B-159825, SEP. 7, 1966

B-159825: Sep 7, 1966

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TO THE SECRETARY OF THE AIR FORCE: FURTHER REFERENCE IS MADE TO LETTER DATED AUGUST 1. AN OFFICER ON THE RETIRED LIST OF THE "REGULAR AIR FORCE * * * WHO IS ENGAGED FOR HIMSELF OR OTHERS IN SELLING. THE TERM "SELLING" AS USED IN THAT LAW IS CURRENTLY DEFINED IN PARAGRAPH I.C. 2. 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 ASSISTANT SECRETARY SAYS THAT THE POSITION FOR WHICH GENERAL PRITCHARD IS BEING CONSIDERED BY AN AEROSPACE COMPANY IS THAT OF A CONSULTANT ON NEW PRODUCT DEVELOPMENT. HE RELATES IN A GENERAL WAY THE DUTIES AND CONTRACTS THE OFFICER IS EXPECTED TO PERFORM IN HIS NEW POSITION.

B-159825, SEP. 7, 1966

TO THE SECRETARY OF THE AIR FORCE:

FURTHER REFERENCE IS MADE TO LETTER DATED AUGUST 1, 1966, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE AIR FORCE (INSTALLATIONS AND LOGISTICS) REQUESTING A DECISION WHETHER THE SERVICES TO BE PERFORMED BY MAJOR GENERAL GILBERT L. PRITCHARD, USAF, FOR HIS PROSPECTIVE EMPLOYER FOLLOWING HIS RETIREMENT, CONSTITUTE "SELLING" WITHIN THE MEANING OF THAT TERM AS USED IN 37 U.S.C. 801/C) SO AS TO PRECLUDE PAYMENT TO HIM OF RETIRED PAY WHILE SO EMPLOYED FOR A PERIOD OF 3 YEARS AFTER RETIREMENT.

SECTION 59C OF TITLE 5, U.S. CODE, AS AMENDED BY PUBLIC LAW 87-777, 76 STAT. 777, APPROVED OCTOBER 9, 1962, AND CODIFIED IN 37 U.S.C. 801/C), PRECLUDES PAYMENT OF RETIRED PAY FOR A PERIOD OF 3 YEARS AFTER RETIREMENT TO, AMONG OTHERS, AN OFFICER ON THE RETIRED LIST OF THE "REGULAR AIR FORCE * * * WHO IS ENGAGED FOR HIMSELF OR OTHERS IN SELLING, OR CONTRACTING OR NEGOTIATING TO SELL, SUPPLIES OR WAR MATERIALS TO ANY AGENCY OF THE DEPARTMENT OF DEFENSE.' THE TERM "SELLING" AS USED IN THAT LAW IS CURRENTLY DEFINED IN PARAGRAPH I.C. 2, OF ENCLOSURE 3-C TO DEPARTMENT OF DEFENSE DIRECTIVE 5500.7, DATED MARCH 22, 1966, TO MEAN, AMONG OTHER THINGS,"D. 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 ASSISTANT SECRETARY SAYS THAT THE POSITION FOR WHICH GENERAL PRITCHARD IS BEING CONSIDERED BY AN AEROSPACE COMPANY IS THAT OF A CONSULTANT ON NEW PRODUCT DEVELOPMENT, AND HE RELATES IN A GENERAL WAY THE DUTIES AND CONTRACTS THE OFFICER IS EXPECTED TO PERFORM IN HIS NEW POSITION. THE ASSISTANT SECRETARY REFERS TO THE HOLDING IN OUR DECISION OF DECEMBER 11, 1965, B-152160, AND HE PROCEEDS TO DISTINGUISH THE EMPLOYMENT ACTIVITIES OF THE OFFICER IN THAT DECISION FROM THE PROPOSED EMPLOYMENT ACTIVITIES OF GENERAL PRITCHARD, WHICH ACTIVITIES THE ASSISTANT SECRETARY VIEWS AS COMING WITHIN THE RULE EXPRESSED IN OUR DECISION REPORTED AT 42 COMP. GEN. 236. IT IS FURTHER STATED IN THE ASSISTANT SECRETARY'S LETTER THAT THE DEPARTMENT OF DEFENSE BELIEVES THAT TECHNICAL LIAISON IS AN IMPORTANT FUNCTION AND ONE WHICH INDUSTRY SHOULD PERFORM, AND THAT SUCH ACTIVITY IS BENEFICIAL TO THE DEPARTMENT OF DEFENSE IN PROMOTING A GREATER UNDERSTANDING AND RESPONSIVENESS ON THE PART OF INDUSTRY TO HIGHLY TECHNICAL AND RAPIDLY CHANGING DEFENSE NEEDS. OTHERWISE PROPER UNDER THE CITED STATUTE, THE VIEW IS EXPRESSED THAT FORMER MILITARY PERSONNEL EMPLOYED FOR THIS PURPOSE WOULD CONSTITUTE A VALUABLE, EXPERIENCED SOURCE OF EXPERTISE IN THIS FIELD.

