B-140581, NOVEMBER 9, 1959, 39 COMP. GEN. 366

B-140581, NOVEMBER 9, 1959, 39 COMP. GEN. 366

MILITARY PERSONNEL - RETIRED - CONTRACTING WITH THE GOVERNMENT - CONSTRUCTION CONTRACTS ALTHOUGH THE TERMS "SUPPLIES" AND "MATERIALS" ORDINARILY MAY BE CONSTRUED AS HAVING REFERENCE TO TANGIBLE PERSONAL PROPERTY, TO CONSTRUE THE TERM "NAVAL SUPPLIES OR WAR MATERIALS" IN THE PROHIBITION IN 10 U.S.C. 6112 (B) AGAINST RETIRED OFFICERS OF THE REGULAR NAVY OR THE REGULAR MARINE CORPS RECEIVING PAYMENT FROM THE UNITED STATES WHILE ENGAGED IN SELLING, OR CONTRACTING OR NEGOTIATING TO SELL, NAVAL SUPPLIES OR WAR MATERIALS TO THE DEPARTMENT OF THE NAVY, AS INCLUDING ONLY PERSONAL PROPERTY, WOULD CREATE A DISPARITY AND FRUSTRATE THE PURPOSES OF THE PROHIBITION IN EVERY CASE INVOLVING OTHER KINDS OF PROPERTY; THEREFORE, SALES ACTIVITIES OF A RETIRED REGULAR NAVY OFFICER IN CONNECTION WITH CONTRACTS FOR CONSTRUCTING AIRPORT IMPROVEMENTS COME WITHIN THE PROHIBITION IN 10 U.S.C. 6112 (B) AND HE IS PRECLUDED FROM RECEIVING RETIRED PAY FROM THE NAVY.

TO THE SECRETARY OF THE NAVY, NOVEMBER 9, 1959:

BY LETTER DATED AUGUST 24, 1959, DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE SUBMISSION NO. 450, THE UNDER SECRETARY OF THE NAVY REQUESTED OUR DECISION AS TO WHETHER, IN THE CIRCUMSTANCES PRESENTED, THE PROVISIONS OF 10 U.S.C. 6112 (B) PROHIBIT THE PAYMENT OF RETIRED PAY TO REAR ADMIRAL CARL H. COTTER, CEC, U.S. NAVY, RETIRED.

IT APPEARS THAT REAR ADMIRAL COTTER RETIRED FROM THE NAVY IN MARCH 1947 AND THAT HE IS PRESIDENT OF THE CAPITOL CONSTRUCTION COMPANY, INC., A CORPORATION CHARTERED UNDER THE LAWS OF PUERTO RICO ON AUGUST 9, 1950. THIS CONCERN ENTERED INTO TWO CONSTRUCTION CONTRACTS WITH THE NAVY, CONTRACT NO. NBY-1414 DATED MAY 7, 1956, AND CONTRACT NO. NBY 1480 DATED APRIL 26, 1957, FOR THE EXTENSION AND REINFORCEMENT OF EXISTING RUNWAYS AND NEW TAXIWAYS AND FOR VARIOUS AIRPORT DEVELOPMENT PROJECTS AT THE U.S. NAVAL STATION, ROOSEVELT ROADS, PUERTO RICO. THESE CONTRACTS CONTAIN AGREEMENTS TO FURNISH ALL LABOR, EQUIPMENT, AND MATERIALS IN CONNECTION WITH CONSTRUCTING THE AIRFIELD IMPROVEMENTS.

REAR ADMIRAL COTTER SIGNED CONTRACT NBY-1414 FOR THE CAPITOL CONSTRUCTION COMPANY, AS PRESIDENT OF THE CONCERN, AND IT IS REPORTED THAT HE SIGNED THE PROPOSAL SUBMITTED BY THE COMPANY WHICH RESULTED IN THE CONTRACT. ALSO, HE ACCEPTED CHANGE ORDERS C AND D TO THIS CONTRACT EFFECTING, RESPECTIVELY, A DECREASE AND AN INCREASE IN THE AMOUNT OF THE WORK TO BE PERFORMED. IT IS REPORTED, HOWEVER, THAT CONTRACT CHANGES ARE PRICED BY A BOARD ON CHANGES, USUALLY CONSISTING OF A CONTRACTOR REPRESENTATIVE AND TWO GOVERNMENT REPRESENTATIVES, AND THAT HE DID NOT TAKE PART IN THE NEGOTIATIONS BEFORE THIS BOARD.

