOMENTS WHEN ALL THIS HAD BEGUN AND HE (ATC CTLR) APOLOGIZED. I THEN CHANGED FREQ. MY CONCLUSIONS: 1) ACFT Y PLT HAD DSNDED TO VMC; BUT WAS NOT MAINTAINING OUTSIDE SCAN. 2) HE FAILED TO GIVE WAY TO APCHING ACFT FROM R BECAUSE HE WASN'T LOOKING. 3) INITIALLY; CTLR WAS AWAY FROM CONSOLE; THUS FAILING TO PROVIDE SEPARATION BTWN IFR AND VFR TFC. 4) I MAY OR MAY NOT HAVE BEEN 500 FT BELOW CLOUDS (VFR CLOUD CLRNC).