B-167407, AUGUST 8, 1969, 49 COMP. GEN. 85

B-167407: Aug 8, 1969

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LIAISON ACTIVITIES THE ACTIVITIES OF A RETIRED REGULAR AIR FORCE OFFICER AS A SELF EMPLOYED SMALL BUSINESS REPRESENTATIVE TO SECURE INFORMATION CONCERNING THE NEEDS OF THE AEROSPACE INDUSTRY FOR COMPANIES MANUFACTURING COMPONENTS USED BY THE INDUSTRY ARE LIAISON ACTIVITIES WITH THE VIEW TOWARD THE ULTIMATE CONSUMMATION OF A SALE. 1969: REFERENCE IS MADE TO YOUR LETTER OF JULY 2. THE SUBMISSION WAS APPROVED BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE AS AIR FORCE REQUEST NO. HEITMAN IS LEAVING THE FIRM AND COLONEL ADAMS PROPOSES TO OPERATE THE BUSINESS IN AN INDIVIDUAL CAPACITY. YOU FURTHER SAY THAT THE CASE WAS REFERRED TO HEADQUARTERS U.S. THE CASE WAS FORWARDED TO THE OFFICE OF THE AIR FORCE GENERAL COUNSEL AND IT WAS THE OPINION OF THAT OFFICE THAT IT COULD NOT BE CONCLUDED THAT COLONEL ADAMS WOULD NOT BE ENGAGED IN "SELLING" IF HE ENTERED FULLY INTO THE DUTIES DESCRIBED IN HIS DD FORM 1357.

B-167407, AUGUST 8, 1969, 49 COMP. GEN. 85

MILITARY PERSONNEL -- RETIRED -- CONTRACTING WITH GOVERNMENT -- LIAISON ACTIVITIES THE ACTIVITIES OF A RETIRED REGULAR AIR FORCE OFFICER AS A SELF EMPLOYED SMALL BUSINESS REPRESENTATIVE TO SECURE INFORMATION CONCERNING THE NEEDS OF THE AEROSPACE INDUSTRY FOR COMPANIES MANUFACTURING COMPONENTS USED BY THE INDUSTRY ARE LIAISON ACTIVITIES WITH THE VIEW TOWARD THE ULTIMATE CONSUMMATION OF A SALE, WHICH ACTIVITIES COUPLED WITH CONTACTS FOR THE PURPOSE OF NEGOTIATING OR DISCUSSING CHANGES IN SPECIFICATIONS, PRICES, COST ALLOWANCES, OR OTHER TERMS OF A CONTRACT, AND POSSIBLY SETTLING DISPUTES CONCERNING THE PERFORMANCE OF A CONTRACT, CONSTITUTE "SELLING" WITHIN THE CONTEMPLATION OF DEFENSE DEPARTMENT DIRECTIVE 5500.7, DATED AUGUST 8, 1967, AND UNDER 37 U.S.C. 801(C) PAYMENT OF RETIRED PAY TO THE OFFICER SO ENGAGED WOULD BE PRECLUDED FOR A PERIOD OF 3 YEARS AFTER RETIREMENT.

TO MAJOR N. C. ALCOCK, DEPARTMENT OF THE AIR FORCE, AUGUST 8, 1969:

REFERENCE IS MADE TO YOUR LETTER OF JULY 2, 1969, ALRA, WITH ENCLOSURES, REQUESTING A DECISION WHETHER, IN THE CIRCUMSTANCES PRESENTED, THE PROPOSED SELF-EMPLOYMENT OF COLONEL PAUL E. ADAMS, USAF (RET.), WOULD CONSTITUTE "SELLING" WITHIN THE MEANING OF 37 U.S.C. 801(C) SO AS TO PRECLUDE PAYMENT OF RETIRED PAY WHILE SO EMPLOYED FOR A PERIOD OF 3 YEARS AFTER HIS RETIREMENT. THE SUBMISSION WAS APPROVED BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE AS AIR FORCE REQUEST NO. DO- AF-1044.

