§ 40.735-3 Ethical standards of conduct.

(a) General. DoD personnel are bound to refrain from any private business or professional activity or from having any direct or indirect financial interest which would place them in a position where there is a conflict between their private interests and the public interests of the United States, particularly those related to their duties and responsibilities as DoD personnel. Even though a technical conflict, as set forth in the statutes cited in this part, may not exist, DoD personnel must avoid the appearance of such a conflict from a public confidence point of view. DoD personnel will not engage in any private business or professional activity or enter into any financial transaction which involves the direct or indirect use, or the appearance of use, of inside information gained through a DoD position to further a private interest or for private gain for themselves or another person or entity, particularly one with whom they have family, business, or financial ties. DOD personnel must not use their DoD positions in any way to induce or coerce, or give the appearance of inducing or coercing, any person (including subordinates) or entity to provide any financial benefit to themselves or another person or entity, particularly one with whom they have family, business, or financial ties. For the purpose of this paragraph, "inside information” means information obtained under Government authority which has not become part of the body of public information. This paragraph does not preclude DoD personnel from teaching, lecturing, and writing as authorized by § 40.735-9(d), nor does it preclude DoD personnel from having financial interests or engaging in financial transactions to the same extent as private citizens not employed by the Government so long as they are not prohibited by law or the regulations in this part.

(b) Dealing with present and former military and civilian personnel. DOD personnel will not knowingly deal with military or civilian personnel, or former military or civilian personnel, of the Government, if such action will result in a violation of a statute or policy set forth in this part.

(c) Membership in associations. All DoD personnel who are members or offcers of nongovernmental associations or organizations must avoid activities on

behalf of the association or organization that are incompatible with their official government positions.

(d) Commercial soliciting by active duty members of the military. Military personnel on active duty are prohibited from personal commercial solicitation and sale to military personnel junior in rank or grade, at any time, on or off duty, in or out of uniform. This limitation includes, but is not limited to, the personal solicitation and sale of life and automobile insurance, stocks, mutual funds, real estate or any other commodities, goods or services. As used in this paragraph, "personal commercial solicitation" refers to those situations where a military member is employed as a sales agent on commission or salary, and contacts prospective purchasers suggesting they buy the commodity, real or intangible, that ne is offering for sale. This prohibition is not applicable to the one-time sale by an individual of his own personal property or privately owned dwelling. It is not the intent of this paragraph to discourage the offduty employment of military personnel, but it is the intent to eliminate any and all instances where it would appear that coercion, intimidation, or pressure was used based on rank, grade, or position. (e) Assignment of reserves for training. DoD personnel who are responsible for assigning Reserves for training should make an effort to assign them when they are on active duty for training to duties in which they will not obtain information that could be used by them or their employers to give them an unfair advantage over their civilian competitors.

(f) Conduct prejudicial to the Government. DoD personnel shall not engage in criminal, infamous, dishonest, immoral, or notoriously disgraceful conduct, or other conduct prejudicial to the Government. Moreover, DoD personnel shall avoid any action whether or not specifically prohibited by this part, which might result in, or create the appearance of:

(1) Using public office for private gain;

(2) Giving preferential treatment to any person;

(3) Impeding Government efficiency or economy;

(4) Losing complete independence or impartiality;

(5) Making a Government decision outside official channels; or

(6) Affecting adversely the confidence of the public in the integrity of the Government.

§ 40.735-4 Bribery and graft.

In general, DoD personnel may be subject to criminal penalties if they solicit, accept, or agree to accept anything of value in return for performing or refraining from performing an official act (see 18 U.S.C.201).

§ 40.735-5 Gratuities.

(a) Except as provided in paragraph (b) of this section, DoD personnel will not solicit or accept any gift, gratuity, favor, entertainment, loan, or any other thing of monetary value either directly or indirectly from any person, firm, corporation, or other entity which:

(1) Is engaged or is endeavoring to engage in procurement activities or business or financial transactions of any sort with any agency of the DoD;

(2) Conducts operations or activities that are regulated by any agency of the DoD; or

(3) Has interests that may be substantially affected by the performance or nonperformance of the official duty of the DoD personnel concerned.

Gifts, gratuities, favors, entertainment, etc., bestowed upon members of the immediate families of DoD personnel are viewed in the same light as those bestowed upon DoD personnel. Acceptance of gifts, gratuities, favors, entertainment, etc., no matter how innocently tendered and received, from those who have or seek business with the Department of Defense may be a source of embarrassment to the department and the personnel involved, may affect the objective judgment of the recipient and impair public confidence in the integrity of the business relations between the department and industry.

(b) For the purpose of this section, a gift, gratuity, favor, entertainment, etc., includes any tangible item, intangible benefits, discounts, tickets, passes, transportation, and accommodations or hospitality given or extended to or on behalf of the recipient. However, the

restrictions in paragraph (a) of this section do not apply to the following:

(1) Instances in which the interests of the Government are served by participation of DoD personnel in widely attended luncheons, dinners, and similar gatherings sponsored by industrial, technical, and professional associations for

the discussion of matters of mutual interest to Government and industry. Participation by DoD personnel is appropriate when the host is the association and not an individual contractor. Acceptance of gratuities, or hospitality from private companies in connection with such association's activities is prohibited.

(2) Situations in which the interests of the Government are served by participation of DoD personnel in activities at the expense of individual defense contractors when the invitation is addressed to and approved by the employing agency of DoD. These activities include public ceremonies of mutual interest to industry, local communities, and the department, such as the launching of ships or the unveiling of new weapons systems, industrial activities which are sponsored by or encouraged by the Government as a matter of U.S. defense or economic policy, such as sales meetings to promote off-shore sales involving foreign industrial groups or governments.

(3) Luncheons or dinners at a contractor's plant, on an infrequent basis, when the conduct of official business within the plant will be facilitated and when no provisions can be made for individual payment.

(4) Situations in which, in the judgment of the individual concerned, the Government's interest will be served by participation by DoD personnel in activities at the expense of a defense contractor. In any such case in which DoD personnel accepts any gratuity, favor, entertainment, etc., either directly or indirectly from any person, firm, corporation, or any other entity which is engaged or is endeavoring to engage in business transactions of any sort with the department, a report of the circumstances will be made within 48 hours by the individual to the designee of the Secretary of the military department concerned or the designee of the Secretary of Defense in the case of DoD personnel not within one of the military departments.

(5) Specialty advertising items of trivial intrinsic value.

(6) Customary exchange of social amenities between personal friends and relatives when motivated by such relationship and extended on a personal basis.

(7) Things available impersonally to the general public or classes of the general public such as a free exhibition by

a defense contractor at a world's fair. (8) Trophies, entertainment, rewards, prizes, given to competitors in contests which are open to the public generally or which are officially approved for participation in by DoD personnel.

(9) Transactions between and among relatives which are personal and consistent with the relationship.

(10) The acceptance of loans from banks or other financial institutions on customary terms to finance proper and usual activities of employees such as home mortgage loans.

(11) Social activities engaged in by officials of the department and officers in command or their representatives with local civilian leaders as part of community relations programs.

(12) Contractor-provided local transportation while on official business and when alternative arrangements clearly impracticable.

are

(13) Participation in civic and community activities by DoD personnel when the relationship with the defense contractor can reasonably be characterized as remote, for example, participation in a little league or Combined Federal Campaign luncheon which is subsidized by a concern doing business with a defense activity.

(14) Receipt of bona fide reimbursement, not prohibited by law, from other than defense contractors, for actual expenses of travel and other necessary subsistence for which no Government payment or reimbursement is made. However, an employee may not be reimbursed, nor may payments be made on his behalf, for excessive personal living expenses, gifts, entertainment, or other personal benefits, nor may an employee be reimbursed from a private source for travel on official business under agency orders except pursuant to 5 U.S.C. 4111 or other applicable statutory authority.

(c) Except as provided in paragraph (b) (12) of this section, personnel on official business may not accept contractor-provided transportation, meals or overnight accommodations in connection with such official business so long as Government or commercial transportation or quarters are reasonably available. Where, however, the over-all Government interest would be served by acceptance by DoD members of such transportation or accommodations in specific

cases, the order issuing authority may authorize it.

(d) Procedures with respect to gifts from foreign governments are set forth in DoD Directive 1005.3.

(e) Procedures with respect to Reserve Officer Training Corps Staff members are set forth in Part 92 of this subchapter.

[31 F.R. 4989, Mar. 26, 1966, as amended at 32 F.R. 12179, Aug. 24, 1967; 36 F.R. 22574, Nov. 25, 1971]

§ 40.735-6

Prohibition of contributions

or presents to superiors.

DoD personnel shall not solicit a contribution from other officers or employees for a gift to an official superior, make a donation as a gift to an official superior, or accept a gift from an officer or employee receiving less pay than themselves (5 U.S.C. 7351). However, this section does not prohibit a voluntary gift of nominal value or donation in nominal amount made on a special occasion such as marriage, illness or retirement. [32 F.R. 12179, Aug. 24, 1967]

§ 40.735-7 Use of Government facilities, property, and manpower.

DoD personnel will not directly or indirectly use, or allow the use of, government property of any kind, including property leased to the government, for other than officially approved activities. Government facilities, property, and manpower, such as stenographic and typing assistance, mimeograph and chauffeur services, may be used only for official government business. DoD personnel have a positive duty to protect and conserve government property, including equipment, supplies, and other property entrusted to them. This section is not intended to preclude the use of government facilities for activities which would further military-community relations provided they do not interfere with military missions.

§ 40.735-8 Use of civilian and military titles in connection with commercial enterprises.

(a) All civilian personnel, and military personnel on active duty, are prohibited from using their civilian and military titles or positions in connection with any commercial enterprises or in endorsing any commercial product. The foregoing shall not be deemed to preclude publication by such personnel of books or articles which identify them as author by

reference to their military or civilian title or position, provided that publication of such material is permitted under § 40.735-9 (d) and has been cleared under existing DoD procedures. (See DoD Directive 5230.9.)

(b) All retired military personnel and all members of reserve components, not on active duty, are permitted to use their military titles in connection with commercial enterprises. Such use of military titles shall in no way cast discredit on the military services or the DoD. Such use is prohibited in connection with commercial enterprises when such use, with or without the intent to mislead, gives rise to any appearance of sponsorship, sanction, endorsement, or approval by the military services or the DoD. The military department may restrict retired personnel and members of reserve components not on active duty, from using their military titles in connection with public appearances in Overseas

areas.

§ 40.735-9

Outside employment of DoD personnel.

(a) DoD personnel shall not engage in outside employment or other outside activity, with or without compensation, which:

(1) Interferes with, or is not compatible with, the performance of their Government duties;

(2) May reasonably be expected to bring discredit on the Government or the DoD agency concerned; or

(3) Is inconsistent with § 40.735-3(a), including such inconsistent acts as the acceptance of a fee, compensation, gift, payment of expense, or any other thing of monetary value in circumstances in which that acceptance may result in, or create the appearance of, conflicts of interest.

(b) No enlisted member of the armed forces on active duty may be ordered or permitted to leave his post to engage in a civilian pursuit or business, or a performance in civil life, for emolument, hire, or otherwise, if the pursuit, business, or performance interferes with the customary or regular employment of local civilians in their art, trade or profession.

(c) An active duty officer of the regular Navy or Marine Corps may not be employed by any person furnishing Naval supplies of war materials to the United States and continue to receive his service pay.

(d) DoD personnel are encouraged to engage in teaching, lecturing, and writing. However, an employee shall not, either for or without compensation, engage in teaching, lecturing, or writing, including teaching, lecturing, or writing for the purpose of the special preparation of a person or class of persons for an examination of the Commission or Board of Examiners for the Foreign Service, that is dependent on information obtained as a result of his Government employment, except when that information has been published or is available to the general public or will be made available on request, or when the agency head gives written authorization for the use of nonpublic information on the basis that the use is in the public interest. In addition, an employee who is a civilian Presidential appointee shall not receive compensation or anything of monetary value for any consultation, lecture, discussion, writing, or appearance, the subject matter of which is devoted substantially to the responsibilities, programs or operations of his agency or which draws substantially on official data or ideas which have not become part of the body of public information. (e) [Reserved]

(f) This section does not preclude DoD personnel from:

(1) Participation in the activities of national or State political parties not proscribed by law or regulation.

