B-152160, DEC. 11, 1964

B-152160, DEC. 11, 1964

TO THE HONORABLE SECRETARY OF THE AIR FORCE:

FURTHER REFERENCE IS MADE TO LETTER OF OCTOBER 20, 1964, FROM THE ASSISTANT SECRETARY OF THE AIR FORCE REQUESTING THAT WE REVIEW OUR DECISION OF OCTOBER 24, 1963, B-152160, 43 COMP. GEN. 408, TO THE SECRETARY OF DEFENSE, TO DETERMINE WHETHER ON THE RECORD NOW PRESENTED, THE EMPLOYMENT ACTIVITIES OF THE RETIRED OFFICER INVOLVED BROUGHT HIM WITHIN THE SCOPE OF THE PROVISIONS OF 5 U.S.C. 59C SO AS TO PRECLUDE THE PAYMENT OF RETIRED PAY DURING THE PERIOD IN QUESTION. THE REQUEST FOR DECISION WAS ASSIGNED SUBMISSION NO. SS-AF-806 BY THE DEPARTMENT OF DEFENSE, MILITARY PAY AND ALLOWANCE COMMITTEE.

SECTION 59C OF TITLE 5, U.S. CODE, PRECLUDES PAYMENT OF RETIRED PAY FOR A PERIOD OF 3 YEARS AFTER RETIREMENT TO AN OFFICER ON THE RETIRED LIST OF THE "REGULAR AIR FORCE, * * * WHO FOR HIMSELF OR FOR OTHERS IS ENGAGED IN THE SELLING OF OR CONTRACTING FOR THE SALE OF OR NEGOTIATING FOR THE SALE OF TO ANY AGENCY OF THE DEPARTMENT OF DEFENSE * * * ANY SUPPLIES OR WAR MATERIALS.' THE TERM "SELLING" IS DEFINED IN PARAGRAPH VI.B OF DEPARTMENT OF DEFENSE DIRECTIVE NO. 5500.7, DECEMBER 12, 1961, AND IN PARAGRAPH I.C. 2 OF INCLOSURE 3-C TO DEPARTMENT OF DEFENSE DIRECTIVE 5500.7, MAY 17,1963, TO MEAN, AMONG OTHER THINGS,"ANY OTHER LIAISON ACTIVITY WITH A VIEW TOWARD THE ULTIMATE CONSUMMATION OF A SALE ALTHOUGH THE ACTUAL CONTRACT THEREFOR IS SUBSEQUENTLY NEGOTIATED BY ANOTHER PERSON.'

