B-149034, AUGUST 8, 1962, 42 COMP. GEN. 87

B-149034: Aug 8, 1962

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RETIRED REGULAR OFFICERS OF THE UNIFORMED SERVICES WHO ARE EMPLOYED BY. MANAGE OR HAVE AN OWNER'S INTEREST IN BUSINESS INVOLVING THE REPAIR OF TELEVISION SETS. ARE REGARDED AS ENGAGED IN ACTIVITIES OF A SERVICE NATURE WHICH DO NOT CONSTITUTE SELLING AS CONTEMPLATED BY 5 U.S.C. 59C AND 10 U.S.C. 6112 (B). THE PAYMENT OF RETIRED PAY TO SUCH OFFICERS WHILE THEY ARE ENGAGED IN SUCH BUSINESS ACTIVITIES IS NOT PRECLUDED. RETIRED REGULAR OFFICERS OF THE UNIFORMED SERVICES WHO HAVE ADMINISTRATIVE. SUPERVISORY OR MANAGERIAL RESPONSIBILITY OVER THE SALES DEPARTMENT OR SALESMEN OF FIRMS DOING BUSINESS WITH THE GOVERNMENT BUT WHO DO NOT HAVE ANY DUTIES OR ANY CONTACTS IN PERSON. PROPOSALS OR CONTRACTS WITH THE MILITARY SERVICES ARE NOT REGARDED AS ENGAGED IN SELLING ACTIVITIES WITHIN THE MEANING OF 5 U.S.C. 59C AND 10 U.S.C. 6112 (B).