PRIOR TO COLONEL ADAMS' RETIREMENT HE ADVISED YOU IN LETTER OF MARCH 28, 1969, WITH COPY OF DD FORM 1357 "STATEMENT OF EMPLOYMENT," THAT HE WOULD BE EMPLOYED WITH DAVID L. HEITMAN AND ASSOCIATES, OKLAHOMA CITY, OKLAHOMA, AND THAT HIS POSITION WOULD BE THAT OF PARTNER/ASSOCIATE. ON MAY 6, 1969, HE SUBMITTED A MORE DETAILED DESCRIPTION OF HIS PROPOSED DUTIES. AS OF AUGUST 1, 1969, MR. HEITMAN IS LEAVING THE FIRM AND COLONEL ADAMS PROPOSES TO OPERATE THE BUSINESS IN AN INDIVIDUAL CAPACITY.

YOU SAY THAT FROM THE TOTAL RECORD IT APPEARED HIS DUTIES COULD INVOLVE "SELLING" AS DEFINED IN AIR FORCE REGULATIONS 30-30. YOU FURTHER SAY THAT THE CASE WAS REFERRED TO HEADQUARTERS U.S. AIR FORCE (AFJAG), AND THAT OFFICE CONCURRED WITH YOUR POSITION. THE CASE WAS FORWARDED TO THE OFFICE OF THE AIR FORCE GENERAL COUNSEL AND IT WAS THE OPINION OF THAT OFFICE THAT IT COULD NOT BE CONCLUDED THAT COLONEL ADAMS WOULD NOT BE ENGAGED IN "SELLING" IF HE ENTERED FULLY INTO THE DUTIES DESCRIBED IN HIS DD FORM 1357.

COLONEL ADAMS DESCRIBED HIS PROPOSED EMPLOYMENT ON DD FORM 1357 (STATEMENT OF EMPLOYMENT), AS FOLLOWS:

1. PROVIDE INFORMATION ON THE LOCAL AREA MARKET REQUIREMENTS FOR INDUSTRIAL & AERO SPACE PRODUCTS TO COMPANIES WE REPRESENT.

2. PROVIDE TECHNICAL ADVICE AND INFORMATION FOR THOSE PRODUCTS WHICH CAN BE PRODUCED AND OR MANUFACTURED BY THE COMPANIES WE REPRESENT.

3. PROVIDE INFORMATION ON THE MANUFACTURING DETAILS, WORKLOADS, DELIVERY SCHEDULES, CHANGES IF ANY, ETC.

4. KEEP THE CUSTOMER AND THE MANUFACTURER ADVISED AS TO THE OTHER REQUIREMENTS AND OR CHANGES.

5. PROVIDE THE COMPANIES WE REPRESENT WITH INFORMATION NECESSARY TO SUCCESSFULLY MANUFACTURE REQUIRED PRODUCTS AND TO MEET SCHEDULES ON A TIMELY BASIS.

THE DUTIES OF HIS PROPOSED EMPLOYMENT WERE AMPLIFIED AND EXPLAINED IN HIS STATEMENT OF MAY 6, 1969, AND WERE FURTHER EXPLAINED IN A STATEMENT WHICH HE SUBMITTED ON JULY 7, 1969. THE STATEMENT OF MAY 6, 1969, IS IN PART AS FOLLOWS:

ITEM 1: PROVIDE INFORMATION ON THE LOCAL AREA MARKET REQUIREMENTS FOR INDUSTRIAL AND AERO SPACE PRODUCTS TO THOSE COMPANIES WE REPRESENT.

DISCUSSION: BY VISITING THE GOVERNMENT AGENCIES' SMALL BUSINESS OFFICE, WHICH IS AVAILABLE TO ANY DESIRED CONTRACTOR, IT CAN BE DETERMINED WHAT ITEMS ARE BEING REQUESTED FOR MANUFACTURE. THESE ITEMS WILL BE IN THE FORM OF A BID PACKAGE WHICH DESCRIBES THE ITEMS BEING PURCHASED. SOME OF THE PACKAGES ARE COMPLETE WITH DRAWINGS AND OTHERS MAY HAVE ONLY A "PART NUMBER." THROUGH MY EXPERIENCE AND KNOWLEDGE, I DETERMINE THOSE ITEMS WHICH ARE WITHIN THE MANUFACTURING CAPABILITY OF THE COMPANIES I REPRESENT. THE GOVERNMENT AGENT FREQUENTLY MAILS COPIES OF THESE PACKAGES TO KNOWN MANUFACTURING SOURCES AND IN ADDITION WILL MAIL COPIES TO THE COMPANIES I REPRESENT AFTER I HAVE ADVISED HIM WHICH ONES HAVE THE MANUFACTURING CAPABILITY. WHEN THE COMPANY RECEIVES THIS INFORMATION, THEY PREPARE A FORMAL BID AND FORWARD IT TO THE AGENCY MAKING THE ORIGINAL REQUEST. THE GOVERNMENT AGENT DETERMINES THE LOWEST SUCCESSFUL BIDDER AND IN TURN WILL AWARD A CONTRACT. IF ONE OF THE COMPANIES I REPRESENT GETS A CONTRACT, IT IS MY DUTY TO MONITOR IT AND BE PREPARED TO DISCUSS IN DETAIL THOSE QUESTIONS ASKED BY THE GOVERNMENT AGENT ON THE STATUS OF THE CONTRACT. I DO NOT SIGN CONTRACTS.

ITEM 2: PROVIDE TECHNICAL ADVICE AND INFORMATION FOR THOSE PRODUCTS WHICH CAN BE PRODUCED AND/OR MANUFACTURED BY THE COMPANIES I REPRESENT.

DISCUSSION: TO DO THIS I REVIEW THE ITEMS BEING REQUESTED BY THE GOVERNMENT AGENCY AND ADVISE THEM WHICH COMPANY, IF ANY, OF THOSE I REPRESENT HAVE THE SKILL, MACHINES, DRAWINGS, ETC., TO MANUFACTURE THE REQUESTED ITEM. THE GOVERNMENT AGENT THEN WILL PROVIDE THE COMPANY WITH THE CAPABILITY A COPY OF THE REQUEST FOR FURTHER CONSIDERATION AND POSSIBLE BID.

ITEM 3: PROVIDE INFORMATION ON THE MANUFACTURING DETAILS WORKLOADS, DELIVERY SCHEDULES, CHANGES IF ANY, ETC.

DISCUSSION: PROVIDE SPECIAL INSTRUCTIONS TO THE COMPANY I REPRESENT IN THE FORM OF ADMINISTRATIVE DETAILS, QUALITY CONTROL, SPECIAL SHIPPING INSTRUCTIONS AND OTHER DETAILS THAT THE GOVERNMENT MAY REQUEST ON AN AWARDED CONTRACT OR PROVIDE ON A BID PACKAGE. I WILL PROVIDE ANSWERS TO GOVERNMENT REQUESTS AND QUESTIONS AFTER CONTACTING THE CONTRACTOR FOR DETAILS. I DO NOT SIGN CHANGES INVOLVING CONTRACTS.

ITEM 4: KEEP THE CONTRACTOR AND GOVERNMENT AGENT ADVISED AS TO THE OTHER REQUIREMENTS, PROBLEMS THAT MAY DEVELOP, CHANGES, ETC.

DISCUSSION: THE GOVERNMENT AGENT FREQUENTLY ASKS FOR INFORMATION REGARDING POSSIBILITY OF CHANGES TO SCHEDULES, VERSUS OVERTIME REQUIREMENTS AND POSSIBLE CHANGES TO COST AS A RESULT OF HIS REQUEST. THIS INFORMATION IS DISCUSSED WITH THE CONTRACTOR AND THE RESULTS ARE PASSED TO THE GOVERNMENT AGENT. THROUGH THESE COORDINATED ACTIONS THE GOVERNMENT AND THE MANUFACTURER CAN SAVE VALUABLE TIME AND COST FACTORS CAUSED BY EXTENDED LINES OF COMMUNICATION. THE CONTRACTOR MAY HAVE TROUBLE WITH INSUFFICIENT DRAWINGS OR BLUEPRINTS AND REQUIRE ADDITIONAL INFORMATION ON EITHER AN AWARDED CONTRACT OR FOR DETERMINING HIS CAPABILITY TO MANUFACTURE. THROUGH MY KNOWLEDGE AND EXPERIENCE, I CAN DISCUSS THESE DEFICIENCIES WITH THE GOVERNMENT AGENT AND ACQUIRE, WHEN POSSIBLE THE ADDITIONAL DRAWINGS AND INFORMATION.

ON THE BASIS OF COLONEL ADAMS' DESCRIPTION OF HIS DUTIES, HIS PROSPECTIVE EMPLOYMENT WOULD APPEAR TO CONSTITUTE HIM A SMALL BUSINESS MANUFACTURERS' REPRESENTATIVE. THE COMPANIES WHICH HE WILL REPRESENT MANUFACTURE VARIOUS COMPONENTS USED BY THE AEROSPACE INDUSTRY AND IT WILL BE HIS RESPONSIBILITY TO PROVIDE THEM WITH INFORMATION AS TO THE NEEDS OF THE INDUSTRY. INSOFAR AS THE DEPARTMENT OF DEFENSE IS CONCERNED HE SAYS HE WILL OBTAIN THIS INFORMATION FROM INVITATIONS FOR BIDS AT THE 'GOVERNMENT AGENCIES' SMALL BUSINESS OFFICE." WHEN THE ADVERTISED NEEDS CAN BE SUPPLIED BY ANY OF HIS MANUFACTURERS HE WILL SEE THAT AN INVITATION FOR BID IS MAILED TO HIS MANUFACTURER. DOUBTLESS SOME, IF NOT ALL, OF THE CONTRACTS WHICH HE WILL MAKE WITH GOVERNMENT PERSONNEL AT THIS TIME WILL BE WITH REPRESENTATIVES OF THE DEPARTMENT OF DEFENSE.

WHEN A CONTRACT IS OBTAINED BY HIS MANUFACTURER HE WILL BE REQUIRED TO MONITOR THE PROGRESS OF THE CONTRACT AND ACT AS AN INTERMEDIARY BETWEEN THE GOVERNMENT AND THE MANUFACTURER FOR THE PURPOSE OF MAINTAINING DELIVERY SCHEDULES, CLARIFYING SPECIFICATIONS, RESOLVING MANUFACTURING DIFFICULTIES AND ASSISTING IN THE EXPEDITIOUS PROCESSING OF ANY NEEDED CHANGES. HE WILL NOT, HOWEVER, SIGN ANY BID, PROPOSAL, OR CONTRACT, OR NEGOTIATE ANY CONTRACT.

COLONEL ADAMS APPEARS TO BELIEVE THAT, IN HIS REPRESENTATIVE CAPACITY, HE SHOULD BE VIEWED AS RENDERING A SERVICE NOT INVOLVING SELLING RATHER THAN BEING ENGAGED FOR HIMSELF OR OTHERS IN SELLING, OR CONTRACTING OR NEGOTIATING TO SELL, SUPPLIES OR WAR MATERIALS TO THE DEPARTMENT OF DEFENSE.

IT APPEARS THAT COLONEL ADAMS RETIRED FROM THE REGULAR AIR FORCE ON MAY 1, 1969, AFTER 28 YEARS' SERVICE. SECTION 801(C) OF TITLE 37 U.S.C. (FORMERLY 5 U.S.C. 59C), 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 AN AGENCY OF THE DEPARTMENT OF DEFENSE, THE COAST GUARD, THE ENVIRONMENTAL SCIENCE SERVICES ADMINISTRATION, OR THE PUBLIC HEALTH SERVICE."