CONTRACT NBY-1480 WAS SIGNED BY ANOTHER OFFICIAL OF THE CAPITOL CONSTRUCTION COMPANY. IT IS REPORTED, HOWEVER, THAT THE PROPOSAL WHICH RESULTED IN THIS CONTRACT WAS SIGNED "C. H. COTTER," AS PRESIDENT.

AN EXAMINATION OF THE STATEMENT AND CERTIFICATE OF AWARD ATTACHED TO EACH OF THESE CONTRACTS SHOWS THAT THE AWARD WAS MADE IN EACH CASE TO THE LOWEST BIDDER AS TO PRICE AFTER EXTENSIVE CIRCULARIZATION AMONG CONTRACTORS, AND OTHER FORMS OF ADVERTISING. EIGHT BIDS WERE RECEIVED IN THE CASE OF CONTRACT NBY-1414 AND 4 BIDS WERE RECEIVED IN THE CASE OF CONTRACT NBY-1480.

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

(A) AN OFFICER OF THE REGULAR NAVY OR THE REGULAR MARINE CORPS, OTHER THAN A RETIRED OFFICER, MAY NOT BE EMPLOYED BY ANY PERSON FURNISHING NAVAL SUPPLIES OR WAR MATERIALS TO THE UNITED STATES. IF SUCH AN OFFICER IS SO EMPLOYED, HE IS NOT ENTITLED TO ANY PAYMENT FROM THE UNITED STATES DURING THAT EMPLOYMENT.

(B) 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 HIS LETTER OF AUGUST 24, 1959, THE UNDER SECRETARY OF THE NAVY STATES THAT THE JUDGE ADVOCATE GENERAL OF THE NAVY HAS INDICATED THAT THE TERM" "SELLING, OR CONTRACTING OR NEGOTIATING TO SELL," CONTAINED IN THE STATUTE, INCLUDES VIRTUALLY ALL ACTIVITIES SURROUNDING THE SELLING PROCESS, AND THAT THE SIGNING OF A GOVERNMENT CONTRACT BY THE PRESIDENT OF A CORPORATION, ALTHOUGH THAT IS HIS ONLY RELATIONSHIP TO A PARTICULAR TRANSACTION, IS CONSIDERED TO BE CONTRACTING FOR SALE UNDER 10 U.S.C. 6112 (B), CITING JAG:II:2:JAC:SH OF AUGUST 13, 1956. IN LINE WITH SUCH VIEWS, WE HELD IN DECISION OF JANUARY 6, 1959, 38 COMP. GEN. 470, THAT ANY ACTIVITIES CALCULATED TO INDUCE THE PURCHASE OF NAVAL SUPPLIES AND WAR MATERIALS MUST BE VIEWED AS COMING WITHIN THE SCOPE OF 10 U.S.C. 6112 (B) AND THAT THE TERM,"NAVAL SUPPLIES OR WAR MATERIALS," HAS REFERENCE TO ANY ARTICLE OF TANGIBLE PERSONAL PROPERTY. BUT FOR THE FACT, THEREFORE, THAT THE CONTRACTS HERE INVOLVED ARE CONTRACTS FOR PUBLIC WORKS AND IMPROVEMENTS, IT WOULD BE QUITE CLEAR THAT ADMIRAL COTTER'S ACTIVITIES WITH RESPECT TO SUCH CONTRACTS WOULD BE SUBJECT HIM TO THE PROHIBITION OF THE STATUTE.

SECTION 6112 OF TITLE 10 HAD ITS INCEPTION IN A PROVISO CONTAINED IN THE NAVAL APPROPRIATION ACT FOR THE FISCAL YEAR 1897, APPROVED JUNE 10, 1896 (29 STAT. 361). SUCH PROVISO MADE IT UNLAWFUL FOR OFFICERS OF THE NAVY AND MARINE CORPS, EITHER ACTIVE OR RETIRED, TO BE IN THE EMPLOY OF PERSONS OR COMMERCIAL FIRMS FURNISHING NAVAL SUPPLIES OR WAR MATERIALS TO THE GOVERNMENT.