THE ONLY INFORMATION WE HAVE CONCERNING GENERAL PRITCHARD'S PROPOSED POST -RETIREMENT EMPLOYMENT ACTIVITIES IS CONTAINED IN A LETTER DATED JUNE 7, 1966, TO THE AIR FORCE ACCOUNTING AND FINANCE CENTER, DENVER, COLORADO, COPY OF WHICH WAS ENCLOSED WITH THE ASSISTANT SECRETARY'S SUBMISSION. THAT LETTER THE OFFICER DESCRIBES HIS DUTIES AND RESPONSIBILITIES OF THE POSITION WITH HIS PROSPECTIVE EMPLOYER, NAMELY, LING-TEMCO-VOUGHT, INC. THE OFFICER STATES THAT THIS COMPANY HAS AN EXTREMELY BROAD SCOPE OF OPERATIONS, SELLING A WIDE VARIETY OF PRODUCTS AND SERVICES BOTH TO THE GOVERNMENT AND TO COMMERCIAL CUSTOMERS. THE OFFICER GOES ON TO DESCRIBE THE POSITION HE IS CONSIDERING AND THE FUNCTIONS HE WILL BE REQUIRED TO PERFORM IN THAT POSITION AS FOLLOWS:

"IN THE POSITION I AM CONSIDERING, I WOULD SERVE AS A CONSULTANT ON NEW PRODUCT DEVELOPMENT. THE PRODUCT DEVELOPMENT WITH WHICH I WOULD DEAL WOULD INCLUDE EQUIPMENT DESIGNED TO MEET OPERATIONAL EQUIPMENT NEEDS OF THE DEPARTMENT OF DEFENSE. TO PERFORM THIS FUNCTION, I WOULD STUDY AND ANALYZE CERTAIN OF THE OPERATIONAL PROBLEMS AND REQUIREMENTS OF THE DEPARTMENT OF DEFENSE ON A CURRENT BASIS. ON THE BASIS OF SUCH STUDY AND ANALYSIS I WOULD ADVISE AND WORK WITH THE COMPANY'S ENGINEERING AND TACTICAL STAFFS, TO IDENTIFY AND INTERPRET FOR THEM THOSE OPERATIONAL PROBLEMS AND REQUIREMENTS OF THE DEPARTMENT OF DEFENSE AND TO ASSIST THEM IN FORMULATING PROPOSALS FOR THE DEVELOPMENT OF NEW EQUIPMENT TO MEET SUCH NEEDS. I WOULD ALSO ADVISE THE COMPANY'S MANAGEMENT WHERE THE COMPANY'S RESOURCES AND PROBLEM SOLVING EFFORTS MIGHT MOST USEFULLY BE EMPLOYED.

