B-142558, MAY 5, 1960, 39 COMP. GEN. 751

B-142558: May 5, 1960

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A RETIRED MARINE CORPS OFFICER WHO IS AN ACTIVE PARTNER IN ENTERPRISES ENGAGED IN OBTAINING CONCESSIONAIRE PRIVILEGES FROM THE GOVERNMENT DOES NOT COME WITHIN THE CONFLICT-OF-INTEREST PROHIBITION IN 10 U.S.C. 6112 (B). PAYMENT OF RETIRED PAY IS NOT PROHIBITED. A RETIRED REGULAR MARINE CORPS OFFICER WHO IS AN ACTIVE PARTNER IN ENTERPRISES WHICH HOLD CONCESSION CONTRACTS WITH THE GOVERNMENT IS NOT. 1960: REFERENCE IS MADE TO YOUR LETTER OF APRIL 1. THIS CONTRACT WAS ENTERED INTO ON DECEMBER 12. IS FOR A TERM OF THREE YEARS. A PARTNERSHIP IN WHICH GENERAL VICTORY IS AN ACTIVE PARTNER. WAS AWARDED A CONTRACT FOR THE OPERATION OF THE POPCORN VENDING CONCESSION AT THE MARINE CORPS AIR STATION.

B-142558, MAY 5, 1960, 39 COMP. GEN. 751

MILITARY PERSONNEL - RETIRED - CONTRACTING WITH THE GOVERNMENT - SALES BY THE GOVERNMENT - DUAL COMPENSATION THE CONFLICT-OF-INTEREST PROHIBITION IN 10 U.S.C. 6112 (B) AGAINST RETIRED OFFICERS OF THE REGULAR NAVY AND REGULAR MARINE CORPS RECEIVING PAYMENT FROM THE UNITED STATES WHILE ENGAGED IN SELLING SUPPLIES TO THE DEPARTMENT OF THE NAVY REFERS TO ACTIVITIES IN CONNECTION WITH THE PROCUREMENT OF PROPERTY BY THE GOVERNMENT AS DISTINGUISHED FROM SALES BY THE GOVERNMENT; THEREFORE, IN THE ABSENCE OF ANY PROHIBITION AGAINST RETIRED OFFICERS ENGAGING IN ACTIVITIES INCIDENT TO SALES BY THE GOVERNMENT, A RETIRED MARINE CORPS OFFICER WHO IS AN ACTIVE PARTNER IN ENTERPRISES ENGAGED IN OBTAINING CONCESSIONAIRE PRIVILEGES FROM THE GOVERNMENT DOES NOT COME WITHIN THE CONFLICT-OF-INTEREST PROHIBITION IN 10 U.S.C. 6112 (B), AND PAYMENT OF RETIRED PAY IS NOT PROHIBITED. A RETIRED REGULAR MARINE CORPS OFFICER WHO IS AN ACTIVE PARTNER IN ENTERPRISES WHICH HOLD CONCESSION CONTRACTS WITH THE GOVERNMENT IS NOT, AS A CONTRACT CONCESSIONAIRE, REGARDED AS AN OFFICER OF THE UNITED STATES OR AS HOLDING A CIVILIAN POSITION UNDER THE GOVERNMENT SO AS TO BE PRECLUDED BY THE 1894 DUAL OFFICE ACT, 5 U.S.C. 62, OR THE 1932 DUAL COMPENSATION LAW, 5 U.S.C. 59A, FROM RECEIVING RETIRED PAY.

TO MAJOR JOHN A. RAPP, U.S. MARINE CORPS, MAY 5, 1960:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 1, 1960, DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE SUBMISSION NO. DO-MC-491, REQUESTING A DECISION AS TO WHETHER, IN THE CIRCUMSTANCES PRESENTED, THE PROVISIONS OF 10 U.S.C. 6112 (B) PROHIBIT THE PAYMENT OF RETIRED PAY TO MAJOR GENERAL RANDALL M. VICTORY, U.S. MARINE CORPS, RETIRED.

IT APPEARS THAT GENERAL VICTORY RETIRED FROM THE REGULAR MARINE CORPS ON JANUARY 1, 1959. PRIOR TO HIS RETIREMENT HE HAD SIGNED A PARTNERSHIP AGREEMENT WITH WALTER G. MEHEN, DOING BUSINESS AS THE MEHEN COMPANY, AN ENTERPRISE WHICH HAD A CONTRACT WITH THE MARINE CORPS EXCHANGE, CAMP LEJUNE, NORTH CAROLINA, TO MAINTAIN AND OPERATE THEATER SNACK BAR CONCESSIONS AT THE MARINE CORPS BASE, CAMP LEJUNE. AFTER HIS RETIREMENT HE BECAME AN ACTIVE PARTNER IN THE ENTERPRISE ACTING AS THE MEHEN COMPANY REPRESENTATIVE WITH THE EXCHANGE AND SIGNING AN ADDENDUM TO THE BASIC CONTRACT FOR THE MEHEN COMPANY ON AUGUST 13, 1959. THIS CONTRACT WAS ENTERED INTO ON DECEMBER 12, 1958, AND IS FOR A TERM OF THREE YEARS.