WE UNDERSTAND THAT THE 1896 ACT WAS ENACTED BECAUSE TWO RETIRED NAVAL OFFICERS RECEIVING RETIRED PAY FROM THE UNITED STATES WERE EMPLOYED BY CERTAIN FIRMS SELLING ARMOR PLATE TO THE GOVERNMENT AT PRICES CONSIDERED EXCESSIVE. IN ORDER TO ACCEPT A POSITION WITH ONE OF THE SUPPLIERS AND AT THE SAME TIME RECEIVE PAY FROM THE NAVY, ONE OF THE OFFICERS WAS RETIRED AT HIS OWN REQUEST BECAUSE OF ALLEGED COLOR BLINDNESS. IT WAS ARGUED THAT OFFICERS WHO ACQUIRE VALUABLE KNOWLEDGE THROUGH SERVICES IN THE NAVY DEPARTMENT SHOULD NOT BE PERMITTED TO LEAVE THE GOVERNMENT IN ORDER TO SELL THE KNOWLEDGE ACQUIRED AT GOVERNMENT EXPENSE TO THOSE WHO CONTRACT WITH THE GOVERNMENT; THAT IF SUCH A PRACTICE WERE PERMITTED SOME OF THE GOVERNMENT'S MOST VALUABLE OFFICERS WOULD PROBABLY SEEK RETIREMENT SO THEY COULD ENTER THE EMPLOY OF PRIVATE FIRMS AND AT THE SAME TIME REMAIN ON THE GOVERNMENT PAYROLL, AND THAT "NO MAN SHOULD SERVE TWO MASTERS," ETC.

THE PROVISO WAS REVISED BY SECTION 9 OF THE ACT OF JULY 22, 1935, 49 STAT. 490, TO MAKE UNLAWFUL ONLY THE SPECIFIED EMPLOYMENT OF OFFICERS ON THE ACTIVE LIST AND TO PERMIT RETIRED OFFICERS TO ENGAGE IN SUCH PRIVATE EMPLOYMENT WITH THE PROVISION, HOWEVER, THAT NO PAYMENT SHOULD BE MADE FROM APPROPRIATIONS MADE BY CONGRESS TO RETIRED OFFICERS ENGAGED IN SELLING ANY NAVAL SUPPLIES OR WAR MATERIALS TO THE NAVY OR THE NAVY DEPARTMENT. SECTION 6112 OF TITLE 10 OF THE CODE IS A CODIFIED VERSION OF SECTION 9 OF THE 1935 ACT.

THE STATUTE HAS BEEN CLASSIFIED AS ONE OF THE GROUP OF SO-CALLED CONFLICT -OF-INTEREST STATUTES. 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. BELIEVE 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.

CONGRESS, IT IS TRUE, BY USING THE TERM,"NAVAL SUPPLIES OR WAR MATERIALS," IN 10 U.S.C. 6112, DID NOT CAST THE STATUTE IN TERMS HAVING CLEAR LITERAL APPLICATION TO THE SITUATION HERE INVOLVED--- SALES ACTIVITIES RELATING TO PUBLIC BUILDINGS AND WORKS. IN 82 C.J.S. STATUTES, SECTION 325 (PAGE 617 ET SEQ.), HOWEVER, IT IS STATED THAT:

EFFECT WILL BE GIVEN THE REAL INTENTION EVEN THOUGH CONTRARY TO THE LETTER OF THE LAW. THE RULE OF CONSTRUCTION ACCORDING TO THE SPIRIT OF THE LAW IS ESPECIALLY APPLICABLE WHERE ADHERENCE TO THE LETTER WOULD RESULT IN ABSURDITY OR INJUSTICE, OR WHERE ADHERENCE TO THE LETTER OF THE LAW WOULD LEAD TO CONTRADICTIONS * * * IN FOLLOWING THIS RULE WORDS MAY BE MODIFIED OR REJECTED AND OTHERS SUBSTITUTED * * *

SEE, ALSO, 82 C.J.S. STATUTES, SECTION 323 (PAGE 607) AND SUTHERLAND ON STATUTORY CONSTRUCTION, SECTION 4925.

