B-160236, DEC. 2, 1966

B-160236, DEC. 2, 1966

TO THE DISBURSING OFFICER, RETIRED PAY DEPARTMENT:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 23, 1966 (FILE REFERENCE XO:HA:WR 7220/493 976), WITH ENCLOSURES, REQUESTING AN ADVANCE DECISION AS TO THE PERIOD DURING WHICH LIEUTENANT COMMANDER WILLIAM W. GENTRY, CEC, USN, RETIRED, IS PRECLUDED FROM RECEIVING RETIRED PAY PURSUANT TO 37 U.S.C. 801 (C), UNDER THE CIRCUMSTANCES DISCLOSED BELOW. YOUR LETTER WAS FORWARDED TO THIS OFFICE ON OCTOBER 12, 1966, BY THE COMPTROLLER OF THE NAVY HAVING BEEN ASSIGNED SUBMISSION NUMBER DO-N-931, BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

YOU STATE THAT COMMANDER GENTRY WAS RELEASED FROM ACTIVE DUTY ON SEPTEMBER 30, 1965, AND TRANSFERRED TO THE RETIRED LIST OF THE REGULAR NAVY ON OCTOBER 1, 1965, UNDER 10 U.S.C. 6323; THAT HE WAS PAID RETIRED PAY CONTINUOUSLY FROM OCTOBER 1, 1965, THROUGH JULY 31, 1966; AND THAT UPON RECEIPT OF A COPY OF LETTER DATED AUGUST 8, 1966, ADDRESSED TO COMMANDER GENTRY FROM THE OFFICE OF THE COMPTROLLER OF THE NAVY CONCERNING THE OFFICER'S POST-RETIREMENT EMPLOYMENT ACTIVITIES HIS RETIRED PAY WAS SUSPENDED EFFECTIVE AUGUST 1, 1966.

YOU REFER TO THE ABOVE-MENTIONED NAVY COMPTROLLER LETTER OF AUGUST 8, 1966, COPY OF WHICH YOU ENCLOSED, WHEREIN COMMANDER GENTRY WAS ADVISED THAT THE NAVY'S ATTENTION HAD BEEN DIRECTED TO THE FACT THAT HE HAD SIGNED, AS VICE PRESIDENT OF CONSTRUCTECH CORPORATION, A PROPOSAL WITH REFERENCE TO CONTRACT NBY-70808, DATED APRIL 7, 1966, FOR THE INSTALLATION OF AN ACCOUSTIC TANK, BUILDING A59, U.S. NAVAL RESEARCH LABORATORY, WASHINGTON, D.C., AND IN THE SAME CAPACITY HE SIGNED CONTRACT NBY-70808, DATED APRIL 14, 1966. THE NAVY COMPTROLLER'S LETTER CONCLUDED THAT IN THE LIGHT OF THE PROVISIONS OF 37 U.S.C. 801 (C), AND OUR HOLDING IN 39 COMP. GEN. 366, COMMANDER GENTRY WAS NOT ENTITLED TO RETIRED PAY BEGINNING WITH THE DATE OF ENTRY INTO CONTRACT NBY-70808 AND CONTINUING DURING THE PERFORMANCE PERIOD OF THAT CONTRACT. THE LETTER ALSO REQUESTED THE OFFICER TO FURNISH INFORMATION CONCERNING ANY OTHER CONTRACTS HE MIGHT HAVE SIGNED WITH OTHER AGENCIES OF THE DEPARTMENT OF DEFENSE.

