B-184849, AUG 11, 1977, 56 COMP GEN 898
Highlights
SPONSORS AND PAYS FOR A SOCIAL FUNCTION AT WHICH RETIRED REGULAR OFFICERS OF THE UNIFORMED SERVICES EMPLOYED BY THE CONTRACTOR MAKE CONTACT WITH DEPARTMENTAL PERSONNEL WHO ARE IN A POSITION TO INFLUENCE PROCUREMENTS BY THE DEPARTMENT. SUCH CONTACTS WILL BE VIEWED AS ESTABLISHING A PRIMA FACIE CASE THAT SUCH OFFICERS ARE "SELLING" WITHIN THE MEANING OF 37 U.S.C. 801(C) AND THEY WILL BE SUBJECT TO FORFEITURE OF RETIRED PAY. HAVE BEEN BROUGHT TO OUR ATTENTION. INFORMATION MADE AVAILABLE TO US INDICATES THAT THESE OFFICERS HAVE ATTENDED SOCIAL FUNCTIONS SPONSORED AND PAID FOR BY THEIR EMPLOYERS AT WHICH CIVILIANS AND ACTIVE DUTY MILITARY PERSONNEL OF THE DOD HAVE BEEN PRESENT. AN EXAMPLE OF THIS TYPE ACTIVITY INVOLVES FUNCTIONS HELD AT HUNTING LODGES LEASED BY CERTAIN DEFENSE CONTRACTORS FOR THE PURPOSE OF GENERATING GOOD WILL FOR THE CORPOATION.
B-184849, AUG 11, 1977, 56 COMP GEN 898
MILITARY PERSONNEL - RETIRED - CONTRACTING WITH GOVERNMENT - WHAT CONSTITUTES SELLING WHERE A CONTRACTOR, DOING BUSINESS WITH DEPARTMENT OF DEFENSE AGENCY, SPONSORS AND PAYS FOR A SOCIAL FUNCTION AT WHICH RETIRED REGULAR OFFICERS OF THE UNIFORMED SERVICES EMPLOYED BY THE CONTRACTOR MAKE CONTACT WITH DEPARTMENTAL PERSONNEL WHO ARE IN A POSITION TO INFLUENCE PROCUREMENTS BY THE DEPARTMENT, SUCH CONTACTS WILL BE VIEWED AS ESTABLISHING A PRIMA FACIE CASE THAT SUCH OFFICERS ARE "SELLING" WITHIN THE MEANING OF 37 U.S.C. 801(C) AND THEY WILL BE SUBJECT TO FORFEITURE OF RETIRED PAY.
IN THE MATTER OF THE "CIVIL SELLING LAW," 37 U.S.C. 801(C), AUGUST 11, 1977:
RECENTLY THE ACTIVITIES OF CERTAIN RETIRED REGULAR OFFICERS OF THE UNIFORMED SERVICES EMPLOYED BY CONTRACTORS DOING BUSINESS WITH THE DEPARTMENT OF DEFENSE (DOD), AND ITS VARIOUS AGENCIES, HAVE BEEN BROUGHT TO OUR ATTENTION. INFORMATION MADE AVAILABLE TO US INDICATES THAT THESE OFFICERS HAVE ATTENDED SOCIAL FUNCTIONS SPONSORED AND PAID FOR BY THEIR EMPLOYERS AT WHICH CIVILIANS AND ACTIVE DUTY MILITARY PERSONNEL OF THE DOD HAVE BEEN PRESENT. AN EXAMPLE OF THIS TYPE ACTIVITY INVOLVES FUNCTIONS HELD AT HUNTING LODGES LEASED BY CERTAIN DEFENSE CONTRACTORS FOR THE PURPOSE OF GENERATING GOOD WILL FOR THE CORPOATION.
SUBSECTION 801(C) OF TITLE 37, U.S.C. PROVIDES THAT PAYMENT MAY NOT BE MADE TO A RETIRED REGULAR OFFICER OF THE UNIFORMED SERVICES WHO IS ENGAGED FOR HIMSELF AND OTHERS IN SELLING, OR CONTRACTING, OR NEGOTIATING TO SELL, SUPPLIES OR WAR MATERIALS TO AN AGENCY OF THE DOD OR ONE OF THE UNIFORMED SERVICES.
ACTIVITIES PROHIBITED BY THAT PROVISION ARE DESCRIBED IN DOD DIRECTIVE 5500.7 AND IN DECISIONS OF THIS OFFICE.