(2) Participation in the affairs or acceptance of an award for a meritorious public contribution or achievement given by a charitable, religious, professional, social, fraternal, nonprofit educational, nonprofit recreational, public service, or civic organization.

[31 F.R. 4989, Mar. 26, 1966, as amended at 33 F.R. 8433, June 7, 1968; 33 F.R. 11170, Aug. 7, 1968]

§ 40.735-10 Gambling, betting, and lotteries.

DoD personnel shall not participate, while on Government-owned or leased property or while on duty for the Government, in any gambling activity including the operation of a gambling device, in conducting a lottery or pool, in a game for money or property, or in selling or purchasing a numbers slip or ticket. However, this section does not preclude activities:

(a) Necessitated by an employee's law enforcement duties; or

(b) Under section 3 of Executive Order

DoD personnel shall pay each just financial obligation in a proper and timely manner, especially one imposed by law such as Federal, State, or local taxes. For the purpose of this section, a "just financial obligation" means one acknowledged by the employee or reduced to judgment by a court, and "in a proper and timely manner" means in a manner which the agency determines does not, under the circumstances, reflect adversely on the Government as his employer. In the event of dispute between an employee and an alleged creditor, this section does not require an agency to determine the validity or amount of the disputed debt.

§ 40.735-12 Information to personnel.

(a) New DoD personnel will be informed of the standards of conduct specified in this part upon employment or entry on duty. These standards of conduct will also be brought to the attention of all DoD personnel by appropriate means upon promulgation and at least semiannually thereafter.

(b) The attention of DoD personnel is directed to each statute relating to ethical and other conduct that is referred to in this part and in Appendix B to this part. DoD personnel will be advised how to obtain additional clarification of the standards of conduct set forth in this part and related statutes, rules, and regulations. For this purpose each of the military departments and Defense agencies shall designate one or more legal officers as deputy counselors who shall be responsible for providing advice and assistance on all matters relating to conduct and conflict of interest covered by this part and for reviewing statements of employment and financial interest.

(c) (1) Appropriate officials in the office of the Secretary of each military department and Head of each Defense agency shall be designated as the counselor for such department or agency and shall be responsible for proper coordination and final disposition of all problems relating to conflicts of interest and for the review of statements of employment and financial interest in accordance with regulations to be prescribed by the respective Secretaries or Agency Heads in accordance with subparagraph (2) of this paragraph. In the Office of the

Secretary of Defense, the General Counsel of the DoD or his designee will be responsible for these matters.

(2) Regulations governing the review of statements of employment and financial interests shall provide that:

(i) Whenever such review discloses a conflict or apparent conflict of interests, the employee concerned is entitled to an opportunity to explain the conflict or appearance of conflict.

(ii) If the conflict or appearance of conflict is not resolved on review by the explanation made by the employee, the information concerning the matter shall be submitted to the appropriate Secretary or Agency Head, or his designee, after review by the counselor designated under subparagraph (1) of this paragraph.

(iii) The resolution of a conflict or apparent conflict of interest either on review or after referral to the appropriate Secretary or Agency Head, or his designee, shall be effected promptly so that the conflict or appearance of conflict is ended. The resolution of the conflict or appearance of conflict may be accomplished by one or more means, such as changes in assigned duties, divestment of the conflicting interest, disqualification for a particular assignment, or disciplinary action. The resolution, whether by disciplinary action or otherwise, shall be effected in accordance with applicable laws, Executive orders, and regulations. § 40.735-13 Reporting suspected viola. tions.

DoD personnel who have information which causes them to believe that there has been a violation of a statute or policy set forth in this part will promptly report such incidents to their immediate superiors. If the superior believes there has been a violation, he will report the matter for further action in accordance with existing procedures. Any question or doubt on the part of the immediate superior will be resolved in favor of reporting the matter.

§ 40.735-14 Statement of employment and financial interests.

(a) DoD personnel required to submit statements. (1) Employees paid at a level of the Executive Schedule in subchapter II of chapter 53 of title 5, United States Code.

(2) Board members of the Armed Service Boards of Contract Appeals.