B-149034, AUGUST 8, 1962, 42 COMP. GEN. 87

MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - WHAT CONSTITUTES SELLING. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - SERVICES V. SALES. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - SERVICES V. SALES. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - MANAGEMENT OF SALES DEPARTMENT, ETC. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - PROHIBITED V. OTHER CONTACTS. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - PROHIBITED V. OTHER CONTACTS. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - PROHIBITED V. OTHER CONTACTS. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - LIAISON ACTIVITIES. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - LIAISON ACTIVITIES. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - PUBLIC RELATIONS ACTIVITIES. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - FOREIGN GOVERNMENT REPRESENTATION. MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - PROHIBITION AFFECTING ENTIRE EMPLOYMENT OVER-THE-COUNTER SALES TRANSACTIONS WHICH RESULT WHEN A REPRESENTATIVE OF A MILITARY AGENCY GOES TO A BUSINESS CONCERN OPERATED OR REPRESENTED BY A RETIRED REGULAR OFFICER OF THE UNIFORMED SERVICES AS OWNER OR EMPLOYEE TO PURCHASE AN ITEM NEEDED IN THE CONDUCT OF THE GOVERNMENT'S BUSINESS AND WHICH DO NOT INVOLVE ANY BID, PROPOSAL OR CONTRACT, OR ANY CONTRACT NEGOTIATIONS OR LIAISON ACTIVITIES INITIATED BY THE RETIRED OFFICER DO NOT CONSTITUTE SELLING WITHIN THE MEANING OF THE PROSCRIPTION IN 5 U.S.C. 59C AND 10 U.S.C. 6112 (B), AGAINST RECEIPT OF RETIRED PAY BY RETIRED REGULAR OFFICERS ENGAGED IN SELLING ACTIVITIES WITH THE MILITARY DEPARTMENTS. RETIRED REGULAR OFFICERS OF THE UNIFORMED SERVICES WHO ARE EMPLOYED BY, REPRESENT, MANAGE OR HAVE AN OWNER'S INTEREST IN BUSINESS INVOLVING THE REPAIR OF TELEVISION SETS, SALE OF PUBLIC UTILITIES AND SALE OF MEALS IN RESTAURANTS, ARE REGARDED AS ENGAGED IN ACTIVITIES OF A SERVICE NATURE WHICH DO NOT CONSTITUTE SELLING AS CONTEMPLATED BY 5 U.S.C. 59C AND 10 U.S.C. 6112 (B), WHICH PROHIBIT PAYMENT OF RETIRED PAY TO REGULAR RETIRED OFFICERS ENGAGED IN SELLING, OR CONTRACTING OR NEGOTIATING TO SELL, SUPPLIES OR WAR MATERIALS TO THE MILITARY DEPARTMENTS AND, THEREFORE, THE PAYMENT OF RETIRED PAY TO SUCH OFFICERS WHILE THEY ARE ENGAGED IN SUCH BUSINESS ACTIVITIES IS NOT PRECLUDED. RETIRED REGULAR OFFICERS OF THE UNIFORMED SERVICES WHO HAVE ADMINISTRATIVE, SUPERVISORY OR MANAGERIAL RESPONSIBILITY OVER THE SALES DEPARTMENT OR SALESMEN OF FIRMS DOING BUSINESS WITH THE GOVERNMENT BUT WHO DO NOT HAVE ANY DUTIES OR ANY CONTACTS IN PERSON, BY CORRESPONDENCE OR OTHERWISE, INVOLVING THE SIGNING OF BIDS, PROPOSALS OR CONTRACTS WITH THE MILITARY SERVICES ARE NOT REGARDED AS ENGAGED IN SELLING ACTIVITIES WITHIN THE MEANING OF 5 U.S.C. 59C AND 10 U.S.C. 6112 (B), PROHIBITING RECEIPT OF RETIRED PAY BY REGULAR RETIRED OFFICERS ENGAGED IN SELLING ACTIVITIES WITH THE MILITARY SERVICES. RETIRED REGULAR NAVY OFFICERS WHO AS EMPLOYEES OF CORPORATIONS WHICH DO BUSINESS WITH THE DEPARTMENT OF THE NAVY, MAINTAIN LINES OF COMMUNICATION BETWEEN THE CORPORATIONS AND THE NAVY BUT HAVE NO AUTHORITY TO NEGOTIATE OR EXECUTE SALES CONTRACTS ARE NOT ENGAGED IN SALES ACTIVITIES FOR THE PURPOSE OF 10 U.S.C. 6112 (B), WHICH PROHIBITS RECEIPT OF ANY PAYMENT FROM THE UNITED STATES WHILE ENGAGED IN SELLING, OR CONTRACTING, OR NEGOTIATING TO SELL, NAVAL SUPPLIES OR WAR MATERIALS TO THE NAVY; HOWEVER, SHOULD SUCH OFFICERS INITIATE ANY CONTACTS WITH THE NAVY FOR ANY OF THE SALES ACTIVITIES ENUMERATED IN DEPARTMENT OF DEFENSE DIRECTIVE 5500.7, IMPLEMENTING 10 U.S.C. 6112 (B), THEY WOULD BE SUBJECT TO THE STATUTE. RETIRED REGULAR NAVY OFFICERS WHO, AS EMPLOYEES OF CORPORATIONS DOING BUSINESS WITH THE NAVY, ANALYZE AND REPORT ON LEGISLATIVE OR EXECUTIVE AGENCY PROGRAMS AFFECTING COMPANY OPERATIONS, ATTEND CONVENTIONS AND MEETINGS THAT ARE ALSO ATTENDED BY NAVY REPRESENTATIVES AND HAVE OCCASIONAL DIRECT CONTACT WITH THE NAVY ARE REGARDED AS ENGAGED IN ACTIVITIES OF A GENERAL NATURE WHICH ARE NOT FOR THE PURPOSE OF EFFECTING A SALE TO THE NAVY SO AS TO BE PRECLUDED BY 10 U.S.C. 6112 (B) FROM RECEIVING RETIRED PAY. LIAISON DUTIES PERFORMED BY A RETIRED REGULAR OFFICER OF THE NAVY IN THE EMPLOY OF A CORPORATION THAT DOES BUSINESS WITH THE GOVERNMENT, WHICH DUTIES CONSIST OF ARRANGING FOR LODGING AND TRAVEL RESERVATIONS, APPOINTMENTS AND GENERAL ASSISTANCE TO VISITORS TO AND FROM THE CORPORATION HOME OFFICE AND WASHINGTON, D.C., ARE NOT SALES ACTIVITIES WITHIN 10 U.S.C. 6112 (B), WHICH PROHIBITS RECEIPT OF ANY PAYMENT FROM THE UNITED STATES BY RETIRED NAVY OR MARINE CORPS OFFICERS ENGAGED IN SELLING, OR CONTRACTING OR NEGOTIATING TO SELL, NAVAL SUPPLIES OR WAR MATERIALS TO THE NAVY; ACCORDINGLY, THE ENTITLEMENT OF SUCH OFFICERS TO RETIRED PAY IS NOT AFFECTED BY THE PERFORMANCE OF SUCH DUTIES. THE MANAGEMENT BY A RETIRED REGULAR NAVY OFFICER OF A LOCAL OFFICE OF A COMPANY WHICH DOES BUSINESS WITH THE NAVY, WHILE A FORM OF LIAISON ACTIVITY, WOULD NOT OF ITSELF CONSTITUTE SELLING ACTIVITIES AS CONTEMPLATED BY 10 U.S.C. 6112 (B), WHICH PROHIBITS RECEIPT OF ANY PAYMENT FROM THE UNITED STATES BY A RETIRED NAVY OR MARINE CORPS OFFICER WHO IS ENGAGED IN SELLING, OR CONTRACTING OR NEGOTIATING TO SELL, NAVAL SUPPLIES OR WAR MATERIALS TO THE NAVY; HOWEVER, SHOULD THE OFFICER ENGAGE IN ANY ACTIVITY AS DEFINED AS SELLING IN DEPARTMENT OF DEFENSE DIRECTIVE 5500.1 ISSUED IN IMPLEMENTATION OF 10 U.S.C. 6112 (B), OR WHICH OTHERWISE MAY BE VIEWED AS SALES ACTIVITIES, HE WOULD BE SUBJECT TO THE STATUTE, BUT MERELY REPLYING TO INQUIRIES OR TO REQUESTS OF NAVY OFFICIALS FOR ASSISTANCE, INFORMATION OR ADVICE IS NOT REGARDED AS ENGAGING IN SALES ACTIVITIES UNDER THE STATUTE. ALTHOUGH PUBLIC RELATIONS DUTIES PERFORMED BY RETIRED REGULAR NAVY OFFICERS FOR CORPORATIONS DOING BUSINESS WITH THE NAVY DEPARTMENT, WHICH DUTIES RESULT IN THE SALE OF THE EMPLOYER'S PRODUCTS TO THE NAVY, ARE SELLING ACTIVITIES WITHIN THE PROHIBITION IN 10 U.S.C. 6112 (B) AGAINST RECEIPT OF RETIRED PAY, THERE MAY BE PUBLIC RELATIONS DUTIES WHICH DO NOT CONSTITUTE SELLING; THEREFORE, IN THE DETERMINATION OF WHETHER PUBLIC RELATIONS DUTIES ARE PROSCRIBED BY THE STATUTE, EACH CASE MUST BE CONSIDERED ON AN INDIVIDUAL BASIS. LIAISON ACTIVITIES OF A RETIRED REGULAR NAVY OFFICER WITH REPRESENTATIVES OF FOREIGN GOVERNMENTS ARE NOT, IN THE ABSENCE OF SOMETHING FURTHER, SELLING ACTIVITIES WITHIN THE PROHIBITION IN 10 U.S.C. 6112 (B) SO AS TO PRECLUDE RECEIPT OF RETIRED PAY. WHEN THE ACTIVITIES OF A RETIRED REGULAR MILITARY OFFICER IN THE EMPLOY OF A CORPORATION WHICH DOES BUSINESS WITH THE MILITARY AGENCIES ARE CONSIDERED TO BE WITHIN THE PROVISIONS OF 5 U.S.C. 59C AND 10 U.S.C. 6112 (B), WHICH RESTRICT PAYMENTS FROM THE UNITED STATES TO RETIRED REGULAR OFFICERS ENGAGED IN SELLING, OR CONTRACTING OR NEGOTIATING TO SELL, SUPPLIES OR WAR MATERIALS TO THE MILITARY DEPARTMENTS, THE PROHIBITION AGAINST PAYMENT OF RETIRED PAY, SUBJECT TO THE 2-YEAR LIMITATION OF 5 U.S.C. 59C WHERE APPLICABLE, CONTINUES DURING THE ENTIRE PERIOD OF THE OFFICER'S ENGAGEMENT IN SUCH ACTIVITIES AND THEREAFTER DURING THE PERIOD COVERED BY ANY CONTRACT RESULTING FROM SUCH ACTIVITIES.