WHILE IT MAY BE THAT SECTION 6112 (B) HAS SOME ASPECTS OF A PENAL STATUTE, EVEN PENAL STATUTES ARE NOT REQUIRED TO BE CONSTRUED IN SUCH A WAY AS TO DEFEAT, IN WHOLE OR IN PART, THEIR MANIFEST PURPOSE. TO BORROW THE WORDS OF THE UNITED STATES SUPREME COURT IN UNITED STATES V. BROWN, 33 U.S. 18, WE ARE NOT UNMINDFUL OF THE MAXIM THAT STATUTES IMPOSING PENALTIES ARE TO BE STRICTLY CONSTRUED. BUT NO REASON IS APPARENT REQUIRING A RESTRICTED INTERPRETATION IN THIS CASE. THE CANNON IN FAVOR OF STRICT CONSTRUCTION IS NOT AN INEXORABLE COMMAND TO OVERRIDE COMMON SENSE AND EVIDENT STATUTORY PURPOSE. AS WAS SAID IN UNITED STATES V. GASKIN, 320 U.S. 527, 530, THE CANON ,DOES NOT REQUIRE * * * NULLIFICATION OF THE EVIDENT MEANING AND PURPOSE OF THE LEGISLATION.' SEE, ALSO, UNITED STATES V. RAYNOR, 302 U.S. 540, 552; UNITED STATES V. GILES, 300 U.S. 41; GOOCH V. UNITED STATES, 297 U.S. 124; UNITED STATES V. CORBETT, 215 U.S. 233.

NOTWITHSTANDING THE STATEMENT WHICH WE MADE IN 38 COMP. GEN. 470, RESPECTING THE APPLICATION OF THE STATUTE TO TANGIBLE PERSONAL PROPERTY, TO HOLD THAT CONGRESS INTENDED TO RESTRICT THE PROHIBITION OF 10 U.S.C. 6112 (B) TO SALES ACTIVITIES RELATING TO PERSONALTY WOULD FRUSTRATE THE CONGRESSIONAL PURPOSE BEHIND THE LAW IN EVERY CASE OF SALES ACTIVITIES RELATING TO PUBLIC WORKS AND IMPROVEMENTS. IN THE ABSENCE OF ANY SIGNIFICANT LEGISLATIVE HISTORY TO SUCH EFFECT--- AND NONE HAS BEEN FOUND- -- WE DO NOT BELIEVE THAT CONGRESS INTENDED ANY SUCH DISPARITY. THE INEQUALITY AND INJUSTICE OF SUCH DISPARATE TREATMENT IS OBVIOUS.

WE FEEL THAT WE MUST RESOLVE ANY DOUBT THERE MAY BE, AS TO THE INTENT OF SECTION 6112 (B), IN FAVOR OF THE INTERPRETATION WHICH WILL GIVE THAT SECTION A REASONABLE, SENSIBLE AND UNIFORM APPLICATION IN ALL CASES INVOLVING SALES ACTIVITIES OF RETIRED NAVAL OFFICERS IN CONNECTION WITH CONTRACTS FOR THE PROCUREMENT OF PROPERTY BY THE GOVERNMENT WHETHER THE PROPERTY BEING PROCURED IS AN EXPENDABLE SUPPLY ITEM, IS IN THE FORM OF A PUBLIC BUILDING OR OTHER IMPROVEMENT TO REAL PROPERTY, OR IS IN SOME OTHER FORM. IN OTHER WORDS, WE BELIEVE THAT WE SHOULD NOT, BY GIVING A STRICT AND NARROW CONSTRUCTION TO THE TERM "NAVAL SUPPLIES OR WAR MATERIALS," FORECLOSE THE COURTS FROM CONSIDERING AND DETERMINING THE SCOPE OF THAT TERM AS USED IN SECTION 6112 (B).

ACCORDINGLY, WE HOLD THAT ADMIRAL COTTER WAS NOT ENTITLED TO ANY RETIRED PAY FROM THE NAVY FOR THE PERIOD WHEN HE WAS PRESIDENT OF THE CAPITOL CONSTRUCTION COMPANY AND THAT COMPANY WAS UNDER OBLIGATION TO PERFORM, OR WAS ENGAGED IN THE PERFORMANCE OF, CONTRACTS NBY-1414, OR NBY-1480, OR ANY SIMILAR CONTRACT.