IN RESPONSE TO THE NAVY COMPTROLLER'S LETTER, COMMANDER GENTRY IN LETTER DATED AUGUST 16, 1966, COPY OF WHICH ALSO WAS ENCLOSED, STATED, IN SUBSTANCE, THAT IT WAS HIS UNDERSTANDING THAT CONTRACT AWARDS MADE ON A WIDELY ADVERTISED, LUMP-SUM, LOW-BID BASIS DID NOT CONSTITUTE "SELLING" WITHIN THE MEANING OF 37 U.S.C. 801 (C); THAT HE FIRST LEARNED OF THE BID PROPOSAL IN QUESTION THROUGH AN ADVERTISEMENT IN A DAILY BULLETIN TO WHICH HIS FIRM SUBSCRIBED; THAT HE VISITED THE INTENDED JOB SITE FOR FAMILIARIZATION BUT DID NOT IDENTIFY OR REPRESENT HIMSELF AS A FORMER NAVAL OFFICER; AND THAT SINCE HIS FIRM WAS THE LOWEST BIDDER OF NINE OTHER BIDS, THE CONTRACT WAS AWARDED TO THE FIRM HE REPRESENTED. THE OFFICER FURTHER STATED THAT TO HIS KNOWLEDGE HE WAS NOT RECOGNIZED AS A RETIRED OFFICER UNTIL SOME TIME IN EARLY JULY--- AFTER THE AWARD OF THE CONTRACT-- - WHEN, DURING A PERIOD OF INSPECTION, HE TALKED WITH AN OFFICER WHOM HE HAD KNOWN WHILE ON ACTIVE DUTY. COMMANDER GENTRY REFERS TO OUR DECISION REPORTED AT 39 COMP. GEN. 366, INVOLVING A SOMEWHAT ANALOGOUS SITUATION, AND HE SAYS THAT EFFECTIVE AUGUST 15, 1966, HE RESIGNED AS AN OFFICER OF CONSTRUCTECH CORPORATION AND REQUESTS THAT HIS RETIRED PAY BE REINSTATED. IN HIS LETTER, COMMANDER GENTRY FURNISHED THE FOLLOWING LIST OF CONTRACTS ENTERED INTO WITH RELATED AGENCIES OF THE DEPARTMENT OF DEFENSE WHICH HE SIGNED IN HIS CAPACITY AS AN OFFICIAL OF THE FIRM:

CHART

CONTRACTING CONTRACT DATE OF DATE OF

OFFICE CONTRACT NO. AMOUNT CONTRACT COMPLETION

NAV. RES. LAB.,

WASHINGTON, D.C. NBY-70792 $ 8,383.00 11-30-65 3-2-66

BOLLING AFB

WASHINGTON, D.C. AF49/604/-4453 7,280.00 12-20-65 3-3-66

MCS, QUANTICO,

VA. NBY-62759 21,780.00 3-4-66 SCHEDULED

9-12-66

FORT BELVOIR, VA. DABB-19-66-C-4357 23,995.00 5-19-66 SCHEDULED

LATE SEPT.

1966

U.S. PROPERTY AND DA-49089-NG-78 15,653.00 6-29-66 9-28-66

FISCAL OFFICER FOR

DIST. OF COLUMBIA;

(FOR AIR NAT-L

GUARD AT ANDREWS

AFB)

YOU EXPRESS DOUBT AS TO COMMANDER GENTRY'S ENTITLEMENT TO RETIRED PAY COMMENCING AUGUST 16, 1966, SINCE HE HAS HAD A CONTINUING FINANCIAL INTEREST IN CONSTRUCTECH CORPORATION SUBSEQUENT TO HIS RESIGNATION AS VICE PRESIDENT, WHEREAS THE OFFICER WHOSE CASE WAS CONSIDERED IN 39 COMP. GEN. 366 DIVORCED HIMSELF FROM HIS COMPANY WHEN HE RESIGNED AS PRESIDENT.

SUBSEQUENT TO THE RECEIPT OF YOUR SUBMISSION THERE WAS FORWARDED HERE BY THE OFFICE OF THE COMPTROLLER OF THE NAVY A COPY OF LETTER OF NOVEMBER 4, 1966, FROM COMMANDER GENTRY TO THAT OFFICIAL, STATING THAT ALL CONTRACTS REPORTED IN HIS LETTER OF AUGUST 16, 1966, QUOTED ABOVE, HAVE BEEN COMPLETED AND ACCEPTED BY THE GOVERNMENT, THE LAST ONE BEING CONTRACT DA 49089-NG-78 WHICH WAS COMPLETED ON OCTOBER 30, 1966. THE OFFICER SAYS THAT NO OTHER GOVERNMENT CONTRACTS WERE ESTABLISHED AND THAT ON SEPTEMBER 30, 1966, HE CEASED BEING AN EMPLOYEE OF CONSTRUCTECH CORPORATION. THE OFFICER ASKED THAT HIS RETIRED PAY BE RESUMED ON ONE OF THREE DAYS, NAMELY, AUGUST 15, SEPTEMBER 30, OR OCTOBER 30, 1966.

SECTION 59 (C) OF TITLE 5, U.S.C. AS AMENDED BY PUB.L. 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 THREE YEARS AFTER RETIREMENT TO, AMONG OTHERS, AN OFFICER ON THE RETIRED LIST OF THE REGULAR NAVY "* * * 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 TERM ,SELLING" AS USED IN THAT LAW IS DEFINED IN PARAGRAPH I.C. 2. OF ENCLOSURE 3-C TO DEPARTMENT OF DEFENSE DIRECTIVE 5500.7 DATED MAY 17, 1963, TO MEAN:

"A. SIGNING A BID, PROPOSAL, OR CONTRACT;

"B. NEGOTIATING A CONTRACT;

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

"/1) OBTAINING OR NEGOTIATING CONTRACTS,

"/2) NEGOTIATING OR DISCUSSING CHANGES IN SPECIFICATIONS, PRICE, 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 THEREFOR IS SUBSEQUENTLY NEGOTIATED BY ANOTHER PERSON.'