TO THE SECRETARY OF DEFENSE, AUGUST 8, 1962:

REFERENCE IS MADE TO LETTER OF MAY 25, 1962, FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER) REQUESTING A DECISION AS TO WHETHER THE PROVISIONS OF 5 U.S.C. 59C AND 10 U.S.C. 6112 (B) PRECLUDE THE PAYMENT OF RETIRED PAY TO REGULAR RETIRED OFFICERS OF THE MILITARY DEPARTMENTS WHO, DURING THE PERIODS FIXED BY THOSE STATUTES, ENGAGE IN THE ACTIVITIES DISCUSSED IN COMMITTEE ACTION NOS. 303, 304 AND 305 OF THE MILITARY PAY AND ALLOWANCE COMMITTEE, DEPARTMENT OF DEFENSE, AND IF SO, FOR WHAT PERIODS OF TIME.

SECTION 59C, TITLE 5, U.S.C. PROVIDES AS FOLLOWS:

NO PAYMENT SHALL BE MADE FROM APPROPRIATIONS IN ANY ACT TO ANY OFFICER ON THE RETIRED LISTS OF THE REGULAR ARMY, REGULAR NAVY, REGULAR MARINE CORPS, REGULAR AIR FORCE, REGULAR COAST GUARD, COAST AND GEODETIC SURVEY, AND PUBLIC HEALTH SERVICE FOR A PERIOD OF TWO YEARS AFTER RETIREMENT 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, THE COAST GUARD, THE COAST AND GEODETIC SURVEY, AND THE PUBLIC HEALTH SERVICE ANY SUPPLIES OR WAR MATERIALS.

SECTION 6112 (B) OF TITLE 10, 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.

FOR THE PURPOSE OF SUCH PROVISIONS, THE TERM "SELLING" IS DEFINED IN PARAGRAPH VI.B OF DEPARTMENT OF DEFENSE DIRECTIVE 5500.7 AS FOLLOWS:

SELLING OR CONTRACTING FOR SALE

* * * FOR THE PURPOSE OF THIS SECTION, SELLING MEANS (1) SIGNING A BID, PROPOSAL, OR CONTRACT, (2) NEGOTIATING A CONTRACT, OR (3) CONTACTING AN OFFICER OR EMPLOYEE OF THE DEPARTMENT OF DEFENSE FOR THE PURPOSE OF (I) OBTAINING OR NEGOTIATING CONTRACTS, (II) NEGOTIATING OR DISCUSSING CHANGES IN SPECIFICATIONS, PRICE, COST ALLOWANCES, OR OTHER TERMS OF A CONTRACT, OR (III) SETTLING DISPUTES CONCERNING PERFORMANCE OF A CONTRACT, (4) ANY OTHER LIAISON ACTIVITY WITH A VIEW TOWARD THE ULTIMATE CONSUMMATION OF A SALE EVEN THOUGH THE ACTUAL CONTRACT THEREFOR IS SUBSEQUENTLY NEGOTIATED BY ANOTHER PERSON. HOWEVER, IT IS NOT THE INTENT OF THIS DIRECTIVE TO PRECLUDE A RETIRED OFFICER FROM ACCEPTING EMPLOYMENT WITH PRIVATE INDUSTRY SOLELY BECAUSE HIS EMPLOYER IS A CONTRACTOR WITH THE GOVERNMENT.

