B-140581, MAR. 24, 1960

B-140581, MAR. 24, 1960

TO REAR ADMIRAL C. H. COTTER, USN, RETIRED:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 28, 1960, AND ENCLOSURES, CONCERNING YOUR ENTITLEMENT TO RETIRED PAY FROM THE NAVY FOR THE PERIOD WHEN YOU WERE PRESIDENT OF THE CAPITOL CONSTRUCTION COMPANY, INC., AND THAT COMPANY WAS UNDER OBLIGATION TO PERFORM, OR WAS ENGAGED IN THE PERFORMANCE OF CONTRACTS NBY-1414 OR NBY-1480, FOR THE CONSTRUCTION OF PUBLIC WORKS AND IMPROVEMENTS FOR THE DEPARTMENT OF THE NAVY, OR ANY SIMILAR CONTRACTS.

THIS MATTER WAS THE SUBJECT OF A DECISION DATED NOVEMBER 9, 1959, B 140581, 39 COMP. GEN. 366, BY THE COMPTROLLER GENERAL TO THE SECRETARY OF THE NAVY ON THE QUESTION OF WHETHER, IN THE CIRCUMSTANCES OF YOUR CASE, YOU WERE SUBJECT TO THE PROVISIONS OF 10 U.S.C. 6112 (B) PROHIBITING THE PAYMENT OF RETIRED PAY TO RETIRED OFFICERS OF THE REGULAR NAVY ENGAGED FOR THEMSELVES OR OTHERS IN SELLING, OR CONTRACTING OR NEGOTIATING TO SELL, NAVAL SUPPLIES OR WAR MATERIALS TO THE DEPARTMENT OF THE NAVY. WHILE RECOGNIZING THAT THE TERMS USED IN THE STATUTE DID NOT HAVE CLEAR LITERAL APPLICATION TO SALES ACTIVITIES RELATING TO PUBLIC BUILDINGS AND WORKS, IT WAS CONCLUDED FOR THE REASONS SET OUT IN THE DECISION, THAT ANY DOUBT THERE MAY BE AS TO THE INTENT OF THE STATUTE MUST BE RESOLVED IN FAVOR OF AN INTERPRETATION WHICH WOULD GIVE IT 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, IRRESPECTIVE OF WHETHER THE PROPERTY BEING PROCURED WAS AN EXPENDABLE SUPPLY ITEM, WAS IN THE FORM OF A PUBLIC BUILDING, OR OTHER IMPROVEMENT TO REAL PROPERTY, OR WAS IN SOME OTHER FORM. IT WAS HELD, THEREFORE, THAT YOU WERE NOT ENTITLED TO RETIRED PAY DURING THE PERIOD INVOLVED. A COPY OF THAT DECISION IS ENCLOSED.

IN YOUR LETTER OF JANUARY 28, 1960, YOU REVIEW THE NATURE OF YOUR DUTIES AS PRESIDENT OF THE CAPITOL CONSTRUCTION COMPANY AND SAY THAT YOUR ACTIVITIES IN CONNECTION WITH CONTRACTS BETWEEN THE CAPITOL CONSTRUCTION COMPANY AND THE DEPARTMENT OF THE NAVY WERE LIMITED TO MONTHLY PROGRESS INSPECTIONS AVERAGING TWO TO THREE HOURS. YOU EXPLAIN THAT YOUR SIGNING OF THE PROPOSAL WHICH RESULTED IN CONTRACT NBY-1414, AND THE CONTRACT, WAS SIMPLY A MINISTERIAL MATTER. YOU EXPRESS THE OPINION THAT YOUR ACTIVITIES WERE WITHIN THESE WHICH CERTAIN NAVY REGULATIONS INDICATED TO BE APPROPRIATE FOR RETIRED OFFICERS. IN SUCH CIRCUMSTANCES AND ON THE BASIS THAT THE CONTRACTS CONCERNED WERE ADVERTISED PROCUREMENTS AWARDED TO THE LOWEST BIDDER AS TO PRICE WITHOUT ANY NEGOTIATION AND THE DECISION WILL HAVE SERIOUS FINANCIAL CONSEQUENCES FOR YOU, YOU ASK THAT WE RECONSIDER THE MATTER.

ENCLOSED WITH YOUR LETTER WAS A MEMORANDUM PREPARED BY YOUR ATTORNEYS CONCERNING THE APPLICATION OF 10 U.S.C. 6112 (B) TO CONSTRUCTION CONTRACTS. THIS MEMORANDUM CITES A NUMBER OF JUDICIAL PRECEDENTS HOLDING THAT A CONTRACT FOR WORK, LABOR AND MATERIAL IS NOT A CONTRACT OF ,SALE.'

EACH OF THE POINTS MADE IN YOUR LETTER HAD BEEN CAREFULLY CONSIDERED BY OUR OFFICE BEFORE WE RENDERED THE DECISION OF NOVEMBER 9, 1949, AND THEREFORE THEY AFFORD NO BASIS FOR ANY CHANGE IN OUR VIEWS. AS TO THE CASES CITED IN ENCLOSED MEMORANDUM, SUCH CASES LARGELY CONCERN INTERPRETATIONS OF THE TERM "SALE" IN THE LIGHT OF ITS USE IN THE UNIFORM SALES ACT AND IN CERTAIN SALES, INCOME TAX, AND OTHER LAWS. WE DO NOT BELIEVE SUCH CASES CONSTITUTE PROPER PRECEDENTS ON WHICH TO BASE AN INTERPRETATION OF THAT TERM IN A LAW FOR PURPOSES OF SAFEGUARDING THE INTEGRITY OF PUBLIC ADMINISTRATION AND PREVENTING GOVERNMENT OFFICIALS FROM USING THEIR POSITIONS AND INFLUENCE FOR PERSONAL GAIN. COMPARE SEASTROM V. UNITED STATES, C.CLS. NO. 220-57, DECIDED NOVEMBER 4, 1959.

ACCORDINGLY, WHILE APPRECIATING YOUR POSITION, WE MUST ADHERE TO THE CONCLUSION REACHED IN THE DECISION OF NOVEMBER 9, 1959, CONCERNING YOUR ENTITLEMENT TO RETIRED PAY.