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; 39 ID. 366; 40 ID. 511; 41 ID. 642. IT HAS BEEN HELD THAT THE EMPLOYMENT OF RETIRED OFFICERS IN NONSALES EXECUTIVE AND ADMINISTRATIVE POSITIONS IS OUTSIDE OF THE PURVIEW OF THE STATUTE. SEE 41 COMP. GEN. 784; 41 ID. 799; 42 ID. 87. ALSO, THE MERE FACT THAT A RETIRED OFFICER HAS A FINANCIAL INTEREST IN A FIRM WHERE EMPLOYED WOULD NOT IN ITSELF BRING HIM WITHIN THE SCOPE OF THE STATUTE IN THE ABSENCE OF A SHOWING THAT HE IS ENGAGED IN SALES ACTIVITIES AS CONTEMPLATED BY THE STATUTE AND THE DEFINITION CONTAINED IN DEPARTMENT OF DEFENSE DIRECTIVE 5500.7. COMPARE 42 COMP. GEN. 236.

IN OUR DECISION OF NOVEMBER 9, 1959, 39 COMP. GEN. 366, CITED IN YOUR SUBMISSION, THERE WAS INVOLVED THE CASE OF A RETIRED REGULAR NAVY OFFICER WHO, AS PRESIDENT OF THE COMPANY THERE MENTIONED, SIGNED TWO BID PROPOSALS AND A CONSTRUCTION CONTRACT ENTERED INTO WITH THE DEPARTMENT OF THE NAVY. AFTER DISCUSSING THE APPLICABLE PROVISIONS OF LAW IN EFFECT AT THAT TIME (10 U.S.C. 6112, WHICH PROVISIONS ARE SUBSTANTIALLY IDENTICAL TO THOSE CONTAINED IN 37 U.S.C. 801 (C) (, WE STATED THAT THE OFFICER WAS NOT ENTITLED TO ANY RETIRED PAY FROM THE NAVY FOR THE PERIOD DURING WHICH HE WAS PRESIDENT OF THE COMPANY AND THE COMPANY WAS UNDER OBLIGATION TO PERFORM, OR WAS ENGAGED IN THE PERFORMANCE OF, THE CONTRACTS THEREIN CITED OR ANY SIMILAR CONTRACTS.

IN VIEW OF THE ABOVE THERE CAN BE LITTLE DOUBT THAT AT LEAST DURING THE PERIOD NOVEMBER 30, 1965, TO OCTOBER 30, 1966, COMMANDER GENTRY WAS ENGAGED IN "SELLING" SUPPLIES OR WAR MATERIALS WITHIN THE CONTEMPLATION OF THE STATUTE AND DEPARTMENT OF DEFENSE DIRECTIVE 5500.7. ACCORDINGLY, ON THE RECORD BEFORE US, THE OFFICER WAS NOT ENTITLED TO RETIRED PAY DURING ANY PART OF THE PERIOD NOVEMBER 30, 1965, TO OCTOBER 30, 1966, WHEN THE SEVERAL CONTRACTS WERE IN EFFECT AND THE FIRM WAS ENGAGED IN THE PERFORMANCE OF THOSE CONTRACTS. SEE 42 COMP. GEN. 32. IN THE EVENT NAVY CONTRACT NBY-70792 ENTERED INTO ON NOVEMBER 30, 1965, WAS PURSUANT TO A BID PROPOSAL SIGNED BY THE OFFICER PRIOR TO THAT DATE, HE WOULD ALSO BE PRECLUDED FROM RECEIVING RETIRED PAY FROM THE DATE OF THE BID PROPOSAL RATHER THAN FROM THE DATE OF THE CONTRACT (NOVEMBER 30, 1965). THE DEPARTMENT OF THE NAVY SHOULD VERIFY THE CONTRACT INFORMATION FURNISHED BY THE OFFICER IN HIS LETTER OF AUGUST 16, 1966, IN ORDER TO ASCERTAIN THE CORRECT PERIOD DURING WHICH RETIRED PAY SHOULD BE WITHHELD. UPON VERIFICATION THAT ARMY NATIONAL GUARD CONTRACT NO. DA-49089-NG-78 WAS COMPLETED ON OCTOBER 30, 1966, THE OFFICER'S RETIRED PAY MAY BE RESUMED EFFECTIVE NOVEMBER 1, 1966.