IN CONSTRUING THE ABOVE-CITED LAW, WE HAVE HELD THAT CONTRACTS MADE BY RETIRED OFFICERS WITH PERSONNEL OF THE VARIOUS AGENCIES WHEN THE RETIRED OFFICERS ARE IN NONSALES, EXECUTIVE OR ADMINISTRATIVE POSITIONS, AND CONTACTS BY THE RETIRED OFFICER IN HIS CAPACITY AS A NONCONTRACTING TECHNICAL SPECIALIST WHICH INVOLVE NO SALES ACTIVITY ARE OUTSIDE THE PURVIEW OF THE STATUTE. SEE 41 COMP.GEN. 784 (1962); 41 ID. 799 (1962); 42 ID. 87 (1962); 42 ID. 236 (1962) AND 52 ID. 3 (1972). HOWEVER, WE HAVE ALSO MAINTAINED THAT WHERE A RETIRED OFFICER ACTUALLY PARTICIPATES IN SOME PHASE OF THE PROCUREMENT PROCESS, SUCH ACTIVITIES BRING HIM WITHIN THE PURVIEW OF THE DEFINITION OF SELLING CONTAINED IN DOD DIRECTIVE 5500.7. SEE 42 COMP.GEN. 52 (1962); 42 ID. 236 (1962); AND 43 ID. 408 (1963).
IN CONSTRUING STATUTES SIMILAR TO 37 U.S.C. 801(C), WE HAVE HELD THAT A RETIRED REGULAR NAVAL OFFICER ENGAGED IN THE PROMOTION OF GOOD WILL ON BEHALF OF HIS EMPLOYER, A CONTRACTOR DOING BUSINESS WITH NAVY, WHICH RESULTED IN SALES TO BE EFFECTED BY OTHER EMPLOYEES OF THE EMPLOYER, WAS "SELLING" WITHIN THE MEANING OF THE STATUTES. 38 COMP.GEN. 470 (1959).
FURTHERMORE, WHILE NOTING THAT THE STATUTORY PROVISIONS DO NOT ENCOMPASS PURELY SOCIAL CONTACTS, WE HAVE EXPRESSED THE VIEW THAT CONTACTS WITH DEPARTMENTAL OFFICIALS FOR SALES PURPOSES AT PLACES OTHER THAN GOVERNMENT FACILITIES AT SOCIAL GATHERINGS, IF ESTABLISHED, WOULD NOT MAKE IT ANY LESS A SALES ACTIVITY FOR WHICH FOREFEITURE OF RETIRED PAY WOULD BE REQUIRED. SEE 42 COMP.GEN. 237, SUPRA.
THUS, IN ANY CASE ARISING IN THE FUTURE WHEN A DEFENSE CONTRACTOR SPONSORS OR PAYS FOR WHAT COULD BE CONSTRUED AS A SOCIAL EVENT, AND RETIRED REGULAR OFFICERS EMPLOYED BY THE CONTRACTOR ATTEND TOGETHER WITH DEPARTMENTAL PERSONNEL, WHO ARE IN A POSITION TO INFLUENCE PROCUREMENTS, WE WILL BE COMPELLED TO VIEW SUCH CONTACTS AS ESTABLISHING A PRIMA FACIE CASE THAT THE RETIRED OFFICERS ARE "SELLING" WITHIN THE MEANING OF 37 U.S.C. 801(C) AND, UNLESS ADEQUATELY REBUTTED, THE OFFICERS WILL BE SUBJECT TO FORFEITURE OF RETIRED PAY.
IN ORDER THAT OUR VIEWS ON THIS MATTER MAY BE CLEARLY UNDERSTOOD BY ALL INVOLVED, WE URGE THE SECRETARY OF DEFENSE TO REVISE THE APPLICABLE DIRECTIVE OR TAKE OTHER STEPS CALCULATED TO INFORM ALL INDIVIDUALS CONCERNED OF OUR POSITION IN THIS MATTER. WE ALSO URGE THE SECRETARIES OF HEALTH, EDUCATION, AND WELFARE, TRANSPORTATION AND COMMERCE TO TAKE SIMILAR ACTION WITH REGARD TO THE COMMISSIONED OFFICER CORPS OF THE PUBLIC HEALTH SERVICE, COAST GUARD, AND THE NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION.