B-169200, JUL. 2, 1970

B-169200: Jul 2, 1970

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A RETIRED AIR FORCE OFFICER WHO ON DAY OF RETIREMENT WAS EMPLOYED AS VICE PRESIDENT OF AN OVERSEAS MARKETING FIRM AND WHO IN SUCH CAPACITY CONTACTED DEFENSE DEPT. INDUSTRY BUT WHO DID NOT ATTEMPT TO SELL OR ARRANGE FOR SALE OF ANYTHING IS NOT CONSIDERED TO BE "SELLING" WITHIN 37 U.S.C. 801(C) AND THEREFORE. RETIRED PAY DOES NOT HAVE TO BE FORFEITED. IF SO FOR WHAT PERIOD COLLECTION IS REQUIRED. THE REQUEST WAS ASSIGNED AIR FORCE REQUEST NO. WAS RETIRED SEPTEMBER 30. ON THE SAME DATE HE EXECUTED DD FORM 1357 (STATEMENT OF EMPLOYMENT) ON WHICH HE STATED HE WAS EMPLOYED BY INTERNATIONAL TECHNICAL SERVICES. AS VICE-PRESIDENT-MARKETING AND THAT HIS DUTIES WERE: "TO PROVIDE OVERSEAS MARKETING SERVICES TO THE COMPANY'S CLIENTS.

B-169200, JUL. 2, 1970

MILITARY -- RETIRED PAY -- CONTRACTING WITH GOVERNMENT DECISION TO FINANCE OFFICER, AIR FORCE CONCERNING A RETIRED OFFICER IN CIVILIAN EMPLOYMENT AND WHETHER SUCH EMPLOYMENT CONSTITUTES "SELLING" TO PRECLUDE RECEIPT OF RETIRED PAY. A RETIRED AIR FORCE OFFICER WHO ON DAY OF RETIREMENT WAS EMPLOYED AS VICE PRESIDENT OF AN OVERSEAS MARKETING FIRM AND WHO IN SUCH CAPACITY CONTACTED DEFENSE DEPT. EMPLOYEES CONCERNING CAPABILITY OF FOREIGN FIRM AS A SUBCONTRACTOR TO U.S. INDUSTRY BUT WHO DID NOT ATTEMPT TO SELL OR ARRANGE FOR SALE OF ANYTHING IS NOT CONSIDERED TO BE "SELLING" WITHIN 37 U.S.C. 801(C) AND THEREFORE, RETIRED PAY DOES NOT HAVE TO BE FORFEITED.

TO MR. N. R. BRENINGSTALL:

YOUR LETTER OF DECEMBER 30, 1969, ALRA, WITH ENCLOSURES, RECEIVED HERE MARCH 2, 1970, REQUESTS A DECISION WHETHER THE DESCRIBED ACTIVITIES OF COLONEL JOHN P. HEALY, USAF, RETIRED, CONSTITUTE "SELLING" WITHIN THE MEANING OF 37 U.S.C. 801(C) SO AS TO REQUIRE COLLECTION OF RETIRED PAY PAID TO HIM, AND IF SO FOR WHAT PERIOD COLLECTION IS REQUIRED. THE REQUEST WAS ASSIGNED AIR FORCE REQUEST NO. DO-AF-1070 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

YOU SAY THAT COLONEL HEALY, A REGULAR OFFICER, WAS RETIRED SEPTEMBER 30, 1967. ON THE SAME DATE HE EXECUTED DD FORM 1357 (STATEMENT OF EMPLOYMENT) ON WHICH HE STATED HE WAS EMPLOYED BY INTERNATIONAL TECHNICAL SERVICES, INC., AS VICE-PRESIDENT-MARKETING AND THAT HIS DUTIES WERE:

"TO PROVIDE OVERSEAS MARKETING SERVICES TO THE COMPANY'S CLIENTS, PRINCIPALLY TECHNICAL PRODUCTS AS WELL AS EUROPEAN LIAISON FOR OTHER UNITED STATES CLIENTS WHO DO THEIR OWN MARKETING. WE PROVIDE SIMILAR SERVICES IN THE UNITED STATES FOR EUROPEAN CLIENTS." UNDER ITEM 2B RELATIVE TO PRODUCTS OR SERVICES SOLD OR OFFERED FOR SALE BY HIS EMPLOYER TO THE AGENCIES LISTED THEREIN, COLONEL HEALY ENTERED "N/A." YOU SAY THAT ON THIS BASIS NO QUESTION WAS RAISED AS TO RETIRED PAY ENTITLEMENT.

YOU SAY FURTHER THAT INFORMATION WAS SUBSEQUENTLY RECEIVED BY THE AIR FORCE ACCOUNTING AND FINANCE CENTER (AFAFC) FROM THE AIR FORCE OFFICE OF SPECIAL INVESTIGATIONS (OSI) INDICATING THE POSSIBILITY THAT COLONEL HEALY WAS ENGAGED IN OBJECTIONABLE CONFLICT OF INTEREST ACTIVITIES IN THE REPRESENTATION OF A NORWEGIAN FIRM, GUSTAV A. RING. YOUR LETTER IS IN PERTINENT PART AS FOLLOWS:

"THE OSI REPORT OF INVESTIGATION INDICATED THAT COL. HEALY, BY LETTER DATED 31 JANUARY 1968, REPRESENTED TO THE NORWEGIAN MILITARY MISSION IN WASHINGTON, D.C. THAT HIS FIRM, INTERNATIONAL TECHNICAL SERVICES, INC., WAS THE WASHINGTON CONSULTANT FOR THE NORWEGIAN FIRM, GUSTAV A. RING; THAT HIS FIRM WAS 'DEVELOPING AN IMAGE OF THIS EXCELLENT COMPANY WHICH WILL PUT IT IN A POSITION THROUGH ITS NEW YORK SALES OFFICE, TO BECOME A SUPPLIER FOR THE U.S. DEPT. OF DEFENSE AND OTHER AGENCIES.' THE LETTER REFERRED TO A PENDING NORWAY-U.S. AGREEMENT AND TO THE HOPE THAT THE U.S. 'SHOPPING LIST' WOULD CONTAIN CERTAIN RING COMMUNICATION EQUIPMENT. THE OSI REPORT DESCRIBED THREE CONTACTS BY COL HEALY ON BEHALF OF A NORWEGIAN MANUFACTURING FIRM WITH MR. JAMES JORDAN, JR., INTERNATIONAL LOGISTICS ANALYST, INTERNATIONAL LOGISTICS DIVISION, NAVY MATERIEL COMMAND. MR. JORDAN STATED THESE OCCURRED IN EARLY MAY AND EARLY JUNE 1968, AND ON 13 SEPTEMBER 1968. THE NORWEGIAN FIRM WAS NOT IDENTIFIED BY MR. JORDAN. THE OSI REPORT ALSO DESCRIBED A TELEPHONE CONTACT BY COL HEALY IN MAY WITH MR. NATHAN L. WILANSKY, INDUSTRIAL SPECIALIST, DIRECTORATE OF PROCUREMENT POLICY, HEADQUARTERS USAF, ON BEHALF OF THE GUSTAV RING FIRM. THESE CONTACTS OCCURRED AFTER THE NORWAY-U.S. AGREEMENT WAS SIGNED."

IT APPEARS THAT THE MATTER WAS CONSIDERED BY THE OFFICE OF THE JUDGE ADVOCATE GENERAL OF THE AIR FORCE AND THAT OFFICE FOUND NO VIOLATION OF THE PROVISIONS OF 37 U.S.C. 801(C). IN VIEW OF THE LIAISON PROVISIONS OF DEPARTMENT OF DEFENSE DIRECTIVE 5500.7, HOWEVER, IT WAS SUGGESTED THAT THE MATTER BE REFERRED TO THIS OFFICE FOR DECISION. YOU SAY YOU HAVE NO INDICATION OF POSSIBLE "SELLING" CONTACTS BY COLONEL HEALY SUBSEQUENT TO SEPTEMBER 13, 1968, AND THAT PAYMENT OF RETIRED PAY HAS CONTINUED TO HIM WITHOUT INTERRUPTION.

SECTION 801(C) OF TITLE 37 U.S.C. (FORMERLY 5 U.S.C. 59C) PRECLUDES PAYMENT OF RETIRED PAY FOR A PERIOD OF THREE 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. CONTACTING AN OFFICER OR EMPLOYEE OR 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 CONTAIN SIMILAR PROVISIONS.

THE ABOVE DEFINITION IS IN LINE WITH OUR DECISIONS AND THE DECISION OF THE COURT OF CLAIMS IN THE CASE OF SEASTROM V UNITED STATES, 147 CT. CL. 453 (1959). SEE 38 COMP. GEN. 470 (1959); 39 COMP. GEN. 368 (1959), 40 COMP. GEN. 511 (1961); 41 COMP. GEN. 642 (1962). IT HAS BEEN HELD THAT THE EMPLOYMENT OF RETIRED OFFICERS IN NONSALES EXECUTIVE AND ADMINISTRATIVE POSITIONS IS OUTSIDE THE PURVIEW OF THE STATUTE. SEE 41 COMP. GEN. 784 (1962); 41 COMP. GEN. 799 (1962); 42 COMP. GEN. 87 (1962).

IT IS COLONEL HEALY'S CONTENTION THAT INTERNATIONAL TECHNICAL SERVICES WAS FORMED AS AN EXPORT-IMPORT COMPANY AND TO PROVIDE COUNSELING FOR FIRMS ENTERING INTERNATIONAL TRADE, AND THAT HIS COMPANY NEVER ENTERED THE FIELD OF GOVERNMENT PROCUREMENT. HE SAYS HE CONSIDERED THE GUSTAV RING FIRM A POTENTIAL CLIENT AS A SUBCONTRACTOR TO U.S. INDUSTRY, AND TO DETERMINE WHETHER HIS COMPANY HAD THE CAPABILITY OF PROVIDING TECHNICAL DIRECTION OR MANAGEMENT ASSISTANCE HE MADE CONTACTS TO OBTAIN INFORMATION WHICH WOULD PERMIT HIS FIRM TO POINT OUT THE PROGRAMS IN WHICH THE RING FIRM COULD PARTICIPATE. HE CONTENDS HE NEVER MADE ANY PROCUREMENT PROPOSAL, VERBAL OR WRITTEN, TO ANY PROHIBITED AGENCY.

THE RECORD DOES NOT SHOW THAT COLONEL HEALY'S FIRM EVER SOLD ANYTHING OR ATTEMPTED TO SELL ANYTHING TO THE GOVERNMENT, OR THAT HE HAD ANY AUTHORITY FROM ANY FIRM TO SELL, OR NEGOTIATE FOR THE SALE OF, SUPPLIES OR WAR MATERIALS TO DEPARTMENT OF DEFENSE AGENCIES. THE OSI REPORT SHOWS THAT IN CONNECTION WITH THE NORWAY-U.S. AGREEMENT (APPARENTLY A FORM OF TRADE AGREEMENT) HE CONTACTED A LOGISTICS ANALYST IN THE INTERNATIONAL LOGISTICS DIVISION, NAVY MATERIEL COMMAND, AND AN INDUSTRIAL SPECIALIST, DIRECTORATE OF PROCUREMENT POLICY, HEADQUARTERS USAF, ON BEHALF OF THE GUSTAV RING COMPANY. THAT REPORT INDICATES, HOWEVER, THAT NEITHER OF THESE PERSONS WAS AUTHORIZED TO PURCHASE, CONSIDER PROPOSALS FOR PURCHASE OR NEGOTIATE THE PURCHASE OF ANYTHING FOR THE GOVERNMENT AND THAT COLONEL HEALY DID NOT ATTEMPT TO SELL OR ARRANGE FOR THE SALE OF ANYTHING TO THOSE ACTIVITIES, OR TO ANY OTHER PERSON OR ACTIVITY IN THE DEPARTMENT OF DEFENSE.

ACCORDINGLY, ON THE PRESENT RECORD, WE AGREE WITH THE APPARENT CONCLUSION OF THE JUDGE ADVOCATE GENERAL OF THE AIR FORCE THAT DURING THE PERIOD OF COLONEL HEALY'S EMPLOYMENT BY INTERNATIONAL TECHNICAL SERVICES, INC., HE WAS NOT ENGAGED IN SELLING, OR NEGOTIATING FOR THE SALE OF SUPPLIES OR WAR MATERIALS TO AN AGENCY OF THE DEPARTMENT OF DEFENSE AND THAT HIS REPORTED CONTACTS WITH NAVY AND AIR FORCE OFFICIALS DID NOT CONSTITUTE LIAISON ACTIVITIES FOR THE PURPOSE OF SALES SO AS TO SUBJECT HIM TO THE RETIRED PAY FORFEITURE PROVISIONS OF 37 U.S.C. 801(C).

YOUR QUESTION IS ANSWERED IN THE NEGATIVE.