FOR THE PURPOSE OF THE ABOVE-CITED PROVISIONS OF LAW, THE TERM "SELLING" IS DEFINED IN PARAGRAPH I.C.2 OF INCLOSURE 3-C, DEPARTMENT OF DEFENSE DIRECTIVE 5500.7 DATED AUGUST 8, 1967, TO MEAN:

A. SIGNING A BID, PROPOSAL, OR CONTRACT;

B. NEGOTIATING A CONTRACT;

C. CONTRACTING AN OFFICER OR EMPLOYEE OF ANY OF THE FOREGOING DEPARTMENTS OR AGENCIES FOR THE PURPOSE OF:

(1) OBTAINING OR NEGOTIATING CONTRACTS.

(2) NEGOTIATING OR DISCUSSING CHANGES IN SPECIFICATIONS PRICES, COST ALLOWANCES, OR OTHER TERMS OF A CONTRACT, OR

(3) SETTLING DISPUTES CONCERNING PERFORMANCE OF A CONTRACT, OR

D. ANY OTHER LIAISON ACTIVITY WITH A VIEW TOWARD THE ULTIMATE CONSUMMATION OF A SALE ALTHOUGH THE ACTUAL CONTRACT THEREFORE IS SUBSEQUENTLY NEGOTIATED BY ANOTHER PERSON. AIR FORCE REGULATIONS 30-30 CONTAINS SIMILAR PROVISIONS.

ON THE BASIS OF COLONEL ADAMS' STATEMENTS OF HIS PROPOSED ACTIVITIES THERE WOULD APPEAR TO BE LITTLE REASON FOR DOUBT THAT HE WILL BE CONTACTING OFFICERS OR EMPLOYEES OF DEPARTMENT OF DEFENSE AGENCIES FOR THE PURPOSE OF NEGOTIATING OR DISCUSSING CHANGES IN SPECIFICATIONS, PRICES, COST ALLOWANCES, OR OTHER TERMS OF A CONTRACT AND, PERHAPS, FOR THE PURPOSE OF SETTLING DISPUTES CONCERNING PERFORMANCE OF A CONTRACT WITHIN THE CONTEMPLATION OF ITEMS C(2) AND (3) OF THE DIRECTIVE. ALSO, SINCE THE ONLY PURPOSE OF ANY CONTACTS MADE BY COLONEL ADAMS WITH DEPARTMENT OF DEFENSE PERSONNEL FOR THE PURPOSE OF ASCERTAINING WHETHER THE NEEDS OF THE DEPARTMENT CAN BE SUPPLIED BY HIS MANUFACTURERS IS TO OBTAIN THE BUSINESS FOR THEM, THERE WOULD APPEAR TO BE A SUBSTANTIAL BASIS FOR REGARDING SUCH CONTACTS AS LIAISON ACTIVITIES WITH A VIEW TOWARDS THE ULTIMATE CONSUMMATION OF A SALE WITHIN THE CONTEMPLATION OF ITEM D OF THIS DIRECTIVE.

ACCORDINGLY, IT IS OUR OPINION THAT THE DUTIES OF COLONEL ADAMS' PROPOSED SELF-EMPLOYMENT AS DESCRIBED BY HIM, MUST BE VIEWED AS "SELLING" WITHIN THE MEANING OF THE STATUTE. IF, THEREFORE, HE ENTERS FULLY INTO THE DUTIES OF HIS SELF-EMPLOYMENT HE WILL NOT BE ENTITLED TO RETIRED PAY WHILE SO ENGAGED FOR A PERIOD OF 3 YEARS AFTER THE DATE OF HIS RETIREMENT.

YOUR QUESTION IS ANSWERED ACCORDINGLY.