B-216052, JAN 29, 1985, OFFICE OF GENERAL COUNSEL

B-216052, JAN 29, 1985, OFFICE OF GENERAL COUNSEL

TRAVEL EXPENSES - AIR TRAVEL - BONUSES, GIFTS, ETC. DIGEST: THE CENTRAL INTELLIGENCE AGENCY (CIA) PROPOSED THE SALE OF NONTRANSFERABLE, EXPIRABLE PROMOTIONAL MATERIALS RECEIVED AS A RESULT OF A COMBINATION OF GOVERNMENT-FUNDED AND PERSONAL TRAVEL TO THEIR EMPLOYEES AS SURPLUS PROPERTY. WE SUGGEST THAT THIS SHOULD NOT BE DONE. ALTHOUGH THE CIA IS NOT SUBJECT TO THE LAWS AND REGULATIONS GOVERNING THE TRAVEL OF MOST FEDERAL EMPLOYEES AND THE DISPOSITION OF THESE PROMOTIONAL BENEFITS, WE SUGGEST THAT AN AGENCY SHOULD MAXIMIZE ITS USE OF SUCH MATERIALS. WOULD NOT BE KNOWN WHETHER SUCH MATERIALS COULD BE USED TO THE GOVERNMENT'S ADVANTAGE UNTIL THE PROMOTIONAL EXPIRED. ALSO, THE SALE OF SUCH PROMOTIONAL MATERIALS TO EMPLOYEES GIVES THE APPEARANCE OF A CONFLICT OF INTEREST. THE CIA'S AUTHORITY TO RECEIVE AND DISPOSE OF GIFTS DOES NOT PROVIDE A BASIS TO SELL THESE PROMOTIONAL MATERIALS TO CIA EMPLOYEES.

MR. DANIEL J. KRUTE: ASSISTANT GENERAL COUNSEL OFFICE OF GENERAL COUNSEL CENTRAL INTELLIGENCE AGENCY WASHINGTON, D.C. 20505

AS YOU REQUESTED IN YOUR LETTER DATED AUGUST 7, 1984, YOUR REFERENCE OGC/84-51705, WE HAVE REVIEWED YOUR PROPOSAL TO SELL NONTRANSFERABLE, EXPIRABLE PROMOTIONAL MATERIALS RECEIVED AS A RESULT OF A COMBINATION OF GOVERNMENT-FUNDED AND PERSONAL TRAVEL TO A CENTRAL INTELLIGENCE AGENCY (CIA) EMPLOYEE. IT IS OUR VIEW THAT THE CIA SHOULD NOT FOR THE REASONS SET FORTH BELOW.

AS WE INDICATED TO YOU EARLIER, WE ARE NOT PROVIDING A FORMAL DECISION ON THIS MATTER AT THIS TIME SINCE YOU HAVE INDICATED THAT THE PROMOTIONAL PROGRAM IN QUESTION EXPIRED IN OCTOBER 1984.

THE PROMOTIONAL PROGRAM IN QUESTION WAS A UNITED AIRLINES "LEAP YEAR SPECIAL AWARD" CERTIFICATE WHICH WOULD PERMIT A 50 PERCENT DISCOUNT ON UNRESTRICTED COACH CLASS ROUND-TRIP FARE. THE CERTIFICATE WAS NONTRANSFERABLE, AND IT EXPIRED OCTOBER 31, 1984. YOUR LETTER STATES THAT THE CIA WOULD NOT BE ABLE TO INTEGRATE THIS CERTIFICATE INTO AGENCY TRAVEL PLANS SINCE ANY OFFICIAL TRAVEL BY THE CIA EMPLOYEE PRIOR TO THE CERTIFICATE'S EXPIRATION DATE WOULD BE LESS EXPENSIVE USING THE CURRENT GOVERNMENT CONTRACT CARRIER RATES. YOUR LETTER STATES FURTHER THAT WHILE IT IS CONCEIVABLE THAT USE OF THE CERTIFICATE MIGHT BE LESS EXPENSIVE THAN THE GOVERNMENT CONTRACT CARRIER RATE, THE CERTIFICATE IS OF NO PRACTICAL USE TO THE CIA ANYWAY, SINCE THE EMPLOYEE'S TRAVEL IS SOMEWHAT UNPREDICTABLE AND IS ON SHORT NOTICE.

THUS, YOU PROPOSE THAT THE CIA SELL THE CERTIFICATE TO THE EMPLOYEE AT THE PREVAILING WASHINGTON, D.C., TO SAN FRANCISCO, CALIFORNIA, ROUND TRIP GOVERNMENT CONTRACT CARRIER RATE, SINCE THE ACTUAL REPLACEMENT VALUE TO THE UNITED STATES IS INDETERMINATE AND SINCE THIS WOULD BE THE MOST EXTENSIVE AND COSTLY USE THAT THE CIA COULD MAKE OF THE CERTIFICATE.