THE CONCLUSION REACHED IN OUR DECISION OF OCTOBER 24, 1963, B 152160, WAS BASED ON THE EMPLOYMENT SITUATION DISCUSSED IN COMMITTEE ACTION NO. 325 OF THE MILITARY PAY AND ALLOWANCE COMMITTEE, DEPARTMENT OF DEFENSE, AND THE INFORMATION THERE FURNISHED. IT WAS REPORTED THAT THE CONTACTS MADE BY THE RETIRED OFFICER WITH PERSONNEL OF THE DEPARTMENT OF DEFENSE AND MILITARY DEPARTMENTS INCLUDING INSTALLATION PERSONNEL, TO DISCUSS GENERAL TRENDS, INCLUDED, AMONG OTHER THINGS, CONTACTS FOR THE PURPOSE OF DISCUSSING "PROCUREMENT PROCEDURES TO INCLUDE POLICY CHANGES, TYPE OF PROGRAM MANAGEMENT PREFERRED,OFFICES OF RESPONSIBILITY FOR VARIOUS PROGRAMS, ETC., " AND ,DOD PROGRAM PACKAGE BUDGET TO INCLUDE SCOPE, FORMAT, IMPORT ON MILITARY PROGRAMS AND REQUIREMENTS, ETC.' IN THIS CONNECTION, WE SAID, IN THE DECISION THAT WHILE WE HAVE RECOGNIZED THAT A CONTACT BY A RETIRED OFFICER IN HIS CAPACITY AS A NONCONTRACTING TECHNICAL CONSULTANT WITH A NONCONTRACTING SPECIALIST WHICH INVOLVES NO SALES ACTIVITY BUT IS MERELY FOR THE PURPOSE OF ACQUIRING TECHNICAL INFORMATION, WHETHER ABOUT THE FUTURE NEEDS AND PROGRAMS OF THE SERVICE OR FOR OTHER PURPOSES, NEED NOT BE VIEWED AS COMING WITHIN THE SCOPE OF THE STATUTE (42 COMP. GEN. 236, B-149705, NOVEMBER 8, 1962), GRAVE DOUBT EXISTS THAT CONTACTS MADE BY A RETIRED OFFICER ON BEHALF OF HIS COMPANY WITH MILITARY PROCUREMENT AND BUDGET PERSONNEL ARE MADE FOR PURPOSES OTHER THAN THOSE ENUMERATED IN THE QUOTED PROVISIONS OF DEPARTMENT OF DEFENSE DIRECTIVE. WE CONCLUDED THAT SINCE, ON THE EXISTING RECORD, THE DUTIES OF THE RETIRED OFFICER INCLUDED, AMONG OTHER THINGS, INITIATING CONTACTS WITH PROCUREMENT AND BUDGET PERSONNEL IN HIS CAPACITY AS COMPANY REPRESENTATIVE AND HE APPEARED TO HAVE PERFORMED SUCH DUTIES, WE REASONABLY COULD NOT CONCLUDE THAT HIS EMPLOYMENT DID NOT COME WITHIN THE PURVIEW OF THE PROHIBITORY STATUTE AND THE QUOTED PROVISIONS OF THE DEPARTMENT OF DEFENSE DIRECTIVE.

IT APPEARS FROM THE INFORMATION NOW FURNISHED THAT THE OFFICER CONCERNED, BRIGADIER GENERAL LAURENCE B. KELLEY, WAS RETIRED FROM THE U.S. AIR FORCE ON JULY 31, 1960, AND THAT ON MARCH 16, 1961, HE WAS EMPLOYED AS A PLANNING AND EVALUATION MANAGER WITH THE CHANCE VOUGHT CORPORATION, VOUGHT ASTRONAUTICS DIVISION, DALLAS, TEXAS, A CORPORATION DOING BUSINESS WITH THE GOVERNMENT AND ENGAGED IN SELLING OR OFFERING TO SELL PRODUCTS SUCH AS AIRCRAFT, MISSILE COMPONENTS, SPACE BOOSTERS, ETC.

IN REQUESTING FURTHER CONSIDERATION OF THE DECISION OF OCTOBER 24, 1963, GENERAL KELLEY EXPLAINED THAT THE PURPOSE OF HIS CONTACTS WITH DEPARTMENT AND INSTALLATION PERSONNEL CONCERNING ORGANIZATIONAL CHANGES, ETC., WAS TO KEEP HIS EMPLOYERS FULLY INFORMED OF NEW DEVELOPMENTS IN THE MILITARY SERVICES, REFERRING TO CHANGES IN POLICY, TRENDS, ROLES, MISSIONS, ETC., AND DID NOT INVOLVE A SELLING EFFORT. AS AN EXAMPLE, HE POINTS OUT THAT WHEN THE AIR MATERIEL COMMAND AND THE AIR RESEARCH AND DEVELOPMENT COMMAND WERE ABOLISHED TO FORM THE AIR FORCE LOGISTICS COMMAND AND THE AIR FORCE SYSTEMS COMMAND, HE WAS AT A LOSS TO KNOW WHERE CERTAIN GENERAL RESPONSIBILITIES WERE LOCATED, AND SO ARRANGED CONTACTS WITH AIR FORCE PERSONNEL TO FAMILIARIZE HIMSELF, AND IN TURN HIS EMPLOYERS, WITH NEW LINES OF RESPONSIBILITY IN THAT COMMAND. HE FURTHER SAYS THAT THERE WAS NO REQUIREMENT TO SOLICIT OTHER THAN GENERAL AND TECHNICAL INFORMATION FROM DEPARTMENT OF DEFENSE PERSONNEL TO PROVIDE HIS EMPLOYER WITH THE INFORMATION REQUIRED BY HIS JOB DESCRIPTION. IN SUPPORT OF THE OFFICER'S CONTENTION THAT HIS CONTACTS WITH DEPARTMENT AND INSTALLATION PERSONNEL WERE PRIMARILY FOR THE PURPOSE OF ASCERTAINING ORGANIZATIONAL CHANGES IN THE AIR FORCE, IDENTIFICATION OF PERSONNEL RESPONSIBILITY FOR OVER-ALL MANAGEMENT OF VARIOUS PROGRAMS, AND LIAISON ACTIVITY BETWEEN MANAGEMENT ELEMENTS AND SYSTEMS ENGINEERING, THERE WAS SUBMITTED A GROUP OF 20 STATEMENTS OF HIGH-RANKING MILITARY PERSONNEL WHO WERE PERSONALLY CONTACTED BY GENERAL KELLEY DURING HIS VISITS AT THE INSTALLATIONS. GENERALLY, THE STATEMENTS SAY, IN SUBSTANCE, THAT THE DISCUSSIONS BETWEEN THE OFFICERS CONTACTED AND GENERAL KELLEY INVOLVED ORGANIZATIONAL CHANGES IN THE AIR FORCE AND TECHNICAL MATTERS, EMPHASIZING IN PARTICULAR THAT THE DISCUSSIONS DID NOT INVOLVE THE POTENTIAL SALE OF ANY PRODUCT MANUFACTURED BY THE COMPANY REPRESENTED BY GENERAL KELLEY. THERE IS ALSO ENCLOSED A LETTER ADDRESSED TO GENERAL KELLEY FROM THE DIRECTOR OF INDUSTRIAL RELATIONS, VOUGHT ASTRONAUTICS DIVISION, TO THE EFFECT THAT THE COMPANY HAS ALWAYS BEEN EXCEEDINGLY SCRUPULOUS IN ITS EFFORTS TO AVOID EMPLOYING OR PLACING RETIRED MILITARY OFFICERS IN POSITIONS WHICH MIGHT JEOPARDIZE THE STATUS OF THE INDIVIDUAL OR THE ORGANIZATION. IT IS FURTHER STATED THAT THE COMPANY RECORDS SHOW THAT GENERAL KELLEY'S POSITION DID NOT HAVE RESPONSIBILITY FOR MARKETING OF DIVISION PRODUCTS OR SERVICES, NOR FOR ANY PHASE OF CONTRACT NEGOTIATION OR SETTLEMENT.

IN ADDITION TO THE ABOVE, THE OFFICER IN HIS REQUEST FOR REVIEW INDICATES THE PURPOSE BEHIND THE CONTRACTS MADE BY HIM AS BEING TO DISCUSS GENERAL TRENDS RELATING TO PROCUREMENT, BUDGET MATTERS, ETC., AS FOLLOWS:

"B. PROCUREMENT MATTERS WERE LIMITED TO GENERALITIES. FOR EXAMPLE, THE "COST-PLUS" TYPE OF CONTRACT THEN IN GENERAL USE WAS SUSPECT BECAUSE OF OVER-RUNS AND HAD FALLEN INTO DISFAVOR BY DOD AND THE CONGRESS. WHAT WAS THE ALTERNATIVE TO THIS TYPE CONTRACT? AS FOR PROGRAM MANAGEMENT, THERE WERE SEVERAL TYPES IN EXISTENCE, INCLUDING TEAM, PRIME WITH SUB- CONTRACTORS, ETC. I SOUGHT TO DETERMINE THINKING IN THIS AREA. PROGRAM MANAGEMENT RESPONSIBILITIES INFORMATION REQUEST WAS IN TERMS OF ENTIRE WEAPONS SYSTEMS. FOR EXAMPLE, WHO WAS RESPONSIBLE FOR THE AEROSPACE PLANE? WAS IT ONE AIRPLANE OR A SPACE SYSTEM?