SUCH DEFINITION IS IN LINE WITH OUR DECISIONS AND THE DECISION OF THE COURT OF CLAIMS IN THE SEASTROM CASE. SEE 38 COMP. GEN. 470; 39 COMP. GEN. 366; 40 COMP. GEN. 511; 41 COMP. GEN. 642; GEORGE H. SEASTROM V. UNITED STATES, 147 CT.CL. 453. THE STATUTORY PROVISIONS AND THE DIRECTIVE DEFINITION ARE AIMED AT AN ACTUAL ENGAGEMENT IN SELLING OR CONTRACTING OR NEGOTIATING FOR THE SALE OF SUPPLIES AND MATERIALS. IT IS OUR VIEW THAT THEY APPLY ONLY TO THOSE SITUATIONS IN WHICH THE RETIRED OFFICERS MAY BE CONSIDERED AS REPRESENTING THEMSELVES OR OTHERS BEFORE THE DEPARTMENT CONCERNED FOR THE PURPOSE OF THE ACTUAL SALE OF PROPERTY. THE COMMENTS IN OUR DECISIONS TO THE EFFECT THAT THE STATUTES INCLUDE VIRTUALLY ANY ACTIVITY SURROUNDING THE SELLING PROCESS HAVE REFERENCE TO THOSE SITUATIONS AND ARE NOT INTENDED TO IMPLY THAT THE STATUTES HAVE APPLICATION TO ANY OTHER EMPLOYMENT, OR TO ANY OTHER ACTIVITY OF ANY BUSINESS CONCERN OR INDIVIDUAL. THUS, THE SALE OF SERVICES AND THE EMPLOYMENT OF RETIRED OFFICERS IN NONSALES EXECUTIVE AND ADMINISTRATIVE POSITIONS HAVE BEEN HELD TO BE OUTSIDE THE PURVIEW OF THE STATUTE. COMP. GEN. 677; 41 COMP. GEN. 784. ALSO, THE PURCHASES BY RETIRED OFFICERS OF CONCESSION RIGHTS ON GOVERNMENT PROPERTY AND ACTIONS BY RETIRED OFFICERS IN RESPONSE TO DEPARTMENTAL REQUESTS FOR ASSISTANCE, INFORMATION OR ADVICE, OR IN THEIR CAPACITY AS MEMBERS OF TECHNICAL AND ADVISORY ORGANIZATIONS WHICH OFFER NOTHING FOR SALE ARE NOT PROSCRIBED BY THE STATUTE. 39 COMP. GEN 751; 41 COMP. GEN. 799. AND, AS WE OBSERVED IN THE DECISION OF JUNE 12, 1962, THE STATUTE AND THE REGULATIONS DO NOT OPERATE TO ISOLATE RETIRED REGULAR OFFICERS FROM SOCIAL CONTACTS WITH THEIR FELLOW OFFICERS OR TO PREVENT THE DEPARTMENTS CONCERNED FROM PURCHASING PROPERTY FROM A SUPPLIER WHO HAS A RETIRED REGULAR OFFICER IN HIS EMPLOY.

THE ACTIVITIES DISCUSSED IN COMMITTEE ACTION NO. 303 ARE (1) "OVER THE- COUNTER SALES" INVOLVING SUCH ITEMS AS PAINT, SMALL TOOLS, AIRCRAFT AND AUTOMOTIVE GASOLINE, AUTOMOTIVE PARTS AND TIRES, LUMBER, BOOKS, AND TELEVISION PARTS, THE SALE OF THE LATTER GENERALLY BEING INCIDENT TO THE REPAIR OF TELEVISION SETS BY BUSINESS CONCERNS OWNED OR REPRESENTED BY THE RETIRED OFFICERS; (2) ,SALE OF TELEPHONE SERVICES, WATER, ELECTRICITY, AND GAS" BY PUBLIC UTILITIES; AND (3) "SALE OF MEALS" BY A RESTAURANT MANAGED, REPRESENTED, OR OWNED BY A RETIRED OFFICER WHICH PURSUANT TO A CONTRACT OR IN EXCHANGE FOR GOVERNMENT MEAL TICKETS, SERVES MEALS TO MILITARY PERSONNEL OR APPLICANTS FOR ENLISTMENT.

IT IS STATED THAT SALES OF THE ITEMS INVOLVED IN THE OVER-THE COUNTER TRANSACTIONS ARE NORMALLY NOT SOLICITED BY THE SELLER AND APPARENTLY ARE BROUGHT ABOUT BY REASON OF A REPRESENTATIVE OF A MILITARY AGENCY OR ACTIVITY GOING BY CHANCE TO MAKE A PURCHASE AT A BUSINESS ESTABLISHMENT WHICH IS OPERATED OR REPRESENTED BY A RETIRED OFFICER EITHER AS OWNER OR EMPLOYEE. THE RETIRED OFFICER DOES NOT CONTACT THE REPRESENTATIVE; INSTEAD THE OFFICER GENERALLY IS CONTACTED AT HIS OR HIS FIRM'S PLACE OF BUSINESS BY THE REPRESENTATIVE WHO WISHES TO PURCHASE A CERTAIN PRODUCT NEEDED IN THE CONDUCT OF THE GOVERNMENT'S BUSINESS. THE TRANSACTIONS ARE INITIATED BY THE GOVERNMENT, AND NOT BY THE RETIRED OFFICER, AT THE BUSINESS PLACE SELECTED BY THE GOVERNMENT FOR THE PURCHASE.