AS YOU ARE AWARE, PROMOTIONAL MATERIALS ACQUIRED AT LEAST IN PART BECAUSE OF GOVERNMENT-FUNDED TRAVEL ARE THE PROPERTY OF THE UNITED STATES-- NOT THE EMPLOYEE. SEE 48 FED.REG. 48,231 (OCTOBER 18, 1983) (TO BE CODIFIED AT 41 C.F.R. SECS. 101-25.103-2); DISCOUNT COUPONS AND OTHER BENEFITS RECEIVED IN THE COURSE OF OFFICIAL TRAVEL, 63 COMP.GEN. 229, 230 AND 232 (1984); AND JOHN D. MCLAURIN, 63 COMP.GEN. 233, 234 (1984).

THE ABOVE-CITED REGULATIONS PROVIDE, IN SECTIONS 101-25.103-2(B) AND (D) THAT, "PROMOTIONAL COUPONS THAT PROVIDE FOR FUTURE FREE OR REDUCED COSTS OF SERVICES (TRAVEL) SHOULD BE INTEGRATED INTO THE AGENCY TRAVEL PLANS TO MAXIMIZE THE BENEFITS TO THE GOVERNMENT. THE COUPONS SHOULD THEN BE APPLIED TO THE MAXIMUM EXTENT POSSIBLE *** ," AND "PROMOTIONAL MATERIALS THAT CANNOT BE USED BY THE RECEIVING AGENCY SHALL BE DISPOSED OF IN ACCORDANCE WITH SECS. 101-25.103-4."

WE NOTE THAT THESE REGULATIONS DO NOT SPECIFICALLY GOVERN THE CIA SINCE THE REGULATIONS ARE ISSUED UNDER THE AUTHORITY OF THE FEDERAL PROPERTY AND ADMINISTRATION SERVICES ACT OF 1949, 40 U.S.C. SECS. 471 544 (1982). THE CIA IS SPECIFICALLY EXEMPTED FROM THE COVERAGE OF THAT ACT BY THE PROVISIONS OF 40 U.S.C. SECS. 474(17). IN ADDITION, THE TRAVEL OF CIA EMPLOYEES IS NOT SUBJECT TO THE PROVISIONS OF 5 U.S.C. SECS. 5701-5709 (1982) AND THE IMPLEMENTING REGULATIONS, THE FEDERAL TRAVEL REGULATIONS (FTR), FPMR 101-7 (SEPTEMBER 1981). RATHER, CIA EMPLOYEES ARE PAID TRAVEL ALLOWANCES COMPARABLE TO MEMBERS OF THE FOREIGN SERVICE. SEE 50 U.S.C. SECS. 403EB) (1982). FURTHERMORE, THE CIA MAY OTHERWISE ISSUE TRAVEL REGULATIONS "IN ORDER TO REFLECT CIA REQUIREMENTS NOT TAKEN INTO ACCOUNT IN THE FORMULATION OF GOVERNMENT WIDE TRAVEL PROCEDURES." 50 U.S.C. SECS. 403EB)(3) (1982).

THUS, CIA EMPLOYEES ARE NOT SUBJECT TO THE STATUTES AND REGULATIONS GOVERNING THE TRAVEL OF MOST FEDERAL EMPLOYEES AND OUR DECISIONS IN DISCOUNT COUPONS AND MCLAURIN, CITED ABOVE, ISSUED PURSUANT TO THOSE STATUTES AND REGULATIONS. HOWEVER, WE BELIEVE THAT THE CIA SHOULD NOT SELL SUCH PROMOTIONAL MATERIALS FOR THE FOLLOWING REASONS.

FIRST, WHILE YOU STATE THAT IT IS UNLIKELY THAT THE CIA CAN INCORPORATE SUCH PROMOTIONAL MATERIALS INTO AGENCY TRAVEL PLANS, IT IS NEVER KNOWN UNTIL THE DATE OF EXPIRATION WHETHER THE PARTICULAR EMPLOYEE TO WHOM THE PROMOTIONAL MATERIALS ARE LIMITED WILL BE CALLED UPON-- PERHAPS AT THE LAST POSSIBLE MOMENT-- TO TRAVEL UNDER CIRCUMSTANCES WHICH WOULD ALLOW USE OF THE PROMOTIONAL MATERIALS. AS TO THE COMPARISON BETWEEN GOVERNMENT CONTRACT CARRIER AND OTHER RATES, YOU ACKNOWLEDGE THAT IT IS CONCEIVABLE THAT A SPECIAL RATE MIGHT BECOME AVAILABLE WHICH, WHEN USED WITH THE PROMOTIONAL MATERIALS, WOULD BE LESS EXPENSIVE THAN THE GOVERNMENT CONTRACT CARRIER RATE. THIS IS ESPECIALLY SO IN THE CURRENT, OFTEN HIGHLY COMPETITIVE AND VOLATILE COMMERCIAL AIR CARRIER MARKET, WITH ITS MANY AND CONTINUALLY CHANGING PROMOTIONAL PROGRAMS.