"C. THE DOD PROGRAM PACKAGE BUDGET WAS AN ENTIRELY NEW CONCEPT NOT UNDERSTOOD BY INDUSTRY. I WAS SEEKING GENERAL INFORMATION AND NOTHING SPECIFIC, ALTHOUGH MY WORDING WAS POOR IN EXPLANATION AND COULD INDICATE OTHERWISE. BY FORMAT, I MEANT THE "OUTLINE" OR "SKELETON" WITHOUT REFERENCE TO ANY OTHER INFORMATION. "SCOPE" REFERS TO BUDGET AREAS INCLUDED. WAS IT ALL INCLUSIVE, OR WERE ONLY CERTAIN BUDGET CATEGORIES INCLUDED? IF IT INCLUDED THE ENTIRE SCOPE OF BUDGETING, HOW WOULD IT AFFECT THE CUSTOMARY PRACTICE OF EACH DEPARTMENT TO MORE OR LESS SUBMIT ITS OWN REQUIREMENTS TO THE CONGRESS, ETC. ? AGAIN TECHNICAL.

"D. SPACE PROGRAMS INFORMATION WAS LIMITED AS STATED AND HAD REFERENCE TO THE BROAD SPECTRUM OF THE VARIOUS RAMIFICATIONS.

"E. CONSOLIDATION OF AUTHORITY IN DOD WAS, AT THAT TIME, A HIGHLY SPECULATIVE SUBJECT AND WAS BEING DISCUSSED AND ANALYZED BY EVERYONE - NOTHING SPECIFIC EXISTED.

"F. DISCUSSION OF LIMITED WAR POLICY COULD NOT HAVE BEEN ANYTHING BUT GENERAL SPECULATION BECAUSE NOTHING SPECIFIC HAD BEEN PROMULGATED AS ADMINISTRATION POLICY AT THAT TIME.

"G. THE AEROSPACE CORPORATION WAS JUST COMING INTO BEING AND ITS EVENTUAL ROLE AND FUNCTIONS WERE NOT YET CLEAR AND, IN ANY CASE, HAD NOTHING TO DO WITH PROCUREMENT OR SELLING.

"H. POLICIES AND PROCEDURES RELATIVE TO LOGISTICS SUPPORT OF WEAPONS SYSTEMS WAS A COMPLEX AND HIGHLY CONTROVERSIAL SUBJECT. BEFORE THE RE- ORGANIZATION, AMC HAD RESPONSIBILITY FOR PROCUREMENT, PRODUCTION CONTROL AND SUPPORT OF THE OPERATIONAL INVENTORY OF WEAPONS SYSTEMS. EVEN THEN THERE WERE MANY CONCEPTS OF SUPPORT. IN-HOUSE OR DEPOT, CONTRACTOR, A COMBINATION OF THESE TWO, OR THE CREATION OF A SPECIALIZED ORGANIZATION TO SUPPORT NEW SYSTEMS EMERGING. UNDER THE NEW COMMAND SET-UP" SUPPORT OF WEAPONS SYSTEMS PASSED TO THE AIR FORCE SYSTEMS COMMAND WITH THE AIR FORCE LOGISTICS COMMAND ASSUMING SUPPORT ONLY AFTER THE WEAPONS SYSTEMS HAD ENTERED THE OPERATIONAL INVENTORY. AT THAT TIME THERE WAS NO APPARENT AGREEMENT ON ANY ONE SYSTEM AND THE THOUGHT SEEMED TO PREVAIL THAT SUPPORT OF EACH SYSTEM WOULD BE DECIDED AS THE NEEDS AROSE. THERE WAS NOT EVEN ANY TECHNICAL INFORMATION AVAILABLE IN THIS AREA.'