IN ADDITION TO THE MEHEN COMPANY CONTRACT THE VICTORY COMPANY, A PARTNERSHIP IN WHICH GENERAL VICTORY IS AN ACTIVE PARTNER, WAS AWARDED A CONTRACT FOR THE OPERATION OF THE POPCORN VENDING CONCESSION AT THE MARINE CORPS AIR STATION, CHERRY POINT. GENERAL VICTORY PERSONALLY PARTICIPATED IN SUBMITTING THE BID WHICH RESULTED IN THIS CONTRACT. BIDS FOR THIS CONTRACT WERE INVITED IN JANUARY 1960, AWARD WAS MADE IN FEBRUARY 1960, AND THE CONTRACT APPARENTLY IS FOR A TWO-YEAR PERIOD BEGINNING MARCH 1, 1960.

EACH OF THESE CONTRACTS PROVIDES FOR THE OPERATION OF THE CONCESSION WITHOUT COST TO THE MARINE CORPS AND EACH PROVIDES FOR PAYMENT TO THE MARINE CORPS EXCHANGE OF A PERCENTAGE OF GROSS RECEIPTS FOR THE PRIVILEGE OF OPERATING THE CONCESSION. SALES ARE MADE TO PATRONS OF THE THEATERS AND SNACK BARS.

SECTION 6112 (B) OF TITLE 10 OF THE U.S.C. PROVIDES:

IF A RETIRED OFFICER OF THE REGULAR NAVY OR THE REGULAR MARINE CORPS IS ENGAGED FOR HIMSELF OR OTHERS IN SELLING, OR CONTRACTING OR NEGOTIATING TO SELL, NAVAL SUPPLIES OR WAR MATERIALS TO THE DEPARTMENT OF THE NAVY, HE IS NOT ENTITLED TO ANY PAYMENT FROM THE UNITED STATES WHILE HE IS SO ENGAGED.

IN DECISION OF NOVEMBER 9, 1959, 39 COMP. GEN. 366, WE SAID THAT THE QUOTED STATUTORY PROVISION HAS BEEN CLASSIFIED AS ONE OF THE GROUP OF SO- CALLED CONFLICT-OF-INTEREST STATUTES AND THAT THE ESSENTIAL PURPOSES OF SUCH STATUTES ARE TO SAFEGUARD THE INTEGRITY OF PUBLIC ADMINISTRATION AND TO PREVENT GOVERNMENT OFFICIALS FROM USING THEIR POSITIONS AND INFLUENCE FOR PERSONAL GAIN. WE EXPRESSED THE BELIEF THAT CONGRESS INTENDED SUCH STATUTES TO APPLY IN ANY CASE REASONABLY WITHIN THE SCOPE OF THE STATUTES WHERE THE MISCHIEF AT WHICH THEY ARE AIMED COULD ARISE. THE TERMS USED IN THE STATUTE, HOWEVER, REFER ONLY TO SALES ACTIVITIES OF RETIRED OFFICERS IN CONNECTION WITH THE PROCUREMENT OF PROPERTY BY THE GOVERNMENT; WE FIND NOTHING IN THE LAW OR ITS LEGISLATIVE HISTORY WHICH SUGGESTS AN INTENTION ON THE PART OF CONGRESS THAT IT SHOULD APPLY TO PROCUREMENT ACTIVITIES OF RETIRED OFFICERS IN CONNECTION WITH SALES BY THE GOVERNMENT. WE ARE NOT AWARE OF ANY LAW WHICH PROHIBITS RETIRED MILITARY OFFICERS FROM PURCHASING WHATEVER THE GOVERNMENT OR ITS INSTRUMENTALITIES PROPERLY MAY OFFER FOR SALE.

THE CONTRACTS INVOLVED IN THIS CASE ARE NOT CONCERNED WITH THE SALE OF ANYTHING TO THE GOVERNMENT, BUT RELATE ENTIRELY TO THE PURCHASE FROM THE GOVERNMENT OF CONCESSIONAIRE PRIVILEGES AT THE NAMED LOCATIONS. THE FACT THAT THE CONCESSIONS DO BUSINESS WITH INDIVIDUAL MEMBERS OF THE MARINE CORPS DOES NOT BRING GENERAL VICTORY'S ACTIVITIES WITHIN THE SCOPE OF THE SALES RESTRICTIONS IMPOSED BY 10 U.S.C. 6112 (B). ACCORDINGLY, THE PAYMENT TO HIM OF HIS RETIRED PAY IS NOT PROHIBITED BY THAT STATUTE BECAUSE OF HIS CONCESSIONAIRE ACTIVITIES. NEITHER IS HIS RIGHT TO RETIRED PAY AFFECTED BY THE 1894 DUAL OFFICE ACT (5 U.S.C. 62) OR THE 1932 DUAL COMPENSATION LAW (5 U.S.C. 59A). AS A CONTRACT CONCESSIONAIRE HE IS NOT AN OFFICER OF THE UNITED STATES NOR DOES HE HOLD OR OCCUPY ANY CIVILIAN POSITION COMING UNDER THE GOVERNMENT OF THE UNITED STATES, THE DISTRICT OF COLUMBIA, OR A GOVERNMENT-OWNED CORPORATION.