NO MATTER HOW REMOTE THE POSSIBILITY THAT THE AGENCY WILL BE ABLE TO USE PROMOTIONAL MATERIALS, AN AGENCY SHOULD NOT DISPOSE OF SUCH MATERIALS UNLESS THEY CANNOT BE USED TO THE GOVERNMENT'S ADVANTAGE. THAT THEY CANNOT BE SO USED WOULD NOT BE KNOWN UNTIL THE EXPIRATION DATE OF THE PROMOTIONAL MATERIALS. THEREFORE, SUCH MATERIALS SHOULD NOT BE SOLD TO THE EMPLOYEE.

SECOND, IN ORDER TO AVOID EVEN THE APPEARANCE OF A CONFLICT OF INTEREST, YOUR LETTER STATES THAT NO COERCION, PRESSURE, OR HARASSMENT WOULD BE USED TO INDUCE EMPLOYEES TO PURCHASE THE PROMOTIONAL MATERIALS; A FIXED NONNEGOTIABLE PRICE WOULD BE SET; AND THE TRANSACTION WOULD REQUIRE HIGH- LEVEL ADMINISTRATIVE APPROVAL. YOU CONTEND THAT THERE WOULD BE NO CONFLICT OF INTEREST, AND ANY APPEARANCE OF POSSIBLE FAVORITISM AND PREFERENTIAL TREATMENT WOULD BE AVOIDED. FINALLY, YOU NOTE THAT CONTRACTUAL OR MONETARY DEALINGS BETWEEN THE UNITED STATES GOVERNMENT AND A FEDERAL EMPLOYEE IN HIS PRIVATE, INDIVIDUAL CAPACITY IS NOT BARRED BY STATUTE.

WE NOTE THAT 5 C.F.R. SECS. 735.201A (1984) PROVIDES THAT EMPLOYEES SHALL AVOID ANY ACTION WHICH MIGHT RESULT IN OR CREATE THE APPEARANCE OF USING PUBLIC OFFICE FOR PRIVATE GAIN OR IMPEDING GOVERNMENT EFFICIENCY OR ECONOMY. IN ADDITION, SECTION 735.202 PROHIBITS RECEIPT OF GIFTS, GRATUITIES, OR THINGS OF MONETARY VALUE, EXCEPT ITEMS OF NOMINAL INTRINSIC VALUE. THE CIA IS NOT EXEMPT FROM THESE PROVISIONS. SEE 5 C.F.R. SECS. 735.102 (1984). FINALLY, THE OFFICE OF GOVERNMENT ETHICS, OFFICE OF PERSONNEL MANAGEMENT, HAS ADVISED AGENCY ETHICS OFFICIALS THAT NO PERSONAL USE SHOULD BE MADE OF THESE PROMOTIONAL MATERIALS. SEE DISCOUNT COUPONS, 63 COMP.GEN. 229, 231. THEREFORE, WE BELIEVE YOUR PROPOSAL MIGHT RESULT IN A PROHIBITED CONFLICT OF INTEREST.

FINALLY, WE NOTE THAT THE CIA HAS SPECIAL AUTHORITY TO ACCEPT GIFTS OF PROPERTY AND USE THEM FOR PURPOSES RELATING TO THE GENERAL WELFARE, EDUCATION. OR RECREATION OF EMPLOYEES. SUCH GIFTS MAY BE SOLD, AND THE PROCEEDS ARE TO BE DEPOSITED IN A SPECIAL FUND. 50 U.S.C. SECS. 403 (1982). WHILE AT FIRST THIS APPEARS TO BE AUTHORITY FOR THE CIA TO DO WHAT IT PROPOSES, WE BELIEVE THAT PROMOTIONAL MATERIALS OF THE NATURE HERE CONCERNED ARE NOT GIFTS. WE MAY HAVE ADDED TO ANY CONFUSION ABOUT THIS IN OUR PRIOR DECISIONS BY REFERRING TO "GIFTS, GRATUITIES, OR BENEFITS" CATEGORICALLY. SEE E.G., MCLAURIN, 63 COMP.GEN. 233, 234, AND DISCOUNT COUPONS, 63 COMP.GEN. 229, 230. SUCH PROMOTIONAL MATERIALS ARE NOT GIFTS FROM COMMERCIAL ENTERPRISES; THEY ARE "EARNED AS A RESULT OF THE EXPENDITURE OF FUNDS. THESE PROMOTIONAL MATERIALS ARE MORE ACCURATELY DESCRIBED AS "BENEFITS;" THEY PROVIDE BENEFITS-- E.G., FUTURE COST REDUCTIONS-- AS AN INCENTIVE FOR MORE IMMEDIATE PATRONAGE OF THE COMMERCIAL ENTERPRISE. THEREFORE, THIS GIFT AUTHORITY SHOULD NOT BE RELIED UPON BY THE CIA TO SUPPORT ITS PROPOSAL.

WE TRUST THAT THIS INFORMATION IS RESPONSIVE TO YOUR INQUIRY.