WHILE, OBVIOUSLY, THESE OVER-THE-COUNTER TRANSACTIONS RESULT IN THE SALE OF SUPPLIES AND MATERIALS, THEY DO NOT APPEAR TO INVOLVE ANY BID, PROPOSAL OR CONTRACT, OR ANY CONTRACT NEGOTIATIONS OR DISPUTES, OR ANY LIAISON ACTIVITIES WITH A VIEW TO THE ULTIMATE CONSUMMATION OF A SALE AND, HENCE, DO NOT CONSTITUTE SELLING AS THAT TERM IS DEFINED IN DEPARTMENT OF DEFENSE DIRECTIVE 5500.7. HAVING IN MIND THE PURPOSE OF THE STATUTORY PROVISIONS AND SINCE THESE TRANSACTIONS INVOLVE NO ACTIVITIES BY THE RETIRED OFFICER BEYOND THE ROUTINE RETAIL CLERK DUTIES NECESSARY TO THE CONSUMMATION OF A MISCELLANEOUS PURCHASE MADE BY THE GOVERNMENT AT ITS OWN ELECTION, WE DO NOT BELIEVE THAT SUCH TRANSACTIONS ARE TO BE VIEWED AS COMING WITHIN THE PROSCRIPTION OF THE STATUTE.

REGARDING THE SALE AND INSTALLATION OF PARTS IN TELEVISION SETS BY A CONCERN WHICH RECEIVED THE SETS FOR REPAIR, THE VERB "SERVICE" IS DEFINED IN 79 C.J.S., SERVICE OR SERVICES (PAGE 1143), AS MEANING "TO PERFORM SERVICES OF MAINTENANCE, SUPPLY, REPAIR, INSTALLATION, DISTRIBUTION, ETC., FOR OR UPON, AS TO SERVICE A CAR, A RADIO SET," AND IN 77 C.J.S., SALES (PAGE 584), IT IS STATED THAT UNDER THE UNIFORM SALES ACT, CONTRACTS FOR THE PAYMENT OF SERVICES RENDERED AND MATERIALS USED IN THE ACTIVITY OF RENDERING SUCH SERVICES ARE NOT CONTRACTS FOR THE SALE OF GOODS. IT SEEMS CLEAR, THEREFORE, THAT THE SUPPLYING OF THE ESSENTIAL PARTS IN THE REPAIR OF TELEVISION SETS BY A CONCERN IS INCIDENT TO THE SERVICE OF REPAIRING THE SET AND NOT A "SALE" OF SUCH PARTS AS THE TERM IS GENERALLY UNDERSTOOD. LIKEWISE, IT IS STATED IN 79 C.J.S. AT PAGE 1141 THAT IN A SOMEWHAT DIFFERENT SENSE "THE WORD "SERVICES" SIGNIFIES THE ACT OR MEANS OF SUPPLYING SOME GENERAL DEMAND, THE SUPPLY OF NEEDS; USE; THINGS REQUIRED FOR USE; PROVISION, ORGANIZATION, OR APPARATUS FOR CONDUCTING SOME PUBLIC UTILITY, AS GAS, RAILWAY, TELEPHONE, OR WATER SERVICE.' FURTHER, ALTHOUGH HOLDINGS TO THE CONTRARY ARE RECOGNIZED, IT APPEARS THAT THE GREATER WEIGHT OF AUTHORITY SUPPORTS THE VIEW THAT SERVICE OF FOOD IN A RESTAURANT DOES NOT CONSTITUTE A "SALE" EITHER AT COMMON LAW OR UNDER THE UNIFORM SALES ACT ON THE GROUND THAT THE TRANSFER OF TITLE TO THE FOOD CONSUMED IS INCIDENTAL TO THE OTHER FACTORS INVOLVED SINCE A CUSTOMER AT A RESTAURANT SEEKS NOT TO MAKE A PURCHASE BUT TO BE SERVED WITH FOOD, FREQUENTLY PREPARED TO HIS INDIVIDUAL LIKING. WITH THE SERVICE AND FOOD GO A PLACE IN WHICH TO EAT AND, USUALLY, A TABLE, DISHES, LINEN, SILVER, WAITERS, ETC.

SINCE THE REPAIRING OF TELEVISION SETS, SUPPLYING OF PUBLIC UTILITIES AND SERVING OF MEALS IN RESTAURANTS CONCERN ACTIVITIES ESSENTIALLY OF A SERVICE NATURE, RETIRED OFFICERS WHO ARE EMPLOYED BY, REPRESENT, MANAGE, OR HAVE AN OWNER'S INTEREST IN SUCH BUSINESSES ARE NOT VIEWED AS BEING ENGAGED IN SELLING SUPPLIES AND MATERIALS AS CONTEMPLATED BY THE STATUTES.

ACCORDINGLY, WE HOLD THAT THE PROVISIONS OF 5 U.S.C. 59C AND 10 U.S.C. 6112 (B) DO NOT PRECLUDE THE PAYMENT OF RETIRED PAY TO RETIRED REGULAR OFFICERS OF THE ARMED FORCES WHILE THEY ARE ENGAGED IN THE BUSINESS ACTIVITIES DISCUSSED IN COMMITTEE ACTION NO. 303 AS OUTLINED ABOVE.

THE VIEW IS EXPRESSED IN COMMITTEE ACTION NO. 304 THAT RETIRED OFFICERS ARE EMPLOYED IN POSITIONS THAT MAY BE REGARDED AS A PART OF THE SELLING PROCESS, AND CALCULATED TO INDUCE PURCHASE OF THE EMPLOYER'S PRODUCT, BUT WHICH INVOLVE LITTLE OR NO CONTACT WITH GOVERNMENT OFFICIALS. THESE CASES ARE DESCRIBED AS FOLLOWS:

RETIRED OFFICERS IN THIS CATEGORY REVIEW GOVERNMENT ANNOUNCEMENTS TO DETERMINE THE PRODUCTS ON WHICH THEIR FIRMS SHOULD BID. THEY PREPARE COST STUDIES, SPECIFICATIONS, ARCHITECTURAL DRAWINGS, AND RELATED MATTER NECESSARY IN DEVELOPING BIDS ON GOVERNMENT CONTRACTS FOR ALL TYPES OF SUPPLIES AND MATERIAL. THEY ALSO PREPARE CORRESPONDENCE WITH MILITARY DEPARTMENTS IN CONNECTION THEREWITH. SOME OF THEM ARE OCCASIONALLY REQUIRED TO ATTEND MEETINGS WITH PERSONNEL FROM THE ARMED FORCES ON MATTERS RELATING TO CONTRACTS AND PROPOSALS. HOWEVER, THEIR PARTICIPATION IS LIMITED SOLELY TO ACTING AS TECHNICAL ADVISERS TO OTHER PERSONNEL FROM THEIR COMPANIES. * * *

OTHER RETIRED OFFICERS ARE EMPLOYED IN SUPERVISORY POSITIONS BY DEFENSE CONTRACTORS. WHILE THEY DO NOT THEMSELVES ENGAGE DIRECTLY IN SELLING TO THE MILITARY SERVICES, OTHER EMPLOYEES WORKING UNDER THEIR SUPERVISION ARE SO ENGAGED. SOME OF THE OFFICERS ARE RESPONSIBLE FOR THE ENTIRE OPERATIONS OF A SMALL COMPANY. SOME ARE RESPONSIBLE FOR ALL PHASES OF THEIR COMPANY'S OPERATIONS WITHIN AN ASSIGNED GEOGRAPHICAL AREA. OTHERS SUPERVISE ONE OR A GROUP OF FUNCTIONS WITHIN THE COMPANY ORGANIZATION. FEW SERVE AS SALES MANAGERS, AND ARE RESPONSIBLE FOR ALL SALES ACTIVITIES OF THEIR FIRMS. WHEN DIRECT NEGOTIATION WITH MILITARY INSTALLATIONS OR OFFICIALS IS NECESSARY, IT IS PERFORMED BY OTHER PERSONNEL. * * *

IN A BROAD SENSE, EVERY INDIVIDUAL WHO IS EMPLOYED BY A CONCERN WHICH IS IN THE BUSINESS OF SELLING A PRODUCT COULD BE CONSIDERED TO BE ENGAGED IN THE SELLING PROCESS. FOR EXAMPLE, THE ADVERTISING DEPARTMENT PERSONNEL WHO PREPARE THE ADVERTISING MATERIAL, THE ACCOUNTING DEPARTMENT EMPLOYEES WHO MAINTAIN THE SALES RECORDS AND THE SHIPPING CLERKS WHO PACKAGE AND EFFECT DELIVERY OF THE SUPPLIES ARE INVOLVED IN OPERATIONS CONNECTED WITH OR SUPPORTING THE SELLING PROCESS. AS PREVIOUSLY STATED, HOWEVER, THE STATUTORY PROHIBITIONS APPLY TO THE OFFICERS CONCERNED ONLY IN THOSE SITUATIONS WHERE THEY MAY BE VIEWED AS REPRESENTING THEMSELVES OR OTHERS FOR THE PURPOSE OF SELLING OR CONTRACTING OR NEGOTIATING TO SELL. CLEARLY EMPLOYEES OF ADVERTISING, ACCOUNTING AND SHIPPING DEPARTMENTS OF BUSINESS CONCERNS GENERALLY ARE NOT SO ENGAGED. THE LAST SENTENCE OF THE DEFINITION OF "SELLING" QUOTED FROM PARAGRAPH VI.B, DEPARTMENT OF DEFENSE DIRECTIVE 5500.7, WOULD SEEM TO EXCLUDE SUCH EMPLOYEES FROM THE SCOPE OF THE PARAGRAPH AND WE DO NOT BELIEVE THAT RETIRED OFFICERS WHOSE DUTIES CONCERN ONLY THE TECHNICAL BACKGROUND OPERATIONS OF ASSEMBLING, ANALYZING, PREPARING AND REPORTING NECESSARY INFORMATION, MATERIAL, CORRESPONDENCE AND DOCUMENTS FOR USE BY OTHERS ARE TO BE REGARDED AS ENGAGED IN SELLING WITHIN THE CONTEMPLATION OF THE STATUTES. NOR DO WE BELIEVE THAT AN OFFICER WHO OCCASIONALLY ACCOMPANIES OTHER MEMBERS OF HIS FIRM AS TECHNICAL ADVISER TO MEETINGS WITH DEPARTMENT OF DEFENSE PERSONNEL TO DISCUSS PERFORMANCE OR PROGRESS OR SIMILAR MATTERS UNDER AWARDED CONTRACTS MAY REASONABLY BE VIEWED AS BEING ENGAGED IN SELLING, TC., FOR THE PURPOSE OF DISCUSSING ANY SUPPLY PROCUREMENT PROPOSALS OR FOR THE PURPOSE OF NEGOTIATING OR DISCUSSING PROPOSED CHANGES IN ANY OF THE TERMS OF AN EXISTING CONTRACT, THE OFFICER'S ATTENDANCE AT SUCH MEETINGS SHOULD, IN OUR OPINION, BE REGARDED AS PARTICIPATION IN SALES ACTIVITIES WITHIN THE PURVIEW OF THE STATUTES.