"AS ONE METHOD OF KEEPING IN TOUCH WITH CURRENT REQUIREMENTS OF THE DEPARTMENT OF DEFENSE, I WOULD HOPE TO DISCUSS OPERATIONAL PROBLEMS FROM TIME TO TIME WITH INDIVIDUAL, NON-CONTRACTING OPERATIONAL AND TACTICAL PERSONNEL OF THE ARMED FORCES, TO DETERMINE WHAT PROBLEMS THEY HAVE ENCOUNTERED IN THE FIELD WHICH MIGHT BE SOLVED BY NEW OR DIFFERENT EQUIPMENT. SUCH CONTACTS WOULD NORMALLY BE WITH PERSONNEL OF COMPANY GRADE AND BELOW--- PILOTS, MECHANICS AND THE LIKE--- WHOSE UNDERSTANDING OF SHORTCOMINGS OR PROBLEMS IN EXISTING EQUIPMENT HAS BEEN FORMED BY OPERATIONAL EXPERIENCES. THE EVALUATION OF THE FIELD EXPERIENCES OF SUCH PERSONNEL FOR THE PURPOSE OF DEVELOPING PRACTICAL SOLUTIONS TO MILITARY REQUIREMENTS PROBLEMS IS, IN MY OPINION, AN IMPORTANT AND NECESSARY TALENT NOW TOO SCARCE IN AMERICAN INDUSTRY. DISSATISFACTION WITH EQUIPMENT CAN OFTEN, AND UNDERSTANDABLY, BE STATED BY THE USER ONLY IN VAGUE AND IMPRECISE TERMS, WHICH THEN REQUIRE TRANSLATION INTO MEANINGFUL SOLUTIONS. THE FREQUENT LACK OF SUCH A CAPABILITY IN INDUSTRY HAS HAMPERED AMERICAN EFFORTS IN THE PAST AND WILL CONTINUE TO DETRACT FROM OUR EFFECTIVENESS IN VIETNAM AND OTHER LOCATIONS WHERE UNUSUALLY FLUID TACTICAL SITUATIONS PREVAIL, UNLESS INDIVIDUALS WITH MILITARY EXPERIENCES ARE ALLOWED TO BRING THEIR JUDGMENT TO BEAR ON SUCH PROBLEMS.' THE OFFICER REFERS TO OUR DECISION OF DECEMBER 11, 1964, B-152160, INVOLVING CONTACTS MADE BY A RETIRED OFFICER WITH PERSONNEL OF THE DEPARTMENT OF DEFENSE, AND HE STATES:

"* * * IN MY CASE, HOWEVER, THE CONTACTS WOULD BE FOR THE SOLE PURPOSE OF OBTAINING TECHNICAL INFORMATION, THE INFORMATION SOUGHT WOULD BE AVAILABLE ON REQUEST TO ANYONE WHO HAS PROPER SECURITY CLEARANCE AND A NEED FOR THE INFORMATION, AND THE CONTACTS WOULD BE WITH TECHNICAL PERSONNEL NOT INVOLVED IN FINANCIAL, SUPPLY, OR CONTRACTING MATTERS AND NOT IN A POSITION TO AFFECT PROCUREMENT OR BUDGETARY POLICY. OF COURSE, I WOULD HAVE NOTHING WHATSOEVER TO DO WITH THE PRESENTATION OF ANY PROPOSALS TO THE GOVERNMENT, THE SALE OF ANY SUPPLIES OR SERVICES, OR THE NEGOTIATION OF ANY CONTRACTS.'

IN OUR DECISION OF DECEMBER 11, 1964, B-152160, WHICH SUSTAINED OUR PRIOR DECISION OF OCTOBER 24, 1963, 43 COMP. GEN. 408, THE RECORD SHOWED THAT THE DUTIES OF THE RETIRED OFFICER THERE CONSIDERED CONSISTED OF, AMONG OTHER THINGS, INITIATING CONTACTS WITH PROCUREMENT AND BUDGET PERSONNEL OF THE DEPARTMENT OF DEFENSE. IN THE DECISION OF OCTOBER 24, 1963, 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 PROVISIONS OF THE DEPARTMENT OF DEFENSE DIRECTIVE. SUSTAINING THAT DECISION, WE SAID, IN THE DECISION OF DECEMBER 11, 1964, THAT WHILE WE HAVE NOT VIEWED CONTACTS BY RETIRED OFFICERS WITH PERSONNEL OF DEFENSE AGENCIES FOR THE SOLE PURPOSE OF OBTAINING TACTICAL DATA OR MATERIALS AND SIMILAR ITEMS AVAILABLE TO ANYONE ON REQUEST AS COMING WITHIN THE STATUTE AND REGULATIONS, WE COULD NOT CONCLUDE, ON THE BASIS OF THE WHOLE RECORD BEFORE US, THAT THE OFFICER'S CONTACTS WERE SOLELY FOR SUCH PURPOSES. FOR YOUR INFORMATION, THE OFFICER CONCERNED IN OUR DECISIONS OF OCTOBER 24, 1963, AND DECEMBER 11, 1964, B-152160, HAS FILED A SUIT WHICH IS NOW PENDING IN THE COURT OF CLAIMS FOR RECOVERY OF THE RETIRED PAY WITHHELD FROM HIM. SEE LAURENCE B. KELLEY V. UNITED STATES, CT.CL.NO. 134-65.