IN THE DECISION OF OCTOBER 24, 1963, WE SAID, CITING 40 COMP. GEN. 511, AND 42 COMP. GEN. 236, THAT THE CONCLUSION REACHED (IN 40 COMP. GEN. 511) WAS BASED ON THE VIEW THAT IF THE STATUTES WERE TO BE COMPLETELY EFFECTIVE, THE CONTACTS CONTEMPLATED BY THE CONTRACT PROVISION INVOLVED IN THAT CASE MUST BE REGARDED IN THE FIRST INSTANCE AS BEING FOR THE PURPOSE OF SELLING, AND WHILE WE RECOGNIZE THAT SUCH A PRIMA FACIE CASE MAY BE REBUTTED BY THE ACTUAL FACTS IN A PARTICULAR CASE, THAT CONTINGENCY AFFORDED NO BASIS FOR IGNORING THE APPARENTLY INTENDED SALES RESULTS OF THE CONTRACTS. WE FURTHER CONCLUDED THAT, GENERALLY, PRECONTRACT CONTACTS WITH OFFICIALS OF DEFENSE AGENCIES BY RETIRED OFFICERS REPRESENTING COMPANIES WHICH SELL SUPPLIES OR WAR MATERIALS TO THOSE AGENCIES SHOULD BE AVOIDED AS COMING WITHIN THE SCOPE OF THE STATUTES AND THE PROVISIONS OF THE DEPARTMENT OF DEFENSE DIRECTIVE UNLESS CLEARLY AND ADEQUATELY SHOWN TO BE FOR SOME OTHER PURPOSE. IN THIS REGARD, WHILE WE HAVE NOT VIEWED SUCH CONTACTS FOR THE SOLE PURPOSE OF OBTAINING TECHNICAL DATA OR MATERIALS AND SIMILAR ITEMS AVAILABLE TO ANYONE ON REQUEST AS COMING WITHIN THE STATUTE AND REGULATIONS, WE MAY NOT CONCLUDE, ON THE BASIS OF THE WHOLE RECORD BEFORE US (INCLUDING GENERAL KELLEY'S LETTER OF MAY 20, 1964, TO THE AIR FORCE ACCOUNTING AND FINANCE CENTER, AND THE ENCLOSURES THEREWITH), THAT THE OFFICER'S CONTACTS WERE SOLELY FOR SUCH PURPOSE.

THE BASIC PURPOSE OF THE STATUTE HERE INVOLVED (5 U.S.C. 59C) IS TO DISCOURAGE INITIATION OF CONTACTS WHICH MIGHT LEAD TO FAVORITISM IN CONNECTION WITH GOVERNMENT PURCHASES OF SUPPLIES AND WAR MATERIALS. HAVING IN MIND THAT PRIVATE CONTRACTORS ARE IN BUSINESS TO MAKE A PROFIT, IT WOULD BE UNREASONABLE TO VIEW CONTACTS OF THE TYPE HERE INVOLVED AS BEING MADE PRIMARILY FOR ANY PURPOSE OTHER THAN TO INCREASE THE CONTRACTOR'S SALES TO THE MILITARY. SEE, GENERALLY, SEASTROM V. UNITED STATES, 147 CT.CL. 453. IN SUCH CIRCUMSTANCES WE BELIEVE THAT UNTIL JUDICIALLY DETERMINED OTHERWISE, ANY DOUBT IN THE MATTER MUST BE RESOLVED BY VIEWING GENERAL KELLEY'S CONTACTS AS LIAISON ACTIVITIES WITH A VIEW TOWARD THE ULTIMATE CONSUMMATION OF SALES FOR PURPOSES OF THE ABOVE-CITED PROVISION OF DEPARTMENT OF DEFENSE DIRECTIVE 5500.7. THE CONCLUSION REACHED IN THE DECISION OF OCTOBER 24, 1963, IS SUSTAINED.