IT IS OUR VIEW THAT RETIRED OFFICERS HAVING ADMINISTRATIVE, SUPERVISORY OR MANAGERIAL RESPONSIBILITY OVER THE SALES DEPARTMENT OR THE SALESMEN OF A FIRM ARE NOT SUBJECT TO THE STATUTES SOLELY BECAUSE OF THEIR ADMINISTRATIVE, SUPERVISORY OR MANAGERIAL DUTIES SO LONG AS SUCH DUTIES CLEARLY AND WITHOUT EXCEPTION DO NOT INVOLVE THEIR SIGNING BIDS, PROPOSALS OR CONTRACTS TO OR WITH THE SERVICES LISTED IN THE STATUTES OR THEIR CONTACTING, IN PERSON OR BY CORRESPONDENCE OR OTHERWISE, ANY INSTALLATION OR OFFICIAL OF SUCH SERVICES FOR THE PURPOSE OF DOING ANYTHING WITHIN THE SCOPE OF SELLING AS DEFINED IN DEPARTMENT OF DEFENSE DIRECTIVE 5500.7. THE QUESTIONS PRESENTED BY COMMITTEE ACTION NO. 304 ARE ANSWERED ACCORDINGLY.

COMMITTEE ACTION NO. 305 CONCERNS OFFICERS WHO HAVE BEEN RETIRED FROM THE NAVY FOR OVER 2 YEARS AND, HENCE, ARE SUBJECT ONLY TO THE PROVISIONS OF 10 U.S.C. 6112 (B). THE CATEGORIES LISTED IN THE COMMITTEE ACTION WILL BE CONSIDERED AND ANSWERED IN THE ORDER STATED THEREIN. CATEGORY 1.

1. THE MAINTENANCE OF LINES OF COMMUNICATION BETWEEN THE CORPORATION AND THOSE GOVERNMENT AGENCIES WITH WHICH THE CORPORATION DOES BUSINESS. VARYING DEGREES, ALL THE CORPORATIONS CONCERNED DO BUSINESS WITH THE NAVY. THE RETIRED OFFICERS CONCERNED HAVE NO AUTHORITY TO NEGOTIATE CONTRACTS OR TO EXECUTE ANY CONTRACTS OF SALES. * * * IN SOME INSTANCES THEIR CONTRACTS OF EMPLOYMENT CONTAIN AN INJUNCTION THAT THEY WILL ENGAGE IN NO ACTIVITIES PROSCRIBED BY LAW OR GOVERNMENTAL REGULATIONS INVOLVING CONFLICT OF INTEREST. COMMUNICATION BETWEEN CORPORATIONS AND THE GOVERNMENT MAY INVOLVE COMPLEXITIES WHICH ARE TIME CONSUMING AND COSTLY IF CONDUCTED ON A TRIAL AND ERROR BASIS. THE SERVICE THE RETIRED OFFICER RENDERS IS TO REDUCE THE TIME AND MONEY LOSS FACTOR INHERENT IN THE COMMUNICATIONS PROCESS.

ON THE BASIS OF SUCH DESCRIPTION THERE APPEARS TO BE LITTLE BASIS FOR A CONCLUSION THAT THE ACTIVITIES REQUIRED OF THE OFFICERS ARE SALES ACTIVITIES FOR PURPOSES OF THE STATUTE. IF, HOWEVER, IN MAINTAINING THE LINES OF COMMUNICATION BETWEEN THE CORPORATION AND THE DEPARTMENT OF THE NAVY THE RETIRED OFFICER IN FACT INITIATES ANY CONTACTS WITH THE NAVY FOR ANY OF THE PURPOSES ENUMERATED IN THE ABOVE-QUOTED PROVISIONS OF DEPARTMENT OF DEFENSE DIRECTIVE 5500.7, HE WOULD BE SUBJECT TO THE STATUTE. 40 COMP. GEN. 511; 41 ID. 784, SUPRA.

CATEGORY 2.

2. ANALYSIS AND REPORTING IN RELATION TO LEGISLATIVE OR EXECUTIVE AGENCY PROGRAMS WHICH MAY AFFECT THE OPERATIONS OF THE COMPANY. THE PERFORMANCE OF THIS FUNCTION FREQUENTLY REQUIRES ATTENDANCE AT CONVENTIONS, SYMPOSIUMS, TRADE ASSOCIATION COMMITTEE MEETINGS, AND OTHER ACTIVITIES THAT ARE ALSO ATTENDED BY REPRESENTATIVES OF THE NAVY. IN SOME INSTANCES OCCASIONAL DIRECT CONTACT WITH THE DEPARTMENT OF THE NAVY MAY ALSO BE NECESSARY.

ACTIVITIES OF THIS GENERAL NATURE WHICH DO NOT PURPORT TO BE FOR THE PURPOSE OF EFFECTING A SALE ARE NOT SUBJECT TO THE PROHIBITION OF SECTION 6112 (B). 41 COMP. GEN. 799, SUPRA. COMPARE, HOWEVER, 40 COMP. GEN. 511.

CATEGORY 3.

3. ARRANGING FOR LODGING AND TRAVEL RESERVATIONS, APPOINTMENTS AND GENERAL ASSISTANCE TO VISITORS FROM WASHINGTON TO THE HOME OFFICE OF THE CORPORATION, AND FROM THE CORPORATION OFFICE TO WASHINGTON.

SUCH LIAISON DUTIES DO NOT APPEAR TO CONSTITUTE SALES ACTIVITIES WITHIN THE APPLICATION OF THE STATUTE.