IN THE AREA OF CONTACTS WITH DEPARTMENT OF DEFENSE PERSONNEL MADE BY RETIRED OFFICERS AS CONSULTANTS REPRESENTING COMPANIES WHICH SELL SUPPLIES OR WAR MATERIALS TO DEFENSE AGENCIES, WE SAID IN OUR DECISION OF NOVEMBER 8, 1962, 42 COMP. GEN. 236, THAT (QUOTING THE THIRD SYLLABUS):

"CONTACTS BY RETIRED OFFICERS OF THE UNIFORMED SERVICES AS TECHNICAL CONSULTANTS WITH NONCONTRACTING DEFENSE DEPARTMENT PERSONNEL FOR THE PURPOSE OF ACQUIRING TECHNICAL INFORMATION RATHER THAN FOR ANY PURPOSE INVOLVING A SALES ACTIVITY OR ATTENDANCE OF RETIRED OFFICERS AS TECHNICAL ADVISERS AT MEETINGS ON PERFORMANCE OR PROGRESS UNDER AWARDED CONTRACTS ARE NOT CONTACTS WHICH WOULD BRING THE OFFICERS WITHIN THE CONFLICT OF INTEREST PROVISIONS IN 5 U.S.C. 59C, AS AMENDED; HOWEVER, MEETINGS OR CONTACTS FOR THE PURPOSE OF DISCUSSING ANY SUPPLY PROCUREMENT PROPOSALS OR NEGOTIATING OR DISCUSSING CHANGES IN EXISTING CONTRACTS ARE CONTACTS UNDER THE DEFINITION OF SELLING IN DEPARTMENT OF DEFENSE DIRECTIVE 5500.7 AND WOULD REQUIRE INVOCATION OF THE STATUTE PRECLUDING ANY PAYMENTS FROM APPROPRIATED FUNDS TO SUCH RETIRED OFFICERS.'

ON THE BASIS OF THE RECORD BEFORE US, IT WOULD APPEAR THAT GENERAL PRITCHARD'S DUTIES FOR HIS PROSPECTIVE EMPLOYER ARE THOSE OF A CONSULTANT TO DISCUSS OPERATIONAL MATTERS WITH NONCONTRACTING OPERATIONAL AND TACTICAL PERSONNEL OF THE ARMED FORCES TO DETERMINE WHAT PROBLEMS THEY HAVE ENCOUNTERED IN THE FIELD WHICH MIGHT BE SOLVED BY NEW OR DIFFERENT EQUIPMENT. SUCH CONTACTS, IT IS STATED, WOULD NORMALLY BE WITH PERSONNEL OF COMPANY GRADE AND BELOW. IT IS FURTHER INDICATED THAT THE OFFICER WOULD NOT BE REQUIRED TO PRESENT ANY PROPOSALS TO THE GOVERNMENT, OR BE INVOLVED IN THE SALE OF ANY SUPPLIES OR SERVICES, OR THE NEGOTIATION OF ANY CONTRACTS.

IN THE LIGHT OF THE OFFICER'S PROPOSED FUNCTIONS AND DUTIES AS CONSULTANT AND TECHNICAL LIAISON, IT IS OUR VIEW THAT SHOULD GENERAL PRITCHARD ACCEPT THE POSITION WHICH HE IS NOW CONSIDERING HE WOULD NOT, SOLELY BY VIRTUE OF EMPLOYMENT IN THAT CAPACITY, BE ENGAGED IN SALES ACTIVITIES WITHIN THE SCOPE OF THE PROVISIONS OF 37 U.S.C. 801/C) AND THE DEPARTMENT OF DEFENSE DIRECTIVE NO. 5500.7, MARCH 22, 1966, SO AS TO FORFEIT HIS RETIRED PAY FOR A 3-YEAR PERIOD WHILE SO EMPLOYED. SEE 41 COMP. GEN. 784; 41 ID. 799 AND 42 ID. 236. HOWEVER, SHOULD THE DUTIES THE OFFICER IS EXPECTED TO PERFORM BE CHANGED ON OR AFTER HE ENTERS EMPLOYMENT WITH THE COMPANY CONCERNED, AND SHOULD THOSE NEW DUTIES INVOLVE ACTIVITIES WHICH WOULD BRING HIM WITHIN THE SCOPE OF SELLING AS CONTEMPLATED BY THE STATUTE AND THE DEPARTMENT OF DEFENSE DIRECTIVE, HE WOULD NOT BE ENTITLED TO RETIRED PAY FOR THE PERIOD OF TIME INVOLVED. COMPARE 40 COMP. GEN. 511 AND 42 ID. 32.