CATEGORY 4.

4. MANAGEMENT OF THE WASHINGTON OFFICE. THIS GENERALLY INCLUDES REPLYING TO WRITTEN AND ORAL INQUIRIES RECEIVED FROM ALL SOURCES, OR REFERRAL OF THE INQUIRIES TO THE HOME OFFICE.

THE MANAGEMENT OF A LOCAL COMPANY OFFICE, WHILE A FORM OF LIAISON ACTIVITY, WOULD NOT OF ITSELF CONSTITUTE AN ENGAGEMENT IN SELLING ACTIVITIES AS CONTEMPLATED BY SECTION 6112 (B). HOWEVER, IF IN THE COURSE OF MANAGING THE LOCAL OFFICE A RETIRED REGULAR OFFICER DOES ANYTHING WHICH IS WITHIN THE SCOPE OF SELLING AS DEFINED IN DEPARTMENT OF DEFENSE DIRECTIVE 5500.7 OR WHICH OTHERWISE MAY BE VIEWED AS SALES ACTIVITIES FOR PURPOSES OF THE STATUTE, HE WOULD BE SUBJECT TO THE STATUTE. MERELY REPLYING TO WRITTEN AND ORAL INQUIRIES OR OTHERWISE RESPONDING TO REQUESTS FROM NAVY OFFICIALS FOR ASSISTANCE, INFORMATION OF ADVICE IS NOT VIEWED AS ENGAGING IN SALES ACTIVITIES FOR PURPOSES OF THE STATUTE. 41 COMP. GEN. 799, SUPRA.

CATEGORY 5.

5. THE PERFORMANCE OF PUBLIC RELATIONS DUTIES FOR THE CORPORATION.

WEBSTER'S NEW INTERNATIONAL DICTIONARY (SECOND EDITION) DEFINES THE TERM "PUBLIC RELATIONS" AS ,THE ACTIVITIES OF AN INDUSTRY, UNION, CORPORATION, PROFESSION, GOVERNMENT, OR OTHER ORGANIZATION IN BUILDING AND MAINTAINING SOUND AND PRODUCTIVE RELATIONS WITH SPECIAL PUBLIC SUCH AS CUSTOMERS, EMPLOYEES, OR STOCKHOLDERS, AND WITH THE PUBLIC AT LARGE, SO AS TO ADAPT ITSELF TO ITS ENVIRONMENT AND INTERPRET ITSELF TO SOCIETY.' CLEARLY, UNDER THAT DEFINITION, THE DUTIES OF RETIRED OFFICERS EMPLOYED AS PUBLIC RELATIONS REPRESENTATIVES BY INDUSTRIES IN BUILDING AND MAINTAINING PRODUCTIVE RELATIONS WITH THE NAVY AND OTHER CUSTOMERS MAY INVOLVE THE PERFORMANCE OF ACTIVITIES DIRECTLY CALCULATED TO RESULT IN THE SALE OF THE EMPLOYERS' PRODUCTS. SEE 38 COMP. GEN. 470. ON THE OTHER HAND, IT IS EQUALLY CLEAR THAT UNDER THE DEFINITION THERE MAY BE CASES IN WHICH RETIRED OFFICERS ARE EMPLOYED BY INDUSTRY IN PUBLIC RELATIONS WORK WHICH DO NOT ACTUALLY CONSTITUTE AN ENGAGEMENT IN SELLING ACTIVITIES AS CONTEMPLATED BY THE STATUTE. ACCORDINGLY, CASES USING THAT TERM AS A DESCRIPTION OF THE RETIRED OFFICER'S DUTIES SHOULD BE CONSIDERED ON AN INDIVIDUAL BASIS WITH THE VIEW OF DETERMINING WHETHER THE SPECIFIC DUTIES OF THE POSITION INVOLVE ANY ACTIVITIES SUCH AS THOSE WITHIN THE CONTEMPLATION OF PARAGRAPH VI.B OF DEPARTMENT OF DEFENSE DIRECTIVE 5500.7 AND OUR DECISIONS.

CATEGORY 6.

6. LIAISON WITH THE REPRESENTATIVES OF FOREIGN GOVERNMENTS.

IT IS NOT UNDERSTOOD HOW SUCH ACTIVITIES MAY BE VIEWED AS SELLING TO THE "DEPARTMENT OF THE NAVY" AND, HENCE, IN THE ABSENCE OF SOMETHING FURTHER, THEY ARE NOT WITHIN THE SCOPE OF THE PROVISIONS OF THE STATUTE. 41 COMP. GEN. 799, SUPRA.

SUBJECT, OF COURSE, TO THE 2-YEAR LIMITATION OF 5 U.S.C. 59C WHERE APPLICABLE, IT IS OUR VIEW THAT WHEN THE ACTIVITIES OF A RETIRED REGULAR OFFICER ARE CONSIDERED TO BE WITHIN THE PURVIEW OF THE STATUTES, THE PROHIBITION AGAINST THE PAYMENT OF RETIRED PAY CONTINUES DURING THE ENTIRE PERIOD WHILE HIS ENGAGEMENT IN THOSE ACTIVITIES IS REQUIRED OR CONTINUES AND THEREAFTER DURING THE PERIOD COVERED BY ANY CONTRACT RESULTING FROM SUCH ACTIVITIES. 39 COMP. GEN. 366; 41 COMP. GEN. 642; 42 COMP. GEN. 32.